Q3 2025 Earnings Summary
- Explosive growth in Oracle's multi-cloud partnerships, with revenue increasing more than 10 times year-over-year , and plans to expand to 40 more regions within the next 12 months , demonstrating strong demand and future revenue potential.
- Technological advantage in AI infrastructure, enabling Oracle to build large-scale AI clusters that run faster and more economically than competitors , leading to significant deals like the upcoming Stargate project, which is expected to further boost bookings and Oracle's RPO of over $130 billion without including Stargate transactions.
- Competitive edge through AI capabilities, such as the AI data platform and Oracle Database 23 AI, allowing customers to leverage leading AI models on their private data securely , and embedded AI agents in applications like healthcare and Fusion applications , driving increased sales and migrations to Oracle's cloud services and distinguishing Oracle from competitors who are "talking about it" while Oracle has "already built and deployed it".
- Oracle's cloud expansion is partially dependent on hyperscaler partners like AWS, Azure, and Google to provide space for deploying additional cloud regions. This dependency may cause delays in deployment, as it's not entirely under Oracle's control, potentially impacting revenue growth.
- The timing and financial impact of significant projects like Stargate remain uncertain. Safra Catz mentioned that she will explain how Stargate will flow through the financials once it's fully laid out, indicating potential ambiguity regarding its contribution to future earnings.
- Oracle's Remaining Performance Obligation (RPO) may exhibit lumpiness due to factors outside of the company's control, such as delays in bringing cloud capacity online. While they expect RPO numbers to be extremely large, the uncertainty around timing could affect revenue visibility.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | +6.4% (from $13,280M to $14,130M) | Total revenue growth was driven by robust performance in Oracle’s cloud business, with increased cloud services and license support revenues helping boost overall revenue compared to the prior period. |
Cloud and License Segment Revenue | +8.1% (from $11,219M to $12,136M) | Cloud and License revenue increased as cloud-based subscription and support services gained traction, reflecting a strategic shift from legacy licensing toward recurring revenue models, which strengthened this segment compared to the previous year. |
Cloud Services and License Support Revenue | +10.5% (from $9,963M to $11,007M) | Cloud services and license support revenues surged due to higher customer adoption and renewals of cloud contracts, highlighting a clear transition to recurring revenue streams, which contributed significantly more than in the prior period. |
Cloud License and On-Premise License Revenue | -10.1% (from $1,256M to $1,129M) | The decline in cloud license and on-premise license revenues reflects a reduced reliance on upfront license transactions as Oracle continues to move customers into cloud subscription models, marking a clear shift from historical revenue patterns. |
Hardware Revenues | -6.8% (from $754M to $703M) | Hardware revenues fell as Oracle de-emphasized sales of non-core hardware products in favor of its growing cloud infrastructure solutions, resulting in lower revenue compared to previous periods. |
Operating Income | +16.2% (from $3,749M to $4,358M) | Operating income improved thanks to stronger margins in cloud segments and disciplined expense management, which allowed Oracle to capture higher profitability on the increased revenue base relative to the prior period. |
Net Income | +22.3% (from $2,400M to $2,936M) | Net income growth was driven by the improved operating performance and lower effective tax rates, clearly reflecting the benefit of higher-margin cloud services and tighter cost control compared to the previous year. |
Americas Revenues | +8.8% (from $8,270M to $9,000M) | In the Americas region, strong demand for cloud services—bolstered by multi-cloud agreements and robust customer renewals—propelled a higher revenue performance compared to the prior period, reinforcing the region’s role as a key growth driver. |
EMEA Revenues | +3.1% | EMEA revenues saw modest growth due to steady adoption of Oracle’s cloud offerings, although the gains were limited compared to the Americas, pointing to more competitive market dynamics and currency effects compared to the previous period. |
Asia Pacific Revenues | +0.9% | Asia Pacific revenues increased slightly as incremental growth in cloud services partially offset softer performance in other segments, indicating a more subdued regional expansion compared to the stronger growth seen in the Americas. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Total Revenue Growth | Q3 2025 | Constant Currency: 9% to 11%; USD: 7% to 9% | no current guidance | no current guidance |
Total Cloud Revenue Growth | Q3 2025 | Constant Currency: 25% to 27%; USD: 23% to 25% | no current guidance | no current guidance |
Non-GAAP EPS | Q3 2025 | Constant Currency: 7% to 9% with EPS between $1.50 and $1.54; USD: 4% to 6% with EPS between $1.47 and $1.51 | no current guidance | no current guidance |
