Oracle's Fiscal Q2 2025 Performance - Oracle's revenue increased by 9% YoY to $14.06 billion, slightly below the $14.1 billion analyst consensus [2] - Cloud revenue grew by 24% YoY to $5.9 billion, with cloud infrastructure revenue surging 52% to $2.4 billion and cloud application revenue rising 10% to $3.5 billion [3] - Adjusted EPS increased by 10% to $1.47, just below the $1.48 analyst consensus [6] Cloud Infrastructure and AI Demand - Oracle Cloud Infrastructure (OCI) consumption revenue soared by 52%, driven by record AI demand, with GPU consumption skyrocketing by 336% [4] - OCI is training some of the world's most important generative AI models and is claimed to be faster and less expensive than competitors [5] - Oracle signed a deal with Meta Platforms to use Oracle's AI Cloud Infrastructure and collaborate on AI agents based on Meta's Llama models [5] - Oracle now has 98 live cloud regions, more than any other competitor [5] Remaining Performance Obligations (RPO) and Future Outlook - RPO surged 49% to $97 billion, with cloud RPO jumping nearly 80% and representing nearly three-fourths of total RPO [6] - Oracle expects to recognize about 39% of its RPO as revenue in the next 12 months [6] - The company forecasts fiscal Q3 revenue growth of 7% to 9%, with cloud revenue growing by 23% to 25% and adjusted EPS rising by 4% to 6% [7] - Full-year cloud infrastructure revenue is expected to grow by more than 50% [7] Capital Expenditures and Financial Position - Oracle ramped up its capex to $4 billion from $2.3 billion in fiscal Q1, leading to negative free cash flow of $2.7 billion in the quarter [8] - The company has net debt of $77.4 billion at the end of fiscal Q2 [13] Market Valuation and Competitive Position - Oracle trades at a forward P/E of just under 28 based on current fiscal-year analyst estimates [11] - The company's high-single-digit revenue growth and 10% earnings growth are notable, but its significant debt and negative free cash flow raise concerns [13]

Company Performance - Oracle's stock has gained 80% year-to-date but dropped over 8% in pre-market trading after Q2 FY2025 earnings missed Wall Street expectations [1][2] - Q2 FY2025 revenue increased 9% YoY to $14.1 billion, with non-GAAP earnings up 10% to $1.47 per share, slightly below analyst estimates of $14.11 billion and $1.48 per share [4] - Cloud infrastructure revenue surged 52% YoY to $2.4 billion, driven by record AI demand [7] - Remaining performance obligations (RPO) grew 50% YoY to $97 billion, indicating strong future revenue potential [6] Cloud Infrastructure Growth - Oracle's cloud infrastructure consumption powered by Nvidia GPUs increased 336% last quarter [8] - The company is expanding its cloud infrastructure with 35 planned cloud regions for major providers like Microsoft Azure, Google Cloud, and Amazon Web Services [8] - Oracle is growing faster than the overall cloud IaaS market, gaining market share [10] Industry Outlook - Gartner forecasts cloud infrastructure spending to grow 25% in 2025 to $212 billion, up from 21% growth this year [9] - Goldman Sachs predicts the cloud IaaS market will generate $580 billion in revenue by 2030, more than double next year's expected revenue [13] Investment Opportunity - Oracle's stock is trading at 30 times forward earnings, a discount to the Nasdaq-100's multiple of 34 [14] - Analysts expect Oracle's earnings to grow 13% in FY2025 to $6.28 per share and another 13% in FY2026 to $7.12 per share [11] - The company's strong RPO growth and cloud infrastructure expansion position it well for future growth [12]

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Parkev Tatevosian, CFA has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet, Amazon, Microsoft, Nvidia, and Oracle. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley ...

Oracle's (ORCL) second-quarter fiscal 2025 results paint a concerning picture for investors, with several key metrics falling short of market expectations. Revenues rose 9% (in USD and cc) year over year to $14.1 billion. The figure missed the Zacks Consensus Estimate by 0.46%, disappointing investors who have boosted the stock to a record high in recent weeks on enthusiasm for the company’s ascendant cloud business.  Shares of the company lost about 7% in extended trading after closing at $190.45. Non-GAAP ...

