Shares of Oracle Corp. hit an all-time high in extended trading today, after the database company delivered strong first-quarter results that topped analysts’ forecasts and announced a new partnership with the most dominant cloud infrastructure provider, Amazon Web Services Inc.
Oracle reported earnings before certain costs such as stock compensation of $1.39 per share, comfortably ahead of the analysts’ target of $1.32. Revenue in the quarter rose 8% from a year earlier, to $13.31 billion, better than Wall Street’s estimate of $13.23 billion. Those results helped to boost the company’s overall profitability, with net income for the period rising to $2.93 billion, up from $2.42 billion in the same period one year earlier.
Oracle Chief Executive Safra Catz (pictured) highlighted strong growth across a number of other metrics during the quarter — including all of its main business segments. Cloud services and license support revenue rose 10% from a year earlier, to $10.52 billion, ahead of the Street’s consensus estimate of $10.47 billion. Meanwhile , cloud infrastructure revenue grew 45%, to $2.2 billion, up 45%, while also accelerating from the prior quarter, when it grew by 42%.
Elsewhere, cloud and on-premises license revenue rose 7%, to $870 million, ahead of the $757.6 million consensus.
“I will say that demand is still outstripping supply,” Catz told analysts on a conference call. “But I can live with that.”
Catz was referring to Oracle’s remaining performance obligations, which increased 53% from a year earlier to a record $99 billion at the end of the quarter. RPO is a metric that refers to a company’s total contracted revenue from services or products yet to be delivered. “That strong contract backlog will increase revenue growth throughout FY25,” the CEO added.
Jefferies analyst Brent Hill told MarketWatch that the 53% growth in backlog was the biggest highlight of Oracle’s latest results and likely one of the key factors driving its stock gains today.
Valoir Research analyst Rebecca Wettemann told SiliconANGLE that Oracle’s cloud growth was fueled by the growing importance of its infrastructure for artificial intelligence developers. She pointed out that a number of AI startups have chosen to deploy on Oracle Cloud Infrastructure, while the company offers more than 50 generative AI capabilities aimed at its database customers.
“Oracle is not charging for generative AI capabilities when they’re delivered in the context of existing apps like HCM, finance, and CX so there’s less friction to adopt,” Wettemann said. “That’s in contrast to Microsoft’s approach of charging extra for standalone copilots.”
On the conference call, Oracle founder and Chief Technology Officer Larry Ellison talked about the company’s accelerating investments in its cloud infrastructure, noting that it now has 163 cloud data centers either in operation or currently under construction. He said the largest of those data centers under construction is 800 megawatts and will provide access to “acres of Nvidia GPU clusters,” referring to the popular graphics processing units that are used for training AI models.
Ellison also discussed the sustainability of the company’s future data centers and its future ambitions. He said it’s currently designing a facility that will use over a gigawatt of power, fueled by three modular nuclear reactors. Over time, Oracle might operate 2,000 data centers globally, but not all of them will be energy hogs, he insisted.
“The smallest are about 150 kilowatts,” Ellison said. “And we’re going to get down to 50 kilowatts.”
Looking ahead, Oracle said it’s anticipating revenue growth in the current quarter of between 8% and 10%, which is more or less in line with the Street’s forecast for growth of 9%. The company also forecasts earnings before certain costs of $1.45 to $1.49 per share, again in line with the Street’s estimate, of $1.47 per share.
The earnings call came as Oracle kicked off its annual customer conference, Oracle Cloud World, where it revealed it has forged a long-overdue partnership with AWS to bring its database services to the world’s most popular cloud infrastructure. “AWS customers will get easy and convenient access to the Oracle database when we go live in December later this year,” Catz said.
The company also announced expanded availability of its database services on Microsoft Azure and Google Cloud.
Investors liked what they saw, with Oracle’s stock gaining more than 8% in extended trading to hit a record high of $153, ahead of its previous all-time best of $145.03 in July. In the year to date, Oracle’s stock has grown 34%.