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    ORCL
    Earnings call· May 2025(Q4 FY25)

    ORACLE Q4 FY25 earnings call ORCL

    Jun 11, 2025 Source

    Executive summary

    Oracle Q4 FY25 — Cloud Revenue Accelerates, RPO Hits $138B, AI Driving Demand

    Oracle's cloud transition is accelerating, with Q4 FY25 marking double-digit revenue growth driven by strong demand for OCI and strategic SaaS applications. The company's substantial remaining performance obligations and pipeline provide clear visibility for future growth, necessitating significant capital expenditures to expand capacity and meet insatiable AI-driven demand. Oracle is leveraging its full-stack advantage and AI-centric database strategy to capture market share across its cloud offerings.

    Highlights

    5

    • Q4 total revenue grew 11% to $15.9 billion, exceeding guidance.

    • Remaining Performance Obligations (RPO) reached $138 billion, up 41% from last year.

    • Total cloud revenue (SaaS plus IaaS) was up 27% to $6.7 billion.

    • IaaS revenue grew 52% to $3 billion, with OCI consumption revenue up 62%.

    • FY26 total cloud revenue is expected to grow over 40% in constant currency.

    Concerns

    3

    • Free cash flow was negative $400 million for the full fiscal year and negative $2.9 billion for Q4, driven by high CapEx.

    • Demand for OCI continues to dramatically outstrip supply, leading to customers being scheduled out into the future.

    • The Q4 non-GAAP tax rate was 9.7%, which was higher than the 19% guidance (as stated by management, though 9.7% is numerically lower than 19%).

    Guidance & targets

    13
    CategoryTargetConfidence
    Total Cloud Revenue Growth
    over 40%
    high materiality
    High
    Cloud Infrastructure Revenue Growth
    over 70%
    high materiality
    High
    Total Revenue
    at least $67 billion
    high materiality
    High
    Remaining Performance Obligations (RPO) Growth
    likely to grow more than 100%
    high materiality
    High
    Revenue Growth Target
    exceed the revenue growth target we previously provided
    high materiality
    High
    Long-Range Financial Targets
    meet and likely exceed our previously provided FY '29 targets
    high materiality
    High
    Total Revenue Growth
    11% to 13%
    medium materiality
    High
    Total Revenue Growth (USD)
    12% to 14%
    medium materiality
    High
    Total Cloud Revenue Growth
    26% to 30%
    medium materiality
    High
    Non-GAAP EPS Growth
    between 4% to 6%
    medium materiality
    High
    Non-GAAP EPS Growth (USD)
    between 5% to 7%
    medium materiality
    High
    Non-GAAP Tax Rate
    19%
    low materiality
    High
    CapEx
    over $25 billion
    high materiality
    High

    Segment performance

    16
    SegmentRevenueYoYQoQMargin
    Total Cloud Revenue (SaaS + IaaS)
    Growth in constant currency.
    		$6.7 billion27%——
    Total Cloud Services and License Support
    Entirely subscription-based.
    		$11.7 billion14%——
    IaaS Revenue
    On top of 42% growth last year. Annualized revenue for infrastructure cloud services is nearly $12 billion.
    OCI consumption revenue: up 62%
    		$3 billion52%——
    Cloud Database Services
    Autonomous Database consumption revenue is on top of 27% growth last year. Expected to be the third driver of revenue growth alongside OCI and strategic SaaS.
    Annualized revenue: $2.6 billionAutonomous Database consumption revenue: up 47%
    		—31%——
    Infrastructure Subscription Revenues
    Includes license support.
    		$6.7 billion19%——
    SaaS Revenue
    Driven by strategic back-office SaaS applications.
    		$3.7 billion11%——
    Application Subscription Revenues
    Includes support.
    		$5 billion8%——
    Strategic Back-Office SaaS Applications
    Includes ERP, financials, EPM, HCM, supply chain, and manufacturing.
    Annualized revenue: $9.3 billion
    		—20%——
    Software License Revenues
    Customers buying more licenses often indicates intent to use bring-your-own-license to the cloud.
    		$2 billion8%——
    Total Company Revenue (FY25)
    Full fiscal year results.
    		$57.4 billion9%——
    Total Cloud Services and License Support (FY25)
    Accounts for 77% of total revenue, entirely subscription-based.
    		$44 billion12%——
    Total Application Subscription Revenue (FY25)
    Full fiscal year results.
    		—7%——
    Infrastructure Subscription Revenues (FY25)
    Full fiscal year results.
    		—17%——
    Total Cloud Services (FY25)
    Full fiscal year results.
    		$24.5 billion24%——
    IaaS (Cloud Infrastructure) Revenue (FY25)
    Full fiscal year results.
    Consumption revenue: up 59%
    		$10.2 billion51%——
    SaaS Revenue (FY25)
    Full fiscal year results.
    		$14.3 billion10%——

    Operational metrics

    14
    Non-GAAP EPS
    $1.70
    Q4 FY25

    In U.S. dollars.

