Oracle Shares Drop Over 9% after Reporting Bleak Q1 2024 Revenue Outlook

Following an uptick in first-quarter revenue, Oracle’s board of directors approved a cash dividend of about 40 cents per share, which will be paid out to shareholders on October 26.

American multinational tech company Oracle Corporation (NYSE: ORCL) shares dropped approximately 9.23 percent during the after-hours sessions to trade around $115.02. The sudden drop in Oracle shares is largely attributed to the announcement of the fiscal year 2024 Q1 financial results that did not match Wall Street’s expectations. Nonetheless, the company announced that its quarterly revenues were up 9 percent YoY to about $12.5 billion. Notably, the company’s guidance for the first quarter was about 8-10 percent in constant currency hence an adjusted earning per share of about 86 cents.

During the first quarter, the company announced cloud services and license support revenues were up approximately 13 percent. However, Oracle noted that the cloud license and on-premise license revenues dropped by about 10 percent YoY during the first quarter.

Oracle and  Q1 2024 Financial Statement

According to the Q1 earnings announcement, the company’s performance was outstanding backed by the rise of generative artificial intelligence (AI) around the world. Moreover, the company’s cloud infrastructure revenue grew by 66 percent during the first quarter. Notably, Oracle’s total cloud service revenue, infrastructure plus applications grew by about 30 percent to about $4.6 billion. As a result, Oracle anticipates better performance in the future amid the mainstream adoption of artificial intelligence through generative applications.

“Is Generative AI the most important new computer technology ever? Maybe!,” Oracle Chairman and CTO Larry Ellison noted. “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.”

As for the specific segments, Oracle’s cloud infrastructure reported a revenue of about $1.5 billion, while the Fusion cloud ERP and the NetSuite Cloud ERP reported a revenue of $0.8 billion and $0.7 billion respectively.

Following an uptick in Q1 2024 revenue, Oracle’s board of directors approved a cash dividend of about 40 cents per share, which will be paid out to shareholders on October 26, following a snapshot on October 12. Meanwhile, Citi raised its Oracle share price target to $138 from $121 but kept a neutral rating.

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