Oracle (ORCL) Q4 2024 Earnings Report

Oracle the company’s shares rose 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 fared against the LSEG consensus:

• Earnings per share: Adjusted $1.63 vs. expected $1.65
• Income: $14.29 billion against the expected $14.55 billion

The statement showed that Oracle’s revenue increased 3% year-over-year in the quarter ending May 31. Net income of $3.14 billion, or $1.11 per share, fell from $3.32 billion, or $1.19 per share, in the year-ago quarter.

The Cloud Services and Licensing 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 generated revenue of $1.84 billion. That’s down 15% and less than the StreetAccount consensus of $2.09 billion.

Cloud infrastructure revenue was $2.0 billion, up 42%, decelerating from the prior quarter’s 49% growth rate. The cloud industry remains smaller than its competitors Amazon Network Services i Microsoft Azure, but grows faster.

In terms of guidance, Oracle expects fiscal first-quarter earnings of $1.31-$1.35 per share and revenue growth of 5-7%. Analysts polled by LSEG expected adjusted prices of $1.32 per share and $13.39 billion in revenue, up 7.6%.

Oracle, in a statement on Tuesday, said it would move its database to Google cloud, and availability will appear in November. Organizations will be able to deploy workloads to Google and Oracle cloud data center regions without incurring data transfer fees, Oracle says.

Last September, Microsoft announced that its customers would be able to use the Oracle database from the Azure cloud.

“The rollout was really, really big,” Clay Magouyrk, Oracle’s executive vice president of cloud infrastructure, said in an interview on 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, Oracle’s co-founder, president and chief technology officer, said on Oracle’s earnings call Tuesday. AWS what does it mean Amazon Web Services is the world’s leading public cloud.

Many e-commerce companies that depend on Oracle’s database would like to apply artificial intelligence to provide better shopping experiences and conversational commerce, Google Cloud CEO Thomas Kurian, himself a former top Oracle executive, told CNBC. “It used to be quite complicated for them. Now it will be trivial for them.”

In a separate statement, Oracle said it was working with Microsoft and OpenAI to provide additional processing power.

“Microsoft remains the exclusive cloud solutions provider for OpenAI and has partnered with OpenAI to enter into an agreement with Oracle to expand the capabilities of the Azure AI platform,” a Microsoft spokesperson said.

But now OpenAI will also use Oracle’s cloud infrastructure incl Nvidia GPUs to train artificial intelligence models, Ellison said on the earnings call.

“We are working as quickly as possible to increase cloud capacity given the magnitude of our backlog and pipeline,” Oracle CEO Safra Catz said on a conference call.

Ellison said the company is building some of the largest data centers in the world.

“Some are approaching, dare I say it, a gigawatt, which means quite a large city or one huge data center for AI cloud training,” Ellison said.

This quarter, Oracle announced that its database software will be available in five additional Azure regions, bringing the total to 15. Oracle also announced the introduction of generative AI capabilities for Fusion cloud applications for supply chain and human resources.

In addition, Oracle exited its advertising business this quarter, which saw its fiscal-year revenue decline to about $300 million, Catz said. The database provider has spent billions in recent years acquiring marketing companies such as BlueKai and Moat, but updates on the dynamics of the situation have been rare. In March 2020, Catz told analysts that its Data Cloud unit was seeing low-single-digit revenue growth.

Regardless of the after-hours move, Oracle shares are up 18% so far this year, while the S&P 500 is up about 13% over the same period.

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