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Cloud revenue, including IaaS and SaaS, jumped 25% in fiscal Q3 2024
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Total cloud revenue has finally surpassed Oracle’s licensing revenue
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AI is – of course – driving massive demand and Oracle is building new data centers as fast as it can
“We have crossed over," may sound like a quote from a Sci-fi drama, but it was actually delivered by Oracle CEO Safra Catz during the company’s fiscal Q3 2024 earnings call this week as she announced a key milestone.
“This quarter marks the first time our total cloud revenue is more than our total license support revenue,” Catz said.
The CEO also teased “some very nice joint announcements with Nvidia” which Oracle expects to reveal next week.
Nvidia has somewhat of a Midas touch these days. Futuriom founder Scott Raynovich said Oracle’s ability to lock in deals with the super hot chip-maker has helped secure its future.
“Right now, the cloud AI game is about having access to Nvidia chips, and Oracle has played that game exceedingly well,” he told Silverlinings. “It's locked in GPU supply and offered an economical AI in the cloud service in a market with robust demand."
By the numbers
Cloud revenue, including infrastructure-as-a-service (IaaS) and software-as-a-service (SaaS), jumped 25% in the quarter (which ended February 29, 2024) to $5.1 billion. IaaS revenue skyrocketed, increasing 49% to $1.8 billion. Consolidated revenue of $13.3 billion was up 7%.
Catz noted that the company inked several large cloud infrastructure deals in FQ3, leaving it with record remaining performance obligations totaling over $80 billion. Slightly less than half (43%) of that is expected to translate to recognized revenue over the next four quarters, she said.
Oracle (NYSE: ORCL) already has 68 customer cloud regions and 47 public cloud regions live around the world. It is hustling to build eight more of the latter, she said and is also adding 13 more dedicated regions to the 11 it already has live.
The AI catalyst
According to Catz, artificial intelligence (AI) is – unsurprisingly – a huge demand driver for the company: “We've got at least 40 new AI bookings that are over a billion that haven't come online yet.” She said the company is working as quickly as possible to build out the necessary capacity.
Chairman and CTO Larry Ellison added that the data centers it is building to meet obligations are absolutely massive. He claimed that the company is building “the largest data centers in the world that we know of,” including one in the U.S. that is so big “you could park eight Boeing 747s nose-to-tail” inside.
Last year, Oracle struck a deal with Microsoft to run its Autonomous Database in Azure data centers. In December, Ellison said Oracle was planning to launch in 20 data centers that would be collocated with and connected to Azure. But it seems the pair are planning to rapidly expand that footprint. Ellison even hinted additional multi-cloud collaborations could be on the way.
“They just ordered three more data centers this quarter,” Ellison said on Monday’s call. “They're adding to that already. And there are other multi-cloud agreements that are being signed.”