Oracle has figured out how to grow with the market: DCLA’s Sarat Sethi

Oracle has figured out how to grow with the market: DCLA's Sarat Sethi

 that is oracle the little talkedabout stock soaring to all-time highs inthe back of its earnings beat fueled bythe cloud guess what oracle is now thebest performing stock in the tech sectorthis week and the stock has now alsooutperformed its cloud rivals likemicrosoft salesforce and sap all yearlet’s welcome in another voice ourfriend sarat seti who joins oracle youown it you have owned it for a whileyou’ve been the oracle of oracle tellingpeople to buy it why is it finally nowstarting to get a little bit ofattentionso what happened was you finally wentfrom mid single digits to high singledigits growth rate so what what thecompany’s forecasting now is on thehigher end of six to eight percent this

was something that they’d been sayingfor a few quarters nobody reallybelieved them the stock was trading at14 times earnings they’ve been buyingback shares for the last three years nowwhat you’re seeing is this inflectionpoint the cloud is now growing highdouble digits you’re seeing licensedrevenue growing you’ve seen themanagement actually come out to sayingthat they’re going to triple the revenuein the next three to five years alongwith that this is a cash flow richcompany margins were 200 basis pointsabove what they expected or what theyactually told the street to expect soyou’ve

got a company now that’sre-rating it’s still trading at 18 timesearnings you know a discount to themarket but it was it was one of thoseshow me stories and it hadn’t shown whatthey could do for a long time so nowthey’re finally in their element and ithink

the the room to grow is so muchand the beauty of this business is it’snot about stealing market share thiswhole market is growing and they havefigured out now how to grow with themarket and in fact if you look at theircompetitors a lot of them have puttogether a lot of mergers like the sapsof the world this is a one productcompany that has grown from the bottomso we really like this story um you knowi think going forward a lot of peoplehave not been on

top of the story so youwill see new attention come in and nowthey’ve got to keep on executing thiscannot be a one or two quarter storythat is kind of the downside to this butbut the upside is yeahwell very quickly because do peopleunderstand what oracle is or tell uswhat you think oracle is i’ll tell youwhy we say that oracle was a databasecompany forever and it still largely isdatabases like we talked about earlierthe theme of the show is boringdatabases are boring recurring revenuenot a lot of growth databasesthey made some deals are they stillprimarily a database company or shouldwe look at them differentlyi think

they are a database company withtheir growth drivers on the cloud andlicense revenue this is the recurringrevenue that’s high margin business thatover time over the next three to fiveyears is going to dominate theirbusinessyou don’t want to get rid of thedatabase business that is a cash heavyrich business that’s providing you thecapital to grow in this other businessthe key here the difference is we’vereached this inflection point and thatinflection point is that people now seethem as a real player they are gettingnew customers they are growing they’renot just taking their current customerbase yeah and and putting them on thecloud cloud is real they are actuallygetting market share they are not thisyou know

small player anymore they arein the game and i think that’s wherepeople will now have to see and re-ratethe stock to say hey recurring revenuebusiness inflection point high singledigits maybe higher and if they canexecute the stock will continue to dowell

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