Oracle delivers upbeat growth forecast, sending stocks higher

By Emily Bary

Oracle shares surged after Monday’s earnings report and look set to continue their rapid growth as the company beat estimates with its fiscal 2029 guidance

During an analyst meeting Thursday afternoon, Oracle Corp. issued optimistic long-term growth forecasts based on expectations of continued strong demand for cloud services.

Many analysts expected the analyst day to bring a promising long-term outlook after the company’s better-than-expected earnings report earlier in the week sent shares soaring. Despite that, Oracle (ORCL) shares also surged in Thursday’s extended session, rising 6.6%.

The software company is now forecasting at least $66 billion in revenue for fiscal 2026, exceeding management’s previous target of $65 billion. Analysts tracked by FactSet had forecast $64.4 billion.

Doug Kehring, Oracle’s vice president of corporate operations, said the company remains “focused on the bottom line” and aims to grow earnings per share by at least 10% in fiscal 2026.

Given the “strong demand” Oracle is seeing, the company “has decided to defer even higher earnings per share growth rates for the foreseeable future in order to grow revenue more rapidly over the next five years,” he added.

Read: Adobe’s earnings report hits record highs, but shares fall as outlook bleak

Additionally, Oracle is forecasting more than $104 billion in revenue in fiscal 2029, while analysts were expecting $87.8 billion. The company aims to “accelerate profitability” by then, targeting a 45% operating margin and more than 20% earnings per share growth in fiscal 2029.

Kehring cited the upbeat demand trends Oracle is already seeing, as evidenced by the 52 percent year-over-year increase in outstanding commitments reported in the most recent quarter.

“RPO is growing as our customers’ commitments to Oracle are growing,” he explained. “This RPO value and its absolute size indicate the multi-dimensional interest of our customers.”

Oracle sees demand “across our entire portfolio, from applications to analytics, from database to infrastructure,” he added. “The demand is broad and accelerating.”

Another key trend for Oracle is the growing contribution from its cloud business, where the momentum contrasts with slower trends in licensing and support.

“The bottom line for us now is that the trade-off is actually very attractive from a total profit perspective,” Kehring said. “When you look at the gross profit contribution perspective, we’re adding a lot more dollars to our net profit versus the drop in dollars lost to licensing and support.”

-Emily Bary

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09-12-24 2105ET