    GAAP EPS
    $1.19
    Q4 FY25

    In U.S. dollars.

    Non-GAAP Tax Rate
    9.7%higher than 19% guidance
    Q4 FY25

    Stated as higher than 19% guidance, though numerically lower.

    CapEx
    $21.2 billion
    FY25

    Full fiscal year.

    CapEx
    $9.1 billion
    Q4 FY25

    Quarterly.

    Cash and marketable securities balance
    $11.2 billion
    Q4 FY25 end

    At quarter end.

    Short-term deferred revenue
    $9.4 billion
    Q4 FY25 end

    At quarter end.

    Shares repurchased
    little over 1 million
    Q4 FY25

    For a total of $150 million.

    Shares outstanding reduction
    more than 1/3
    last 10 years

    At an average share price of just over $54.

    Dividends paid
    $4.7 billion
    last 12 months

    Over the last 12 months.

    Quarterly dividend
    $0.50
    Q1 FY26

    Declared by the Board of Directors.

    Non-GAAP EPS
    $6.00up 9%
    FY25

    Full fiscal year.

    Operating Income Growth
    9%
    FY25

    Full fiscal year.

    Operating Income Growth
    7%
    Q4 FY25

    Quarterly.

    Industry KPIs

    8
    MetricValueDetails
    Capacity CAPEX$21.2 billionUSD
    Revenue growth$15.9 billionUSD
    Arr net new arrnearly $12 billionUSD
    Rpo current rpo$138 billionUSD
    Bookings billings$138 billionUSD
    Gross retention renewal ratehigher
    Operating FCF margin rule of 40negative $400 millionUSD
    Ai product adoption monetizationover 100agents

    Orderbook & backlog

    2
    Remaining Performance Obligations (RPO)$138 billionQ4 FY25 end

    up $8 billion QoQ, up 41% YoY

    Approximately 33% of total RPO is expected to be recognized as revenue over the next 12 months.

    Cloud RPOnearly 80% of total RPOQ4 FY25 end

    up 56% YoY

    On top of 80% growth last year.

    Product announcements

    2
    ProductTypeDetails
    Oracle 23 AIupdate
    AI Agents for Strategic SaaS Productsupdate

    Deals & partnerships

    8
    TemuMoving infrastructure to Oracle Cloudgigantic contract

    Temu is a very large company growing extremely rapidly, moving their infrastructure to the Oracle Cloud.

    OpenAIPart of the Stargate initiative

    OpenAI is one of Oracle's partners in Stargate. Business with OpenAI is part of Oracle's future.

    Microsoft AzureMulti-cloud offering for Oracle Database

    Customers can get the fully capable Oracle database in Microsoft Azure with all features, including new AI features.

    GoogleMulti-cloud offering for Oracle Database

    Customers can get the fully capable Oracle database in Google Cloud.

    AmazonMulti-cloud offering for Oracle Database

    Customers can get the fully capable Oracle database in Amazon's cloud.

    ByteDance/TikTokExisting business relationship

    Oracle does business with ByteDance/TikTok.

    UberCustomer of Oracle Cloud

    Uber is a customer of Oracle Cloud.

    Security companiesMoving to Oracle Cloud

    A bunch of security companies have moved to the Oracle Cloud.

    Capital programs

    1
    Data Center Capacity Expansionunderway
    Period spend: over $25 billion

    Benefit: meet demand from backlog, accelerate revenue and profit growth

    FY26 CapEx will be higher at over $25 billion to meet demand from backlog. The vast majority of CapEx investments are for revenue-generating equipment going into data centers, not land or buildings. This figure may turn out to be understated due to insatiable demand.

    Risks & headwinds

    3
    Supply not meeting demand for OCIOngoing

    Demand dramatically outstrips supply; customers being scheduled out into the future.

    Mitigation: Significant CapEx investments (over $25 billion in FY26) to build out data center capacity and acquire revenue-generating equipment.

