Tuesday, June 18, 2024

Oracle shares jump on Google and OpenAI deals despite earnings miss


Larry Ellison, co-founder, chairman and chief technology officer of Oracle, speaks during the Oracle OpenWorld conference in San Francisco on Oct. 1, 2017.

David Paul Morris | Bloomberg | Getty Images

Oracle shares jumped as much as 10% in extended trading on Tuesday after the software maker announced cloud deals with Google and OpenAI, despite fourth-quarter results that fell short of Wall Street expectations.

Here’s how the company did compared with LSEG consensus:

  • Earnings per share: $1.63 adjusted vs. $1.65 expected
  • Revenue: $14.29 billion, vs. $14.55 billion expected

Oracle’s revenue increased 3% year over year during the quarter, which ended on May 31, according to a statement. Net income, at $3.14 billion, or $1.11 per share, was down from $3.32 billion, or $1.19 per share, in the year-ago quarter.

The cloud services and license support segment generated $10.23 billion in revenue, up 9% and slightly below the StreetAccount consensus of $10.29 billion.

The company’s cloud and on-premises licenses business contributed $1.84 billion in revenue. That’s down 15% and lower than the $2.09 billion StreetAccount consensus.

Cloud infrastructure revenue came to $2.0 billion, up 42%, which was a deceleration from the 49% growth rate in the prior quarter. The cloud business remains smaller than rivals Amazon Web Services and Microsoft Azure but is growing faster.

With respect to guidance, Oracle sees fiscal first-quarter earnings of $1.31 to $1.35 per share and 5% to 7% revenue growth. Analysts polled by LSEG were looking for $1.32 per share on an adjusted basis and $13.39 billion in revenue, which implies 7.6% growth.

Oracle said in a statement on Tuesday that it would bring its database to Google’s cloud, with availability coming in November. Organizations will be able to deploy workloads in Google and Oracle cloud data center regions without being subject to data-transfer charges, Oracle said.

In an additional statement, Oracle said OpenAI has selected Oracle’s cloud to provide additional computing capacity. OpenAI has relied on Azure for years.

“We are working as quickly as we can to get cloud capacity built out, given the enormity of our backlog and pipeline,” Oracle CEO Safra Catz said on a conference call with analysts.

During the quarter, Oracle said its database software would be available in five additional Azure regions, bringing the total to 15. Oracle also announced generative artificial intelligence features coming to its Fusion cloud applications for supply chain and human resources.

Oracle left the advertising business during the quarter, which had declined to around $300 million in revenue during the fiscal year, Catz said.

Notwithstanding the after-hours move, Oracle stock has gained 18% so far this year, while the S&P 500 index is up about 13% over the same period.

Executives will discuss the results with analysts and give guidance on a conference call starting at 5 p.m. ET.

This is breaking news. Please check back for updates.

WATCH: Trade Tracker: Jim Lebenthal buys more Oracle and Bill Baruch buys some SPY put spreads and sells AMD

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