Oracle expects half a trillion dollars in booked cloud orders, stock rises 27%
[NEW YORK] Oracle said on Tuesday (Sep 9) that it expects booked revenue at its Oracle Cloud Infrastructure (OCI) business to exceed half a trillion dollars, boosted by growing demand for its relatively low-cost cloud infrastructure services and sending its shares up 27 per cent after the bell.
The company’s remaining performance obligations, or RPO, the most popular measure of booked revenue, jumped 359 per cent to US$455 billion in the first quarter, ended Aug 31.
“Over the next few months, we expect to sign-up several additional multi-billion-dollar customers and RPO is likely to exceed half-a-trillion dollars,” said CEO Safra Catz.
Oracle, whose shares have risen 45 per cent so far this year, forecast OCI revenue growth of 77 per cent to US$18 billion this fiscal year, and on to US$144 billion over the subsequent four years.
“Enterprises are clearly eager for cost-effective AI cloud tools, and Oracle is positioning itself to capture that demand,” said eMarketer analyst Jacob Bourne.
Oracle offers integrated cloud technologies along with flexible deployment models, enabling it to meet a range of customer demands.
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“We made it very easy for our customers to directly connect all their databases ... to the world’s most advanced AI reasoning models – ChatGPT, Gemini, Grok, all of which are uniquely available in the Oracle Cloud,” Catz said on a post-earnings call.
Even though it is a smaller player, “both current and forecast numbers show that Oracle’s investment in infrastructure is continuing to pay off as large organisations look to Oracle Cloud to support their AI initiatives”, said Rebecca Wettemann, CEO of industry analyst firm Valoir.
It has struck deals with Amazon, Alphabet and Microsoft for OCI to run inside their respective cloud infrastructure. Revenue from these clients grew 1,529 per cent in Q1.
“We expect MultiCloud revenue to grow substantially every quarter for several years as we deliver another 37 datacentres to our three hyperscaler partners, for a total of 71,” chairman Larry Ellison said.
“By offering integrated solutions across various environments, Oracle is not just keeping up but actually leading the way in the cloud space. This could attract even more businesses looking for versatile cloud options,” according to Melissa Otto, head of research at S&P Global’s Visible Alpha.
Oracle also said that it had signed four multi-billion-dollar contracts with three different customers in Q1, helping a 12 per cent increase in revenue to US$14.93 billion.
For the second quarter, Oracle expects total revenue to grow 12 to 14 per cent, while it sees cloud revenue growth between 32 to 36 per cent.
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