Oracle shares extended their rally Monday after the enterprise software company posted better-than-expected quarterly results.
Shares (ticker: ORCL) were up 3.5% in after-hours trading. The stock closed up 6.1% in Monday’s regular session.
Heading into the announcement, investors were focused on the outlook for the company’s cloud business, which is getting a boost from generative AI companies.
For the fiscal fourth quarter ended May 31, Oracle reported revenue of $13.8 billion, up 17% as reported and 18% in constant currency. Oracle had projected growth of 17% to 19% adjusted for currency. Non-GAAP profit was $1.67 a share, a dime above Wall Street’s consensus.
Results were driven by a 54% growth in cloud-related revenue, or 55% in constant currency, well above Street estimates of about 50%. Under generally accepted accounting practices, Oracle earned $1.19 a share. Oracle noted that unfavorable exchange rates reduced non-GAAP profit by three cents a share.
Oracle said its cloud-infrastructure business in the quarter had revenue of $1.4 billion, up 76% as reported or 77% adjusted for currency. Cloud applications revenue were $3 billion, up 45% or 47% adjusting for foreign exchange.
For the full fiscal year, Oracle posted $50 billion in revenue, an all-time high, up 18% as reported or 22% in constant currency. The company said its combined cloud businesses were up 50% for the year in constant currency. Oracle noted that its cloud infrastructure business in particular has been accelerating.
Oracle said that it has recently signed more than 30 AI development companies, together committing to purchase more than $2 billion of capacity in Oracle’s Gen 2 cloud.
shares have been flying in recent weeks amid a growing view the company’s cloud business is well positioned to benefit from the growing AI trend. The stock is trading at an all-time high, today smashing through the $300 billon market valuation level. Oracle shares have rallied more than 30% since March.
What has changed, mostly, is Oracle’s aggressive push into the cloud, first with its own software and then with the launch of Oracle Cloud, as Barron’s noted in a February 2021 cover story and reiterated in a story last October that included an interview with CEO Safra Catz. Since then, the stock has rallied 70%.
“Customers who compare us with the other clouds are often stunned,” Catz said at the time. “Why do all these auto companies—Toyota,
—why are they doing all their high-performance work in the Oracle Cloud? Is it our charming bedside manner? Probably not. Is it because it is faster, cheaper, and more secure? Ding, ding, ding!”
Oracle also is taking advantage of strong customer relationships, a cutting edge cloud-platform, and a tight relationship with
(NVDA), which supplies chips to almost every cloud vendor, to become a surprisingly compelling AI play. Oracle today said that Nvidia itself is using a cluster with more than 4,000 GPUs.
For the August quarter, Street estimates call for revenue of $12.3 billion, and adjusted profit of $1.16 a share. Oracle will discuss the outlook on its coming conference call.
Write to Eric J. Savitz at firstname.lastname@example.org