Oracle Shares jumped as much as 11% in extended trading Tuesday after the software maker announced cloud deals with Google and OpenAI, despite fourth-quarter results falling short of Wall Street expectations.
Here are the company’s results compared to the LSEG consensus:
- Earnings per share: $1.63 adjusted vs. $1.65 expected
- Income: $14.29 billion, versus $14.55 billion expected
Oracle’s revenue increased 3% year-over-year in the quarter ended May 31, according to a statement. Net income, at $3.14 billion, or $1.11 per share, was down from $3.32 billion, or $1.19 per share, in the year-ago quarter.
The cloud services and licensing support segment generated $10.23 billion in revenue, up 9% and slightly below the StreetAccount consensus of $10.29 billion.
The company’s cloud and on-premises licensing businesses generated $1.84 billion in revenue. That’s down 15% and below the StreetAccount consensus of $2.09 billion.
Cloud infrastructure revenue was $2.0 billion, up 42%, representing a slowdown from the previous quarter’s growth rate of 49%. The cloud sector remains smaller than its competitors Amazon Web Services and Microsoft Azure but is growing faster.
As for guidance, Oracle expects fiscal first-quarter earnings in the range of $1.31 to $1.35 per share and revenue growth of 5 to 7 percent. Analysts surveyed by LSEG had expected $1.32 per share on an adjusted basis and $13.39 billion in revenue, implying growth of 7.6%.
Oracle said in a statement Tuesday that it would bring its database to Google cloud, with availability expected in November. Organizations will be able to deploy workloads across Google and Oracle cloud data center regions without being subject to data transfer fees, Oracle said.
Last September, Microsoft announced that its customers could use the Oracle database from the Azure cloud.
“The adoption has actually been really, really strong,” Clay Magouyrk, Oracle’s executive vice president of cloud infrastructure, said in an interview with CNBC on Tuesday.
The idea is to further expand the availability of Oracle’s flagship database software.
“We would love to do the same thing with AWS,” Larry Ellison, Oracle co-founder, president and chief technology officer, said during Oracle’s earnings conference call Tuesday.
Many e-commerce companies that rely on Oracle’s database would like to adopt AI to deliver a better shopping experience and conversational commerce, Google Cloud CEO Thomas Kurian, himself a former senior executive at Oracle. “It used to be quite complex for them to do this. Now it will be trivial for them to do it.”
In a separate statement, Oracle said it is partnering with Microsoft and OpenAI to provide additional computing capacity.
“Microsoft remains the exclusive cloud provider for OpenAI and has partnered with them to enter into this agreement with Oracle to expand Azure AI capability,” a Microsoft spokesperson said.
But now OpenAI will also rely on Oracle cloud infrastructure, including Nvidia graphics processing units, to train AI models, Ellison said on the earnings call.
“We are working as quickly as possible to expand cloud capacity, given the enormity of our backlog and pipeline,” Oracle CEO Safra Catz said on the conference call.
Ellison said the company is building some of the largest data centers in the world.
“Some are closer to, dare I say it, a gigawatt, which is a pretty good sized city or a huge cloud training data center for AI,” Ellison said.
During the quarter, Oracle announced that its database software would be available in five additional Azure regions, bringing the total to 15. Oracle also announced generative AI capabilities in its Fusion cloud applications for the channel procurement and human resources.
Oracle exited its advertising business during the quarter, whose revenue had fallen to about $300 million during the fiscal year, Catz said.
Despite the after-hours moves, Oracle stock has gained 18% so far this year, while the S&P 500 index is up about 13% over the same period.
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