The Six Five team discusses Oracle Q1FY25 Earnings
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Transcript:
Patrick Moorhead: Oracle, Earnings Q1, Larry was on fire, talk to me.
Daniel Newman: Well, I mean look, let’s just kind of finish where we started. I mean, so Oracle made this big announcement and then you saw, I think Oracle stock is actually up 20% in one week. Again, this isn’t Nvidia, this isn’t AMD, this isn’t some cool Palantir, this is Oracle. This is Oracle, like really? So Oracle had a strong beat guide. It led with this Oracle database at AWS and it led because it was just that shocking to people. And like I said, such a big moment. And I think people are starting to see the capacity for growth, the scale for growth that this deal could give to the company. And you and I had the chance to spend time with our EVP of revenue ops, Jason Maynard. We actually have a full pod, I think it may be dropped or it’ll drop any time now. We’re just kind of talking about the evolution here, but this is a company that is sort of seen its growth go exponential. If you actually look at its valuation shift over the last decade, it’s like a six X magnitude, it’s incredible.
Patrick Moorhead: Yeah.
Daniel Newman: Companies like half a trillion dollars in value now. And it’s doing so through being able to diversify, being able to successfully enter the cloud space on the app side and on the infrastructure side, the fastest growing infrastructure. It is smaller, but their cloud infrastructure is wielding towards $12 billion. Now, this is not a small business and obviously they’ve been able to take advantage of their database and their cloud. So all that migration of on-prem to the cloud, they offer one alternative that’s been doing pretty well. Now they can do it on theirs, you can do it in AWS, can do it in Microsoft, you can do it in Google, wherever you want to run it, Pat, it’s encouraging. And then Larry was really on fire. I mean talking about going from hundreds of data centers, like 162 to talking about thousands of data centers over the next several years. He’s talking about going from 800 megawatt to multi gigawatt. He’s talking about expansion. He’s talking about using the utility relationships to build nuclear, local nuclear to be able to power these things. By the way, looking great at 80 years old up there on stage.
Patrick Moorhead: Amazing. I want to be him when I grow up.
Daniel Newman: You want to be, we all do. We all want to be Larry Ellison when we grow up. And then, of course, you have the growth across the board. You got NetSuite growth, we just sat down with CEO Evan Goldberg, we got apps growth double-digit, 10% plus. We heard from Steve Miranda, Pat, the company just overall is really, really well positioned. The autonomous technology is market leading. Again, it’s hard to get swoon over Oracle. It just is. It’s historically just been a tough company to be swoon about. But, I literally looked at these earnings, I’m like, this is just really good. And then he talked about 3000, what was it? This 3 billion, sorry, is the number I’m looking for in GPU commits.
Now we don’t know exactly what those contracts look like, what the per hour rate is and how much money the company’s making. But Pat, one thing we did here over and over, whether it was Evan, whether it was Miranda, whether it was Clay McGurk, whether it was Jason Maynard, is they believe AI is part of what they’re charging for. Which is interesting, because I had felt that being able to show incremental value was going to be super important. They seem to believe if it makes their products great, people will pay more for them, they’ll stick with them. But much more incremental in terms of how they’re thinking about it rather than any sort of one time charging. And you and I both hammered on that pretty hard throughout the course of the week.
Patrick Moorhead: Yeah, that’s great stuff. Dan. So Oracle had their investor conference today in Las Vegas. That was and back to back to back to meetings, but I think what the company has to show, first and foremost, Larry talked about a hundred thousand data centers. What’s the CapEx going to look like on that? Because right now they’re not spending, they’re spending about a little over 10% of what some of the MAG seven companies are spending now. If you put that in comparison that they don’t have a consumer franchise, they have to pay for Google and Microsoft, but it’s more equivalent to let’s say an AWS who deals with enterprise. And then if you narrow that into very large, very highly regulated, require the highest level of security, you still have to get to something other than I think AWS has the 7X, the CapEx. I’m really interested to see as small as they might be, what kind of CapEx is going to be need to put in there on that. It’s also very clear to me that, from a bump on their earnings, I think also had to do with the realization with the smart investors on what this can mean for the future. If you are the database of record, and it really enables multicloud that really hasn’t taken off.
And also let’s say 80% of that data on-prem becomes 50% on-prem, that’s going to be 30% more data going into the public cloud. Imagine what that could do for the hyperscalers and what they can do. I know we’re here talking about Oracle, but I think it’s as important to talk about the network effects and ecosystem effects that this type of move can make. The apps business is going to be interesting. I think humming along at double digits there. And listen, overall apps are hard to move there. I can’t tell you I can put a, I mean they’re doing well, obviously. They have a lot of openness, particularly around ERP of both NetSuite and Fusion. But I’m wondering, Dan, it’s unclear to me what can turn that into deep double-digit, right from 10% to 20% to 30% to 40% if they’re not charging extra for AI. And as Steve Miranda said, “It’s not free, it’s included.” So interesting stuff there. Dan Oracle overnight became a more interesting company to investors out there. I think you and I always thought they were an interesting company for various reasons, but it’s now on the radar screen and if nothing else, they’re going to be lumped into the AI, the very rich AI category.
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.
