On Monday Oracle reported its quarterly earnings that exceeded Wall Street’s expectations and showcased its position to gain as enterprise cloud customers integrate artificial intelligence (AI) tech. Oracle shares gained about 13% in extended trading.
Catz said the company added several “large new cloud infrastructure” contracts during the quarter. The company’s cloud revenue, which is reported as part of the cloud services unit, rose 25% year over year to $5.1 billion, Oracle said.
Oracle quarterly earnings report
Here’s how the company did in the fiscal third quarter ending February 29, compared to estimates by LSEG, formerly known as Refinitiv:
Oracle’s earnings per share: $1.41 adjusted vs. $1.38 expected
Oracle revenue: $13.28 billion vs. $13.3 billion expected
Expected earnings of Oracle: For the fiscal fourth quarter, $1.62 to $1.66 earnings per share. Analysts were expecting $1.64 in adjusted earnings per share, according to LSEG.
Oracle’s revenue growth will be between 4% and 6% over sales of $13.8 billion a year ago. The midpoint of that range would equal revenue of about $14.5 billion, while analysts were expecting a little more than $14.7 billion.
Goal for fiscal 2026
Oracle CEO Safra Catz said the company was committed to hitting previously stated goals of $65 billion in sales by fiscal 2026. “Some of these goals might prove to be too conservative given our momentum,” Catz said.
Oracle’s revenue rose 7% in the quarter from $12.4 billion a year earlier. Oracle’s net income climbed 27% to $2.4 billion, or 85 cents per share, from $1.9 billion, or 68 cents per share, a year ago.
Oracle’s cloud services
cloud services and license support segment of Oracle, its largest business, saw sales rise 12% to $9.96 billion, slightly beating StreetAccount consensus expectations of $9.94 billion. The company attributed the rise to strong demand for its artificial intelligence servers.
“We signed several large deals this quarter and we have many more in the pipeline,” Catz told investors on the earnings call.
Oracle Chairman Larry Ellison cited increased business from Microsoft on the earnings call.
“We’re building 20 data centers from Microsoft and Azure. They just ordered three more data centers this week,” Ellison said.
Oracle clients
Nvidia (NVDA), McDonald’s (MCD), Walmart (WMT), and Uber (UBER) are a few of Oracle’s customers using its cloud technology.
After transferring most customers from Cerner, a health information tech company that it acquired in 2021, to Oracle’s Gen2 Cloud infrastructure in the third quarter, the company is set to “start delivering its completely new Ambulatory Clinic Cloud Application Suite to these same customers,” CTO Larry Ellison said.
The company’s other units didn’t fare as well.
Cloud license and on-premise sales declined 3% to $1.26 billion, slightly beating StreetAccount’s forecast. Hardware revenue fell 7% to $754 million. Sales in the company’s services division slid 5% to $1.31 billion, both falling short of StreetAccount expectations.
Oracle shares gain
Prior to Monday’s report, Oracle shares gain was 8.7% for the year. This Oracle shares gain slightly outperforming the S&P 500.
Despite some declines in other areas such as cloud license and on-premise sales, and hardware revenue, the robust performance of the cloud segment, with a 12% increase in sales and a notable 25% rise in cloud revenue, indicates the success of Oracle’s focus on cloud computing and artificial intelligence services.