Currency Impact | Q3 2025 | $0.03 negative effect on EPS and 2% negative effect on revenue | no current guidance | no current guidance |
Tax Rate | Q3 2025 | Base Tax Rate: 19% | no current guidance | no current guidance |
CapEx | Q3 2025 | Fiscal Year 2025 CapEx expected to double compared to FY 2024 | no current guidance | no current guidance |
Total Revenue Growth | Q4 2025 | no prior guidance | Constant Currency: 9% to 11%; USD: 8% to 10% | no prior guidance |
Total Cloud Revenue Growth | Q4 2025 | no prior guidance | Constant Currency: 24% to 28%; USD: 25% to 27% | no prior guidance |
Non-GAAP EPS | Q4 2025 | no prior guidance | Constant Currency: 0% to 2% with EPS between $1.62 and $1.66; USD: -1% to +1% with EPS between $1.61 and $1.65 | no prior guidance |
Currency Impact | Q4 2025 | no prior guidance | $0.01 to $0.02 negative effect on EPS and 1% negative effect on revenue | no prior guidance |
Tax Rate | Q4 2025 | no prior guidance | Base Tax Rate: 19% assumed | no prior guidance |
CapEx | Q4 2025 | no prior guidance | around $16 billion, more than double previous year's CapEx | no prior guidance |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
Total Revenue Growth | Q3 2025 (YoY) | 7% to 9% | 6.4% YoY growth from 13,280In Q3 2024 to 14,130In Q3 2025 | Missed |
Total Cloud Revenue Growth | Q3 2025 (YoY) | 23% to 25% (USD) | 8.2% YoY growth from 11,219 (9,963 + 1,256)In Q3 2024 to 12,136 (11,007 + 1,129)In Q3 2025 | Missed |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Multi-cloud strategy and partnerships | Discussed consistently in Q1 2025 ( ), Q2 2025 ( ) and Q4 2024 ( ); emphasis was on leveraging hyperscaler partnerships to drive migration and revenue growth, with early mentions of growth potential and emerging dependency risks in some calls ( ) | Q3 2025 highlights 200% growth in its multi-cloud business with major hyperscalers and reemphasizes strategic benefits while noting dependency risks ( ) | Consistent focus with robust growth, but the current period places more explicit emphasis on hyperscaler dependency risks, adding a note of caution to an otherwise positive story. |
Oracle Cloud Infrastructure (OCI) growth and supply constraints | Mentioned in Q1 2025 ( ), Q2 2025 ( ) and Q4 2024 ( ); discussions centered on strong year-over-year growth figures, rising consumption revenues, and supply/capacity constraints limiting potential, alongside improving margins through automation and scalable deployments ( ) | Q3 2025 reports 51% YoY revenue growth for OCI, record-level AI demand driving consumption, with supply constraints still a significant issue ( ) | Steady and robust growth continues as demand outstrips supply, confirming that supply constraints remain a key operational challenge despite scaling efforts. |
Cloud Database Services and Autonomous Database transformation | Consistently discussed across Q1 2025 ( ), Q2 2025 ( ) and Q4 2024 ( ); noted for strong revenue growth, migration of on-premise workloads, and early-stage challenges with migration—with emphasis on potential cost savings and process automation (e.g. 50% cost savings) | Q3 2025 shows 28% revenue growth and 42% Autonomous Database consumption increase, reinforcing robust performance as Oracle continues to drive workload migration ( ) | Consistent and expanding focus; revenues continue to accelerate as the migration process matures, even if early-stage migration challenges persist. |
AI infrastructure and capabilities | Earlier discussions (Q1 and Q2 2025) touched on scalable AI infrastructure and high-performance GPU clusters ( ) but without specific naming of flagship initiatives; Q4 2024 focused on large-scale infrastructure for AI but did not mention specific projects like Stargate ( ) | Q3 2025 introduces the significant Stargate project along with details on massive AI GPU clusters and partnerships (e.g. with OpenAI and NVIDIA) ( ) | Emerging as a major new initiative; while AI investments were always present, the detailed emphasis on the Stargate project in Q3 suggests a new strategic thrust with strong future potential. |
Data center expansion and capital expenditures | Consistent in Q1 2025 ( ), Q2 2025 ( ) and Q4 2024 ( ); previous periods emphasized modular expansion from small to gargantuan data centers and significant increases in CapEx to support demand, alongside discussions on operational risks and scalability challenges | Q3 2025 reaffirms the strategy with emphasis on starting with smaller data centers that scale with demand and a forecast of FY 2025 CapEx nearing $16 billion ( ) | Continuation of heavy investment and expansion; Oracle remains committed to scaling globally via modular, automated builds while managing associated operational risks. |
Remaining Performance Obligation (RPO) and revenue recognition challenges | Discussed in Q1 2025 ( ), Q2 2025 ( ) and Q4 2024 ( ); past periods focused on strong RPO growth (around $97–$99 billion) with recognition challenges due to capacity constraints and long-term contracts, and the inherent “lumpiness” in conversion timing | Q3 2025 reports RPO at $130 billion with about 31% expected to convert over the next 12 months, reiterating revenue recognition timing issues tied to capacity ( ) | RPO continues to grow strongly, but realization remains uncertain due to capacity constraints—highlighting both robust demand and ongoing execution challenges. |
