Oracle shares rose 9% in extended trading on Monday after the database software vendor reported fiscal Q1 earnings that topped Wall Street estimates. Additionally, Oracle also announced a strategic partnership with cloud-services rival Amazon.com’s Amazon Web Services.
Oracle stock jumped late Monday, after the tech giant reported fiscal Q1 earnings and sales that exceeded expectations. Oracle stock had gained more than 30% year to date heading into the report. Its strong run was helped by momentum for its Oracle Cloud Infrastructure business, AI growth. This is by winning cloud-computing contracts from AI-focused startups. This AI growth helped Oracle outrun struggles that have hit other software stocks this year.
Oracle earnings report
Here is how the company did compared to LSEG consensus:
Oracle’s earnings per share: $1.39 adjusted vs. $1.32 expected
Oracle’s revenue: $13.31 billion vs. $13.23 billion expected
Revenue for Oracle increased 8% from $12.45 billion from 2023. Net income rose to $2.93 billion, or $1.03 per share, from $2.42 billion, or 86 cents per share, in the same quarter a year ago.
Oracle’s revenue growth
For the current quarter, Oracle expects revenue growth of 8 to 10%, CEO Safra Catz said on the earnings call. Analysts were expecting growth of close to 9%, according to LSEG. Oracle saw adjusted earnings per share for the fiscal Q2 of 1.45 to $1.49. Analysts were looking for earnings of $1.47 per share for Oracle.
Growth in Oracle’s Cloud earnings
The company said its cloud services and license support business generated $10.52 billion in revenue. That was up 10% from a year earlier and higher than the StreetAccount consensus of $10.47 billion.
Oracle’s cloud and on-premises license segment had $870 million in revenue, up 7%, and more than StreetAccount’s $757.6 billion consensus.
Revenue from cloud infrastructure came to $2.2 billion, up 45%. That is an acceleration from the prior quarter, during which revenue went up 42%.
“As cloud services became Oracle’s largest business, both our operating income and earnings per share growth accelerated,” Oracle Chief Executive Safra Catz said in a news release.
“I will say that demand is still outstripping supply. But I can live with that,” Catz said on the call.
Oracle’s data center
Oracle is currently designing a data center that will use over a gigawatt of power, and it will rely on three modular nuclear reactors, Larry Ellison, Oracle’s co-founder, chairman and chief technology officer, said on the call.
Over time, Oracle might operate 2,000 data centers, up from 162 today, Ellison said. But not all of them require massive amounts of power.
“The smallest are about 150 kilowatts,” Ellison said. “And we’re going to get down to 50 kilowatts.”
Oracle’s expansion and partnerships
During the quarter, Oracle announced the opening of a second cloud region in Saudi Arabia and said its database software will be available through Google’s public cloud.
In a separate statement on Monday, Oracle said it would partner with cloud infrastructure market leader Amazon Web Services to enable its database services on dedicated hardware.
Oracle’s stock update
At it’s after hours share price of about $153, Oracle is on pace to reach a record on Tuesday. Oracle’s stock’s highest close to date was $145.03 in July. Prior to the report, Oracle was up about 34% so far this year, compared to the S&P 500′s 15% gain.
