Strong growth in cloud and GenAI infrastructure sales delivered Oracle a slightly higher revenue in the third quarter of fiscal 2024. Overall, quarterly revenue rose 7 percent to 12.17 billion euros ($13.3 billion). Net sales rose 18 percent to a total of about 2.2 billion euros ($2.4 billion).
According to Oracle, the positive quarterly figures were mainly due to more contracts for the cloud infrastructure segment or Oracle OCI. In particular, a good number of larger new cloud deals were signed during the quarter.
Experts point out that the growth in Oracle OCI revenue mainly builds on existing database infrastructure. This helps existing and new customers scale more easily to a complete cloud-based infrastructure.
Overall, Oracle’s OCI business saw a 49 percent increase in revenue to $1.8 billion in Q3 FY2024. According to the cloud player, revenue growth in this segment can even be estimated at 52 percent when certain legacy hosting operations are scrapped. Then total revenue for the past quarter would even reach $6.7 billion.
GenAI very important
Another key component that contributed significantly to Oracle’s revenue growth last quarter is its own GenAI infrastructure. The cloud giant has invested heavily, including with a deal with Nvidia, for the necessary GPU infrastructure and this is now delivering the needed results.
Although no exact figures are given for this, Oracle reports that the demand for GenAI infrastructure exceeds the current supply. Oracle is therefore investing heavily in new data centers to meet customer demand. This is because the company assumes that GenAI will continue to grow significantly for the foreseeable future.
At the same time, Oracle is also developing new GenAI applications to help customers get the most out of this technology, Oracle CEO Larry Ellison indicated in a comment .
Rumors also suggest that Oracle is likely to announce a new deal with Nvidia for its own GenAI infrastructure and solutions as early as this week.
Sunny outlook, but also risks
Oracle further sees the future looking bright. In any case, it already expects total revenue for fiscal 2025 to be considerably higher than what the current fiscal year will bring in for 2024. Ellison indicates that that there are currently about 40 OCI deals worth $1 billion each that have yet to go online.
Analysts are also very positive about developments at Oracle, but do warn of potential risks. Among other things, the company should bet even more on GenAI applications, something companies like ServiceNow and Salesforce are doing much better now. Also, Oracle should assume less that customers want to house all their applications in a single cloud environment.
In addition, the company is generating less revenue in the Americas, EMEA and Asia Pacific regions. Therefore, the fourth quarter will be very important and exciting for Oracle, according to analysts.
Finally, there is concern about whether Oracle can arrange for itself enough GPU capacity to implement the aforementioned GenAI plans. One reassures analysts for this by stating that it can certainly arrange for sufficient GPU access and capacity.
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