Austin, Texas – Oracle Corp. experienced a significant 11% surge in its stock prices, signifying a positive trend in its cloud computing division. The company reported a 25% increase in cloud revenue, exceeding Wall Street’s expectations at $5.1 billion. Of this revenue, $1.8 billion came from renting computing power and storage, while $3.3 billion originated from applications.
Focusing on expanding its cloud infrastructure business, Oracle aims to compete with industry giants like Amazon.com Inc., Microsoft Corp., and Alphabet Inc.’s Google. Despite facing challenges in recent quarters due to slowing growth rates, the company showed signs of stabilization in the third quarter, with sales growing at a consistent pace compared to the preceding months.
Oracle’s remaining performance obligation stood at $80 billion, surpassing analysts’ expectations of $59 billion. CEO Safra Catz highlighted the momentum with large new cloud infrastructure contracts signed during the quarter, emphasizing the company’s commitment to meeting customer demands by swiftly opening new cloud data centers.
The stock price of Oracle rose to $126.46 in extended trading following the positive earnings report. While the stock had seen a 10% dip in the past six months, it lagged behind the iShares software ETF, which had a 16% gain over the same period. Analysts viewed the results as better than anticipated, with Jeffries analyst Brent Thill noting the strong performance of other cloud vendors like Amazon and Microsoft.
In the fiscal third quarter, Oracle saw a 7.1% increase in total sales to $13.3 billion, aligned with analysts’ projections. Profit, excluding certain items, reached $1.41 per share, slightly higher than the average estimate of $1.38. Sales of Fusion software for corporate finance management rose by 18% year-over-year, while revenue from NetSuite, targeting small- and mid-sized companies, saw a 21% growth.
Oracle’s focus on modernizing its legacy software business through acquisitions like Cerner, an electronic health records company, has been evident. Chairman Larry Ellison mentioned the successful transition of Cerner customers to Oracle cloud infrastructure and highlighted upcoming updates to further enhance the business. These initiatives are expected to position Cerner and Oracle Health as high-growth ventures for the foreseeable future.