Oracle Q1 FY24 Income Statement
Oracle this week announced their FY24 Quarter 1 results; it is more encouraging for Oracle Corporation than the depressed share price suggests!
First Glance
Looking at Oracle’s income statement (graphically represented below via https://twitter.com/EconomyApp) we can see that the revenue that Oracle Corporation received worldwide was $12.5Billion US Dollars. For a first quarter, that is quite a good start for the financial year. It marks a 9% year on year increase from Q1 last year — which on the face of it is good, but less than the forecast.
Breakdown
Having a more in-depth view of the income statement you can see that the majority of the incoming revenue is from Cloud Services & License Support at a 13% year on year increase from Q1 2022. This means that the highest performing stream was made up of Cloud Services (PaaS, IaaS, SaaS) and License Support (Annual Support Renewals/Maintenance). This is to be expected with more customer migrating environments to Oracle Cloud Infrastructure and the Support and Maintenance inflation increase of 8% taking effect. In the news, some financial news reporters were saying it was a bad Q1, due to missing the projected forecast revenues and that was because take up of Cloud Services was not as projected — which is a bit misleading as you can see a 13% year on year increase, whilst not at the projected rate, is still an increase for Cloud Services. However, the actual licensing revenue for Cloud services such as SaaS and On-Premise licensing is showing a decrease from last years quarter 1, down 11% year on year.
Cloud License & On-Premises License accounts for all licenses purchased by customers worldwide, there is little way to examine this figure whether ‘licensing’ for the Cloud has increased or went down with On-Premise licensing going up or vice versa — unless this was split out. On-Premises License traditionally has always been a strong performer for Oracle, but with customers now being more cost conscious, we can see in the marketplace that customers are trying to shrink On-Premise licensing by multiple techniques such as migrations to other vendors, cancellations, transitions to cloud environments, re-architecting, redeploying, and optimising licensing strategies.
The other areas for income were for hardware (which will include a small amount for on-premises kit and larger (and increasing) amounts for Cloud@Customer) and services such as consulting, implementations, and application migrations/upgrades. This was down on last years quarter 1 by 6%.
“Oracle Cloud Infrastructure revenue grew 66% in Q1, much faster than our hyperscale cloud infrastructure competitors,” said Oracle CEO, Safra Catz. “Total cloud services revenue, Infrastructure plus Applications, grew 30% to $4.6 billion in the quarter. Oracle Cloud Services plus License Support revenue now accounts for 77% of Oracle’s total revenue. This highly-predictable, highly-profitable recurring revenue stream — combined with continued expense discipline — drove 16% growth in non-GAAP earnings per share, 21% growth in free cash flow, and $7.0 billion in operating cash flow in the Q1.”
“Is Generative AI the most important new computer technology ever? Maybe!,” said Oracle Chairman and CTO, Larry Ellison. “Self-driving cars, molecular drug design, voice user interfaces — billions of dollars are being invested in AI. As of today, AI development companies have signed contracts to purchase more than $4 billion of capacity in Oracle’s Gen2 Cloud. That’s twice as much as we had booked at the end of Q4. The largest AI technology companies and the leading AI startups continue to expand their business with Oracle for one simple reason — Oracle’s RDMA interconnected NVIDIA Superclusters train AI models at twice the speed and less than half the cost of other clouds.”
Summary
Of the $12.5B revenues, costs were considerable to achieve this, totalling $9.1B — that takes a huge chunk of the incoming revenue. After internal costs and operating expenses are considered, Oracle is looking at an operating profit of $3.3B, with a net profit of $2.4B after all deductions, amortisation, and expenses.
So, Oracle have a net profit at the end of quarter 1 of $2.4Billion USD. If you multiply that by four (four quarters), you would get to $9.6Billion USD by the end of the fiscal year 2024. We will review the quarter 2 performance next quarter to see if there are trends emerging for FY24.
About the Author:
Johnny Cree is a Oracle SAM License Consultant at Version 1.
