☁️ Oracle: Riding the AI Wave
Larry Ellison sees data centers grow 10X
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Oracle (ORCL) surged 9% after-hours on Monday, fueled by a strong performance in Q1 FY25 (ending in August 2024). As one of NVIDIA’s biggest customers, the database software giant is shifting to the cloud and gaining momentum.
CEO Safra Catz had some big news to share:
“The biggest news of all was signing a MultiCloud agreement with AWS—including our latest technology Exadata hardware and Version 23ai of our database software—embedded into AWS cloud datacenters.”
The new agreement will enable customers to connect data in their Oracle Database to apps running on AWS starting in December. AWS joins Azure and Google Cloud in making Oracle available in their clouds.
Oracle Cloud Infrastructure (OCI) is on track to become the fourth-largest cloud provider (after AWS, Azure, and GCP), so let’s zoom in on what’s driving the growth of this segment.
Is the AI bubble about to pop? Larry Ellison shared valuable insights during the call.
Today at a glance:
Oracle’s Q1 FY25.
WTF is OCI?
Larry Ellison on the AI cycle.
Cloud market share and outlook.
1. Oracle Q1 FY25
As a reminder, Oracle operates on several layers of the tech stack:
🏢 Industry Applications: Specialized solutions for sectors like communications, financial services, health, and utilities.
📊 Fusion / NetSuite Applications: Core cloud-based enterprise resource planning (ERP), supply chain, human capital management (HCM), and customer experience applications.
🔧 3rd Party Applications: Integration with independent software vendors (ISVs) and custom applications to enhance flexibility.
☁️ Oracle Cloud Infrastructure (OCI): Provides essential compute, networking, storage, and security services, with strong capabilities in AI/ML, database management, and hybrid cloud solutions.
Key metrics:
RPO (Remaining Performance Obligations): Future revenue from existing contracts signed. RPO grew 53% Y/Y to $99 billion (with 38% expected to be recognized as revenue within a year). Growth accelerated from 44% in the prior quarter. RPO is a critical leading indicator of revenue growth.
Cloud services: The company's growth engine was up 21% Y/Y to $5.6 billion.
IaaS (Cloud Infrastructure) focuses on providing compute, storage, and networking services. It grew +45% Y/Y to $2.2 billion, driven by increased adoption of OCI for high-performance workloads and multi-cloud deployments.
SaaS (Cloud Application) focuses on delivering Oracle's suite of enterprise applications via the cloud. It grew 10% Y/Y to $3.5 billion, driven by demand for cloud-based ERP, HCM, and CRM solutions.
Fusion Cloud ERP grew +16% Y/Y to $0.9 billion.
NetSuite Cloud ERP grew +20% Y/Y to $0.9 billion.
Income statement:
Revenue grew +7% year-over-year to $13.3 billion ($60 million beat).
☁️ Cloud services & license support grew +10% Y/Y to $10.5 billion.
Cloud services grew +21% Y/Y to $5.6 billion.
License support was flat Y/Y at $4.9 billion.
🌐 Cloud license & on-prem grew 8% Y/Y to $0.9 billion.
🖥️ Hardware declined 8% Y/Y to $0.7 billion.
💼 Services declined 5% Y/Y to $1.3 billion.