    Negative Free Cash Flow due to high CapExFY25 and Q4 FY25

    FY25 FCF negative $400 million; Q4 FY25 FCF negative $2.9 billion.

    Mitigation: CapEx is primarily for revenue-generating equipment to meet future demand, which is expected to accelerate revenue and profit growth.

    Currency exchange rate fluctuationsQ1 FY26

    Q1 FY26 EPS guidance assumes $0.02 positive effect, revenue flat to 1% positive effect; actual impact may differ.

    Mitigation: Guidance provided in both constant currency and U.S. dollars to reflect potential impact.

    What to watch in Q1 FY26

    5

    FY26 CapEx spend

    FY26
    Current$9.1 billion (Q4 FY25)
    TargetOver $25 billion

    Why it matters

    Indicates the pace of capacity build-out to meet demand, which is crucial for future revenue acceleration.

    I expect that FY '26 CapEx will be higher at over $25 billion as we work to meet demand from our backlog.

    Q&A highlights

    6

    Can you provide color or numbers to help investors understand the durability and profitability of Oracle's AI business, given the lack of understanding on the street?

    Larry Ellison explained that Oracle's database, Oracle 23 AI, is an AI data platform enabling enterprises to use AI models on their own private data, unlike public internet-trained models. He asserted that Oracle holds most of the world's valuable data and is the key enabler for secure, scalable, and reliable AI for enterprises, which will drive significant database growth.

    “Our database takes all of your data. our applications take all of your application data and make that data available to the most popular AI models, like if you like ChatGPT, you use ChatGPT. If you like Grock, you use Grok, you use that in the Oracle Cloud. We are the key enabler for enterprises to use their own data and AI models. No one else is doing that.”

    asked by Mark Moerdler · answered by Lawrence Ellison

    2 min read6 chapters

    Detailed Narrative

    01

    Cloud Transition Acceleration and Demand

    Oracle's cloud transition has reached a tipping point, with Q4 FY25 marking double-digit revenue growth and expectations for continued acceleration. The company reported Remaining Performance Obligations (RPO) of $138 billion, a 41% year-over-year increase, and a substantial pipeline, providing strong visibility for future revenue growth. This momentum is driven by exceptional demand for OCI and strategic SaaS applications, particularly for AI workloads.

    02

    OCI Demand Outstripping Supply

    OCI is experiencing unprecedented🌐 demand, with consumption revenue up 62%. Management noted that demand continues to dramatically outstrip supply, leading to customers being scheduled out into the future. To address this, Oracle is making significant capital expenditures, with CapEx projected to be over $25 billion in FY26, primarily for revenue-generating equipment in data centers, to expand capacity and meet the 'insatiable' demand.

    03

    AI-Centric Database Strategy

    Oracle's latest database, Oracle 23 AI, is positioned as an AI data platform, designed to make enterprises' private data available to popular AI large language models while maintaining privacy and security. Larry Ellison emphasized that Oracle holds most of the world's valuable data, and this AI-centric approach is expected to drive significant growth in Oracle's database market share as on-premise databases migrate to the cloud.

    04

    Strategic SaaS Applications Momentum

    The applications business, especially strategic back-office SaaS products like ERP, EPM, and HCM, is showing strong bookings and higher renewal rates. The integration of over 100 AI agents into these products and the compelling need for cloud-based applications to leverage advanced AI capabilities are key drivers. Oracle's strategy of offering integrated, AI agent-based application suites provides a 'one-stop shop' for enterprises, eliminating integration complexities.

    05

    Multi-Cloud and Full-Stack Advantage

    Oracle highlights its multi-cloud strategy, allowing customers to deploy Oracle databases on OCI, private clouds, or partner clouds like Azure, Google, and AWS. The company's full-stack approach, from applications to infrastructure and silicon, is presented as a competitive differentiator, enabling the development of faster, cheaper, more reliable, and more secure integrated solutions, particularly through its autonomous database technology.

    06

    Shareholder Returns and Financial Discipline

    Despite substantial CapEx investments, Oracle remains committed to returning value to shareholders. In Q4 FY25, the company repurchased over 1 million shares for $150 million, contributing to a reduction of shares outstanding by more than one-third over the last decade. Oracle also paid $4.7 billion in dividends over the last 12 months and declared a quarterly dividend of $0.50 per share.

    AI-generated summary of the company’s earnings call. Not investment advice.