Oracle Corporation’s (NYSE: ORCL) stock soared to $215 per share on Friday, June 13, 2025, climbing 22% after the database provider announced its FY25 results on June 11, 2025. The company outperformed analyst expectations, posting Q4 2025 revenue at $15.9 billion, up 11% year-on-year (y-o-y) driven by strong growth in its cloud services and licenses support revenue. For FY25, the company posted total revenue of $57.4 billion, an increase of 8% compared to last year. Adjusted net income for the year was $17.3 billion, or $6.03 per share.
However, the highlight of the earnings release was the robust growth in the company’s remaining performance obligations (RPO). The RPO stood at $138 billion at the end of FY25, $8 billion higher from the previous quarter and a 41% increase compared to last year. A solid RPO number not only provides visibility about the company’s future revenues and profitability but is also indicative of the robust demand for its infrastructure services and a strong customer conversion rate.
Earnings Snapshot
Oracle posted a strong Q4 2025 performance with total revenue at $15.9 billion, ahead of market expectations of $15.8 billion. Cloud services revenue, which includes infrastructure and applications, was $6.7 billion, 27% higher y-o-y. Infrastructure revenue soared to $3.0 billion, up 52% y-o-y, and application revenue rose to $3.7 billion, an improvement of 12% y-o-y. License support revenue was largely flat at $5 billion, while cloud license and on-premise license revenue increased to $2.0 billion, higher by 9% y-o-y. Non-GAAP earnings for the quarter stood at $1.70 per share, and GAAP earnings at $1.19 per share.
For FY25, the company reported total revenue of $57.4 billion. Cloud services revenue rose to $24.5 billion, 24% higher y-o-y, while license support revenue was flat y-o-y at $19.5 billion. Cloud on-premise revenue for the year improved slightly to $5.2 billion. Non-GAAP operating income for FY25 was $25 billion, with operating margin of 44%, flat y-o-y, implying that the revenue growth did not come at the cost of profitability.
Capital expenditure for 4Q 2025 and FY25 was $9.1 billion and $21.2 billion respectively. The company generated $20.8 billion in operating cash flow, up 12% from the previous year, which is likely to augment its plans to expand its global data center footprint. Oracle announced a cash dividend of $0.50 per share for Q4 2025 for outstanding common shares.
Oracle Cloud Infrastructure (OCI): A Growth Driver
The remaining performance obligation or RPO is the revenue that customers have committed to pay to a company for services that will be delivered by it in the foreseeable future. Oracle’s RPO of $138 billion implies that at the current revenue rate of $57.4 billion, it has already secured two and a half years’ worth of revenue, providing visibility into its future revenue and earnings.
The main driver behind the surge in Oracle’s RPO has been strong growth in its OCI business. Though Oracle joined the cloud infrastructure game a little late, it caught up fast. Oracle offers customized solutions to enterprise customers, saving their costs while providing them with higher flexibility. With a strategic focus on broadening its AI agent integration across applications, multi-cloud expansion, and accelerated infrastructure rollout, the company has been able to grow its OCI revenue sharply over the last couple of years. In Q4 2025, Oracle’s OCI revenue stood at $3 billion, an increase of 52% y-o-y, while its competitors – Amazon Web Services, Google Cloud and Microsoft Azure– witnessed a moderate growth during the period.
Oracle is on track to become a market leader, says CEO
During the Q4 conference call, Oracle’s CEO, Safra Catz, highlighted FY26 as a tipping point in the company’s cloud transition journey. Given the continued demand for cloud applications and infrastructure, including database services, the management raised the FY26 revenue guidance to $67 billion, $1 billion higher than the previous guidance. Catz also showed strong optimism towards growth in its cloud business in FY26, with combined cloud growth (applications plus infrastructure) expected to grow over 40% in FY26, compared to 24% in FY25.
Individually, the OCI business is estimated to grow from 50% in FY25 to over 70% in FY26. The company’s large and loyal on-premise customer base is likely to provide a strong clientele for its infrastructure services. Addition of over 100 AI agents, a strong RPO and high renewal rate of its strategic SaaS products will be the primary drivers for OCI growth in FY26. With a sharp growth in OCI, the company’s RPO is expected to more than double by the end of FY26. Further, the management estimates its annual capital expenditure to be north of $25 billion focused on building revenue-generating equipment for the expansion of data centers.
For Q1 2026, Oracle’s total revenue is expected to grow between 11% and 13% in constant currency terms. Total cloud revenue is estimated to grow in the range of 26% to 30%, while non-GAAP earnings are likely to increase by 4% to 6%.
Way Forward
Oracle is a key partner in OpenAI’s Stargate AI infrastructure project. The company’s current RPO growth estimates do not consider the surge in demand expected from the Stargate project. With the project still in its nascent stages, the company has a huge upside potential from the project which has not been factored into its future growth and stock price.
Additionally, the CEO highlighted that there is a demand-supply mismatch in the cloud infrastructure market. Oracle currently has 23 MultiCloud data centers globally, and plans to build 47 more over the next 12 months to meet the rising demand. In fact, it will soon have more data centers than all of its competitors combined. While this will result in a sharp jump in its capital expenditure in FY26, it will reap benefits for the company in the long term.
Given a strong RPO, strategic focus on expanding its data center footprint, and ability to build an array of AI-enabled solutions, Oracle is optimistic about a much stronger performance in FY26 and beyond. In fact, the company, which was once just a database provider, is growing at a fast pace and is set fulfil its CEO’s vision of becoming a leader in cloud and AI solutions soon.
Read the full article here
