Oracle Q4 cloud wins “doing better” than SAP, AWS, Ellison claims

Oracle chair and CTO Larry Ellison speaks | Oracle Q4

Oracle has announced its fourth quarter and full-year financial results for fiscal 2023, overshooting revenue estimates after demand rose for its cloud offerings in Q4. The rise is said to be driven by companies investing more in AI technology and what Oracle chair and CTO Larry Ellison claims are “dramatically lower costs” compared to other vendors.

Q4 total revenue reached $13.8bn, up 17 percent year-on-year, beating analysts’ estimates of $13.74bn and bringing the fiscal yearly total to $50bn, an 18 percent boost from fiscal 2022.

Cloud revenue for the quarter jumped up by 54 percent, bringing in revenues of $4.4bn.

Cloud Infrastructure (IaaS) revenue saw the biggest percentage growth YoY, up 76 percent to $1.4bn. Oracle’s SaaS offerings, Cloud Application, Fusion Cloud ERP and NetSuite Cloud ERP also saw jumps of 45 percent, 26 percent and 22 percent respectively; $3bn, $0.7bn, $0.7bn YoY.

After growing 23 percent in Q4, cloud services and license support revenues totaled $9.4bn, up 17 percent to $35.3bn for the full fiscal year. Meanwhile, cloud license and on-premise license revenues dropped 15 percent this quarter, to $2.2bn. For the full fiscal year, license revenues saw a two percent drop YoY to $5.8bn.

Medical records firm, Cerner, purchased by Oracle last year, also proved fruitful for the firm, contributing $1.5bn in revenue during quarter four.

Q4 GAAP operating income was $4.1bn and GAAP operating margin was 30 percent. Non-GAAP operating income was $6.2bn, up ten percent, and Non-GAAP operating margin was 44 percent.

Fiscal year 2023 GAAP operating income was $13.1bn and GAAP operating margin was 26 percent. Non-GAAP operating income was $20.9bn and non-GAAP operating margin was 42 percent. Quarter four GAAP net income was $3.3bn and non-GAAP net income was $4.7bn, and for the full fiscal year 2023, GAAP net income was $8.5bn, while non-GAAP net income was $14.2bn.

The results follow several big partnerships for the firm, including its NVIDIA alliance to build the world’s largest high-performance computer and the launch of a generative AI cloud service for enterprise customers with Cohere.

In the company earnings call, Larry Ellison, chair and CTO, Oracle, said: “In the cloud, since you pay by the minute, if you run twice as fast, and we do – you pay half as much. It cost us one-tenth to implement Fusion ERP versus SAP’s new ERP system with HANA. So, the cost of implementing our applications are dramatically lower than our competitors. So, we have a lot of people moving from AWS to our cloud for infrastructure services, a lot of people continuing to move from SAP to Fusion. We’re seeing that migration, and we’re taking a lot of market share from our competitors. That’s why we’re doing better, and they’re not doing quite as well.”

Safra Catz, CEO, Oracle, said: “Q4 was another fantastic quarter and the end of a great year. While competitors have seen their growth rates drop precipitously over the last year, our cloud infrastructure growth rate has essentially doubled from last year to 77 percent this quarter, and with Gen2 OCI growth even higher.”

We are seeing unprecedented demand for our cloud services and especially our AI services. As a result, I expect cloud revenue, excluding Cerner, will continue growing at least similar rates to what we experienced in fiscal 2023. As our high-growth cloud revenues are becoming a larger, larger portion of total revenue, we are seeing an acceleration of our total revenue growth. I expect this trend will continue in fiscal 2024.”