"With Siemens, we've got the digital backbone that lets us turn ideas into reality faster than ever. Their tools give our engineers the freedom to innovate, adapt and stay agile, which in Formula 1 can be the difference between winning and losing. It's a partnership that continues to push us to new heights every season," said Christian Horner, CEO and team principal, Oracle Red Bull Racing. Since 2004, Oracle Red Bull Racing has built its engineering infrastructure on the Siemens Xcelerator portfolio of ind ...

This account is managed by Noah's Arc Capital Management. Our goal is provide Wall Street level insights to main street investors. Our research focus is mainly on 20th century stocks (old economy) undergoing a 21st century transformation, but occasionally we'll write on companies that help transform 20th century firms as well. We look for innovations in a business model that will cause a stock to change dramatically. Associated with SA contributors Thomas Potter and Elijah Buell.Analyst’s Disclosure: I/we h ...

JR Research is an opportunistic investor. He was recognized by TipRanks as a Top Analyst. He was also recognized by Seeking Alpha as a "Top Analyst To Follow" for Technology, Software, and Internet, as well as for Growth and GARP. He identifies attractive risk/reward opportunities supported by robust price action to potentially generate alpha well above the S&P 500. He has also demonstrated outperformance with his picks. He focuses on identifying growth investing opportunities that present the most attracti ...

Revenue Performance - The cloud and license business accounted for 85% of total revenues on a trailing 4-quarter basis, with cloud services revenues representing 42% of total revenues for the three- and six-month periods ended November 30, 2024 [80]. - Cloud services revenues increased from 37% of total revenues for the three- and six-month periods ended November 30, 2023, indicating a growing trend in cloud adoption [80]. - Total revenues for the three months ended November 30, 2024, were $14,059 million, representing a 9% increase compared to $12,941 million for the same period in 2023 [96]. - Cloud and license revenues reached $12,001 million for the three months ended November 30, 2024, reflecting an 11% increase from $10,817 million in the prior year [96]. - Cloud and license business total revenues increased by $1.2 billion (14%) in Q2 2025 and $2.2 billion (11%) in the first half of fiscal 2025 compared to the prior year periods [104]. Expense and Margin Analysis - Total operating expenses increased by $520 million in the second quarter of fiscal 2025 compared to the same period in the previous year, primarily due to higher cloud services and license support expenses [98]. - Total operating margin for the three months ended November 30, 2024, was $4,220 million, with an operating margin percentage of 30% [96]. - Total margin for the cloud and license business was $7.558 billion (63% margin) in Q2 2025, compared to $6.915 billion (64% margin) in the prior year [104]. - Total margin for the hardware business increased to $498 million (68% margin) in Q2 2025, compared to $474 million (63% margin) in the prior year [107]. - Total expenses decreased by $86 million (7%) in Q2 2025 and $166 million (7%) in the first half of fiscal 2025 compared to the prior year periods [115]. Investment and Development - The company has invested $1.5 billion in Ampere Computing Holdings LLC, holding approximately 29% ownership as of November 30, 2024 [89]. - The company anticipates continued investments in research and development to enhance cloud operations and expand product offerings [80]. - The company plans to continue significant investments in research and development to maintain its competitive position [115]. - The company plans to continue investing in the development and delivery of its second-generation cloud infrastructure as part of its restructuring initiatives [122]. - The company has a selective acquisition strategy, historically investing billions in complementary companies and technologies [87]. Regional Performance - The Americas region contributed 82% to total revenue growth in constant currency during the second quarter of fiscal 2025 [98]. - The Americas region contributed 83% of the constant currency revenue growth for the cloud and license business in Q2 2025 [104]. - Services revenues in the Americas decreased by 10% to $1,577 million, while Asia Pacific saw an 8% increase to $176 million in Q2 2025 [111]. Cash Flow and Capital Expenditures - Cash, cash equivalents, and marketable securities increased to $11.311 billion as of November 30, 2024, a 6% increase from $10.661 billion on May 31, 2024 [129]. - The company incurred $6.3 billion in cash for capital expenditures during the first half of fiscal 2025 [128]. - Net cash provided by operating activities increased by $1.6 billion, reaching $8.731 billion for the first half of fiscal 2025, a 23% increase compared to $7.117 billion in the same period of fiscal 2024 [131]. - Net cash used for investing activities rose by $3.7 billion to $6.553 billion in the first half of fiscal 2025, primarily due to increased capital expenditures [131]. - Free cash flow for the trailing four quarters ended November 30, 2024, was $9.542 billion, a 6% decrease from $10.104 billion in the previous year [131]. Tax and Interest Expenses - Effective tax rates for the second quarter of fiscal 2025 were reported at 20.1%, compared to 18.8% for the same period in fiscal 2024 [101]. - The provision for income taxes increased by 11% to $239 million in the second quarter of fiscal 2025 compared to $217 million in the same quarter of fiscal 2024 [127]. - Interest expense decreased to $1.708 billion in the first half of fiscal 2025, down from $1.760 billion in the same period of fiscal 2024, primarily due to $4.0 billion in scheduled repayments of senior notes [123]. Restructuring and Operational Efficiency - The company initiated the 2024 Restructuring Plan to improve operational efficiencies, focusing on cloud-based offerings [122]. - The company completed an assessment increasing the estimated useful lives of servers from five years to six years, effective at the beginning of fiscal 2025 [90]. - Research and development expenses increased by $245 million in the second quarter of fiscal 2025 compared to the prior year, driven by higher employee-related costs [98]. Hardware Business Performance - The hardware business represented 5% of total revenues on a trailing 4-quarter basis, with revenues recognized at the point of delivery [83]. - The company reported a decrease in hardware revenues of 4% in the second quarter of fiscal 2025, attributed to a focus on cloud-based infrastructure technologies [98]. - Hardware business total revenues decreased by $28 million (-4%) in Q2 2025 and $87 million (-6%) in the first half of fiscal 2025 compared to the prior year periods [107]. - Total hardware expenses decreased by $52 million (-18%) in Q2 2025 and $115 million (-20%) in the first half of fiscal 2025 compared to the prior year periods [109].

