Oracle’s second quarter was strong, but light relative to expectations. Oracle’s cloud revenue was up 24% in the second quarter from a year ago with cloud infrastructure revenue up 52%.
The company reported second quarter earnings of $1.10 a share on revenue of $14.1 billion, up 9% from a year ago. Non-GAAP earnings were $1.47 a share.
Wall Street was expecting Oracle to report second quarter earnings of $1.48 a share on revenue of $14.12 billion, up 9% from a year ago.
- Oracle Database@AWS hits limited preview
- Oracle databases everywhere with AWS partnership, strong Q1 results
- Oracle CTO Ellison talks about AWS partnership with Garman, the need for autonomous security
- Oracle's cloud, AI plans are a master class in co-opetition
Safra Catz, Oracle CEO, said that Oracle Cloud Infrastructure saw “record level AI demand.” She added:
“Growth in the AI segment of our Infrastructure business was extraordinary—GPU consumption was up 336% in the quarter—and we delivered the world's largest and fastest AI SuperComputer scaling up to 65,000 NVIDIA H200 GPUs.”
Catz said that Oracle Cloud revenue should top $25 billion this fiscal year.
CTO Larry Ellison said Oracle will collaborate with Meta and its Llama models to develop AI agents. “Oracle trained AI models and AI Agents will improve the rate of scientific discovery, economic development and corporate growth throughout the world,” said Ellison.
As for the outlook, Catz said revenue for the third quarter is expected to grow 9% to 11% with total cloud revenue growing at a 25% to 27% clip. Non-GAAP earnings will between $1.41 to $1.47 a share. Third quarter earnings will be impacted by a 5 cents a share loss due to an investment loss in another company.
Constellation Research analyst Holger Mueller said:
"Oracle delivered a good quarter with cloud apps in the 20s and cloud infrastructure at more than 50% growth. And Oracle keeps doubling down on investment, it is the first quarter that Oracle is investing a double digit billion amount in CAPEX, with $10.75B. Year over year that is an increase of 50% over Q2 in the last fiscal year, it marks also the first time Oracle invests over 50% of free cash flow 20.29B into CAPEX. Larry Ellison and Safra Catz seen an opportunity an invest into it – no question. And Oracle’s ambitious goal of overtaking and then leading market leader AWS in terms of datacenters is continuing. Oracle grew in all of it regions, with the Americas being the strongest with almost 10%, and APAC the weakest."
Here's what Catz said on the conference call:
- "Our strategic SaaS applications continue to grow rapidly, and we are also seeing more of our industry based cloud applications come online which immediately contribute to revenue growth."
- Cloud database services now have an annualized revenue of $2.2 billion.
- "We are currently live in 17 cloud regions with Database@Cloud services, and have another 35 planned with Azure, Google and AWS."
Ellison said:
"We have one suite of automation tools that works in all 100 of our current regions, and it makes it possible, because of the high degree of automation, to run not dozens of regions, but hundreds, or even theoretically, 1,000s of regions. Individual customers are dedicating their own region. Individual customers are buying complete Oracle regions, and installing them, if you what seems like it would be on premise, though it is a full Oracle Cloud region just happens to be a dedicated data center to that customer."
Catz added that scaling approach enables Oracle to drive profits over time.
"We don't have to spend a long time with a with empty centers, because we literally are small and just fill them up as our customers are consuming," said Catz.
