Shulou(Shulou.com)11/24 Report--

According to news in the morning of June 13, Beijing time, Oracle, a US business software giant, today released its results for the fourth quarter of fiscal 2023. The company's cloud computing business has performed well and will maintain a high growth momentum in the new fiscal year. Oracle shares hit an all-time high at the close of the day and continued to rise 3.5% in after-hours trading.

Oracle's total revenue reached $13.8 billion in the fourth quarter, up 17% from a year earlier, according to financial data. By contrast, Wall Street analysts' average forecast for total revenue was $13.7 billion, with Oracle beating analysts' expectations. Net income, excluding special income, was $1.67 a share, also exceeding analysts' expectations of $1.58.

Of this total, oracle's cloud computing business had revenue of $4.4 billion in the fourth quarter, up 54% from a year earlier, a growth rate of more than 45% in the third quarter. In all sections of cloud computing, cloud infrastructure business grew by 17% to $1.4 billion, while sales of cloud software increased by 45% to $3 billion.

At the earnings conference, Oracle CEO Safra Catz said the cloud computing business is expected to grow at a similar or even higher rate in the new fiscal year to the end of May next year.

John DiFucci, an analyst at Guggenheim Securities, said that the current macroeconomic environment is not ideal, and the strong growth of Oracle's cloud computing business is unusual.

Oracle is a catch-up in the cloud computing market and has been expanding its cloud computing infrastructure in recent years to enhance its competitiveness with leaders such as Amazon and Microsoft. It is reported that the growth rate of leading cloud computing companies such as Amazon and Microsoft has slowed.

Oracle executives said that there is a technology boom of generative artificial intelligence in the market, which drives the demand for Oracle's cloud computing business. It is worth mentioning that last week, Cohere, a generative artificial intelligence startup, announced that it had raised $270 million in a new round of financing, and Oracle was one of the investors.

After the release of the results, Barclays analyst Ramio Leizhou (Raimo Lenschow) said in a customer research report that driven by factors such as generative artificial intelligence, Oracle's cloud computing business continues to maintain growth momentum, and Barclays believes that Oracle shares will continue to maintain their recent rising potential.

Recently, generative artificial intelligence companies developing large language models have brought Oracle more than $2 billion in new contracts for cloud computing, including Mosaic ML, Adep AI and Cohere, according to Oracle chairman Larry Ellison. Oracle's "second-generation cloud" products have quickly become the best option for running generative artificial intelligence computing tasks, he said.

Katz said that the two strategic sectors of Oracle's cloud computing business are getting bigger and faster, which indicates that the company's fiscal year 2024 will be another "bumper harvest year."

Oracle shares closed at an all-time high of $116.43 on the day, and continued to rise to a high of $122.87 in after-hours trading. Oracle shares are reported to have risen 42 per cent compared with the start of the year, surpassing the 32 per cent rise in a US software ETF fund over the same period.

A year ago, Oracle made a big acquisition, acquired Cerner, an American digital case service, and renamed it Oracle Health. In the fourth quarter, the business contributed $1.5 billion in revenue. It should be noted that management said that to improve the profit margins of the business, Oracle Health has launched a layoff plan at the beginning of this year.

For the current quarter, which ends at the end of August, Katz predicts that cloud computing, excluding Oracle Health, will grow by 29%. Quarterly revenue is expected to grow by 8% to 10%. By contrast, Wall Street analysts expect revenue to grow by an average of 8%. Katz said earnings for the quarter are expected to be between $1.12 and $1.16 a share.

Oracle's cloud computing business advantage lies in commercial applications, which account for the lion's share of revenue, including Fusion, which manages the company's finances, and NetSuite's enterprise resource planning software (which mainly serves small and medium-sized companies). Fusion revenue rose 26 per cent in the fourth quarter, up from 25 per cent in the third quarter, according to the data. NetSuite software revenue grew 22% in the fourth quarter, down slightly from 23% in the previous quarter.

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