Oracle Reports Strong Results And Amazon Partnership - Oracle (NYSE:ORCL)

On Monday, Oracle Corporation (NYSE:ORCL) reported its fiscal first quarter results, with both revenue and earnings surpassing Wall Street expectations. In addition, Oracle also announced it joined forces with its cloud rival, no other than the tech titan and cloud leader, Amazon.com Inc (NASDAQ:AMZN).

Fiscal first quarter highlights

For the quarter ended on August 31st, Oracle reported overall revenue rose 8% YoY to $13.31 billion, surpassing LSEG’s consensus estimate of $13.23 billion.

Cloud services revenue rose 21% YoY to $5.6 billion

Powered by hardware from Nvidia Corporation (NASDAQ:NVDA), cloud infrastructure revenue slightly accelerated from the May quarter as it increased 45% to $2.2 billion. In the previous quarter, Oracle reported growth of 42%. But ,this is still lower from quarters preceding the May one that recorded cloud sales growth of 49%, 52% and 66% consecutively. Oracle's contracted work, grew 53% YoY to $99 billion.

Graphics processing unit won as many as 42 new cloud contracts worth $3 billion with Oracle constructing a data center with acres of Nvidia GPU Clusters for training large scale AI models.

Cloud services and license support brought in $10.52 billion as revenue grew 10% YoY. Cloud and on-premises license unit reported revenue growth of 7%, bringing in $870 million.

Net income rose to $2.93 billion, or $1.03 per share while adjusted earnings amounted to $1.39 per share, also surpassing LSEG’s estimate of $1.32.

During the quarter, Oracle announced its database software will be available through Alphabet Corporation (NASDAQ:GOOG)(NASDAQ:GOOGL)-owned Google’s public cloud.

Amazon joins in after Google and Microsoft Corporation (NASDAQ:MSFT).

Along with its fiscal first quarter earnings release, Oracle also revealed it will bring database services to Amazon Web Services. Oracle already signed a similar agreement back in June, with another Big Tech titan, Google Cloud. Its existing partnership with Microsoft got expanded earlier this year to meet growing consumer demand across the globe. Therefore, Oracle has now signed agreements with the biggest cloud players. Seemingly, Microsoft, Amazon, Google and Oracle have put their differences aside to satisfy their consumers, providing them with choice and flexibility in cloud offerings. While there was speculation of Amazon following the footsteps of Microsoft and Google, there was also uncertainty due to the complicated history between Oracle CTO, Larry Elison and Amazon CEO, Andy Jassy, who was previously in charge of AWS. But, these differences have clearly been put aside for the two to offer Oracle Database@AWS. The partnership will be discussed in more detail during the ongoing Oracle's annual CloudWorld event that is taking place in Las Vegas.

Outlook

For the current quarter, Oracle guided for revenue growth between 8% and 10% with adjusted earnings per share between $1.45 to $1.49.

For the May-ending fiscal 2025-year, Oracle is targeting reach double-digit revenue growth while aiming for revenue of $65 billion for the fiscal year 2026.

Cloud growth and AI potential is the fuel that Oracle needed

Oracle touted its AI momentum that was fueled by contracts from AI-focused startups, managing to offset its other struggles. Oracle positioned itself well for offering less expensive cloud offerings compared to market leaders, Amazon and Microsoft. While Amazon and Microsoft shares rose 8% and 15%, respectively, Oracle shares surged more than 32% this year, reflecting its AI-era potential.

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