Analyst(s): Keith Kirkpatrick, Daniel Newman
Publication Date: March 11, 2025
Oracle’s Q3 FY 2025 earnings highlight continued cloud expansion and record quarterly backlog growth, driven by strong demand for AI-powered workloads and enterprise cloud services. The company secured major cloud agreements, reinforcing its competitive position in infrastructure and AI-driven applications. With growing adoption across hyperscalers and industry-specific solutions, Oracle’s strategic cloud investments are set to drive sustained momentum.
What is Covered in this Article:
- Oracle’s Q3 FY 2025 financial results
- Cloud revenue growth and record RPO expansion
- AI infrastructure scaling and multi-cloud adoption
- Expansion of Oracle’s AI Data Platform and database integrations
- Increased CapEx and AI-driven data center expansion
- Guidance for FY 2026 and Oracle’s long-term cloud strategy
The News: Oracle Corporation (NYSE: ORCL) announced its fiscal Q3 FY 2025 financial results, reporting total revenue of $14.1 billion (-1.8% below consensus), reflecting a 6% year-on-year (YoY) increase and 8% YoY in constant currency. Oracle Cloud Infrastructure (OCI; IaaS) revenue grew 49% YoY to $2.7 billion, while Cloud Applications (SaaS) revenue increased 9% YoY to $3.6 billion. Cloud revenue, which includes Infrastructure-as-a-Service (IaaS) and Software-as-a-Service (SaaS), grew 23% YoY to $6.2 billion. Non-GAAP operating income rose 7% YoY to $6.2 billion (-0.9% below consensus), with a non-GAAP operating margin remaining stable YoY at 44%. Non-GAAP net income stood at $4.2 billion (-1.6% below consensus), up 6% YoY and 9% YoY in constant currency. Non-GAAP diluted earnings per share (EPS) was $1.47 (-1.5% below consensus), reflecting a 4% YoY increase and 7% YoY in constant currency. Oracle’s remaining performance obligations (RPO) surged 62% YoY in USD to $130 billion, signaling strong future revenue visibility.
“Oracle signed sales contracts for more than $48 billion in Q3,” said Safra Catz, CEO at Oracle. “This record sales number pushed our RPO up 63% to over $130 billion. We expect that our huge $130 billion sales backlog will help drive a 15% increase in Oracle’s overall revenue in our next fiscal year beginning this June.”
Oracle Q3 FY 2025 Earnings Show Strong RPO Growth Amid Cloud Expansion
Analyst Take: Oracle’s rapid expansion in cloud and AI continues to be a major growth engine, driven by solid Remaining Performance Obligations (RPO), increasing multi-cloud adoption, and a growing AI infrastructure. The company’s aggressive investments in data centers and AI technology, alongside strategic partnerships with hyperscalers, are strengthening its competitive edge and positioning it for sustained momentum.
Revenue and Earnings Could Reflect Market Challenges
For the quarter, Oracle reported total revenue of $14.1 billion, which came in 1.8% below the financial analysts’ consensus estimate. It also missed earnings expectations, with non-GAAP diluted EPS of $1.47, 1.5% below consensus. The top- and bottom-line misses may be indicative of customer caution around overspending and Oracle’s significant level of investment into AI data centers and technology.
Cloud Growth and RPO Drive Future Expansion
Analyst estimates notwithstanding, Oracle’s cloud strategy is paying off, with total cloud services revenue – including both IaaS and SaaS – climbing 23% year-over-year (YoY) to $6.2 billion. Meanwhile, RPO saw an even more dramatic rise, jumping 62% YoY to $130 billion, with cloud-related RPO alone surging over 90%. This robust backlog signals strong long-term revenue visibility, with management forecasting a 15% revenue boost in fiscal year 2026, primarily led by cloud infrastructure growth.
A key upcoming catalyst is Oracle’s Stargate initiative, a $100 billion AI infrastructure project in partnership with OpenAI and SoftBank. While Stargate hasn’t yet factored into Oracle’s RPO figures, executives anticipate the first contract signing soon – an event expected to have a significant impact on Oracle’s cloud trajectory.
Beyond infrastructure, Oracle’s Fusion Cloud ERP and NetSuite Cloud ERP continue to gain traction, growing 16% YoY. The increasing adoption of AI-powered SaaS applications for enterprise automation and analytics further reinforces Oracle’s cloud leadership as businesses accelerate their digital transformation.
AI Infrastructure and Multi-Cloud Adoption Gain Momentum
Oracle’s AI-focused cloud infrastructure is scaling at an unprecedented rate, with GPU consumption for AI training skyrocketing 244% YoY as enterprises ramp up model training and inferencing. This surge has fueled 49% YoY revenue growth for Oracle Cloud Infrastructure (OCI), solidifying the company’s position as a key player in AI-driven cloud computing.
