Oracle conference call: Reached cooperation with Google Cloud and Microsoft Cloud, cloud demand will drive double-digit growth

Overnight, Oracle, the fourth largest cloud provider in the United States, announced its financial performance for the 24th fiscal year fourth quarter, which fell slightly short. With a revenue of $14.29 billion, it was lower than the expected $14.55 billion, and the growth rate also slowed down compared to the previous quarter at 7%. The revenue from the highly anticipated cloud services division also fell below expectations.

However, despite the underperformance, during the earnings call, Oracle executives reassured analysts that the demand for cloud services remains strong and is expected to further boost Oracle's sales and RPO (reflecting order backlog and potential future revenue). The company also announced partnerships with Microsoft, OpenAI, and Google Cloud, showing confidence in the performance outlook.

At the time of writing, Oracle's stock surged by 9% after hours.

Major Collaboration Agreements with Google and Microsoft Cloud

During the call, Oracle announced collaborations with Microsoft and OpenAI to integrate Azure into Oracle's cloud infrastructure, providing additional computing power support to OpenAI for large-scale AI model training.

Google will also collaborate with Oracle to allow Google Cloud customers to access Oracle's database services. Oracle CEO Safra Catz stated that Oracle databases on Google Cloud will go live in September, allowing customers to directly access Oracle database services deployed on Google Cloud. The company will run 12 Oracle databases on Google Cloud sites this year.

Oracle's founder and CTO Larry Ellison mentioned that the company is building "a very, very large data center" with "a lot of Nvidia chips" for AI model training. He emphasized the necessity of large data centers for complex AI training, especially with the expansion of model capabilities.

Ellison mentioned that aside from Microsoft, OpenAI, and Google, customers using Oracle's cloud infrastructure and data centers include Nvidia and Musk's xAI, among others.

While Amazon's AWS is not among Oracle's major cloud customers, Ellison expressed to analysts that Oracle is "very willing (like with Microsoft and Google) to collaborate with AWS."

AI to Drive Continued Growth for Oracle, Cloud Infrastructure Services Growth Rate to Exceed 2024 Fiscal Year by 2025

Safra Catz emphasized that Oracle expects revenue to continue growing, driven by the need for advanced AI models in data centers and cloud capacity

The expected strong demand for cloud services will drive Oracle's revenue and RPO to further increase, achieving double-digit revenue growth in this fiscal year. With the increase in Oracle's cloud infrastructure capacity to meet customer demand, the growth rate in each quarter will exceed the previous quarter.

She pointed out that the growth rate of cloud infrastructure services in the fiscal year 2025 will exceed that of the fiscal year 2024.

Catz also emphasized that Oracle's differentiation from competitors lies in its ability to provide customers with a comprehensive data center service.

Competitors are unable to provide the complete service suite that Oracle can offer, although they may have some unique features in certain aspects, they fall short in overall service capabilities compared to Oracle:

Regardless of the deployment model, (Oracle's customers) do not have to compromise. Some of our competitors may offer some degree of data sovereignty (meaning customer data is fully controlled by the customer and not subject to external interference) or some degree of independence (meaning the ability to completely disconnect from cloud services), but in reality, they do not provide all the services.

She also stated that data sovereignty "may be very critical" for governments and some customers, and Oracle is highly competitive in data security, standing out among a multitude of cloud service providers