Oracle Stocks Plunge After Disappointing Cloud Revenue

On Wednesday, Oracle shares delivered their worst performance in two decades, driven by disappointing first-quarter cloud revenue.

Its stock price plummeted by 13.50% to $109.61 apiece on September 12. Likewise, it is expected to rise by 0.67% to $110.30 per share in the upcoming session.

On September 11, Oracle published its report for the first quarter of its 2024 fiscal year ending August 31.  The report detailed how the tech company narrowly missed expectations and displayed a slowing cloud revenue growth rate.

Specifically, ORCL fell 0.16% short of its expected first-quarter revenue of $12.47 billion. Additionally, it adjusted its fiscal second-quarter revenue growth to between 5.00% and 7.00%, far below the analysts’ 8.20% average estimate.

Also, Fusion software only grew by 21.00%, far slower than the 26.00% growth it enjoyed in the prior quarter. Similarly, NetSuite revenue only increased by 21.00%, failing to match the 22.00% increase of the preceding quarter.

Moreover, its cloud-as-a-service segment had a first-quarter cloud growth of 66.00%, far slower than the 76.00% of the previous quarter. Furthermore, Oracle struggles with building AI and data centers fast enough to meet the growing demand.

Cerner, its newly acquired health information technologies provider, contributed $1.40 billion to total revenues. The recently concluded fiscal year 2024 first quarter is Cerner’s debut quarter since its integration.

Despite its first-quarter failings, Oracle stocks currently boast a 34.00% year-to-date (YTD) growth rate. In comparison, the S&P 500 only has a 16.00% YTD growth rate.

Cloud Revenue Fluctuates as Oracle Trails Behind

Cloud demand skyrocketed during the pandemic, with many businesses using the downturn to search for better digitization and AI alternatives. As a result, Oracle became stuck playing catch-up with larger rivals such as Amazon, Microsoft, and Google.

Besides, ORCL is still reeling from the growth slowdown caused by its $28.20 billion acquisition of Cerner in June 2022. The company is still in the process of accelerating Cerner’s to the cloud.

Even so, Oracle Chairman Larry Ellison remains optimistic thanks to the growing demand driven by AI. He revealed that the company had already booked $4.00 billion worth of cloud contracts, 100.00% more than the previous quarter.

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