Shares of Oracle (ORCL 2.02%) charged sharply higher on Tuesday, gaining as much as 13.49% in early trading. As of 10:58 a.m. ET, the stock was still up 11.3%.
The catalyst that sent the database specialist higher was quarterly results that were far better than feared.
Blockbuster results
Oracle reported the results for its fiscal 2024 third quarter (ended Feb. 29), and investors breathed a sigh of relief. Revenue of $13.3 billion grew 7% year over year, resulting in adjusted earnings per share (EPS) of $1.41, up 16%.
For context, analysts' consensus estimates were calling for revenue of $13.28 billion and adjusted EPS of $1.38, so while sales were largely in line with expectations, profits were slightly higher.
However, the top- and bottom-line numbers didn't raise eyebrows as much as Oracle's growing backlog. The company's remaining performance obligation (RPO) -- or contractually obligated sales that haven't yet been recognized as revenue -- climbed to $80 billion, up 29% year over year to an all-time record. When RPO grows faster than sales, this suggests stronger results to come.
Furthermore, Oracle's cloud revenue was surprisingly strong, growing 25% year over year to $5.1 billion. The company's cloud infrastructure offering -- which competes with Amazon Web Services, Alphabet's Google Cloud, and Microsoft Azure -- grew 49% year over year, or 52% excluding some legacy operations. This outpaced its "big three" rivals, suggesting it was gaining market share.
The artificial intelligence (AI) wild card
Management cited a cloud infrastructure agreement it signed with Nvidia (NVDA 6.18%) during the quarter, noting that demand for AI cloud capabilities "substantially exceeds supply," according to CEO Safra Catz, and as a result, the company is "opening new and expanding existing cloud data centers very, very rapidly." Catz said she expects Oracle's cloud infrastructure business to remain in "hypergrowth phase ... for the foreseeable future."
For the upcoming quarter, management is guiding for revenue growth between 4% and 6%, while cloud revenue is expected to climb 23% at the midpoint of guidance.
After several quarters of tepid growth, this is a step in the right direction for Oracle, but investors should watch to be sure its robust growth continues.
