Oracle Corp. (ORCL) posted stronger-than-expected fiscal-fourth-quarter earnings, as double-digit sales growth in its cloud-services division helped power full-year revenue to a record $50 billion.
Oracle, which earns the bulk of its revenue from cloud services and license support, topped Wall Street earnings forecasts by 9 cents with an adjusted second bottom line of $1.67 per share,
Group revenue, Oracle said, added 16.6% to $13.8 billion, again topping analysts' estimates of a $13.73 billion tally. Cloud-services revenue was up 23% to $9.4 billion while cloud license and on-premise license revenue dropped 15% to $2.2 billion.
The group's operating margin widened by two percentage points from the prior quarter to 44%.
Looking into the current quarter, Oracle said it saw revenue growth in the region of 8% to 10%, with more double-digit gains for cloud on the back of AI demand.
"We are seeing unprecedented demand for our cloud services and especially our AI services," Chief Executive Safra Catz told investors on a conference call late Monday.
"As a result, I expect cloud revenue, excluding Cerner, will continue growing at least similar rates to what we experienced in fiscal 2023, even though our base is much bigger and may be higher."
Oracle shares were marked 6.37% higher in pre-market trading following the earnings release to indicate a Tuesday opening bell price of $123.85 each, an all-time high that would value the group at just over $330 billion.
AI Outlays Seen Helping Oracle Grow
Oracle accelerated its earnings potential last year with the $28 billion purchase of Cerner (CERN), the second-largest designer of software used by doctors and hospitals to manage and store medical records.
Oracle is set to become one of the early beneficiaries of the buildout in AI spending following a partnership with chipmaker Nvidia (NVDA) it inked in March.
The deal makes Oracle the first public cloud company to offer both DGX Cloud and Nvidia AI Foundations to its broader offerings. And it builds on a deal from October 2022 that added thousands of Nvidia chips to Oracle Cloud Infrastructure, its umbrella division.
The partnership effectively means companies can 'rent' Nvidia's supercomputers, and their AI design capabilities, through Oracle's cloud business and its Remote Direct Memory Access, or RDMA, technology, which facilitates fast data transfers between computer systems.
“The extreme high performance and related cost savings of running generative AI workloads in our Gen 2 Cloud has made Oracle the #1 choice among cutting-edge AI development companies," said Chairman Larry Ellison.
"In the aggregate, our generative AI cloud customers have recently signed contracts to purchase more than $2 billion of capacity in Oracle's Gen 2 cloud."
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