The News: Oracle Corporation announced fiscal 2023 Q4 and full-year results. Total quarterly revenue was up 17% year-over-year in USD and 18% in constant currency to $13.8 billion. Cloud services and license support revenues were up 23% in USD and up 25% in constant currency to $9.4 billion. Cloud license and on-premise license revenues were down 15% in USD and down 14% in constant currency to $2.2 billion. For Q4 of fiscal 2023, Cerner contributed $1.5 billion in total revenue.
Fiscal year 2023 total revenue was up 18% in USD and up 22% in constant currency to $50.0 billion. Cloud services and license support revenues were up 17% in USD and up 21% in constant currency to $35.3 billion. Cloud license and on-premise license revenues were down 2% in USD and up 2% in constant currency to $5.8 billion. For fiscal 2023, Cerner contributed $5.9 billion to total revenue. Read the full Press Release from Oracle here.
Oracle Fiscal Q4 and FY 2023 Results: Oracle Showcases Cloud and AI Mettle in Delivering Record Full-Year Revenue
Analyst Take: Oracle registers strong fiscal Q4 and FY 2023 results, reaching an all-time high of $50 billion in FY23. Oracle CEO Safra Catz emphasized that the company’s annual revenue growth was led by its cloud applications and infrastructure businesses, which grew at a combined rate of 50% in constant currency. Oracle’s infrastructure growth rate has been accelerating with 63% growth for the full year, and 77% growth in Q4. Also, Oracle’s cloud applications growth rate accelerated in FY23. As a result, both of Oracle’s two strategic cloud businesses are growing larger and faster, setting the stage for another strong year in FY24.
Key fiscal Q4 2023 cloud-related results included:
- Q4 Cloud Revenue (IaaS plus SaaS) $4.4 billion, up 54% in USD, up 55% in constant currency
- Q4 Cloud Infrastructure (IaaS) Revenue $1.4 billion, up 76% in USD, up 77% in constant currency
- Q4 Cloud Application (SaaS) Revenue $3.0 billion, up 45% in USD, up 47% in constant currency
- Q4 Fusion Cloud ERP (SaaS) Revenue $0.7 billion, up 26% in USD, up 28% in constant currency
- Q4 NetSuite Cloud ERP (SaaS) Revenue $0.7 billion, up 22% in USD, up 24% in constant currency
From our perspective, the 76% IaaS growth indicates Oracle is gaining share in the global cloud market at a positive rate with the IaaS revenue representing an additional good sign for sustaining Oracle’s cloud ecosystem momentum. Plus, Oracle’s SaaS/Cloud Application 45% growth is solid, especially as measured against slower growth in the overall SaaS market.
In our assessment, Oracle is primed to drive generative AI innovations that can further broaden the ecosystem-wide influence of Oracle’s Gen2 Cloud. Oracle Chairman and CTO Larry Ellison accentuated that its Gen2 Cloud is the top choice for running generative AI workloads since Oracle has demonstrated the highest performance, lowest cost GPU cluster technology on a global basis. For instance, AI stalwart NVIDIA uses Oracle clusters, including one with more than 4,000 GPUs, for its AI infrastructure.
Oracle’s GPU clusters are built using what the company asserts is the highest-bandwidth and lowest-latency remote direct memory access (RDMA) network that is designed to scale up to 32,000 GPUs. As such, large language model (LLM) development firms such as Mosaic ML, Adept AI, and Cohere plus 30 additional AI development companies have committed to buy more than $2 billion of capacity in Oracle’s Gen2 Cloud.
Key financial highlights include that Oracle Q4 GAAP operating income was $4.1 billion. Non-GAAP operating income was $6.2 billion, up 10% in USD and up 12% in constant currency. GAAP operating margin was 30%, and non-GAAP operating margin was 44%. GAAP net income was $3.3 billion, and non-GAAP net income was $4.7 billion. Q4 GAAP earnings per share (EPS) was $1.19 while non-GAAP EPS was $1.67. Without the impact of the US dollar strengthening compared to foreign currencies, Oracle’s reported Q4 non-GAAP earnings per share would have been $0.03 higher.
Oracle’s FY 2023 GAAP operating income was $13.1 billion, and GAAP operating margin was 26%. Non-GAAP operating income was $20.9 billion, and non-GAAP operating margin was 42%. GAAP net income was $8.5 billion, while non-GAAP net income was $14.2 billion. GAAP EPS was $3.07, while non-GAAP EPS was $5.12. Short-term deferred revenues were $9.0 billion. Operating cash flow was $17.2 billion during fiscal year 2023, up 80% in USD.
