Oracle Corp. reported results for the third quarter of its fiscal 2025, which ended February 28, 2025. Oracle’s profit and revenue for the quarter fell short of Wall Street estimates, sending the company’s shares down more than 5% despite a large number of large cloud computing contracts for the future, MarketWatch writes.
Oracle’s revenue increased 6% to $14.13 billion in the quarter, compared with the consensus estimate of $14.39 billion from analysts surveyed by LSEG. Adjusted non-GAAP earnings per share also fell short of LSEG’s consensus estimate of $1.47 versus the $1.49 expected. GAAP net income for the quarter was $2.94 billion, or $1.02 per diluted share, compared with $2.40 billion, or $0.85 per diluted share, in the third quarter of fiscal 2024.
Cloud services and license support brought in $11.01 billion (up 10% year-on-year), accounting for 78% of its total revenue. Revenue from cloud and on-premises licensing fell 10% to $1.13 billion. Hardware sales also fell 7% year-on-year to $703 million, and service revenue fell 1% to $1.29 billion. Cloud infrastructure (IaaS) revenue grew 49% to $2.7 billion.
Database MultiCloud revenue across Microsoft, Google, and Amazon platforms has grown 92% in the past three months. Accelerator consumption for AI training has grown 244% in the past 12 months. Ellison said that amid the huge demand for inference, the company has integrated OpenAI ChatGPT, xAI Grok, and Meta✴ Llama models directly into Oracle’s 23ai database. This new product, called Oracle AI Data Platform, allows customers to use any of the world’s leading AI models to analyze all of their data while keeping it secure.
Oracle CEO Safra Catz reported that Oracle signed a record-breaking $48 billion in sales contracts in the third fiscal quarter, increasing its remaining performance obligations (RPO) by 63% to more than $130 billion, which will help Oracle’s overall revenue grow by 15% next fiscal year. It should be noted that, according to FactSet, analysts had previously forecast Oracle’s sales growth of 12.5% in fiscal 2026. At the same time, capital expenditures for fiscal 2025 are expected to double from last year to about $16 billion.
Image Source: Oracle
According to Katz, cloud agreements have been signed with several of the world’s leading tech companies, including OpenAI, xAI, Meta✴, NVIDIA, and AMD, and the first contract under Project Stargate is expected to be signed in the near future, which will allow Oracle to expand both training and inference. Oracle Chairman and CTO Larry Ellison noted that customer demand is at an all-time high, and the company will double its data center capacity in calendar year 2025. The company is in the process of deploying a giant AI cluster of 64,000 liquid-cooled NVIDIA GB200s. Oracle will also build a cluster of 30,000 AMD Instinct MI355Xs.
Oracle expects revenue to grow 8% to 10% in the current quarter. Analysts had expected growth of about 11% to $15.91 billion, according to LSEG. The company said it expects adjusted earnings of $1.61 to $1.65 per share. Analysts forecast adjusted earnings of $1.79 per share. Catz also said Oracle’s capital expenditures will be $16 billion this year, more than double last year’s amount.