A very good week for Oracle (ORCL, Financial) has turned into an even better one after the database and cloud software company raised its FY26 revenue guidance to at least $66.0 billion during a Financial Analyst meeting yesterday. This bullish outlook, driven by robust demand within ORCL's cloud infrastructure business (OCI), follows a solid Q1 earnings report featuring an EPS beat and impressive Remaining Performance Obligations (RPO) growth of 53%. Fueled by these catalysts, shares of ORCL have surged by 20% this week.
- Looking ahead, ORCL aims for $104 billion in revenue by FY29 as it expands its cloud infrastructure business and capitalizes on increasing AI use cases. While Microsoft (MSFT, Financial), Google (GOOG, Financial), and Amazon Web Services (AMZN, Financial) are the major cloud providers, ORCL is becoming a formidable player in the space.
- OCI offers customers virtual machines and servers for complex workloads, a variety of storage options for massive data volumes, and new AI tools like OCI Vision and Oracle Machine Learning for data analytics and automation. OCI also includes cloud application products such as Human Capital Management (HCM) and Enterprise Resource Planning (ERP) products.
- In Q1, ORCL reported a 45% year-over-year surge in cloud infrastructure revenue to $2.2 billion, driven by a 56% increase in OCI consumption revenue. Growth could have been even stronger if ORCL had greater capacity. To address this, the company plans to double its capex in FY25 compared to FY24 to support the buildout of 77 more cloud regions, adding to its current 85 operational cloud regions.
- MSFT, GOOG, and AMZN are not just competitors but also customers of ORCL, running ORCL's database software on their cloud platforms. Additionally, ORCL announced a new deal with Amazon Web Services (AWS), enabling AWS customers to access Oracle Autonomous Database on dedicated infrastructure and Oracle Exadata Database Service within AWS.
The long journey from an on-premise database software developer to a cloud software and infrastructure company has been challenging for ORCL and its shareholders, but its transition is now in full swing, and stronger growth is finally a reality.
