Oracle choking on Adobe’s dust as software giants report this week

The week ahead

IMImobile PLC (LON: IMO) is today subject of a recommended offer from Cisco Systems at 595p per share in cash, which values the issued ordinary share capital of IMImobile at approximately GBP543 million on a fully diluted basis.

GB Group PLC (LON: GBG), the provider of identity verification software, announces interim results on Tuesday. In its post-period trading update in late October, GB Group said it had performed well during the period and is expected to report revenues of GBP103m, reflecting organic growth of 10%; however, it said that growth had been underpinned by a strong performance in the US from a specific one-off customer project, which is not expected to have a material impact into the second half. Consequently, the company said it expects full-year group revenue to be flat to marginally ahead of full-year 2020 (FY20) on an underlying basis, which was ahead of consensus at the time of the October update. GB Group said it expects to report a 26% growth in adjusted operating profit in the first half to GBP27mln with net debt declining by GBP32.3mln over the period to stand at GBP2.7mln. In the trading update, it also said that, due to the strong first-half performance and confidence in the outlook, it intends to declare an interim dividend of 3 pence per share at the time of the half-year results and also plans to release the executive director bonuses accrued in FY20.

Solid State PLC (LON: SOLI), which manufactures computing, power and communications products, is scheduled to report interim results on Tuesday. According to the post-period trading update in late October, the company expects to announce revenues and adjusted profits marginally easier at approximately GBP33.0mln (2019: GBP33.6mln) and GBP2.50mln (2019: GBP2.67mln) respectively. The open order book at 30 September 2020 was GBP34.3mln (30 September 2019: GBP36.5mln) of which around GBP23.7mln is expected to be shipped in this financial year. Net cash improved to GBP3.9mln as at 30 September 2020 (31 March 2020: GBP3.2mln) and the group has an unused GBP7.5mln revolving credit facility. Despite the uncertain outlook, the board anticipated that the financial outcome for the current financial year will be similar to the prior year. In a sign of optimism, the group said it has restarted its capex programme and is re-engaging with potential acquisition targets across both divisions.

Across the pond, Adobe and Oracle report earnings on Thursday. Adobe shares are up around 45% year-to-date, reflecting a market capitalisation of around US$233 billion and trading on a hefty 16 times (16x) annual sales. Adobe has been enjoying the cloud software boom, but its growth has been moderating over recent quarters so the focus will be on the rate of growth moderation. Oracle trades more modestly, on around 5x sales, but is growing at a much slower pace than Adobe – at just 2% in the last quarter. Investors will be looking to see how much its cloud applications growth outweighs weakness elsewhere. Other US technology companies expected to report earnings this week include Coupa Software, Smartsheet, Sumo Logic, Guidewire Software, Verint Systems, Ncino, Broadcom and Ciena.