TLDR
- Oracle missed Q3 earnings expectations with $1.47 EPS vs $1.49 expected and revenue of $14.13 billion vs $14.39 billion expected
- Remaining performance obligations (RPO) surged 62% to $130 billion, exceeding analyst expectations of $105 billion
- Oracle projects 15% revenue growth in fiscal 2026 and 20% in fiscal 2027, accelerating from previous 6% average growth
- Company plans to double data center capacity and increase capital expenditures to $16 billion in fiscal 2025
- Oracle raised its quarterly dividend by 25% to $0.50 per share ($2.00 annually)
Oracle Corporation (NYSE:ORCL) shares dipped in early trading Tuesday after the software giant reported fiscal third-quarter results that fell short of Wall Street expectations. The company posted adjusted earnings per share of $1.47 on revenue of $14.13 billion for the quarter ended February 28, missing analyst estimates of $1.49 and $14.39 billion respectively.
Despite the earnings miss, Oracle revealed a surge in bookings that far exceeded projections. Remaining performance obligations (RPO), a key measure of booked revenue, jumped by 62% to $130 billion.
This figure greatly surpassed analyst expectations of approximately $105 billion. Chairman Larry Ellison pointed to “record levels” of customer demand driving this growth.
The company’s cloud infrastructure business continues to show strong momentum. This segment increased by 49% compared to 52% growth in the previous quarter.
Oracle is racing to build out computing capacity for AI startups and other cloud users. It competes against larger players like Amazon, Microsoft, and Google in this space.
“We are on schedule to double our data center capacity this calendar year,” Ellison stated in the earnings release. This expansion aims to meet the rapidly growing demand for Oracle’s AI-enhanced cloud computing services.
CEO Safra Catz provided an optimistic outlook for the company’s future growth. Oracle now expects revenue to grow by 15% in its 2026 fiscal year and by 20% in fiscal 2027.
These projections mark a major acceleration from the 6% average growth Oracle has seen over the previous five fiscal years. Catz indicated that the growing backlog for cloud services gives the company “clear line of sight to our future revenue growth.”
Plans to more than double its capital expenditures
To support this growth trajectory, Oracle plans to more than double its capital expenditures. The company expects to spend $16 billion during the 2025 fiscal year, roughly doubling from the previous year.
This increased spending aims to address demand that is “dramatically” outpacing supply, according to Catz. However, some analysts have expressed concerns about the eventual financial returns and cost effectiveness of this soaring AI-related spending.
Investors were particularly interested in updates regarding “Stargate,” a joint venture between Oracle, OpenAI, and SoftBank. The $100 billion project, which could potentially grow to $500 billion over four years, features Oracle as an initial equity backer.
Ellison described Stargate as “the biggest AI training project out there.” He added that the company expects to sign its first large Stargate contract “fairly soon.”
Catz noted that the company expects RPO to continue growing rapidly as they look forward to signing their first Stargate contract. Analysts pointed out that the current RPO growth does not yet include benefits from this initiative.
Quarterly dividend raised by 25%
In a move that might please shareholders, Oracle raised its quarterly dividend by 25%. The new dividend will be $0.50 per share, or $2.00 annually, up from the previous $1.60.
Like many stocks that benefited from last year’s AI enthusiasm, Oracle has faced concerns about returns on its large technology infrastructure investments. The stock has lost about 10.5% so far this year, after rallying nearly 60% in 2024 for its biggest annual gain since 1999.
Evercore ISI analyst Kirk Materne noted there would be “some back and forth with bulls and bears” following the results. While revenue and EPS came in below consensus, he highlighted “the massive jump in RPO to $130 billion” as the bigger story.
Barclays analyst Raimo Lenschow offered a similar perspective, noting that while “Q3 in itself was not stellar,” the strong RPO growth and fiscal 2026 guidance “confirm the revenue acceleration story.”
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