Oracle on Monday announced customers committed to $48 billion of future cloud services consumption – just $5 billion less that its annual revenue for FY 2024 – but investors aren’t impressed.
Big Red’s revenue for Q3 2025 came in at $14.1 billion, up six percent year over year. Net income of $2.9 billion represented a 22 percent bump.
Earnings per share (EPS) rose 20 percent to reach $1.02 – but Wall Street [expected](https://au.investing.com/news/stock-market-news/oracle-earnings-missed-by-002-revenue-fell-short-of-estimates-3722488) a couple of cents more and also hoped for higher revenue and profit.
On the company’s earnings call, CEO Safra Catz explained poor forecasting may have cost Oracle a shot at an EPS beat.
“The non-GAAP tax rate for the quarter was 19.9 percent, which was higher than my 19 percent guidance and lowered EPS by $0.02,” she admitted. “EPS currency headwind ended up at $0.04, more than I thought would be hurt by currency as currency continued to strengthen,” she added.
There’s some irony in those admissions because Catz proudly pointed out that Oracle’s use of its own Fusion ERP means it was able to report earnings just ten days into its new quarter. “We continue to file our quarterly and annual financial statements faster than any other company in the S&P 500,” she said. Those statements just reflect the result of incorrect forecasts.
Oracle shares started the day at $150.34 and after its earnings announcement briefly spiked to $153, sank to $141.74, before settling at around $144.
The company predicted lovely numbers in the future as that $48 billion in cloudy bookings means it now has $130 billion of remaining performance obligation (RPO) on its books – that’s stuff customers have committed to pay for, but which Oracle hasn’t yet delivered.
“The RPO figure is the leading indicator of demand for our cloud services, while our live data center count and power capacity is the leading indicator of the conversion of RPO to revenue,” Catz said. The CEO told investors the quarter past saw Oracle’s 101st cloud region come online and shared the expectation that Oracle’s available power capacity will double this calendar year and triple by the end of its next fiscal year – meaning mid-2027.
“As we bring more capacity online, our revenues will clearly accelerate,” she said.
Some of that revenue will come from the [Stargate Project](https://www.theregister.com/2025/01/22/openai_stargate_ai_datacenter_company/), the OpenAI-led $500 billion project to build giant AI datacenters that Oracle has already started building datacenters to host but which is yet to produce any revenue or bookings.
Oracle’s chair and CTO Larry Ellison let on that Big Red is yet to sign a contract to participate in the project.
“We do expect … our first large Stargate contract fairly soon,” he said, despite previously saying work on datacenters for the project has already commenced.
Whenever the deal is done, it will further boost RPO.
Ellison talked up Oracle’s datacenter architecture, praising its “high degree of automation, which lowers our labor costs dramatically.”
“More important than lowering our labor costs with no labor, there's no human error.,” he said. “There's no human mischief. So, we're much more reliable and much more secure because we don't have a lot of human beings in our data centers.”
One interesting number in the quarterly results was 49 percent year on year growth in infrastructure-as-a-service (IaaS) revenue, making it Oracle’s fastest-growing segment. NetSuite and cloudy ERP each grew 16 percent, and other SaaS grew nine percent.
Ellison described Oracle’s AI training and multi-cloud database as experiencing “hyper-growth”, with Oracle’s offerings hosted at AWS, Google and Microsoft growing 200 percent in the last three months.
He also revealed Oracle is building “a gigantic 64,000 GPU liquid-cooled NVIDIA GB200 cluster for AI training.”
The cost of that rig is almost certainly included in the $16 billion annual capex expenditure forecast by Catz, $5.9 billion of which came in Q3.
The CEO wrapped things by stating “Our confidence in meeting our $66 billion revenue target for FY '26 is now stronger than ever and represents around a 15 percent growth rate. And more importantly, I now expect that our fiscal year '27 growth rate will be around 20 percent, which is even higher than I previously guided.”