Oracle Fiscal Q4 and FY 2023 Results: Why Oracle’s Cloud Business is Flourishing
We expect that Oracle’s multi-cloud and developer breakthroughs can further strengthen the company’s competitive position in the unfolding multi-cloud era (i.e., super cloud), especially as enterprise customers increase their demand for streamlined multi-cloud interconnectedness and capabilities. For instance, we find the Oracle Database 23c Free-Developer Release as being firmly positioned for positive and rapid acceptance in the developer community across both Oracle and non-Oracle users.
Oracle is committed to getting the interconnect latencies to the equivalent of two data centers acting as one data center, effectively minimizing latency issues, and making them feel like one cloud to customers. We anticipate that Oracle’s interconnect model will serve as the interconnect approach, which all hyperscalers and most cloud service providers adopt. Business customers will continue to drive the demand to use whatever service they want in the cloud that is best suited for any workload. As such, AWS, Google Cloud, and Azure should all connect to other clouds in the same manner that interstate highways interconnect motor vehicle traffic.
We see other cloud vendors locking in their users within their own cloud ecosystem. Strikingly, Oracle has taken a different and sharply differentiated approach with its major portfolio offerings such as Autonomous Data Warehouse. The company is extending Autonomous Data Warehouse’s capabilities by implementing the open-source Data Sharing protocol and building a collaborative platform with its new Data Sharing feature.
With this feature, users can now securely and efficiently grant access to subsets of their data with anyone on any cloud. As such, we anticipate that the new Oracle Autonomous Data Warehouse capabilities will enable Oracle to further distinguish and differentiate its overall cloud database portfolio vision and strategy, bolstering its multi-cloud and open source ecosystem missions.
Oracle Cloud Infrastructure (OCI) introduced new capabilities aimed at easing migration to OCI in accord with new Oracle Database features that target streamlining modern data-driven application development as well as expansion of machine learning (ML) capabilities in Oracle MySQL HeatWave, including unsupervised anomaly detection and recommender systems. OCI customers can now migrate virtual machines (VMs) from Amazon Web Services (AWS) to OCI, following on existing OCI support for VMware VM migration. The service has no management fee, although the VM conversion process incurs a resource charge.
With the new service, OCI is clearly targeting streamlining the ability of AWS customers to adopt OCI, with the strategic objective of improving their overall multi-cloud strategy and capabilities. We believe that the new cloud migration, workload security, and CDN features in alignment with Oracle Database portfolio enhancements, can reinforce OCI’s key value proposition of right sizing workloads according to specific customer requirements, moving the data industry away from predetermined inflexible workload parameters imposed by major providers.
Key Takeaways: Oracle Fiscal Q4 and FY 2023 Results Confirm Cloud and AI Prowess
Overall, we regard Oracle’s fiscal Q4 and FY 2023 results as impressive since they validate that the company is a vital player in powering innovation and accelerating adoption across the multi-cloud and AI ecosystems. In meeting the swiftly evolving demands of the multi-cloud era, Oracle is focusing on building out a cloud ecosystem that delivers the next generation of interconnect technology providing a solid foundation to fuel the sustained growth of its cloud business.
Disclosure: The Futurum Group is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.
Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of The Futurum Group as a whole.
Other insights from The Futurum Group:
Oracle Autonomous Data Warehouse: Boosting the Multi-Cloud and Open Source Missions
Oracle Database Analyst Summit: Powering the Multi-Cloud Era and Liberating Developers
Oracle Cloud Infrastructure: New Features and Database Portfolio Capabilities Boost Market Momentum
Author Information
Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.
From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.
A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.
An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.
Ron is an experienced, customer-focused research expert and analyst, with over 20 years of experience in the digital and IT transformation markets, working with businesses to drive consistent revenue and sales growth.
He is a recognized authority at tracking the evolution of and identifying the key disruptive trends within the service enablement ecosystem, including a wide range of topics across software and services, infrastructure, 5G communications, Internet of Things (IoT), Artificial Intelligence (AI), analytics, security, cloud computing, revenue management, and regulatory issues.
Prior to his work with The Futurum Group, Ron worked with GlobalData Technology creating syndicated and custom research across a wide variety of technical fields. His work with Current Analysis focused on the broadband and service provider infrastructure markets.
Ron holds a Master of Arts in Public Policy from University of Nevada — Las Vegas and a Bachelor of Arts in political science/government from William and Mary.
