Oracle Posts Disappointing Growth, Denting Cloud Enthusiasm

(Bloomberg) — Oracle Corp. reported quarterly revenue in line with estimates, disappointing investors who have boosted the stock to a record high in recent weeks on enthusiasm for the company’s ascendant cloud business. The shares fell in extended trading.

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Fiscal second-quarter revenue increased 9% to $14.1 billion, the company said Monday in a statement. Sales from Oracle’s closely watched cloud infrastructure business jumped 52% to $2.4 billion, in line with the growth projected by analysts.

Oracle has long tried to find its footing in the lucrative industry of renting computing power and storage, which is dominated by much-larger rivals led by Amazon.com Inc.’s Amazon Web Services and Microsoft Corp. The recent success has been fueled by demand from artificial intelligence companies seeking to train their models and marquee customers like Uber Technologies Inc. and ByteDance Ltd.’s TikTok. Chairman Larry Ellison has focused particularly on Oracle’s ability to provide the hardware and integrated software needed to handle powerful AI workloads.

The stock slipped about 7% in extended trading after closing at $190.45. Expectations were high for Oracle headed into the results, with its stock jumping 81% this year.

It was a “mixed quarter against elevated expectations,” wrote Rishi Jaluria, an analyst at RBC Capital Markets.

Remaining performance obligations — a measure of bookings — were $97 billion as of the period ended Nov. 30, a step down from $99.1 billion in the previous quarter. Earnings, excluding some items, were $1.47 a share. Analysts, on average, estimated $1.48, according to data compiled by Bloomberg.

Total cloud sales, including infrastructure and applications, was $5.9 billion. Analysts, on average, estimated $6 billion.

That 52% growth in infrastructure sales suggests “strong expansion in AI workloads, both from direct and indirect clients,” wrote Anurag Rana, an analyst at Bloomberg Intelligence.

For the fiscal third quarter, revenue will increase about 8%, Chief Executive Officer Safra Catz said on a conference call after the results were released. Profit, excluding some items, will be $1.47 to $1.51 a share. Cloud revenue will rise about 24%, she said. All of those metrics missed analyst estimates.

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