Oracle reported fiscal first-quarter results after Thursday's close that beat on revenue, earnings and its closely watched cloud backlog, and the stock is up 5.5% in premarket trading Friday as a result.
What did Oracle report for its fiscal first quarter?
For the quarter ended August 31, adjusted earnings per share came in at $1.92 versus a $1.74 consensus, and revenue reached $19.35 billion versus $19.14 billion expected, a roughly 30% year-over-year gain. Cloud infrastructure revenue was the standout line, up 121% year-over-year to $7.4 billion. Non-GAAP operating income rose 31% to $8.2 billion.
Why did the stock jump after such a rough year?
Oracle shares were down more than 21% year to date heading into this print, against an S&P 500 up close to 11% over the same stretch. That gap traces back to worries that Oracle is spending faster than the AI demand it's chasing, a concern that led S&P to cut the company's credit rating to BBB- back in July. Thursday's numbers eased that specific fear rather than erasing it: the stock rose 5.5% in premarket trading after the print, the first real relief this stock has had in weeks.
What is actually driving the backlog number?
Remaining performance obligations, Oracle's measure of contracted future cloud revenue, reached $664 billion, up $26 billion from the fourth quarter and above the roughly $640 billion analysts had penciled in. The company said it booked more than $30 billion of additional AI cloud contracts during the quarter alone. RPO is a promise of future revenue, not cash in hand this quarter, but a number growing this fast is the clearest signal Oracle has given that its infrastructure buildout has buyers lined up behind it.
What did the options market get right, and wrong, about this move?
OpticAlpha flagged Thursday morning that options were pricing an implied move near 11.5% for Oracle around this print, against a backlog that already stood at $638 billion. The stock's actual premarket move, 5.5%, landed at roughly half of what the options market had priced. That's not unusual for Oracle specifically. A year ago, its fiscal Q1 report missed on both revenue and EPS yet the stock still surged as much as 36% overnight, purely on an RPO number that jumped 359%. This time the headline numbers beat too, so the move came in smaller relative to the hedge, not because the print was weak, but because less of the good news was a surprise.
What's left to watch before next week's Fed decision?
August CPI is due Friday at 8:30 AM ET, the last inflation print before the Federal Reserve's September 15-16 meeting. Economists polled ahead of the release expected headline CPI to rise 0.4% on the month and ease to roughly 3.3% to 3.4% year-over-year, with core CPI seen at 0.2% monthly. Rate-hike odds for next week's decision had already climbed into the high 60s to low 70s percent range on hotter-than-expected PPI data earlier in the week. A hotter CPI print this morning would firm those odds further; a cooler one would put the hike back in question.
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