Oracle misses on earnings and issues weak revenue guidance

Oracle issued quarterly results on Monday that trailed analysts’ estimates and gave a forecast that came up short of expectations.

Here is how Oracle did compared to LSEG consensus:

• Earnings per share: $1.47 adjusted vs. $1.49 expected
• Revenue: $14.13 billion vs. $14.39 billion expected

Revenue increased 6% from $13.3 billion in the same period last year. Net income rose 22% to $2.94 billion, or $1.02 a share, from $2.4 billion, or 85 cents a share, a year earlier. Revenue in Oracle’s cloud services business jumped 10% from a year earlier to $11.01 billion, accounting for 78% of total sales.

The company’s cloud infrastructure segment, which helps businesses move workloads out of their own data centers, has been booming due to demand for computing power that can support artificial intelligence projects. Oracle said revenue in its cloud infrastructure unit increased 49% from a year earlier to $2.7 billion.

“We are on schedule to double our data center capacity this calendar year,” Oracle Chair Larry Ellison said in a release. “Customer demand is at record levels.”

In January, President Donald Trump announced plans to invest billions of dollars in AI infrastructure in the U.S. in collaboration with Oracle, OpenAI and SoftBank. The first initiative of the joint venture, called Stargate, will be to construct data centers in Texas, an effort that is already underway, Ellison said during the announcement at the White House.

Oracle said it has more than $130 billion in remaining performance obligations after signing $48 billion in contracts during the period. That excludes contracts related to Stargate, Oracle CEO Safra Catz said on the call with analysts.

Oracle will spend around $16 billion in capital expenditures this year, which is a little more than double the total from last year, Catz added.

“As always, we remain careful to pace and align our CapEx investments appropriately and in line with booking trends,” Catz said.

For the current quarter, Oracle expects revenue to grow of between 8% and 10%. Analysts were expecting growth of about 11% to $15.91 billion, according to LSEG. The company said it expects adjusted earnings of $1.61 to $1.65 per share. Analysts were calling for adjusted earnings per share of $1.79.

Catz said Oracle’s fourth quarter adjusted earnings projections were negatively impacted by losses from an investment in another company.

Oracle’s cloud and on-premises licenses business contributed $1.1 billion in revenue during the quarter, down 10% year over year.

The company also said it is increasing its quarterly dividend to 50 cents a share from 40 cents.

As of Monday’s close, Oracle’s stock is down almost 11% year to date.