Why Oracle Stock Is Soaring Today
Oracle (NYSE: ORCL) stock is jumping in Tuesday morning trading. The company's share price was up 12.3% as of 11:30 a.m. ET, according to data from S&P Global Market Intelligence.
After the market closed yesterday, Oracle published results for the first quarter of its current fiscal year (which ended Aug. 30). The company beat Wall Street's sales and earnings for the period, and it also announced promising new cloud partnerships with Amazon and Alphabet.
Cloud momentum powers Q1 beats for Oracle
Oracle posted non-GAAP (generally accepted accounting principles) adjusted earnings per share of $1.39 on revenue of $13.3 billion in fiscal Q1. The company's earnings performance beat the average analyst target by $0.06 per share, and sales came in $60 million above the average target.
Sales rose 6.8% year over year in the quarter, but other growth metrics were significantly more encouraging. Remaining performance obligations, a metric that tracks services that have been contracted for but not yet delivered and recorded as sales, was up 53% year over year to $99 billion. Meanwhile, total cloud revenue rose 21% year over year to hit $5.6 billion.
Within the overall cloud category, the infrastructure as a service (IaaS) component of category sales rose 45% year over year to hit $2.2 billion, and cloud application software-as-a-service (SaaS) increased 10% year over year to hit $3.3 billion.
Oracle issues solid guidance and scores new cloud partnerships
For fiscal Q2, Oracle is expecting sales to increase between 7% and 9% on a constant-currency basis. Management expects total cloud revenue to increase between 23% and 25% on a currency-adjusted basis, and adjusted earnings per share are projected to come in between $1.42 and $1.46 -- good for growth of roughly 8% at the midpoint of the guidance range.
In addition to solid forward guidance, the company also profiled new cloud integrations. With its earnings update yesterday, Oracle unveiled a new partnership with Amazon Web Services (AWS) and profiled a new service that will allow AWS users to use the Oracle Autonomous Database and Oracle Exadata Service. Oracle also highlighted a similar offering for Alphabet's Google Cloud infrastructure service.
Oracle is still a small player in the cloud-infrastructure space compared to Amazon, Microsoft, and Alphabet, but it's showing some encouraging momentum. New database integrations with leading IaaS providers should help the company increase its overall footprint in the space and become a bigger part of customers' multicloud strategies.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Microsoft, and Oracle. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
