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Oracle stock falls after reporting mixed Q2 results

Oracle (ORCL) reported mixed second quarter results. Adjusted earnings of $1.34 per share topped Wall Street estimates of $1.33, but adjusted revenue of $12.94 billion was less than the expected $13.05 billion. Oracle CEO Safra Catz says in the release that demand for the companies Cloud Infrastructure and Generative AI services "is increasing at an astronomical rate." Yahoo Finance Live breaks down the report.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Video Transcript

[AUDIO LOGO]

JUILE HYMAN: Shares of Oracle are sliding 8% after-hours, as the company reported second-quarter earnings, its fiscal second quarter missing adjusted revenue estimates. It did beat slightly on the bottom line. Adjusted revenue for the company at $12.94 billion. That's versus the estimate for $13.04 billion.

This is even though total revenue did rise by 5%. So it was a year-over-year gain. It just wasn't as large as analysts had predicted here. Adjusted earnings per share beating by just a penny $1.34, $1.33 is what analysts had been looking. And just to run down the different areas of business here, cloud revenue up 25% to $4.8 billion. Cloud infrastructure revenue up 52%, that was the biggest growth area, to 1.6%. Cloud application revenue-- are you ready for all the different kinds of cloud revenue here? Cloud application revenue up 15% to $3.2 billion. Those are the three biggest lines of businesses here for Oracle.

JOSH LIPTON: Yeah. Oracle CEO Safra Catz trying to send kind of a bullish tone here, saying demand for our cloud infrastructure and generative AI services is increasing at an astronomical rate. She goes on to say that business is good and getting better. But, obviously, the initial take here is not positive for investors. On the call, that's when you would typically hear Safra Catz give guidance. So we'll be waiting for that.

You know, the stock, Julie, had a nice run into this print. It was up about 40%, obviously selling off here, at least initially. I think some big questions, I think, I know analysts want to hear on the call, just about the broader cloud environment, what it looks like. Is management still comfortable with this long-term call? They've put out there $20 billion plus of cloud revenue by the end of fiscal '24. AI questions as well, when is Oracle really think generative AI is going to start generating some meaningful tailwinds for OCI or Oracle Cloud Infrastructure? That's that public cloud service competing with the giants like the Amazons and the Microsofts.

JUILE HYMAN: Yeah. And Larry Ellison, of course, the chairman and CTO, chiming in the release also. And he seems to be talking about still just the huge demand for cloud services. He talks about the expansion of their data centers that they're building 100 new cloud data centers. He said they build them very quickly. They operate very efficiently. They're high performance here. And they operate them inexpensively. So he said-- he talks about them being connected to Microsoft Azure.

So, you know, again, to your point, there's nothing negative tone-wise in this release. So it's really going to hinge on the call here and what they have to say there about what's going on with--

JOSH LIPTON: Oracle calls are good call, by the way. Larry Ellison, oh--

JUILE HYMAN: I'm sure.

JOSH LIPTON: Throws sharp elbows, Larry.

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