To The Moon

$Oracle(ORCL)$ is scheduled to report its fiscal Q4 2025 earnings after the market closes on Wednesday, 11 June 2025.

Investors would be watching keenly for insights into its cloud growth, especially Oracle Cloud Infrastructure (OCI), and how its significant Remaining Performance Obligations (RPO) are translating into revenue.

Revenue: Analysts generally expect total revenue to be around $15.54 billion to $15.6 billion, representing an increase of approximately 8.8% to 9% year-over-year.

Earnings Per Share (EPS): The consensus for adjusted EPS is approximately $1.64 per share, indicating a modest 0.6% to 1% year-over-year growth.

OCI Revenue: A critical metric. OCI revenue is projected to surge around 54% year-over-year to $3.11 billion. This will be a major focus, as it reflects Oracle's ability to capitalize on AI demand.

Cloud Services and License Support Revenue: This broader category is expected to reach around $11.60 billion, showing a growth of approximately 13.4% year-over-year. Within this, Infrastructure cloud services and license support are expected to be up nearly 20%.

Oracle (ORCL) Last Positive Earnings Call Saw Share Price Rose By 19.49%

Oracle (ORCL) had a positive earnings call on 10 March 2025 which saw its share price rose by 19.49% since.

The earnings call reflected Oracle's strong performance with record-breaking bookings, robust cloud revenue growth, and significant advancements in AI and cloud infrastructure. However, the exit from the advertising business, component delays, and currency impacts posed challenges. Overall, the highlights significantly outweigh the lowlights.

Oracle (ORCL) Guidance

During the Oracle Corporation Third Quarter Fiscal Year 2025 Earnings Conference Call, the company provided detailed guidance and metrics reflecting their strong performance and future outlook. Oracle reported a record $48 billion addition to their backlog, with a Remaining Performance Obligation (RPO) balance now at $130 billion, up 63% year-over-year. Oracle's cloud revenue, comprising SaaS and IaaS, was up 25% to $6.2 billion, with SaaS revenue increasing by 10% and IaaS revenue surging by 51%. The total cloud services and license support revenue reached $11 billion, up 12%, driven by Oracle Cloud Infrastructure (OCI) and strategic cloud applications.

Oracle's infrastructure subscription revenues were $6.2 billion, up 18%, with OCI consumption revenue up 57%, and GPU consumption revenue nearly 3.5 times the size of last year’s. They forecast a fiscal year 2025 CapEx of approximately $16 billion and projected total cloud revenue to grow by 24% to 28% in constant currency for Q4. Additionally, Oracle expects a 15% revenue growth rate for FY '26 and a 20% growth rate for FY '27, highlighting confidence in their $66 billion revenue target for FY '26.

Key Areas of Focus and What to Watch For

Oracle Cloud Infrastructure (OCI) Growth and AI Momentum:

Performance: The pace of OCI revenue growth will be the most scrutinized aspect. Oracle has been aggressively investing in OCI, positioning it as a key player in the AI infrastructure space. Strong growth here will validate its strategy and AI narrative.

Oracle's backlog increased by $48 billion, and their RPO balance reached $130 billion, up 63% year-over-year. This excludes contracts with project Stargate.

Capacity Constraints: In previous quarters, Oracle faced capacity constraints that hindered revenue conversion despite strong bookings. Investors will be looking for updates on whether these constraints are easing and if the company can accelerate its AI infrastructure buildout (e.g., the "Stargate" project).

AI Bookings & Pipeline: Beyond current revenue, the market will be looking for continued strong bookings and a robust pipeline related to AI workloads and major AI deals. Oracle recently secured a multi-billion-dollar contract with AMD for GPUs, underscoring its efforts in this area.

Oracle's 101st cloud region came online, marking a milestone. The company aims to have more cloud regions than competitors combined, leveraging their Gen 2 architecture.

Remaining Performance Obligations (RPO) Conversion:

Oracle reported a record $130 billion in RPO in Q3 FY25, a massive 62% year-over-year jump. This backlog signifies significant future revenue visibility.

The market will be looking for how much of this RPO is translating into actual revenue in Q4 and how quickly. The ability to convert this backlog efficiently will be crucial for validating Oracle's long-term growth story.

