Oracle shares were down early Tuesday as the software maker's fiscal third-quarter results fell short of market estimates, while it issued an earnings outlook below expectations for the ongoing three-month period. The company reported adjusted earnings of $1.47 a share for the quarter ended February 28, up from $1.41 the year before.
However, the consensus on FactSet anticipated earnings of $1.49. Revenue improved by 6% year over year to $14.13 billion, but the figure missed the Street's expectations of $14.38 billion. Consequently, the stock decreased by 1.9% in premarket activity. For the current quarter, Oracle anticipates adjusted EPS to remain relatively stable, indicating it could be down by 1% or up to 1%, suggesting a range of $1.61 to $1.65.
Chief Executive Safra Catz discussed these projections during a conference call, where revenue growth is expected to fall in the range of 8% to 10%. The Street's outlook expects non-GAAP EPS of $1.70 and sales of $15.71 billion. Catz also noted that assuming exchange rates hold steady, the currency fluctuations should have a negative impact on EPS of approximately $0.01 to $0.02, along with a 1% adverse effect on revenue. Revenue in the cloud services and licensing support segment climbed 10% to $11.01 billion in the third quarter, driven by a surge in artificial intelligence demand, which contributed to a remarkable 51% growth in the company's cloud infrastructure revenue.
In contrast, revenue from the cloud license and on-premise license divisions fell by 10% to $1.13 billion, and hardware and services sales experienced declines of 7% and 1%, respectively. During the quarter, Oracle signed sales contracts exceeding $48 billion, contributing to a significant increase in its remaining performance obligations (RPO), which rose by 63% in constant currency to surpass $130 billion, as stated by Catz.
"We expect that our substantial $130 billion sales backlog will facilitate a 15% increase in Oracle's overall revenue in our next fiscal year starting this June," Catz emphasized during the statement. Oracle maintains a strong sense of confidence and commitment toward its cloud infrastructure revenue for fiscal 2025, projecting growth to exceed the 50% reported in the previous fiscal year.
Additionally, Oracle is targeting $66 billion in revenue for fiscal 2026, indicating an annual growth rate of 15%, while fiscal 2027 sales are anticipated to grow by approximately 20%, marking an increase over earlier expectations, as per Catz's comments..