Earnings and Profitability - Q2 GAAP Earnings per Share increased 24% to $1.10, Non-GAAP Earnings per Share increased 10% to $1.47[2] - Q2 GAAP operating income was $4.2 billion, with a GAAP operating margin of 30%[3] - Q2 Non-GAAP operating income was $6.1 billion, up 10% in both USD and constant currency[3] - Operating income for Q2 fiscal 2025 rose to $4,220 million, up from $3,620 million in Q2 fiscal 2024, a 17% increase[14] - Net income for Q2 fiscal 2025 grew by 26% to $3,151 million from $2,503 million in Q2 fiscal 2024[14] - Operating income for the six months ended November 30, 2024 rose by 19% to $8,211 million[17] - Net income for the six months ended November 30, 2024 increased by 24% to $6,080 million[17] - Diluted earnings per share for Q2 fiscal 2025 increased by 24% to $1.10 from $0.89 in Q2 fiscal 2024[14] - Operating income rose by 19% to $8.211 billion in 2024 from $6.918 billion in 2023[20] - Net income increased to $6.08 billion in 2024 from $4.92 billion in 2023[20] - Diluted earnings per share grew by 24% to $2.13 in 2024 from $1.75 in 2023[20] - Net income for the six months ended November 30, 2024, was $6,080 million, compared to $4,923 million in the same period in 2023[26] Revenue Growth - Q2 Total Revenue reached $14.1 billion, up 9% in both USD and constant currency[2] - Q2 Cloud Revenue (IaaS plus SaaS) grew 24% to $5.9 billion[2] - Q2 Cloud Infrastructure (IaaS) Revenue surged 52% to $2.4 billion[2] - Q2 Cloud Application (SaaS) Revenue increased 10% to $3.5 billion[2] - Total revenues for Q2 fiscal 2025 increased by 9% to $14,059 million compared to $12,941 million in Q2 fiscal 2024[14] - Cloud services and license support revenues increased by 11% to $21,324 million for the six months ended November 30, 2024[17] - Total revenues increased by 8% to $27.366 billion in 2024 compared to $25.394 billion in 2023[20] - Cloud services revenue for Q2 Fiscal 2025 reached $5.93 billion, showing a 25% year-over-year growth[32] - Total revenues for Q2 Fiscal 2025 were $14.059 billion, an 8% increase compared to the previous year[32] - Cloud services and license support revenues grew by 12% in Q2 Fiscal 2025, reaching $10.806 billion[32] - Constant currency revenue growth for cloud services was 24% in Q2 Fiscal 2025[32] - Applications cloud services and license support revenues grew by 7% in Q2 Fiscal 2025, reaching $4.784 billion[32] - Infrastructure cloud services and license support revenues increased by 12% in Q2 Fiscal 2025, totaling $6.022 billion[32] Cloud Services - Q2 Cloud Revenue (IaaS plus SaaS) grew 24% to $5.9 billion[2] - Q2 Cloud Infrastructure (IaaS) Revenue surged 52% to $2.4 billion[2] - Q2 Cloud Application (SaaS) Revenue increased 10% to $3.5 billion[2] - Oracle Cloud Infrastructure signed an agreement with Meta for AI Cloud Infrastructure collaboration[5] - Cloud services revenue for Q2 Fiscal 2025 reached $5.93 billion, showing a 25% year-over-year growth[32] - Cloud services and license support revenues grew by 12% in Q2 Fiscal 2025, reaching $10.806 billion[32] - Applications cloud services and license support revenues grew by 7% in Q2 Fiscal 2025, reaching $4.784 billion[32] - Infrastructure cloud services and license support revenues increased by 12% in Q2 Fiscal 2025, totaling $6.022 billion[32] Operating Expenses and Margins - Q2 GAAP operating income