Oracle's cloud infrastructure business posted revenue growth of 52% in the fourth quarter as its results were better than expected.

The company reported fourth quarter earnings of $1.19 a share on revenue of $15.9 billion, up 11% from a year ago. Non-GAAP earnings were $1.70 a share.

Wall Street was looking for Oracle to report fourth quarter earnings of $1.64 a share on revenue of $15.59 billion.

Perhaps the biggest takeaway in the quarter is that Oracle's infrastructure-as-a-service unit is closing in on the company's SaaS revenue. In the fourth quarter, Oracle Cloud Infrastructure (OCI) had revenue of $3 billion, up 52%, and the SaaS unit delivered sales of $3.7 billion, up 12%.

Oracle's cloud revenue including software and infrastructure was $6.7 billion, up 27% from a year ago.

For fiscal 2025, Oracle reported earnings of $12.4 billion, or $4.34 a share, on revenue of $57.4 billion, up 9% from a year ago.

Oracle CEO Safra Catz said fiscal 2025 was a good year, but fiscal 2026 should deliver "dramatically higher" revenue growth rates. She noted that fiscal 2026 total cloud growth rate should be more than 40%, up from 24% in fiscal 2025. "Oracle is well on its way to being not only the world's largest cloud application company—but also one of the world's largest cloud infrastructure companies," she said.

CTO Larry Ellison said that "multicloud database revenue from Amazon, Google and Azure grew 115% from Q3 to Q4." He added that OCI has 23 multicloud data centers live with 47 on tap in the next 12 months. Ellison added that triple-digit revenue growth for multicloud should continue.

Oracle's cloud business is on an annual run rate approaching $27 billion. Google Cloud is more than $49 billion on an annual run rate. AWS is more than $117 billion. Microsoft Cloud's annual revenue run rate was more than $169 billion including sales across all units. The annual revenue run rate for Microsoft Intelligent Cloud, which includes Azure, is more than $107 billion.

Highlights from the earnings call include:

  • Catz said fourth quarter capital spending was $9.1 billion with the "vast majority of our CapEx in revenue generating equipment that was going into data centers and not for land or buildings."
  • In fiscal 2026, Catz said capital expenditures will be more than $25 billion "to meet demand from our backlog."  
  • Cloud infrastructure revenue growth will grow more than 70% in fiscal 2026, said Catz. 
  • For the first quarter, Oracle projected total cloud revenue growth of 26% to 30%. Non-GAAP earnings for the quarter will be between $1.44 and $1.48 a share. 
  • Ellison said Oracle has developed an integrated AI agent suite for ERP, supply chain, manufacturing, human resources, customer engagement and industry applications. Ellison said Oracle's database has been critical to building out AI agents. 
  • "These other companies say they have all the data, so they can do AI really well. They can build all these AI agents on top of all of that data," said Ellison. "The only problem with that statement is they don't have all the data we do. We have most of the world's valuable data. The vast majority of it is in an Oracle database. Our applications take all of your application data and make that data available to the most popular AI models."
  • Ellison said Oracle's suite approach to applications and AI agents is resonating. "Companies don't really enjoy buying applications from five different vendors and then making all of those applications work together," said Ellison. "We're seeing a lot of companies buying those basically saying, I'm going to go all Oracle. I'm going to buy the complete Oracle suite."
  • "Our intent is to use our biggest customers, a one stop shop by the entire suite to run their enterprise from us. And that gets rid of a lot of headaches. Everything is in the same database. Everything comes with the same AI data platform. With it, all the analytics are there. You don't have to do the system integration," said Ellison.  
  • Oracle still has more demand than it can meet. "I am still in a position where our supply is not meeting our demands," said Catz. "We actually currently are still waving off customers from or scheduling them out into the future so that we have enough supply to meet demand."

Constellation Research's take

Holger Mueller, an analyst at Constellation Research, said:

"Oracle is doubling down on IaaS revenue and benefitting from the popularity of the multicloud offering of the Oracle Database. This marks the first quarter where Oracle even accepted a negative cash flow. It is clear where Safra Catz and Larry Ellison see the opportunity.

In the concluded fiscal year alone the CapEx tripled from $7 billion to $21 billion in Q4. For a long time Oracle settled CapEx at 50% of free cash flow - no more. Last fiscal year's  accumulated CapEx was about $27 billion, and Q4 alone was $21.2 billion. 

How long can Oracle afford that investment level into data centers? But Oracle is more about infrastructure than ever before - and the only vendor who was relevant in the 1990s to make that transition. It will be key to show growth in regions (all have grown YoY) beyond its Americas region. Many international data centers are just opening now."

 

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Oracle, hyperscale data centers