Oracle has delivered strong numbers for its cloud infrastructure services and is also working on generative AI. ORCL’s stock gained more than 6 per cent on Monday.
Software giants on Monday, June 12 Oracle Corporation (NYSE:ORCL) reported results for its fourth fiscal quarter that outperformed Wall Street’s expectations — on both top line and bottom line numbers. This news has had an impact on ORCL’s stock.
For the previous quarter, the company reported earnings per share of $1.67 against the expected $1.58. Similarly, the company reported revenue of $13.84 billion against market expectations of $13.74 billion.
During the quarter ended May 31, Oracle’s revenue grew 17% year over year. Oracle’s net income was $3.32 billion, or $1.19 per share, compared with $3.19 billion, or $1.16 per share, in the same quarter a year ago.
Speaking on a conference call Monday, Oracle CEO Safra Catz said she expects first-fiscal quarter adjusted earnings of $1.12 to $1.16 per share and revenue growth of 8% to 10%. Analysts at Refinitiv are expecting $1.14 in adjusted earnings per share on $12.34 billion in revenue. This means an increase of 7.8%.
Oracle’s main revenue driver, cloud services and license support, grew a significant 23% to reach $9.37 billion. However, revenue from cloud licenses and on-premises saw a 15% decline to $2.15 billion.
Revenue from cloud infrastructure showed impressive growth, reaching $1.4 billion, up 76% compared to 55% growth last quarter. While Oracle’s cloud infrastructure is expanding at a faster rate than Microsoft and Google’s, it is smaller in size than its competitors.
Oracle Chief Financial Officer Safra Catz noted during the conference call that gross margin expansion in the cloud infrastructure unit will continue. He further said:
“Our infrastructure growth rate is accelerating – with 63% growth for the full year and 77% growth in the fourth quarter. Our cloud application growth rate has also accelerated in FY23. Therefore, both our Strategic cloud businesses are getting bigger — and growing faster. This bodes well for another strong year in FY24.
Venturing into the Generative AI Space
Oracle’s president and chief technology officer, Larry Ellison, said the company is planning to launch a generative AI cloud service in partnership with startup Foghere. Microsoft also has a similar partnership with OpenAI, and Azure provides the OpenAI service. This allows large organizations to deploy large language models (LLMs) to generate human-like responses and take human input.
Although Ellison said that Oracle is using its tool internally. He couple,
“This new service protects the privacy of our enterprise customers’ training data, allowing those customers to securely use their private data to train their own specialized large-language models.”
Shares of Oracle (ORCL) rose 6% on Monday, June 12, and are already up 5% in Tuesday’s pre-market hours. Since the beginning of 2023, ORCL stock has gained a total of 40%.
Bhushan is passionate about Fintech and has a good grasp of understanding the financial markets. His interest in economics and finance drew his attention to the newly emerging blockchain technology and cryptocurrency markets. He is in the process of continuous learning and keeps motivating himself by sharing his acquired knowledge. In his spare time he reads thriller fiction novels and occasionally explores his culinary skills.
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