After-hours surge of 14%! Oracle (ORCL.US) Q3 profits exceed expectations, cloud computing revenue up 25% year-on-year.

On Tuesday morning Beijing time, Oracle (ORCL.US) released its financial results for the third quarter of fiscal year 2024. The data showed that the company's Q3 revenue was $13.3 billion, a 7.1% year-on-year increase, in line with market expectations; excluding certain items, earnings per share were $1.41, better than the market's expected $1.38. In the third quarter, the cloud computing revenue, which was highly anticipated, increased by 25% year-on-year to $5.1 billion, slightly higher than the market's expectation of $5.06 billion. Of this, $1.8 billion came from compute and storage leasing, and $3.3 billion came from applications. The surge in cloud computing bookings indicates that Oracle has made progress in gaining market share. At the end of the third quarter ending in February, remaining performance obligations (a measure of Oracle's sales backlog) stood at $80 billion. This greatly exceeded analysts' expectations of $59 billion. Oracle CEO Safra Catz pointed out that this number was driven by "large new cloud infrastructure contracts signed in the third quarter," demonstrating growth momentum. J.P. Morgan analyst Brent Thill said the results were "definitely better than people were worried about." He noted that other cloud computing providers like Amazon and Microsoft have recently announced similarly strong performance. Furthermore, revenue for the Fusion software used for enterprise finance grew by 18% year-on-year. Revenue for NetSuite, an enterprise planning tool for small and medium-sized businesses, grew by 21%. The revenue for both businesses grew by 21% in the previous quarter as well. Following the acquisition of the digital health records company Cerner, Oracle has been focusing on modernizing its traditional software business. Oracle Chairman Larry Ellison stated that the company completed the work of transitioning "most Cerner customers" to Oracle's cloud infrastructure in this quarter. He added that further updates in the coming year, such as a new set of applications, will transform Cerner and Oracle's health business into a "high-growth business for the next few years." Catz expects revenue to grow by around 5% in the fourth quarter ending in May. Cloud computing revenue excluding Cerner is expected to grow by 23%. Catz stated that Cerner's revenue growth will recover in the fiscal year ending in May 2025, adding that the business has been a "significant headwind" to revenue growth this year. Catz stated that capital expenditure for this fiscal year will amount to $7.5 billion. She added that as the company establishes more data centers to meet the demands of cloud computing, this expenditure will increase to $10 billion by fiscal year 2025. This is higher than the analyst's average expectation of around $8.9 billion. During the earnings call, Oracle announced plans to release details of its collaboration with tech giant NVIDIA (NVDA.US) next week. As of the time of writing, Oracle's stock rose by 13.82% in after-hours trading, reaching $129.90.