Oracle released quarterly earnings on Monday that fell short of analysts’ projections and provided a forecast that was below expectations.
TakeAway Points:
- Oracle’s fiscal third-quarter results missed analysts’ expectations.
- The company’s cloud infrastructure segment has been booming due to demand for computing power that can support artificial intelligence projects.
- Oracle said revenue in its cloud infrastructure unit increased 49% from a year earlier to $2.7 billion.
- Fintech stocks were some of the biggest decliners on Monday as the Nasdaq suffered its steepest drop since 2022.
- Crypto-related companies Robinhood, Coinbase and Strategy all notched double-digit declines.
Oracle fails on result
Oracle issued quarterly results on Monday that trailed analysts’ estimates and gave a forecast that came up short of expectations.
Earnings per share was $1.47 adjusted vs. $1.49 expected, while Revenue was $14.13 billion vs. $14.39 billion expected.
Revenue increased 6% from $13.3 billion in the same period last year. Net income rose 22% to $2.94 billion, or $1.02 a share, from $2.4 billion, or 85 cents a share, a year earlier. Revenue in Oracle’s cloud services business jumped 10% from a year earlier to $11.01 billion, accounting for 78% of total sales.
The company’s cloud infrastructure segment, which helps businesses move workloads out of their own data centers, has been booming due to demand for computing power that can support artificial intelligence projects. Oracle said revenue in its cloud infrastructure unit increased 49% from a year earlier to $2.7 billion.
“We are on schedule to double our data center capacity this calendar year,” Oracle Chair Larry Ellison said in a release. “Customer demand is at record levels.”
Billion-dollar investment in AI infrastructure
In January, President Donald Trump announced plans to invest billions of dollars in AI infrastructure in the U.S. in collaboration with Oracle, OpenAI and SoftBank. The first initiative of the joint venture, called Stargate, will be to construct data centers in Texas, an effort that is already underway, Ellison said during the announcement at the White House.
Oracle said it has more than $130 billion in remaining performance obligations after signing $48 billion in contracts during the period. That excludes contracts related to Stargate, Oracle CEO Safra Catz said on the call with analysts.
Oracle will spend around $16 billion in capital expenditures this year, which is a little more than double the total from last year, Catz added.
“As always, we remain careful to pace and align our CapEx investments appropriately and in line with booking trends,” Catz said.
For the current quarter, Oracle expects revenue to grow of between 8% and 10%. Analysts were expecting growth of about 11% to $15.91 billion, according to LSEG. The company said it expects adjusted earnings of $1.61 to $1.65 per share. Analysts were calling for adjusted earnings per share of $1.79.
Catz said Oracle’s fourth quarter adjusted earnings projections were negatively impacted by losses from an investment in another company.
Oracle’s cloud and on-premises licenses business contributed $1.1 billion in revenue during the quarter, down 10% year over year.
The company also said it is increasing its quarterly dividend to 50 cents a share from 40 cents.
As of Monday’s close, Oracle’s stock is down almost 11% year to date.
Fintech stocks plummet
It was a bad day for tech stocks, and a brutal one for fintech.
As the Nasdaq suffered its steepest decline since 2022, some of the biggest losers were companies that sit at the intersection of Wall Street and Silicon Valley.
Stock trading app Robinhood tumbled 20%, bitcoin holder Strategy fell 17% and crypto exchange Coinbase lost 18%. Much of the slide in those three stocks was tied to the drop in bitcoin, which fell almost 5%, continuing its downward trajectory. The price of the leading cryptocurrency is now down 19% over the past month, falling after a big postelection pop in late 2024.
Beyond the crypto trade, online lenders and payments companies also fell more than the broader market. Affirm, which popularized buy now, pay later loans, dropped 11%, as did SoFi, which offers personal loans and mortgages. Shopify, which provides payment technology to online retailers, fell more than 7%.
JPMorgan Chase fintech analysts on Monday highlighted declining consumer confidence as a potential challenge for companies that rely on consumer spending for growth. In late February, the Conference Board’s consumer confidence index slipped to 98.3 for the month, down nearly 7%, the largest monthly drop since August 2021. Walmart recently reported a shift away from discretionary purchases, underscoring the potential trouble.
“Our universe has modestly outperformed the S&P 500 since the election, but sentiment has soured of late on declining consumer confidence and signs of slowing discretionary spend,” the JPMorgan analysts wrote.
The fintech sell-off follows a strong rally in the fourth quarter, driven by Fed rate cut expectations and hopes for a more favorable regulatory environment under the Trump administration.
