Oracle Reports Strong Bookings, Signaling Cloud Momentum

(Bloomberg) — Oracle Corp. reported better-than-expected bookings, suggesting continued momentum for the company’s efforts to compete in cloud computing with its larger technology rivals. Shares jumped about 9% in extended trading.

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Total remaining performance obligations, a measure of future sales under contract, increased 44% to $98 billion in the fiscal fourth quarter, the company said Tuesday in a statement. Analysts on average estimated $73.9 billion.

The Austin-based company, known for its database software, is focused on expanding its cloud infrastructure business to compete with Amazon.com Inc., Microsoft Corp. and Alphabet Inc.’s Google. Although that division represents only a small portion of total revenue, investors view it as Oracle’s biggest bet for future growth.

Over the past two quarters, “Oracle has signed the largest sales deals in our history, driven by enormous demand for training large AI language models in Oracle Cloud,” said Safra Catz, CEO, in the press release.

Revenue growth will increase by double digits in the current fiscal year ending May 2025, fueled by strong demand for AI, Catz said. Growth is expected to accelerate over the year as “cloud unit capacity begins to catch up with demand,” she added.

Oracle also announced a new agreement to make its namesake database available on Google’s cloud infrastructure. A similar deal with Microsoft, announced in late 2023, “will supercharge the growth of our cloud database,” President Larry Ellison said in the release.

OpenAI, which has received billions in funding from Microsoft, will use Oracle’s cloud infrastructure for “additional capacity,” the companies said in a separate statement. Oracle’s cloud has developed a reputation for success with generative AI startups — the company has touted clients including Reka, MosaicML and Elon Musk’s xAI.

Shares hit a high of $136.40 in late trading after closing at $123.88 in New York. The stock has surged nearly 18% this year, hitting a record high in March.

Revenue at the cloud unit that rents computing power and storage rose 42% to $2 billion in the period ended May 31. Analysts estimate it on average at $1.97 billion, according to data compiled by Bloomberg.

Total revenue rose 3.3% to $14.3 billion, compared with the average estimate of $14.6 billion. Profit, excluding certain items, was $1.63 per share. Analysts were forecasting $1.65.

Disappointing results from rivals such as Salesforce Inc. and Workday Inc. in recent weeks have fueled investor concern that technology budgets are being diverted from application software to artificial intelligence tools. Oracle’s cloud applications business, including its Fusion applications for corporate finance, grew 10% to $3.3 billion. That’s a slowdown from the roughly 14% growth the unit has seen in recent quarters and lower than analysts’ estimates.

New partnerships expected to accelerate Oracle’s growth…

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