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In today’s Cloud Wars Minute, I look at Oracle’s superb Q4 results, along with its new Google Cloud partnership.
Highlights
00:21 — In its Q4 results, Oracle had an absolute blowout with its RPO numbers. In combination with its multi-cloud deal with Google Cloud, it adds up to a dazzling Q4 for Oracle. Cloud revenue was up only 20%. I was expecting it to be up 29% this quarter.
01:04 — Now, you might say, “Oh, that’s bad news,” and it’s not great. But what’s behind that is called booking or RPO, remaining performance obligation. That’s contracted business that is not yet recognized as revenue. So, while the actual revenue number was down to 20%, the RPO, which is the backlog behind the revenue, surged 44% to $98 billion.
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02:22 — Oracle expects that for fiscal 25, which started June 1, it will double its spending on CapEx to build out data centers. So you can see a huge investment here that Oracle is making to try to get that data center capacity up so it can start delivering these services to customers. Chairman Larry Ellison said that in Q4, they signed contracts — AI deals only—with 30 customers totaling $12.5 billion.
03:25 — He said these are with the largest and most successful cloud and AI companies in the world. He cited NVIDIA, Microsoft, Google, xAI, OpenAI, and Cohere. Now, at the same time, with these Q4 results, especially with that RPO number, Oracle’s market cap overnight went up 13% to $384 billion. While Oracle is the smallest of the four hyperscalers, it is in many ways the most disruptive.
04:06 — On the one hand, you’ve got this surging AI business that led to the $98 billion backlog, so much of that for AI training. On the other hand, you’ve got these forward-looking ideas with things like the multi-cloud deal with Google Cloud that, in some ways, parallels what Oracle did several months ago with Microsoft.
04:40 — For both of these companies, it’s a superb move because it gives customers the chance to pick the clouds they want in the ways they want, and it makes it easier for them to use both clouds to move data around and to run their business the way they want.