Margin pressures and profitability concerns | Addressed in Q1 2025 ( ), Q2 2025 ( ) and Q4 2024 ( ); earlier periods discussed improving cloud and SaaS margins driven by automation and scale, while acknowledging the cost impacts of rapid expansion | Q3 2025 maintains a positive spin with reported operating margins at 44% and emphasis on disciplined expense management ( ) | Stable and improving margins remain a positive theme; cost and scalability concerns are well-managed, reinforcing investor confidence despite high growth investments. |
Flexible deployment models and dedicated on-premise cloud regions | Strongly emphasized in Q1 2025 ( ), Q2 2025 ( ) and Q4 2024 ( ); past calls highlighted the ability to tailor deployments—including fully dedicated, on-premise cloud regions for regulatory or security reasons | Q3 2025 reaffirms flexible deployment options, noting that customers can access Oracle’s services across multiple environments (public cloud, on-premise, and hyperscalers) ( ) | Consistently important differentiator; while the emphasis is slightly less pronounced in Q3, the ability to deploy tailored solutions remains a competitive advantage. |
Communication clarity and guidance corrections | Previously noted in Q1 2025 ( ), Q2 2025 ( ) and Q4 2024 ( ); past calls acknowledged occasional guidance corrections and a strong commitment to transparency in financial messaging | Q3 2025 showcases clear, detailed communication with explicit guidance adjustments (e.g. currency effects, tax impacts) and rapid reporting (10 days post-quarter) ( ) | Ongoing commitment to transparency and prompt corrections; management’s messaging remains clear, which helps maintain investor confidence amid evolving market conditions. |
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Stargate Impact on Revenue
Q: What's Oracle's unique value in the Stargate project?
A: Larry Ellison explained that Oracle's ability to build massive AI clusters that run faster and more economically than competitors gives them a technological and economic advantage, allowing them to win large deals like Stargate. He mentioned that despite not including any transactions from Stargate, their RPO reached over $130 billion. They expect Stargate to be the biggest AI training project and anticipate it will further increase their RPO in coming quarters. -
RPO Growth and Future Expectations
Q: How should we think about RPO trends in the next few quarters?
A: Safra Catz stated that they expect extremely significant numbers in the next few months, with RPO continuing to grow due to high demand. She emphasized that people want to lock in and schedule into Oracle's cloud, and they anticipate the RPO number to be extremely large. -
AI Training vs. Inferencing Opportunity
Q: What's Oracle's view on AI training versus inferencing opportunities?
A: Larry Ellison noted that while their AI training business is growing rapidly, AI inferencing represents a much larger opportunity. He highlighted that millions of Oracle databases worldwide will use their data to train AI models, and their new Oracle Database 23 AI with vector capabilities uniquely enables this process. Customers can now train AI models on their private data while keeping it secure, a capability that nobody else has. -
OCI and Multi-Cloud Growth
Q: How is demand unfolding across OCI and multi-cloud environments?
A: Safra Catz reported that everything is progressing on all fronts, with multi-cloud demand exploding—more than 10 times what it was a year ago. She mentioned that OCI public cloud is going gangbusters, cloud at customer is doing well, and capacity is filling up. Larry Ellison added that customers can access the Oracle database everywhere—from on-premises to OCI and through partners like Azure, AWS, and Google. The Oracle database is becoming more capable, and its large installed base is beginning to migrate to the cloud. -
AI Agents Driving SaaS Adoption
Q: Are AI agents impacting SaaS business and cloud conversion pace?
A: Larry Ellison explained that AI agents are a significant differentiator, especially in healthcare, where they automate tasks like updating electronic health records and prior authorizations, saving billions and improving patient outcomes. Safra Catz noted that their Fusion applications already have dozens of embedded agents across areas like supply chain, financials, and HR, unlike competitors. They believe that all their applications are becoming AI agents, making it a strong motivator for customers to move to the cloud. -
CapEx Efficiency and Trajectory
Q: Why is Oracle's CapEx lower per dollar of revenue, and what's the trajectory?
A: Larry Ellison stated that Oracle starts its data centers small and scales up based on demand, leading to higher utilization and lower initial CapEx. They have a high degree of standardization and automation in their cloud, which reduces labor costs and improves margins, even though it doesn't show up in CapEx.
Research analysts covering ORACLE.