Oracle Beats Earnings Estimates as Cloud Infrastructure Revenue More Than Doubles

Oracle’s cloud-infrastructure business more than doubled in its fiscal first quarter, helping the company beat Wall Street’s revenue and profit expectations. The result strengthens Oracle’s cloud-growth story, while its data-center expansion coincided with sharply higher spending and more negative free cash flow.

Oracle reported adjusted earnings of $1.92 a share, above the $1.74 LSEG consensus estimate. Revenue reached $19.35 billion, exceeding the $19.14 billion consensus. The company’s shares rose 7% in extended trading after the results.

Cloud demand supplied the catalyst

The fiscal first quarter, which ended August 31, brought revenue growth of almost 30% from a year earlier. Total cloud revenue rose 62% to $11.61 billion. Within that business, cloud-infrastructure revenue reached $7.4 billion, above the $7.09 billion StreetAccount consensus estimate.

Oracle said it delivered 850 megawatts of data-center capacity during the quarter. Its remaining performance obligations, a measure that includes contracted but not yet recognized revenue as well as deferred revenue and uncollected invoices, reached $664 billion at quarter-end.

The balance sheet becomes part of the growth case

Oracle’s debt stood at $125 billion at quarter-end. The higher spending, more negative free cash flow and debt figure show the financial demands accompanying the company’s capacity buildout.

Those figures do not negate the quarter’s sales momentum. They frame the immediate challenge differently: Oracle is adding capacity as cash flow has moved further below zero. The reported backlog offers a large indication of contracted business, but it is not the same as revenue already recorded in the quarter.

A higher target sets the next test

For the fiscal second quarter, Oracle forecast adjusted earnings of $1.85 to $1.93 a share and revenue growth of 30% to 34%. For the full fiscal year, it forecast adjusted earnings of $8.10 a share and revenue of at least $90 billion.

Oracle has cleared a higher near-term bar with a quarter that surpassed estimates. The next results will show whether its forecast growth and expanding cloud revenue can continue alongside the capital spending needed to keep delivering data-center capacity.