After posting Q1 results this afternoon, Oracle will almost certainly remain the world’s hottest major cloud vendor with cloud revenue expected to grow at least 29% and possibly higher.
This will be the first quarter that Oracle’s growth rates do not include a big boost from its acquisition of Cerner, which was completed in June of 2022, so it’s certainly true that the anticipated Q1 growth range of 29% to 31% will pale in comparison to the 54% cloud growth Oracle posted for its Q4 ended May 31.
Nevertheless, a 30% cloud growth rate would still be higher than any other Cloud Wars Top 10 company.
On top of that, the Q1 guidance offered three months ago by Oracle CEO Safra Catz was unlike anything offered by any other Cloud Wars Top 10 company in its unconditional bullishness. In sharing that Q1 guidance three months ago, Catz made no mention of customers delaying cloud purchases, or concerns of economic uncertainty, or growth challenges posed by the “macro.”
Rather, here’s how Catz laid out her expectations for Q1 during Oracle’s June 12 Q4 earnings call (emphasis mine):
“Now, before I finish, let me also give you some initial thoughts on fiscal year 2024. As I described and Larry will elaborate in-depth, 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 at least similar rates to what we experienced in fiscal 2023, even though our base is much bigger, and may be higher. As our high-growth cloud revenues are becoming a larger portion of total revenue, we are seeing an acceleration of our total revenue growth. I expect this trend will continue in fiscal 2024, and of course, we also expect to deliver a higher non-GAAP operating margin percentage this coming year as well.” (For the full story on that, please see “The Larry Ellison Effect: 5 Reasons for Oracle’s Extraordinary Growth Surge.”)
And to get a sense of how Oracle’s cloud business performed in Q4 — a performance Catz says the company expects to match or exceed in Q1 — here are the key numbers:
Oracle’s Q4 Cloud Revenue Results
- Q4 total cloud (IaaS plus SaaS) $4.4 billion, up 54% in USD, up 55% in constant currency
- Q4 cloud infrastructure $1.4 billion, up 76% in USD, up 77% in constant currency
- Q4 cloud application revenue $3.0 billion, up 45% in USD, up 47% in constant currency
- Q4 Fusion Cloud ERP revenue $0.7 billion, up 26% in USD, up 28% in constant currency
- Q4 NetSuite Cloud ERP revenue $0.7 billion, up 22% in USD, up 24% in constant currency
On top of those stellar numbers, three separate but related comments from Catz in the Q4 earnings call lead me to believe that Oracle will deliver very strong results today:
- As I mentioned above, Oracle has the only Cloud Wars Top 10 executives who, on earnings calls over the past year, have not talked about customers cutting back on cloud spending or the hazy economy. While some companies have gone into great detail about how those factors have led to moderated growth rates, neither Catz nor Oracle chairman Larry Ellison has even mentioned those external issues.
- In giving guidance three months ago for Q1, Catz said she expects Q1 cloud revenue —excluding Cerner — “to continue growing at at least similar rates” as Oracle achieved in Q4, and added that Q1 growth “may be higher.”
- Citing “unprecedented demand for our cloud services and especially our AI services,” Catz noted that “additional upside depends on how fast we can put out even more capacity for our customers.” My guess is that Oracle’s been moving heaven and Earth and everything in between to create that additional capacity.
On Wednesday of this week, I’ll be offering extensive analysis of the results and commentary Catz and Ellison will be sharing later today.
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