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Oracle's stock surged in after-hours trading on March 11th, 2024, following the release of their positive fiscal 2024 Q3 results. The company's share price increased by 5.9%, reaching $120.82. This surge is attributed to a rise in quarterly profits driven by the growing demand for Oracle's cloud-computing services, fueled by the recent boom in generative AI.
Oracle Corporation’s (NYSE: ORCL) total quarterly revenue rose 7% year-over-year to $13.3 billion. This increase held true in both USD and adjusted currency. The growth was driven by a 12% rise in cloud services and license support revenue, reaching $10 billion. However, cloud and on-premise license sales dipped slightly by 3%.
Notably, Oracle's Q3 profitability has improved significantly. Non-GAAP operating income, a key measure excluding one-time charges, rose 12% to $5.8 billion. This strong performance translated to a 18% increase in non-GAAP net income, reaching $4.0 billion. Even GAAP (Generally Accepted Accounting Principles) measures reflected growth, with net income rising to $2.4 billion.
Their short-term deferred revenue sits at $8.9 billion, indicating future contracted income. Additionally, over the past year, they generated $18.2 billion in operating cash flow and $12.3 billion in free cash flow, demonstrating their ability to convert revenue into actual cash.
Oracle's board approved a quarterly cash dividend of $0.40 per share. This will be distributed to shareholders on record as of April 10th, 2024 with a payment date of April 24th, 2024.
Management Commentary
"Large new cloud infrastructure contracts signed in Q3 drove Oracle's total Remaining Performance Obligations up 29% to over $80 billion—an all-time record," said Oracle CEO, Safra Catz. "We expect to continue receiving large contracts reserving cloud infrastructure capacity because the demand for our Gen2 AI infrastructure substantially exceeds supply—despite the fact we are opening new and expanding existing cloud data centers very, very rapidly. We expect that 43% of our current $80 billion of Remaining Performance Obligations will be recognized as revenue over the next four quarters, and that our Gen2 Cloud Infrastructure business will remain in a hypergrowth phase—up 53% in Q3—for the foreseeable future."
"In Q3, Oracle finished moving the majority of Cerner customers to Oracle's Gen2 Cloud Infrastructure," said Oracle Chairman and CTO, Larry Ellison. "In Q4, Oracle will start delivering its completely new Ambulatory Clinic Cloud Application Suite to these same customers. This new AI-driven system features an integrated voice interface called the Clinical Digital Assistant that automatically generates doctors' notes and updates Electronic Health Records—saving precious time and improving health data accuracy. The delivery of this revolutionary new healthcare technology will enable the rapid modernization of our customers' health systems over the coming year, and transform Cerner and Oracle Health into a high-growth business for years to come."
