Oracle Corp. (ORCL) reported fourth-quarter revenues increased 3% to $14.3 billion, with net income down 5% to $3.1 billion and EPS down 7% to $1.11. Revenue growth during the quarter was driven by 20% growth in cloud revenue to $5.3 billion, writes Ingrid Hendershot, editor of Hendershot Investments.

The company’s total remaining performance obligations (RPO) jumped 44% to $98 billion, with 39% of the RPO expected to be recognized as revenue in fiscal 2025. Oracle signed the largest sales contracts in its history due to enormous demand for Artificial Intelligence (AI) training of large language models and neural networks in the Oracle cloud.

Oracle Corp. (ORCL)
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Massive contracts were signed by more than 30 customers, including contracts from Nvidia Corp. (NVDA), Microsoft Corp. (MSFT), Alphabet Inc. (GOOGL), XAI, and OpenAI. The world’s largest and most successful AI companies are using Oracle’s datacenters because they are faster, less expensive, and more secure than others.

During the year, Oracle’s free cash flow increased 39% to $11.8 billion, with the company paying $4.4 billion in dividends and repurchasing $1.2 billion of its common stock. Oracle spent $6.9 billion on capital expenditures in fiscal 2024, with that amount expected to double in fiscal 2025. The company is expanding its capacity to meet an enormous backlog and pipeline given strong Cloud demand, with Cloud Infrastructure services expected to grow faster than 50%.

For the first fiscal quarter of 2025, Oracle expects revenues to grow 5% to 7%, with non-GAAP EPS expected in the range of $1.31-$1.35. Revenue, earnings, and cash flow growth is expected to get stronger and accelerate each quarter during fiscal 2025, with double-digit revenue growth expected for the full year.

Recommended Action: Buy ORCL.

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