Oracle delivered robust numbers for its cloud infrastructure services and is also working on generative AI. ORCL stock shot up by more than 6% on Monday.
On Monday, June 12, software giant Oracle Corporation (NYSE: ORCL) reported the results for its fourth fiscal quarter while exceeding Wall Street expectations on both – the top line and the bottom line numbers. This news has had an impact on ORCL stock.
For the last quarter, the company reported earnings per share at $1.67 against the expected $1.58. Similarly, the company reported a revenue of $13.84 billion against the market expectations of $13.74 billion.
During the quarter ending May 31, Oracle’s revenue jumped by 17% year over year. The net income for Oracle stood at $3.32 billion, or $1.19 per share, against the $3.19 billion, or $1.16 per share, in the same quarter a year ago.
Speaking on the conference call on Monday, Oracle CEO Safra Catz said that she expects the first-fiscal quarter adjusted earnings of $1.12 to $1.16 per share and revenue growth of 8% to 10%. Refinitiv analysts are expecting $1.14 in adjusted earnings per share on $12.34 billion in revenue. This implies a 7.8% growth.
Oracle’s main revenue driver, cloud services and license support experienced a significant increase of 23% to reach $9.37 billion. However, revenue from cloud licenses and on-premises saw a decline of 15% to $2.15 billion.
The revenue from cloud infrastructure showed impressive growth, reaching $1.4 billion, a 76% increase compared to the previous quarter’s 55% growth. While Oracle’s cloud infrastructure is expanding at a faster rate than Microsoft and Google, it remains smaller in scale compared to its competitors.
Oracle’s Chief Financial Officer, Safra Catz, mentioned that the gross margin in the cloud infrastructure unit will continue to expand during a conference call. She further added:
“Our infrastructure growth rate has been accelerating – with 63% growth for the full year, and 77% growth in the fourth quarter. Our cloud applications growth rate also accelerated in FY23. So, both of our two strategic cloud businesses are getting bigger – and growing faster. That bodes well for another strong year in FY24.”
Venturing into Generative AI Space
Oracle’s chair and technology chief Larry Ellison said that the company is planning to introduce a generative AI cloud service in partnership with startup Cohere. Microsoft also has a similar partnership with OpenAI, and offers the Azure OpenAI Service. It allows big organizations to deploy large language models (LLMs) for generating human-like responses and taking human input.
Ellison, however, said that Oracle has been using its tool internally. He added:
“This new service protects the privacy of our enterprise customers’ training data, enabling those customers to safely use their own private data to train their own private specialized large-language models.”
Oracle (ORCL) stock gained by 6% on Monday, June 12, and is already up by another 5% in the pre-market hours of Tuesday. Since the beginning of 2023, the ORCL stock has gained by a total of 40%.
Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
