Prime Highlights:
- Oracle shares jumped 30% after the company projected massive growth in its cloud services, signaling strong investor confidence.
- The company signed major deals with OpenAI and Google, positioning itself as a key player in the cloud services market.
Key Facts:
- Oracle’s cloud services revenue grew 55% year-over-year to $3.3 billion, and the company expects it to reach $18 billion in fiscal 2026.
- The company’s remaining performance obligations soared 359% to $455 billion, reflecting contracted revenue not yet recognized.
Key Background:
Oracle Corp. saw its shares soar 30% Wednesday after the company outlined ambitious growth projections for its cloud infrastructure business, even though its quarterly earnings and revenue slightly missed analysts’ estimates.
In its latest earnings report, Oracle announced that remaining performance obligations, a measure of contracted revenue not yet recognized, jumped 359% year-over-year to $455 billion. The company now projects its cloud services revenue to reach $144 billion by fiscal 2030, rising from about $10 billion in fiscal 2025.
During the quarter, Oracle secured deals with OpenAI and Google, among other clients. OpenAI signed an agreement with Oracle to develop 4.5 gigawatts of U.S. data center capacity, while Google’s Gemini AI models are now set to become available on Oracle’s cloud infrastructure. CEO Safra Catz highlighted that Oracle signed four multibillion-dollar contracts with three different customers during the period.
Despite the strong forward-looking guidance, Oracle’s quarterly results showed slightly lower-than-expected figures. The company posted adjusted earnings of $1.47 per share, slightly below the expected $1.48, and reported revenue of $14.93 billion, just under the forecast of $15.04 billion. Revenue grew 12% from $13.3 billion a year earlier, and net income remained roughly flat at $2.93 billion, or $1.01 per share.
Oracle’s cloud infrastructure revenue demonstrated robust growth, reaching $3.3 billion, a 55% increase from the same quarter last year. The company expects cloud services revenue to hit $18 billion in fiscal 2026 and sees it growing steadily to around $144 billion by 2030.
Larry Ellison, the co-founder and chairman of Oracle, explained that the company was concentrating on new technology services. He talked of the coming Oracle Database service that will enable customers to execute sophisticated applications on their Oracle data.
These developments have seen Oracle consolidating its grip in the cloud services market, as it takes advantage of increasing needs in high-performance computing. The company stock has so far increased 45% this year, far higher than the growth of the S&P 500.