Release Date: March 10, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Oracle Corp (ORCL, Financial) reported its strongest booking quarter ever, adding $48 billion to its backlog, with a 63% year-over-year growth in RPO.
- The company achieved a milestone with its 101st cloud region coming online, indicating a strategic advantage in cloud infrastructure.
- Oracle Cloud Infrastructure (OCI) revenue grew by 51% in Q3, driven by record-level AI demand, outperforming hyperscaler competitors.
- Oracle's strategic back-office SaaS applications now have an annualized revenue of $8.6 billion, reflecting an 8% growth.
- The company increased its quarterly dividend by 25%, demonstrating a commitment to returning value to shareholders.
Negative Points
- Oracle Corp (ORCL) faced component delays that slowed cloud capacity expansion, although these are expected to ease in Q1 FY26.
- Software license revenues declined by 8% to $1.1 billion, indicating a potential challenge in this segment.
- The non-GAAP tax rate for the quarter was higher than expected, impacting EPS by $0.02.
- Currency headwinds negatively affected EPS by $0.04, highlighting exposure to foreign exchange fluctuations.
- The company's Q4 EPS guidance is negatively impacted by $0.03 due to losses recognized from an investment in another company.
Q & A Highlights
Q: Larry, can you expand more on Stargate and Oracle's unique value add in this massive AI venture with OpenAI and NVIDIA?
A: Lawrence Ellison, Chairman and CTO, explained that Oracle's unique capability lies in building large AI clusters that run faster and more economically than competitors. This technological advantage translates into an economic advantage, allowing Oracle to secure significant deals like Stargate. The Stargate project, expected to be the largest AI training project, will further boost Oracle's RPO in the future.
Q: How should we expect the Stargate project to impact Oracle's financials?
A: Safra Catz, CEO, stated that Stargate will not affect Oracle's financials in a unique way. Contracts will flow through as usual, and the company will provide clear explanations as they materialize. The impact will be reflected in larger numbers rather than a change in financial reporting.
Q: Can you discuss the demand trends across different environments like multi-cloud, database on hyperscalers, and sovereign clouds?
A: Safra Catz highlighted that demand is strong across all fronts, with multi-cloud revenue growing more than tenfold year-over-year. OCI public cloud and Cloud@Customer are performing well, and sovereign clouds are rolling out. The company is seeing significant bookings turning into revenue, with customers accessing Oracle databases through various partners.
Q: What is Oracle's position on AI training versus inferencing opportunities, and how is Oracle differentiated in this space?
A: Lawrence Ellison emphasized that while AI training is growing rapidly, AI inferencing presents a much larger opportunity. Oracle's AI data platform allows customers to train AI models on their private data stored in Oracle databases, a capability unique to Oracle. This enables customers to derive insights and actions from their data while maintaining privacy.
Q: How should we understand Oracle's lower CapEx compared to larger hyperscale cloud providers, and what is the trajectory of CapEx given the strong RPO and OCI growth?
A: Lawrence Ellison explained that Oracle starts its data centers smaller and scales based on demand, leading to higher utilization and lower CapEx. Additionally, Oracle's high degree of standardization and automation in its cloud operations results in better margins and lower labor costs, contributing to its efficient CapEx management.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
