inspiration 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 that fell short of Wall Street expectations.
Here's how the company performed compared to the LSEG consensus:
Earnings per share: $1.63 adjusted vs. $1.65 expected Revenue: $14.29 billion vs. $14.55 billion expected
Oracle's revenue rose 3% year over year during the quarter that ended May 31, according to a statement. Net income was $3.14 billion, or $1.11 per share, down from $3.32 billion, or $1.19 per share, in the same quarter last year.
The Cloud Services and License Support segment generated revenue of $10.23 billion, up 9% and slightly below the StreetAccount consensus of $10.29 billion.
The company's cloud and on-premises licensing business contributed $1.84 billion in revenue. This is down 15% and below the StreetAccount consensus of $2.09 billion.
Cloud infrastructure revenue reached $2.0 billion, up 42%, slowing from the 49% growth rate in the previous quarter. The cloud business remains smaller than competitors Amazon Web services and Microsoft Azure but it's growing faster.
In terms of guidance, Oracle expects fiscal first-quarter earnings of $1.31 to $1.35 per share and revenue growth of 5% to 7%. Analysts polled by LSEG were looking for $1.32 per share on an adjusted basis and $13.39 billion in revenue, which would imply growth of 7.6%.
Oracle said in a statement on Tuesday that it will move its database to… Google Cloud, available in November. Organizations will be able to deploy workloads in Google and Oracle's cloud data center regions without being subject to data transfer fees, Oracle said.
Last September, Microsoft said its customers would be able to use Oracle Database from the Azure cloud.
“Adoption has been really strong,” Clay McGuirk, Oracle's executive vice president in charge 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 like to do the same thing with AWS,” Larry Ellison, co-founder, chairman and CEO of Oracle, said on Oracle's earnings call on Tuesday. AWS, which stands for Amazon Web Services, the world's leading public cloud.
Google Cloud CEO Thomas Kurian, a former top Oracle executive, told CNBC that many e-commerce companies that rely on Oracle's database want to embrace AI to deliver a better shopping and conversational commerce experience. “It was too complicated for them to do this. Now it will be trivial for them to do so.”
In a separate statement, Oracle said it is cooperating with… Microsoft and OpenAI to provide supplementary computing power.
“Microsoft remains the exclusive cloud provider for OpenAI and has partnered with them to form this deal with Oracle to expand Azure AI capability,” a Microsoft spokesperson said.
But now OpenAI will also rely on Oracle's cloud infrastructure, incl Nvidia GPUs for training AI models,” Ellison said on the earnings call.
“We are working as quickly as we can to build cloud capacity, given the size of our backlog and pipeline,” Oracle CEO Safra Katz said on the conference call.
Ellison said the company is building some of the largest data centers in the world.
“Some are approaching, so to speak, a gigawatt, which is a good-sized city or a huge data center for cloud training based on artificial intelligence,” Ellison said.
During the quarter, Oracle said its database software will be available in five additional Azure regions, bringing the total to 15. Oracle also announced generative AI features coming to its Fusion cloud applications for supply chain and HR.
Additionally, Oracle exited its advertising business this quarter, whose revenue fell to about $300 million during the fiscal year, Katz said. The database vendor has spent billions acquiring marketing companies like BlueKai and Moat in recent years, but updates on momentum have been rare. In March 2020, Katz told analysts that the Data Cloud unit was seeing revenue growth in the low single digits.
Despite the after-hours move, Oracle stock is up 18% so far this year, while the S&P 500 is up about 13% over the same period.
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