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Oracle shares soar 13% on better-than-expected quarterly earnings

Oracle’s quarterly earnings beat Wall Street projections. Shares gained 13% in extended trading.  

Here’s how the company performed in the fiscal third quarter ending February 29, compared to estimates by LSEG, formerly known as Refinitiv

Earnings per share: $1.41 adjusted, against $1.38 projected.  

Revenue: $13.28 billion, compared to $13.3 billion predicted 

Oracle predicts fourth-quarter earnings of $1.62 to $1.66 per share. LSEG reported that analysts expected adjusted earnings per share of $1.64. Revenue will increase by 4% to 6% over last year’s sales of $13.8 billion. The midpoint of the range corresponds to revenue of approximately $14.5 billion, when analysts expected little more than $14.7 billion.  

Oracle CEO Safra Catz said the company was dedicated to meeting previously stated revenue targets of $65 billion by fiscal 2026. “Some of these goals might prove to be too conservative given our momentum,” Catz told the crowd.  

Revenue increased by 7% in the quarter from $12.4 billion a year ago. Net income increased 27% to $2.4 billion, or 85 cents per share, from $1.9 billion, or 68 cents per share, the year before. 

Oracle’s largest division, cloud services and license support, increased sales by 12% to $9.96 billion, slightly exceeding StreetAccount average projections of $9.94 billion. The company attributed the increase to high demand for its AI servers.  

Catz stated that the company signed numerous “large new cloud infrastructure” contracts during the quarter. Oracle claimed that its cloud revenue, which is reported as part of the cloud services sector, increased by 25% year on year to $5.1 billion

“We signed several large deals this quarter and have many more in the pipeline,” Catz told investors during the conference call.  

Oracle Chairman Larry Ellison mentioned growing business from Microsoft on the results call.  

“We’re developing 20 data centers using Microsoft and Azure. “They just ordered three more data centers this week,” Ellison explained. 

The company’s other divisions did not perform as well.  

Cloud licensing and on-premise sales fell 3% to $1.26 billion, just above StreetAccount’s expectations. Hardware revenue declined 7% to $754 million, while sales in the company’s services sector fell 5% to $1.31 billion, both below StreetAccount forecasts. 

Prior to Monday’s news, Oracle shares were up 8.7% year to date, slightly outpacing the S&P 500.  

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