Oracle Corp. reported quarterly revenue that topped estimates, signaling the software maker’s cloud business is benefiting from heightened demand for artificial intelligence workloads. Shares gained in extended trading.
Sales increased 17% to $13.8 billion in the fiscal fourth quarter, the company said Monday in a statement. Analysts, on average, estimated $13.7 billion, according to data compiled by Bloomberg. Profit, excluding some items, was $1.67 a share, compared with the average estimate of $1.58.
“Revenue growth was led by our cloud applications and infrastructure businesses,” Chief Executive Officer Safra Catz said in the statement. “Our infrastructure growth rate has been accelerating.”
Oracle has focused on expanding its cloud infrastructure business to more forcefully compete with Amazon.com Inc., Microsoft Corp. and Alphabet Inc.’s Google, all of which have seen recent slowdowns. A boom in generative AI, which needs tremendous computing power, may boost demand for Oracle’s cloud services, wrote Alex Zukin, an analyst at Wolfe Research, in a note echoed by several other analysts ahead of earnings. Generative AI startup Cohere said last week that Oracle was among its investors in a $270 million funding round.
Cloud infrastructure revenue increased 76% to $1.4 billion in the period ended May 31. Cloud application sales jumped 45% to $3 billion, the Austin, Texas-based company said.
Shares increased about 3% in extended trading after gaining 6% to close at a record high of $116.43 in New York. Oracle has rallied 42% this year, compared with the 32% rise in the iShares expanded software ETF.
Over $2 billion in cloud capacity has recently been contracted by companies doing large language model development such as Mosaic ML, Adept AI and Cohere, Oracle Chairman Larry Ellison said in the statement. “Oracle’s Gen2 Cloud has quickly become the number 1 choice for running Generative AI workloads,” he said.
Oracle’s other big bet — the acquisition a year ago of digital health records provider Cerner Inc., now called Oracle Health — generated $1.5 billion in the quarter. Oracle began cutting jobs in the division earlier this year after executives promised to improve profitability.
Much of Oracle’s cloud revenue is produced by business applications such as Fusion software for managing corporate finances and NetSuite’s enterprise planning tools, which are targeted at small- and mid-size companies. Fusion sales increased 26% in the quarter, compared with 25% growth in the previous period. NetSuite revenue jumped 22%, a decrease from 23% in the previous period.
(Updates with comments from CEO in the third paragraph. An earlier version corrected the spelling of the company name in the headline.)
