ORCL stock jumps 6% after Q4 2023 revenue and profit beat estimates.

On June 12, Oracle Corporation (NYSE: ORCL), a major software company, released its fourth-quarter results, exceeding Wall Street’s expectations in terms of both top-line and bottom-line figures. This news has affected ORCL’s stock.

For the last quarter, the company reported earnings per share of $1.67, surpassing the expected $1.58. Similarly, the company reported revenue of $13.84 billion, compared to the market’s expectations of $13.74 billion.

During the quarter ending May 31, Oracle’s revenue rose by 17% year-over-year. Oracle’s net income was $3.32 billion, or $1.19 per share, compared to $3.19 billion, or $1.16 per share, in the same quarter of the previous year.

On Monday’s conference call, Oracle CEO Safra Catz stated that she anticipates adjusted earnings of $1.12 to $1.16 per share for the first fiscal quarter and revenue growth of 8% to 10%. Refinitiv analysts anticipate adjusted earnings per share of $1.14 and revenue of $12.34 billion. This implies a 7.8% growth.

Oracle’s primary revenue driver, cloud services and license support, increased significantly by 23%, reaching $9.37 billion. However, revenue from cloud licenses and on-premises decreased by 15% to $2.15 billion.

Revenue from cloud infrastructure grew impressively, reaching $1.4 billion, a 76% increase over the previous quarter’s 55% growth. While Oracle’s cloud infrastructure is growing at a faster rate than Microsoft and Google, it remains smaller in scale than its competitors.

During a conference call, Oracle’s Chief Financial Officer, Safra Catz, stated that the gross margin in the cloud infrastructure division would continue to expand. She added:

“Our infrastructure growth rate has been accelerating – with 63% growth for the full year, and 77% growth in the fourth quarter. Our cloud applications growth rate also accelerated in FY23. So, both of our two strategic cloud businesses are getting bigger – and growing faster. That bodes well for another strong year in FY24.”

Venturing into Generative AI Space

Oracle’s chair and technology chief, Larry Ellison, stated that the company plans to introduce a generative AI cloud service in partnership with startup Cohere. Microsoft also has a similar partnership with OpenAI and offers the Azure OpenAI Service, allowing large organizations to deploy large language models (LLMs) to generate human-like responses and take human input.

Ellison, however, stated that Oracle had been using its tool internally. He added:

“This new service protects the privacy of our enterprise customers’ training data, enabling those customers to safely use their own private data to train their own private specialized large-language models.”

On June 12, Oracle (ORCL) stock increased by 6%, and it is already up by another 5% in pre-market hours on Tuesday. Since the beginning of 2023, ORCL’s stock has increased by a total of 40%.