The software giant’s backlog stunned Wall Street.
When I visited the Silicon Valley headquarters of Oracle (ORCL -5.05%) 25 years ago as a young technology reporter, I was dumbstruck.
The stunning campus of glistening emerald towers surrounding a placid lake looked positively otherworldly to me, something akin to the Emerald City of Oz that summoned Dorothy and her ragtag gang in The Wizard of Oz. “This place looks like the future,” I kept thinking.
The enterprise software firm has since relocated to Texas, but its future is now.
Many of the big tech names of the 1990s have faded from view — acquired, outmoded, or outcompeted.
Not Oracle. The stock is up 79% year to date and rose about 39% on Sept. 10.
What happened?
On Sept. 9 after the market closed, the software giant announced its results for the fiscal first quarter, ended Aug. 31, and they were as awe-inspiring as that original emerald campus.
Now, however, instead of back-office systems, the company’s fortunes are surging on the cloud.
A burgeoning backlog
But it wasn’t the revenue or earnings results that sent the stock skyward. In fact, quarterly revenue of $14.9 billion was up 12% from a year ago but still slightly below Wall Street’s expectations of $15 billion. And earnings per share of $1.47, up 6% from last year, came in a penny below expectations.
All that mattered little. It’s the backlog of business that stunned the market and sent the share price soaring.
Oracle said it expects revenue from its cloud infrastructure unit to surge 77% this year, to $18 billion. It also posted a huge surge in bookings in the latest quarter and signed four multibillion-dollar contracts with three different customers in the quarter.
The company’s remaining performance obligations — expected future revenue from signed contracts that has not yet been collected — surged during the quarter to $455 billion, a jump of 359%.
If that’s not the future, I’m not sure what is.
Multibillion-dollar customers
“Clearly, it was an excellent quarter and demand for Oracle Cloud infrastructure continues to build,” CEO Safra Katz said on the Sept. 9 earnings call. “I expect we will sign additional multibillion-dollar customers.”
CEOs often speak in hyperbole on earnings calls. But in this case Katz’s language seemed subdued, if anything. Multicloud-based revenue from Microsoft, Alphabet, and Amazon soared more than 1,500% in the quarter.
Oracle Chairman and Silicon Valley legend Larry Ellison said the company expects to deliver another 37 data centers to these three tech giants over the next few years, taking the total to 71.
Image source: Getty Images.
Pure gold
By the way, due to Oracle’s incredible run-up, Ellison’s fortune soared $90 billion to more than $380 billion, putting him right behind the world’s richest person, Elon Musk.
To incentivize his sales force, Ellison once paid bonuses in gold coins. He wanted to reward ruthlessness and drive competitors out of business.
It worked, as several early competitors — Sybase and Informix are a couple of them — stagnated or were swallowed up by other companies.
Ellison no longer pays bonuses in gold. But Oracle is certainly a golden stock for its shareholders.
Matthew Benjamin has positions in Alphabet and Microsoft. The Motley Fool has positions in and recommends Alphabet, Amazon, Microsoft, and Oracle. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.