ORCL: Oracle Stock Jumps 7% on AI Cloud Boom and Smaller Cash Burn

Cloud infrastructure revenue more than doubled and Oracle’s backlog reached $664 billion.

☁️ AI cloud shifts into high gear

• Oracle shares ORCL gained about 7% in extended trading after the software company reported quarterly revenue and earnings above Wall Street forecasts. The rebound offered welcome relief after the stock entered the results down more than 20% this year.
• Fiscal first-quarter revenue rose 30% from a year earlier to $19.3 billion, beating the $19.14 billion expected by analysts. Adjusted earnings reached $1.92 a share, comfortably ahead of the $1.74 consensus estimate.
• Cloud infrastructure revenue surged 121% to $7.4 billion. That division rents computing power to companies training and operating AI models, placing Oracle in more direct competition with Amazon Web Services, Microsoft Azure and Google Cloud.

📚 Backlog reaches $664 billion

• Oracle signed more than $30 billion of additional AI cloud contracts during the quarter. That lifted its remaining performance obligations — signed business that has not yet been recognized as revenue — to $664 billion, above Wall Street’s expectations.
• Around half of that backlog is expected to become revenue within the next 36 months. The number gives Oracle unusually strong visibility into future sales, although investors must still watch how quickly contracts convert and whether data-center capacity arrives on schedule.
• Oracle expects total revenue to grow between 30% and 34% in the current quarter, while cloud sales are forecast to rise between 64% and 70%. Full-year revenue should reach at least $90 billion, with adjusted earnings of $8.10 a share.

💸 Customers help carry the bill

• The growth remains expensive. Oracle spent $28.5 billion on capital expenditure during the quarter — considerably more than its total revenue — and continues to expect annual spending of $90 billion to $95 billion. Data centers, chips and electricity rarely accept payment in future backlog.
• Free cash flow was negative $5.4 billion, meaning Oracle spent more cash than its operations generated. That was still much better than the negative $9.6 billion expected by analysts and below the $11.5 billion burn reported two quarters earlier.
• About $11.4 billion of quarterly capital spending was covered by customer prepayments. Many new contracts also use arrangements in which clients provide their own hardware, limiting Oracle’s upfront cost.