Oracle’s Q1 2024 results reveal slower cloud sales, Musk AI deal

Oracle’s CEO, Safra Catz | Oracle’s Q1 2024 results reveal slower cloud sales, but AI optimistic

Oracle’s figures for the first quarter 2024 ended August 31 saw slow cloud sales growth stifling some enthusiasm, but further optimism for increased AI demand was evident.

Its projected current-quarter revenue of $12.45bn narrowly missed the $12.47bn expected by LSEG analysts as the turbulent economy impacted businesses’ cloud spending.

At the same time, both Oracle and investors expressed hopes that growing demand for AI products will help the company gain shares in the market and boost revenues.

Larry Ellison, chairman and chief technology officer of Oracle, said during the earnings call: “Generative AI is changing everything. As of today, AI development companies have signed contracts to purchase more than $4bn of AI training capacity in Oracle’s Generation 2 Cloud. That’s twice as much AI training as we had booked at the end of the last Q4.”

Ellison also boasted that Elon Musk AI venture xAI has recently signed a contract to carry out AI training in Oracle’s Gen 2 Cloud, while outlining that large AI technology companies and leading AI start-ups continue to expand their business with Oracle. According to the CTO, they are driven by the fact that “Oracle’s RDMA-interconnected Nvidia superclusters train AI models at twice the speed and much less than half the cost of other clouds”.

The company’s total quarterly revenues were up 9 percent year-on-year in USD and up 8 percent in constant currency to $12.5bn, while cloud services and license support revenues were up 13 percent and up 12 percent in constant currency to $9.5bn. Cloud license and on-premise license revenues were down 10 percent in USD and down 11 percent in constant currency to $0.8bn.

Oracle’s CEO, Safra Catz, highlighted that Oracle Cloud Infrastructure revenue grew 66 percent in Q1, “much faster than our hyperscale cloud infrastructure competitors,” she said.

Oracle announced that new partnerships with Nvidia, Uber, Ascension Health and Cohere will be revealed in the coming weeks, while it gave a nod to its expanding set of strategic partners driving the Oracle ecosystem, including Amdocs, VMware and Microsoft.

Some recent partnerships and collaborations also include Oracle helping VMware modernize its workloads on Oracle Cloud Infrastructure; Oracle becoming a founding member of CancerX, an inaugural project in The White House’s national Cancer Moonshot initiative; CIQ, Oracle and SUSE’s intent to form an Open Enterprise Linux Association (OpenELA) aimed at driving the development of distributions compatible with Red Hat Enterprise Linux (RHEL); and United BioSource, LLC migrating its safety functions from on-premises to Oracle Argus Cloud Service.