To The Moon

$Oracle(ORCL)$ will be reporting its quarterly earnings result for period for fiscal Q3 2025 on 10 March 2025 after market close.

ORCL is expected to post an earnings per share at $1.49 per share, this would represent an increase of 5% compared to same period one year ago.

Revenues is forecast to come in at $14.36 billion, representing an increase of 8.1% year over year.

Oracle (ORCL) Last Positive Earnings Call Saw A Decline Of 20.55%

ORCL had a positive earnings call on 09 Dec 2024 but the share price saw a decline of 20.55% since then.

The earnings call highlighted strong growth in cloud revenue, particularly in AI demand and infrastructure, and a significant increase in remaining performance obligations, indicating robust future revenue. However, challenges such as negative free cash flow, currency impact, and investment losses were noted. Overall, the positive aspects of strong revenue growth and future potential outweighed the financial challenges.

Oracle (ORCL) Guidance On Cloud Offering Momentum For AI

In the Oracle Corporation's Q2 2025 earnings call, Safra Catz provided detailed guidance highlighting the company's strong financial performance and optimistic outlook. Total revenue reached $14.1 billion, marking a 9% increase from the previous year, with cloud services and license support accounting for 77% of total revenue. Specifically, the cloud segment saw a 24% increase, with $5.9 billion in revenue, driven by SaaS and IaaS growth of 10% and 52%, respectively. Oracle's remaining performance obligation (RPO) surged by 50% to $97.3 billion, reflecting robust demand and extended contract durations. The company anticipates full-year cloud revenue to exceed $25 billion, with continued acceleration expected in upcoming quarters. Operating income grew by 10%, achieving a 43% margin, while non-GAAP EPS rose by 10% to $1.47.

Looking ahead, Oracle projects Q3 total revenue growth of 9% to 11% in constant currency and cloud revenue growth of 25% to 27%, underscoring the ongoing momentum in its cloud offerings and strategic partnerships.

Key Factors to Watch For Oracle (ORCL) Upcoming Earnings

Cloud Growth Momentum

Cloud Infrastructure (IaaS): Oracle’s aggressive push into cloud infrastructure (competing with AWS, Azure, and GCP) will be critical. Growth in demand for AI/ML workloads, Oracle Cloud Infrastructure (OCI) partnerships (e.g., with NVIDIA), and enterprise migration to hybrid/multi-cloud setups could drive revenue.

In fiscal Q2 2025, Oracle Cloud Infrastructure revenue increased by 52%, driven by extraordinary growth in AI demand, with GPU consumption up 336%.

SaaS (Applications): Performance of Fusion ERP, NetSuite, and Cerner (healthcare SaaS) will indicate enterprise adoption. Cerner’s integration into Oracle’s health cloud could be a major growth lever.

Cerner Integration

The $28B acquisition of Cerner (closed in 2022) is central to Oracle’s healthcare vertical. By Q3 2025, investors will scrutinize:

Revenue synergies from cross-selling Cerner’s EHR platform with Oracle’s cloud tools.

Progress in modernizing Cerner’s legacy systems and margins.

Margins and Profitability

Cloud gross margins (historically lower than SaaS) and operating margins will be key. Higher cloud capex could pressure short-term profitability, but scale benefits might start materializing by 2025.

Oracle expects total cloud revenue to surpass $25 billion this fiscal year. Guidance for Q3 includes a total revenue growth of 9% to 11% in constant currency.

AI and Partnerships

Oracle’s AI-driven cloud services (e.g., generative AI tools, database automation) and partnerships (e.g., NVIDIA, Cohere) could attract enterprise clients. Revenue from AI-related workloads may accelerate.

Oracle delivered the world's largest and fastest AI supercomputer, scaling up to 65,000 NVIDIA H200 GPUs, enhancing its AI infrastructure capabilities.

Legacy Business Drag

License updates and on-premise software (still ~20% of revenue) may decline as clients shift to cloud. Pace of this transition will impact total revenue growth.

Macro Environment

Enterprise IT spending trends: A recessionary environment could delay cloud migrations, while strong corporate budgets would favor Oracle’s SaaS/IaaS offerings.

