Shares of software giant Oracle Corporation surged by as much as 5 percent in extended trading on Monday, following the announcement of its fiscal fourth-quarter results, media reports said. Oracle’s robust earnings and revenue growth were primarily fueled by the strength of its cloud services and license support division.
Oracle reported adjusted earnings of $1.67 per share for the fiscal fourth quarter, surpassing the estimated $1.58 per share predicted by analysts.
According to Refinitiv, the company’s revenue exceeded expectations, reaching $13.84 billion compared to the anticipated $13.74 billion.
Oracle’s revenue grew by 17 percent year over year in the quarter ending on May 31, with net income totaling $3.32 billion, or $1.19 per share. This represented a significant increase from the year-ago quarter’s net income of $3.19 billion, or $1.16 per share.
During a conference call, Oracle’s CEO Safra Catz provided an optimistic outlook for the fiscal first quarter. The company expects adjusted earnings per share in the range of $1.12 to $1.16, along with 8 percent to 10 percent revenue growth.
Analysts polled by Refinitiv had projected adjusted earnings of $1.14 per share on $12.34 billion in revenue, indicating an estimated growth of 7.8 percent.
Strong Performance in Cloud Services
Oracle’s cloud services and license support division emerged as the company’s primary revenue driver, experiencing a remarkable 23 percent jump to $9.37 billion. However, revenue from cloud licenses and on-premises solutions declined by 15 percent to $2.15 billion.
Notably, revenue from cloud infrastructure demonstrated exceptional growth, reaching $1.4 billion with a staggering 76 percent increase, surpassing the 55 percent growth recorded in the previous quarter.
Although Oracle’s cloud infrastructure unit is expanding faster than its counterparts, Microsoft and Google, it still trails behind them in terms of overall market share.
Expansion into Generative AI
Oracle’s Chair and Technology Chief, Larry Ellison, revealed the company’s plan to introduce a generative artificial intelligence (AI) cloud service through a partnership with startup Cohere.
This collaboration will leverage Oracle’s cloud infrastructure while ensuring the privacy and security of enterprise customers’ training data.
The new service aims to enable organizations to develop and utilize their own private specialized large-language models. Oracle has already implemented this tool internally, showcasing its commitment to harnessing the potential of AI technologies.
Government Approvals and Market Performance
Oracle achieved significant milestones during the quarter, as US defense and intelligence agencies approved more of its cloud services.
Excluding after-hours trading, Oracle’s stock has demonstrated a substantial increase of almost 43 percent year-to-date, outperforming the broader S&P 500 index, which has risen by approximately 13 percent.
The stock experienced a notable 6 percent surge during regular trading on Tuesday, marking its best performance in a year. This positive momentum was bolstered by Wolfe Research, who upgraded Oracle to a ‘buy’ rating from a ‘hold’ based on the company’s improving financials and strong position in the AI sector.
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