The demand for multi-cloud solutions is also accelerating. Database MultiCloud revenue – driven by deeper integrations with Microsoft Azure, AWS, and Google Cloud – soared 92% last quarter. This trend highlights Oracle’s growing role in enterprise cloud environments, where businesses seek flexibility to deploy Oracle’s database solutions across multiple platforms.
To enhance its AI capabilities, Oracle recently introduced the Oracle AI Data Platform, which integrates OpenAI’s ChatGPT, xAI’s Grok, and Meta’s Llama directly with Oracle Database 23ai. This innovation will enable real-time AI inferencing on private enterprise data while maintaining security and compliance. Additionally, Oracle signed a multi-billion-dollar deal with AMD to develop a 30,000-GPU AI cluster, further expanding OCI’s AI training and inferencing capacity. With rapid cloud expansion, strategic AI investments, and deeper hyperscaler collaborations, Oracle is cementing its position as a major AI infrastructure player, intensifying competition with AWS and Microsoft Azure.
Heavy Investment in AI and Cloud Drives Higher Capex
Oracle’s aggressive push into AI infrastructure is reflected in its capital expenditures (CapEx), which totaled $5.9 billion this quarter – far exceeding analyst expectations of $3.8 billion. The sharp increase highlights Oracle’s commitment to scaling AI data centers, GPU capacity, and cloud networking to meet surging demand from enterprises, AI developers, and hyperscalers.
Looking ahead, Oracle plans to double its data center capacity by 2025, with power capacity expansion outpacing even that growth to support rising AI workloads. CEO Safra Catz confirmed that CapEx for FY 2025 is expected to surpass $16 billion – more than double the previous year. This level of investment is critical to sustaining OCI’s rapid expansion and reinforcing Oracle’s ability to compete with cloud giants like AWS, Azure, and Google Cloud. Despite the heavy spending, Oracle maintained a solid non-GAAP operating margin of 44%, reflecting disciplined cost management even as the company scales aggressively.
Guidance and Outlook: AI and Cloud Expansion Set the Stage for Growth
Oracle expects 15% revenue growth in FY 2026 and 20% in FY 2027, driven by a $130 billion RPO, increasing AI adoption, and expanding multi-cloud partnerships. To support this growth, FY 2025 CapEx is set to more than double to $16 billion, funding data center expansion and AI infrastructure scaling. For Q4 FY 2025, Oracle forecasts 9%-11% total revenue growth in constant currency, cloud revenue growth of 24%-28%, and non-GAAP EPS between $1.62 and $1.66.
Key growth drivers this quarter included a 92% surge in Database MultiCloud revenue from Microsoft, AWS, and Google Cloud, a 244% rise in GPU consumption for AI training, and a planned doubling of AI/GPU cloud capacity. Oracle also raised its dividend by 25%, reflecting confidence in cash flow stability. Looking ahead, Oracle’s expanding AI footprint and multi-cloud adoption remain key differentiators, positioning the company for sustained growth in AI training, inferencing, and cloud database solutions. With deeper hyperscaler integrations and potential Stargate contracts, Oracle is set to compete even more aggressively with AWS and Microsoft Azure in the AI cloud market.
Oracle is also well positioned due to the company’s vertically integrated strategy, which enables the organization to make the appropriate bets into AI without being constrained by external costs. This will be increasingly important as AI agents continue to gain attention in the market and will be highly reliant on a scalable, reliable, and secure ecosystem to perform as desired. Oracle’s strong investments in the underlying technology, along with the company’s robust and tightly integrated application offerings, is well-suited to support customers’ rapid adoption of AI agents.
See the complete press release on Oracle’s fiscal Q3 FY 2025 financial results on the Oracle website.
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 Q2 FY 2025 Results Focus on AI, Healthcare, and Cloud Revenue
Oracle Unveils Next-Generation EHR to Redefine Healthcare Delivery
Oracle Exadata X11M: The Enterprise AI Architecture
Author Information
Keith has over 25 years of experience in research, marketing, and consulting-based fields.
He has authored in-depth reports and market forecast studies covering artificial intelligence, biometrics, data analytics, robotics, high performance computing, and quantum computing, with a specific focus on the use of these technologies within large enterprise organizations and SMBs. He has also established strong working relationships with the international technology vendor community and is a frequent speaker at industry conferences and events.
In his career as a financial and technology journalist he has written for national and trade publications, including BusinessWeek, CNBC.com, Investment Dealers’ Digest, The Red Herring, The Communications of the ACM, and Mobile Computing & Communications, among others.
He is a member of the Association of Independent Information Professionals (AIIP).
Keith holds dual Bachelor of Arts degrees in Magazine Journalism and Sociology from Syracuse University.
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.
