Oracle (ORCL +12%) is trading significantly higher today after reporting impressive EPS upside with its Q1 (Aug) earnings last night. Revenue increased 6.9% year-over-year to $13.31 billion, surpassing expectations. Oracle also provided in-line guidance for Q2 (Nov) EPS and revenue. Notably, this is Oracle's fifth consecutive earnings report that led to a gap in the share price, with Q1 and Q2 down but Q3, Q4, and now Q1 gapping higher.
- Oracle announced a deal with Amazon's AWS segment. The new Oracle Database@AWS offering allows customers to access Oracle Autonomous Database on dedicated infrastructure and Oracle Exadata Database Service within AWS. AWS joins Microsoft Azure and Google Cloud in making Oracle Cloud Infrastructure (OCI) and Oracle available in their respective clouds.
- Despite missing EPS and revenue in Q4, Oracle's Remaining Performance Obligation (RPO) was a key factor in propelling the stock higher. In Q1, RPO rose 52% constant currency (CC) to a record $99 billion. Oracle typically sees a seasonal decline in RPO in Q1, but the company signed several large deals this past quarter, resulting in a sequential increase. Cloud RPO grew over 80% CC and now represents nearly 75% of total RPO.
- Oracle echoed sentiments from Azure and AWS, stating that both are ramping up investments to build out their infrastructure to handle increased demand. Oracle expects its FY25 capital expenditures to be double what they were in FY24, reflecting confidence in its pipeline. Oracle currently has 85 cloud regions live, with another 77 planned.
- Oracle Database is thriving, and multi-cloud agreements with Microsoft, Google, and now AWS make it easier for customers to run Oracle Databases in the cloud. Oracle is rapidly expanding its OCI capacity to meet the demand seen in its 52% CC RPO cloud growth. While much attention is focused on its GPU-related businesses, Oracle's non-GPU infrastructure business continues to grow faster than its competitors.
Overall, investors are clearly impressed with Oracle's strong start to FY25. The significant RPO growth is having a substantial impact on the share price today. The sequential growth in RPO, which typically declines in Q1, is noteworthy. Investors are also pleased with the AWS partnership, adding to Oracle's deals with the big three cloud providers. The stock has surged more than 50% since mid-December, reaching a new all-time high, despite other tech names pulling back on AI concerns. We commend Oracle for its impressive performance.