Total cloud revenue was up 25% at $6.2 billion, with SaaS revenue of $3.6 billion (up 10%) and IaaS revenue of $2.7 billion (up 51%). Record level AI demand drove OCI revenue up 51%. GPU consumption revenue is nearly 3.5 times the size of last year's.

Profitability and Margins under CapEx-Heavy Model:

Oracle has been guiding for increased capital expenditures (CapEx), with FY25 CapEx expected to surpass $16 billion (more than double the previous year) to fund data center expansion and AI infrastructure.

Oracle's Board of Directors increased the quarterly dividend by 25%, from $0.40 to $0.50 per share. Oracle's multi-cloud business with Amazon, Google, and Microsoft grew 200% in the last three months alone, with plans for 40 more regions.

Analysts will be keen to see the impact of this increased CapEx on operating margins. While the investments are necessary for future growth, sustained margin pressure could concern some investors. BMO Capital, for instance, raised its price target but flagged lower operating margin expectations for FY26 and FY27 due to depreciation from data center investments.

Guidance for Fiscal Year 2026 (FY26)

Oracle's outlook for the upcoming fiscal year will be paramount. Management previously guided for 15% revenue growth in FY26 and potentially 20% in FY27, driven by its RPO and AI adoption. Confirmation and details around this guidance will significantly impact the stock.

Specific guidance on cloud revenue growth for FY26, especially OCI, will be closely watched.

Multi-Cloud Partnerships (Google Cloud, Microsoft Azure):

Oracle's partnerships with Google Cloud and Microsoft Azure to expand its database services are critical. Updates on the traction and revenue generated from these collaborations will highlight Oracle's ability to address multi-cloud database workloads and extend its reach beyond its native cloud.

Traditional Business Segments:

While the focus is heavily on cloud and AI, investors will still monitor performance in traditional segments like hardware and on-premise licenses. These segments are expected to decline, but the pace of decline should be within expectations.

The exit from the advertising business last year lowered total cloud revenue growth by 2% this quarter. Oracle experienced delays in cloud capacity expansion due to component shortages, expected to ease in Q1 FY '26.

Stock Valuation Context:

The stock's valuation is currently considered premium by some metrics (e.g., Price/Book of 27.73x vs. industry average of 8.89x). This means a strong performance is needed to justify the current valuation.

The non-GAAP tax rate for the quarter was 19.9%, higher than the 19% guidance, affecting EPS by $0.02. Currency fluctuations resulted in a $0.04 negative impact on EPS, more than initially expected.

Oracle (ORCL) Price Target

Based on 31 analysts from Tiger Brokers offering 12 month price targets for Oracle in the last 3 months. The average price target is $182.34 with a high forecast of $246.00 and a low forecast of $130.00. The average price target represents a 2.93% change from the last price of $177.15.

Technical Analysis - Exponential Moving Average (EMA)

Oracle shares have had a strong run in recent weeks, adding roughly one-quarter of their value since the end of April. This reflects growing optimism about its AI potential.

Historically, Oracle's stock has seen negative one-day returns after earnings announcements in 60% of instances over the past five years, with a median decline of 4.4%. This highlights the potential for volatility post-earnings.

If we looked at the positive momentum gathered for ORCL and it is currently trading above key levels, with the bulls continue to make daily uptrend continuation, I believe the demand for AI services and infrastructure would helped Oracle to continue to gain in its OCI revenue growth.

Summary

Oracle's Q4 FY25 earnings report is pivotal. The company has successfully shifted the narrative towards its cloud and AI capabilities, evidenced by its massive RPO. The key will be whether it can demonstrate strong execution in converting this backlog into accelerating revenue growth, particularly within OCI, while managing the capital expenditures required for its AI infrastructure buildout.

A strong beat on OCI revenue, clear signs of easing capacity constraints, and an optimistic outlook for FY26 (especially accelerating cloud revenue growth) could send the stock higher. Conversely, any significant miss on cloud growth, continued concerns about capacity, or a more conservative outlook could lead to profit-taking.

Appreciate if you could share your thoughts in the comment section whether you think Oracle would show an earnings surprise with a strong OCI revenue growth path.

@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.