Oracle(US:ORCL) ZACKS·2025-12-11 16:41Core Insights - Oracle's second-quarter fiscal 2026 results showed mixed performance, with shares dropping 11% pre-market despite strong cloud growth and a record backlog [1] - Total revenues reached $16.1 billion, a 14% increase in U.S. dollars, but fell short of estimates by 0.55% [1][5] Financial Performance - Cloud revenues surged to $8 billion, up 34% in U.S. dollars, with cloud infrastructure revenues increasing 66% to $4.1 billion [2] - Software revenues declined by 3% to $5.9 billion, indicating challenges in legacy products [2] - Free cash flow was negative $10 billion due to capital expenditures of $12 billion, with operating cash flow at $2.1 billion [4] - Non-GAAP earnings per share were $2.26, a 54% increase, while GAAP earnings per share reached $2.10, up 91% [5] Backlog and Future Guidance - Remaining performance obligations (RPO) rose to $523 billion, a 438% year-over-year increase, with a 40% growth expected to be recognized within 12 months [3] - Oracle anticipates $4 billion in additional revenues for fiscal 2027 from the backlog [3] - For the fiscal third quarter, Oracle projects cloud revenue growth of 37% to 41% and total revenue growth of 16% to 18% [6] Strategic Initiatives - The company is focusing on its AI data platform and multicloud database partnerships, with multicloud database business growing 817% [7] - Oracle's databases are positioned for AI applications, leveraging high-value private data [7] Competitive Landscape - The cloud infrastructure market is highly competitive, with Amazon Web Services holding approximately 30% market share, followed by Microsoft Azure and Google Cloud [12] - Oracle competes through its multicloud database offerings embedded in major cloud platforms [12] Valuation Metrics - Oracle's stock is trading at a forward Price/Sales ratio of 8.42x, above the industry average of 7.61x, indicating a premium valuation [13] - The company carries a Value Score of D, reflecting stretched valuation metrics [13]