Tech News

Oracle Cloud Bookings Rise 44%, with 9% Gain in Shares

Oracle’s cloud bookings jump 44% to $98 billion, fueling a predicted double-digit revenue growth and a 9% share jump.

TakeAway Points:

  • Oracle’s outstanding performance obligations increased by 44% to $98 billion, which caused its shares to rise by 9% during extended trading.
  • Demand for AI, combined with new cloud collaborations with Google and Microsoft, should drive double-digit revenue growth through May 2025.
  • Oracle’s total quarterly revenue of $14.3 billion was less than the $14.6 billion analyst projection, despite a robust 42% growth in cloud infrastructure revenue.

Strong Reservations Fuel Growth

Oracle Corp. reported better-than-expected bookings, indicating continued momentum in its cloud computing efforts against larger tech rivals. The company’s total remaining performance obligations, a measure of future contracted sales, increased 44% to $98 billion in the fiscal fourth quarter, surpassing analysts’ average estimate of $73.9 billion. This positive performance led to a 9% jump in Oracle’s shares during extended trading.

CEO Safra Catz highlighted the significance of recent large sales contracts, 

“Oracle signed the largest sales contracts in our history — driven by enormous demand for training AI large language models in the Oracle Cloud. Revenue growth will increase by double digits in the current fiscal year ending in May 2025, fueled by strong AI demand. Growth should accelerate through the year as the cloud unit’s capacity begins to catch up with demand,” Catz said.

She projected double-digit revenue growth for the current fiscal year ending in May 2025, fueled by strong AI demand. She noted that growth should accelerate as the cloud unit’s capacity catches up with demand.

Cloud’s Collaborative Growth

Oracle announced a new agreement to make its database available on Google’s cloud infrastructure, with availability expected in November. This follows a similar deal with Microsoft announced in late 2023, which Chairman Larry Ellison believes will “turbocharge our cloud database growth.” 

Additionally, OpenAI, which has received significant funding from Microsoft, will use Oracle’s cloud infrastructure for additional capacity. Oracle’s cloud has gained a reputation for success with generative AI startups, including customers like Reka, MosaicML, and Elon Musk’s xAI.

Despite these positive developments, Oracle’s cloud infrastructure revenue, while up 42% to $2 billion, showed a deceleration from the 49% growth rate in the prior quarter. The cloud business remains smaller than rivals Amazon Web Services and Microsoft Azure but is growing faster.

Financial Growth

Oracle’s total revenue for the quarter increased by 3.3% to $14.3 billion, slightly below the average analyst estimate of $14.6 billion. Profit, excluding some items, was $1.63 per share, compared to analysts’ projection of $1.65. 

The cloud services and license support segment generated $10.23 billion in revenue, up 9% but slightly below the StreetAccount consensus of $10.29 billion. The cloud and on-premises licenses business contributed $1.84 billion in revenue, down 15% and lower than the $2.09 billion StreetAccount consensus.

Oracle’s cloud applications business, including its Fusion apps for corporate finance, increased 10% to $3.3 billion. This growth rate represents a slowdown from the roughly 14% growth seen in recent quarters and fell below analysts’ estimates.

 The company’s results have been weighed down by its health unit, which includes Cerner, the electronic health records business acquired in June 2022 for $28 billion. Oracle is focused on transitioning this legacy software business to the cloud, facing setbacks such as customer departures and the renegotiation of a flagship federal contract.

To Top

Pin It on Pinterest

Share This