ORCL Q3 Call Highlights: AI Advancements, Cloud Expansion & Record Bookings!

Oracle Corporation, a database management and cloud service providing company, in its Q3 earnings call highlighted several strengths, including a massive $130 billion backlog driven by technological advantages that make their systems faster and more economical than competitors. Management discussed it is rapidly expanding multi-cloud offerings with 18 regions live and 40 more planned across major hyperscalers. The company’s Database 23ai with vector capabilities uniquely allows customers to train AI models on private data while maintaining confidentiality. Oracle mentioned that its AI agents are deeply integrated into company’s applications, especially in healthcare, creating competitive advantages and driving cloud migrations. Management also highlighted that its cloud deployment strategy of starting small and scaling with demand helped control capital expenditures while maintaining high utilization.

Oracle missed analyst expectations for Q3 with adjusted earnings of $1.47 per share and revenue of $14.13 billion, though it still achieved 6% year-over-year revenue growth and a 22% increase in net income. Oracle’s cloud infrastructure segment was a bright spot, growing 49% to $2.7 billion, driven by AI computing demand. Looking forward, the company projected aggressive fiscal 2026 and 2027 revenue growth of 15% and 20% respectively, exceeding analyst expectations. Oracle plans to double data center capacity and has committed to $16 billion in CapEx in FY25. The company also highlighted its participation in Stargate, an AI joint venture with OpenAI and Softbank. Oracle also reported its strongest booking quarter ever, adding $48 billion to its backlog and increasing remaining performance obligations by 63% year-over-year to $130 billion.

Continue Reading: Unearth the Vital Insights from Oracle Corporation’s Earnings Call!

Financial/Operational Metrics:

• Total Revenue: $14.1 billion, up 6% YoY.
• GAAP Net Income: $2.9 billion, up 22% YoY.
• GAAP EPS: $1.02, up 20% YoY.
• Operating Expense: $9.77 billion, up 3% YoY.
• Operating Income: $4.4 billion, up 16% YoY.

Outlook:

• Q4 Revenue Growth: 8-10% in USD.
• Q4 Non-GAAP EPS: $1.61-1.65 in USD.
• Total Cloud Revenue Growth: 24-28% in constant currency.
• FY26 Revenue Growth: Up 15% YoY.

Analyst Crossfire:

• Stargate Project Impact (Brad Zelnick – Deutsche Bank): Oracle’s Stargate project, partnered with OpenAI and NVIDIA, was chosen for its superior AI cluster performance and cost-efficiency. When Stargate contracts hit, they will integrate seamlessly into Oracle’s financials, showing up as straightforward revenue growth (Larry Ellison – CTO, Safra Catz – CEO).

• OCI Growth & Capacity Expansion (Derrick Wood – TD Cowen): OCI is experiencing rapid growth across all fronts — multi-cloud partnerships, public cloud, and Cloud@Customer, with sovereign and disconnected clouds now rolling out. Bookings are converting into revenue as capacity fills up. Oracle’s database flexibility across OCI, Azure, AWS, and Google is key to expanding adoption (Safra Catz – CEO, Larry Ellison – CTO).

• AI Training vs. Inferencing Market & RPO Growth Outlook (Alex Zukin – Wolfe Research): Oracle expects AI inferencing to surpass training in growth potential. The AI Data Platform allows Oracle Database 23ai to transform existing data into vector format for AI model training and insights, giving Oracle a unique advantage. While RPO trends may vary quarter-to-quarter, continued strong demand is expected to sustain exceptionally high RPO figures in the upcoming months (Safra Catz – CEO, Larry Ellison – CTO).

• Cloud Region Expansion (John DiFucci – Guggenheim): Oracle has 18 active multi-cloud regions with plans to expand by 40 additional regions over the next year. Deployment timelines are dependent on hyperscalers like AWS, Azure, and Google, but momentum is strong due to high demand and competitive urgency (Safra Catz – CEO, Larry Ellison – CTO).

• AI-Driven Healthcare Solutions & CapEx Efficiency (Kirk Materne – Evercore ISI, Mark Moerdler – Bernstein): Oracle’s AI agents are enhancing healthcare by automating tasks such as patient summaries, prescription entries, and insurance approvals. This innovation boosts healthcare system efficiency and contributes significantly to Oracle’s SaaS growth. Mark Moerdler – Bernstein (Larry Ellison – CTO, Safra Catz – CEO).