‘Record-level AI demand’ helped Oracle Cloud Infrastructure revenue grow 52 percent, says Oracle CEO Safra Catz.

Oracle CEO Safra Catz expects the database product giant to hit $25 billion in cloud revenue in its current fiscal year, crediting in part Oracle’s cloud speed and adoption rate for artificial intelligence use cases.

“Record-level AI demand” helped Oracle Cloud Infrastructure revenue grow 52 percent, Catz said on the Austin, Texas-based vendor’s Monday quarterly earnings call. OCI consumption revenue grew 58 percent in the quarter.

“We remain the preferred cloud for AI workloads, as well as for non-GPU cloud infrastructure services,” Catz said. “Our ability to deploy our cloud in many sizes gives our customers flexibility. And our multi-cloud agreements with Microsoft, Google and AWS provide customers more choice in how they can migrate their Oracle databases to the cloud.”

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Oracle Secon-Quarter Earnings

Cloud services and license support is Oracle’s fastest-growing line item, Catz said on the call. During the second fiscal quarter ended Nov. 30, revenue from this segment grew 12 percent year over year, reaching $10.8 billion for the quarter. This segment now represents 77 percent of Oracle’s total revenue.

Catz also pledged “expense discipline” as the vendor invests in research and development and building capacity to meet demand, although she predicts fiscal year 2025 capital expenditures to double those of fiscal year 2024.

As with AI contemporaries Microsoft and Salesforce, AI agents have become a focus area for Oracle lately. Oracle co-founder and CTO Larry Ellison told call listeners that the vendor’s agents are at work automating drug design, image and genomic analysis, satellite image analyses for agriculture, real-time video weapons detection and more.

“The scale of this opportunity is unimaginable,” Ellison said.

Catz added that Oracle has “dozens and dozens of AI agents that can really help companies spend a lot less and really do a better job serving their customers.”

“We find enormous, enormous interest in this area, and no one has the capability and the data and the AI capability that Oracle can bring to a customer,” she said.

Ellison said that the variety and speed of building Oracle data centers while keeping all of its services available through each region was part of the key to beating the competition.

“We don’t have to provision like our competitors do,” Ellison said. “Our competitors have some of their services in some regions and some of their services in other regions. We have all of our services in all of our regions, even though we are both smaller in terms of our smallest region— and larger in terms of our largest region—than our competitors.”

Catz said that Oracle’s data center designs help on CapEx because “our competitors always have to land with an extremely large footprint before they can even get started.”

“We can land with smaller footprints, have consumption and expand as customers need it,” she said. “And this allows us to really match our capital expenditure with, ultimately, our revenue, because we don’t have to spend a long time with empty centers because we literally can start small and just fill them up as our customers are consuming.”

Multi-Cloud Business Grows

Despite Oracle’s leadership having strong words for the cloud competition, the vendor’s multi-cloud business that allows customers to use Oracle’s database service with third-party cloud providers continues to grow.

The vendor is at work on at least 35 more cloud regions with Microsoft Azure, Google Cloud and Amazon Web Services, having launched 17 already. The vendor has about 98 cloud regions in total.

The vendor’s Database@Azure, Google Cloud and AWS offerings have reached a $100 million-plus run rate, Catz said, and is on track to exit the first year above $100 million in revenue.

Banks, telecommunications companies and other customer types are among the early customers, Ellison said.

“It will be a multibillion-dollar business,” he said.

Oracle’s Network Work

During the call, Ellison told analysts about the vendor’s work building networks to move large volumes of data into graphics processing unit (GPU) clusters faster.

Ellison said he believes Oracle has an advantage already in networking speed for AI training, but it remains an area of investment by the vendor. “If no one makes the networking faster, then I think there’s a potential bottleneck,” he said. “We’re trying to avoid that bottleneck by speeding up our networking.”

Oracle saw GPU consumption up fourfold in the quarter, Catz said.

Second Quarter In Depth

For the second fiscal quarter, Oracle reported total revenue of $14.1 billion, up 9 percent year over year. Oracle Cloud revenue is expected to top $25 billion for the fiscal year, according to the vendor.

Total remaining performance obligations (RPO) was $97 billion, up 50 percent year over year ignoring foreign exchange. Catz credited the growth to more customers signing larger, longer contracts. Cloud RPO grew about 80 percent year over year and represents three-fourths of total RPO. About 40 percent of RPO becomes revenue over the following 12 months.

Cloud license and on-premises licenses revenue—including Java—grew 3 percent year over year ignoring foreign exchange, reaching $1.2 billion. Cloud database services grew 28 percent year over year and has annualized revenue of $2.2 billion, according to the vendor.

Infrastructure subscription revenue, including license support, was $6 billion, up 17 percent year over year. Infrastructure cloud services annualized revenue is now $9.7 billion.

Total cloud revenue from the quarter was $5.9 billion, up 24 percent year over year. Within this segment, Infrastructure as a Service was $2.4 billion, up 52 percent year over year.

Software as a Service was $3.5 billion, up 10 percent year over year. Strategic back-office SaaS applications now have annualized revenue of $8.4 billion and grew 18 percent during the quarter.

Oracle’s Fusion Cloud ERP software brought in $900 million during the quarter, up 18 percent year over year. NetSuite Cloud ERP brought in the same amount, up 19 percent year over year ignoring foreign exchange.

Second fiscal quarter operating income was $4.2 billion using GAAP. GAAP net income was $3.2 billion.

Catz said on the call that for the full 2025 fiscal year, she is “very confident and committed” to double-digit total revenue growth. Total cloud infrastructure growth should also best last year’s 50 percent growth.

In the third fiscal quarter, Oracle expects total revenue to grow between 9 percent and 11 percent year over year ignoring foreign exchange. Total cloud revenue should grow 25 percent to 27 percent.

Oracle’s stock traded at about $176 a share after hours Monday, down about 8 percent.