According to reports, the American commercial software giant Oracle released its financial report for the fourth quarter of the 2023 fiscal quarter today. High growth momentum. Oracle’s stock price hit a record high at the close that day and continued to rise by 3.5% in after-hours trading.
According to financial report data, in the fourth fiscal quarter, Oracle’s total revenue reached US$13.8 billion, a year-on-year increase of 17%. For comparison, Wall Street analysts’ average forecast for total revenue was $13.7 billion, and Oracle beat analyst expectations. Net income, excluding special income, was $1.67 a share, beating analysts’ forecast of $1.58.
Among them, the revenue of Oracle’s cloud computing business in the fourth fiscal quarter was US$4.4 billion, a year-on-year increase of 54%, which has exceeded the 45% growth rate in the third fiscal quarter. Among cloud computing segments, cloud infrastructure grew 17 percent to $1.4 billion in revenue, and cloud software sales rose 45 percent to $3 billion.
At the financial report meeting, Oracle CEO Safra Catz said that in the new fiscal year ending in May next year, it is expected that the cloud computing business will maintain a similar or even higher growth rate than the previous fiscal year.
John DiFucci, an analyst at Guggenheim Securities in the United States, said that the current macroeconomic environment is not ideal, and the strong growth of Oracle’s cloud computing business is really unusual.
In the cloud computing market, Oracle is a catcher. In recent years, it has been expanding its cloud computing infrastructure in order to enhance its competitiveness with leading companies such as Amazon and Microsoft. It is reported that the growth rate of leading cloud computing companies such as Amazon and Microsoft has slowed down.
Oracle executives said that there is currently a technological upsurge in generative artificial intelligence in the market, which has boosted the demand for Oracle’s cloud computing business. It is worth mentioning that last week, generative artificial intelligence startup Cohere announced that the company had raised a new round of financing, raising $270 million, and Oracle was one of the investors.
After the release of the earnings report, Barclays Bank analyst Raimo Lenschow said in a client research report that driven by factors such as generative artificial intelligence, Oracle’s cloud computing business continued to maintain growth momentum. Barclays Bank I believe that Oracle’s stock price will continue to maintain its recent upward momentum.
According to Larry Ellison, chairman of Oracle, recently, a generative artificial intelligence company that develops large language models has brought Oracle more than $2 billion in new cloud computing contracts, with signers including Mosaic ML, Adep AI and companies like Cohere. For running generative artificial intelligence computing tasks, Oracle’s “second-generation cloud” products have quickly become the best option, he said.
Katz said that the two strategic segments of Oracle’s cloud computing business are getting bigger and faster, which indicates that the company’s fiscal year 2024 will be another “harvest year.”
On the same day, Oracle’s stock price closed at $116.43 per share, a record high. In the after-hours trading session, the stock price continued to rise, creating a high of $122.87. It is reported that compared with the beginning of the year, Oracle’s stock price has risen by 42%, exceeding the 32% increase of a software ETF fund in the United States during the same period.
A year ago, Oracle made a big acquisition, buying Cerner, an American digital case service provider, and changing its name to “Oracle Health.” In the fiscal fourth quarter, this business contributed $1.5 billion in revenue. It should be pointed out that the management stated that it wants to increase the profit margin of this business, and it has launched the “Oracle Health” layoff plan earlier this year.
For the current quarter, which ends at the end of August, Katz forecasts cloud growth excluding Oracle Health at 29%. Quarterly revenue is expected to grow 8% to 10%. For comparison, Wall Street analysts on average forecast revenue growth of 8%. Catz said earnings for the quarter are expected to be between $1.12 and $1.16 per share.
The strength of Oracle’s cloud computing business lies in business application software, which accounts for the bulk of revenue, including Fusion software for managing company finances, and subsidiary NetSuite’s enterprise resource planning software, which mainly serves small and medium-sized companies. Fusion revenue rose 26% in the fiscal fourth quarter, up from 25% in the third quarter, the data showed. NetSuite software revenue rose 22% in the fiscal fourth quarter, down slightly from 23% in the prior quarter.