Currency headwinds: A strong USD could hurt international revenue (44% of sales). Significant strengthening of the U.S. dollar led to a negative impact on revenue and EPS in USD terms for the upcoming quarter.

Financial Metrics to Track

Revenue Growth: Consensus will focus on: Cloud revenue (IaaS + SaaS) growth (likely >20% YoY if execution holds).

Total cloud revenue reached $5.9 billion, with a 24% increase. IaaS revenue surged by 52%, while SaaS revenue grew by 10%. Cloud services and license support represented 77% of total revenue.

License support revenue (legacy segment) trends.

Operating Margin: Target is ~45% long-term; progress toward this will signal cost discipline.

Remaining performance obligation (RPO) grew by 50% to $97.3 billion. Cloud RPO grew nearly 80%, indicating strong future revenue potential. Operating income grew by 10%, with an operating margin of 43%, up 60 basis points from the previous year.

Free Cash Flow: Oracle’s ability to sustain buybacks/dividends hinges on FCF (historically strong but pressured by Cerner capex). In fiscal Q2 2025, The free cash flow was negative $2.7 billion, despite a positive operating cash flow of $1.3 billion.

EPS guidance for Q3 is negatively impacted by $0.05 due to an investment loss in another company.

Oracle (ORCL) Price Target

Based on 26 Wall Street analysts offering 12 month price targets for Oracle in the last 3 months. The average price target is $194.38 with a high forecast of $220.00 and a low forecast of $140.00. The average price target represents a 28.78% change from the last price of $150.94.

If we looked at how ORCL share price have moved, the guidance for Q3 looks to be impacted by investment loss in another company, so will this also change the guidance for the rest of 2025?

If that happen, we could see a volatility in the share price trading post earnings on next Monday (10 Mar).

We might want to consider the factor that could make a bull case or bear case.

Bull Case:

1. Accelerating Cloud Growth: OCI gains market share in AI/ML workloads, and Cerner integration drives healthcare SaaS adoption.

2. Margin Expansion: Cloud scale offsets legacy declines, and operating margins improve toward 44-45%.

3. AI Monetization: Strong uptake of AI-driven database and analytics tools.

4. Stock Reaction: Positive earnings surprise could drive multiple expansion.

Bear Case:

1. Cloud Slowdown: Competition from hyperscalers limits OCI growth; Cerner integration struggles to boost SaaS revenue.

2. Margin Pressure: High cloud capex and slower SaaS adoption keep margins below 40%.

3. Legacy Drag: Faster-than-expected decline in license revenue.

4. Stock Reaction: Weak guidance or margin misses could trigger sell-offs.

Technical Analysis - Exponential Moving Average (EMA)

ORCL looks to have lost the investors interest as RSI is trending very close to oversold region, this could be seen from the bearish downside in its share price since 21 Feb.

There have been attempt to reclaim the 200-day period, but it did not work out this week, so we could expect some more downside movement in its share price.

But this could provide a good opportunities for investors to buy ORCL at a low price, but a negative guidance could move ORCL share price down further.

Summary

Oracle’s fiscal Q3 2025 earnings will hinge on:

1. Cloud Acceleration: Sustained double-digit growth in IaaS/SaaS.

2. Cerner Synergies: Healthcare vertical becoming a revenue pillar.

3. Margin Discipline: Balancing cloud investments with profitability.

If Oracle executes well on AI/cloud demand and integrates Cerner smoothly, it could exceed expectations. However, any missteps in transitioning from legacy licenses or macroeconomic weakness would pose downside risks.

I think it is important for us as Investors to watch for management’s commentary on:

• AI-driven cloud bookings,

• Cerner’s margin trajectory,

• Capital allocation (buybacks vs. debt reduction).

Long-term, Oracle’s bet on verticalized SaaS (e.g., healthcare) and OCI’s niche in high-performance workloads (AI, databases) could position it well, but fiscal 2025 will be a critical test of its cloud pivot.

Appreciate if you could share your thoughts in the comment section whether you think Oracle would be able to provide a better guidance for fiscal 2025.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.