Key Points
- Oracle reported Q2 earnings per share of $1.47 on $14.06B revenue, missing Wall Street estimates.
- Pre-market trading shows a sharp 8.63% drop, indicating potential investor concerns or significant market news.
- Total cloud revenue rose 24%, with OCI achieving 52% growth year-over-year. The remaining performance obligations increased by 49% to $97B.
- Q3 revenue is projected to grow by 7%-9%, with cloud revenue up by 23%-25%.
Oracle Corporation (NYSE:ORCL) reported fiscal second-quarter results Monday that missed Wall Street expectations, even as AI-fueled demand bolstered its cloud business. The company’s adjusted earnings per share came in at $1.47, slightly below estimates of $1.48, while revenue reached $14.06 billion, falling short of the anticipated $14.12 billion.
In pre-market trading, the stock price has dropped significantly to $174.02, representing a decline of $16.43 or 8.63%. This notable pre-market movement signals market reactions to recent developments or announcements regarding the company.
Revenue grew 9% year-over-year in constant currency, an improvement over the 7% growth in the prior quarter. Total cloud revenue surged 24%, reaching $59 billion, with Oracle Cloud Infrastructure (OCI) experiencing a 52% increase. Remaining performance obligations, a key metric indicating booked revenue, climbed 49% to $97 billion. Oracle CEO Safra Catz highlighted the company’s success in capitalizing on AI demand, stating that OCI’s growth rate significantly outpaced that of competitors.
For the upcoming fiscal third quarter, Oracle expects revenue growth of 7% to 9%, or 9% to 11% in constant currency. Cloud revenue is projected to rise by 23% to 25%, with total fiscal 2025 revenue anticipated to grow in double digits and OCI forecasted to expand by over 50%. Wolfe Research analysts increased their price target for Oracle from $195 to $205, citing strong execution and AI-related opportunities as key growth drivers.
Despite the optimistic projections, challenges remain. Bank of America noted concerns over scaling capital expenditures, which Oracle expects to double in fiscal 2025 to meet surging demand. The growing reliance on OCI’s database services compared to other hyperscale cloud providers’ diverse offerings could further complicate scaling efforts.
