Oracle CloudWorld 2024

Oracle Corp. (NASDAQ: ORCL) hosted CloudWorld on September 12, 2024. Here are some of our key observations from the sessions.

Oracle CloudWorld

Oracle hosted CloudWorld on Thursday, September 12, 2024. There were a host of speakers from various divisions within Oracle. There was also a session with customers, including MGM Resorts, Nomura Research Institute, and Vodafone. The presentations aimed to bring the AI investment story to life and provide a comprehensive view of Oracle’s role and outlook.

The big news coming out of CloudWorld was the increase to its revenue target to over $66 billion, ahead of the consensus of $65 billion. Oracle maintained its EPS target for FY26. The company provided revenue and earnings estimates for FY29, highlighting its confidence and visibility in the direction. Currently, FY29 consensus expects revenue of $97 billion, below the >$104 billion Oracle highlighted. Will these estimates continue to move higher or does this indicate that consensus is somewhat skeptical of the outlook provided?

Oracle’s New Targets

Source: Oracle CloudWorld (September 12, 2024)
https://www.oracle.com/a/ocom/docs/corporate/financial-analyst-meeting-2024-kehring.pdf

Visible Alpha consensus estimates for revenue segments and EPS have moved up since September 9, 2024, indicating that analysts are increasingly more optimistic about the FY26 outlook.

The Direction of Oracle Estimates

Source: Visible Alpha consensus (September 24, 2024). Stock price data courtesy of FactSet. Oracle’s current stock price is as of the market close on September 23, 2024.

Clay Magouyrk, Executive Vice President of Oracle Cloud Infrastructure, gave a comprehensive look at the Cloud business. He called out that the important message to understand is that Oracle’s multi-cloud strategy is different because OCI is partnered with other cloud service providers. This enables the same level of service and quality.

Multi-cloud Approach

Source: Oracle CloudWorld (September 12, 2024)
https://www.oracle.com/a/ocom/docs/corporate/financial-analyst-meeting-2024-magouyrk.pdf

Doug Kehring, head of Operations at Oracle, highlighted the practicalities of the multi-cloud approach and how this focus is key to the revenue growth story. Based on data from 451 Research, he supported his strategy by highlighting that 98% of enterprises use two or more clouds. With the addition of AWS and Google Cloud this year, he expects the workload migrations to accelerate. This strategy will drive the sales and earnings growth for FY26 and beyond.

Source: Oracle CloudWorld (September 12, 2024)
https://www.oracle.com/a/ocom/docs/corporate/financial-analyst-meeting-2024-kehring.pdf

Looking Ahead

Back in the spring, Oracle shared a few interesting numbers from studies done by PWC and Grand View Research quantifying the impact of AI, estimating that AI’s predicted CAGR from 2023 to 2030 will be 37% and add $15.7 trillion to global GDP by 2030. Based on analysis from Insider Intelligence and ITU, Oracle highlighted that the adoption curve of AI has been much faster than smartphones and PCs.

This analysis and the outlook provided at CloudWorld suggest that momentum for generative AI adoption by enterprises may continue to be stronger than current expectations. Based on Visible Alpha consensus, Oracle estimates for its Cloud businesses have been grinding back to levels initially expected in early FY24. Could there be a catalyst in Q2?

Oracle’s Q2 Estimates

Source: Visible Alpha consensus (September 24, 2024)