was $4.2 billion, with a GAAP operating margin of 30%[3] - Q2 Non-GAAP operating income was $6.1 billion, up 10% in both USD and constant currency[3] - Total operating expenses for the six months ended November 30, 2024 increased by 4% to $19,155 million[17] - Operating margin improved to 30% in 2024, up from 27% in 2023[20] - Stock-based compensation for Q2 fiscal 2025 was $1,170 million, a 14% increase from $1,029 million in Q2 fiscal 2024[14] - Amortization of intangible assets for Q2 fiscal 2025 decreased by 22% to $591 million from $755 million in Q2 fiscal 2024[14] Cash Flow and Capital Expenditures - Free cash flow for Q2 fiscal 2025 was $9,542 million, a decrease of 6% compared to the prior year[29] - GAAP operating cash flow for Q2 fiscal 2025 was $20,287 million, representing a 19% growth over the prior year[29] - Operating cash flow as a percentage of net income for Q2 fiscal 2025 was 175%[29] - Free cash flow as a percentage of net income for Q2 fiscal 2025 was 82%[29] - Net cash provided by operating activities increased to $8,731 million in the six months ended November 30, 2024, from $7,117 million in the same period in 2023[26] - Capital expenditures for the six months ended November 30, 2024, were $6,273 million, up from $2,394 million in the same period in 2023[26] - Proceeds from issuances of senior notes and term loan credit agreements, net of issuance costs, were $11,837 million in the six months ended November 30, 2024[26] - Repayments of senior notes and term loan credit agreements were $9,700 million in the six months ended November 30, 2024[26] - Cash and cash equivalents at the end of the period were $10,941 million, up from $8,244 million in the same period in 2023[26] Regional Performance - Americas region contributed $8.933 billion to total revenues in Q2 Fiscal 2025, a 7% increase[33] - Europe/Middle East/Africa region revenues grew by 6% in Q2 Fiscal 2025, reaching $3.381 billion[33] - Asia Pacific region revenues increased by 3% in Q2 Fiscal 2025, totaling $1.745 billion[33] Assets and Liabilities - Total current assets increased to $23.503 billion in 2024 from $22.554 billion in 2023[23] - Property, plant, and equipment, net rose to $26.432 billion in 2024 from $21.536 billion in 2023[23] - Total liabilities decreased to $134.247 billion in 2024 from $131.737 billion in 2023[23] - Stockholders' equity increased to $14.236 billion in 2024 from $9.239 billion in 2023[23] Remaining Performance Obligations - Q2 Total Remaining Performance Obligations rose 49% to $97 billion[2] AI and GPU Consumption - Q2 GPU consumption increased 336%, driven by record AI demand[5] - Oracle Cloud Infrastructure signed an agreement with Meta for AI Cloud Infrastructure collaboration[5] Hardware Revenues - Hardware revenues declined by 6% in Q2 Fiscal 2025, totaling $728 million[32]

The last decade was definitely the decade of cloud software or SaaS (Software As A Service). It seems the current decade is already one of AI, but that does not imply that cloud computing growth is dead. According to "Fundamental Options" would be the title of my investing style, because I combine fundamental analysis with the power of options. I use Fundamental Analysis to quantitatively and qualitatively assess individual stocks and ETFs, and I pursue various strategies: Income oriented, especially BDCs, ...