On Tuesday, Citi reaffirmed its neutral position on Oracle Corporation (NYSE:ORCL) stock, maintaining a price target of $140.00. The assessment followed Oracle's recent financial results for the August quarter, which showed stronger revenue and profitability than previous trends, albeit within the expected guidance range.
Oracle's Cloud Infrastructure (OCI) experienced a growth reacceleration of three percentage points, slightly missing the consensus expectation of 47%, and remains below the 50% annual growth target.
Despite this, the company's bookings continued to show robust year-over-year growth of approximately 30%, and Remaining Performance Obligations (RPO) increased by 53% compared to the previous year. The growth in RPO suggests a potential benefit from the duration of contracts.
However, Oracle's capital expenditures were reported at $2.3 billion, falling short of both Citi's and the consensus estimates, which stood at $3.04 billion and $3.17 billion, respectively.
On a positive note, the company exhibited strong profitability, attributed to aggressive cost-cutting measures, particularly an 8% year-over-year reduction in general and administrative spending, which helped offset gross margin pressures from new cloud workloads.
In addition to its financial performance, Oracle announced a significant partnership with Amazon (NASDAQ:AMZN) Web Services (AWS), enabling Oracle's database to run on AWS infrastructure. This collaboration completes a series of announcements involving all major hyperscalers.
As the industry awaits further details from Oracle's conference call, the focus remains on the company's guidance and the confidence in the cloud business's reacceleration. Oracle's financial results and strategic partnerships are anticipated to be key discussion points during this week's Cloud World and investor day events.
In other recent news, Oracle Corporation has seen a series of significant developments. Oracle's first-quarter fiscal year 2025 results surpassed consensus estimates, with revenue reaching $13.31 billion, a 7% year-over-year increase, and non-GAAP earnings per share at $1.39.
The company's cloud segments, including Infrastructure as a Service (IaaS) and Software as a Service (SaaS), exhibited substantial growth. JMP Securities upgraded Oracle's stock rating to Market Outperform, reflecting confidence in the company's performance.
Oracle has also been making strides in collaborations with Google (NASDAQ:GOOGL) Cloud and Amazon Web Services (AWS), launching joint database services to streamline cloud migration and management of enterprise workloads. These partnerships aim to leverage Oracle's database technologies with Google Cloud's analytics and AI tools and AWS's scalable platform.
Oracle's recent legal developments include the settlement of a privacy lawsuit for $115 million. In acquisition news, Oracle co-founder Larry Ellison is set to gain control of Paramount Global following Skydance Media's acquisition of the Redstone family's stake in the film and television company.
Analyst firms including TD Cowen, Deutsche Bank (ETR:DBKGn), Edward Jones, and Mizuho have reaffirmed Buy ratings for Oracle, emphasizing the company's strategic shift towards cloud services. These are the recent developments shaping Oracle's trajectory.
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