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Oracle (NYSE: ORCL) reported its fiscal Q2 2024 results on Monday, posting worse-than-expected revenue and Q3 revenue guidance. The report triggered a sell-off in after-hours trading, sending the company’s shares down 9.5% in Tuesday’s premarket. 

Oracle’s EPS Beat Estimates But Q3 Revenue Guidance Falls Short

Oracle’s shares tumbled more than 9.5% in premarket trading Tuesday after the software maker unveiled its financial results for the fiscal Q2 2024, missing revenue estimates. Revenue guidance for the current quarter was also below expectations.

Notably, Oracle generated $12.94 billion in second-quarter revenue, up 5% year-over-year but falling short of the consensus estimates of $13.05 billion. $9.64 billion of total revenue came from the company’s cloud services and license support, while Wall Street was looking for $9.71 billion. $1.18 billion was generated from cloud and on-premises licenses, down 18% from last year.

The company’s Q2 adjusted earnings per share stood at $1.34, exceeding the projected $1.32 per share. Net income climbed 44% year-over-year to $2.5 billion, or 89 cents per share, down from $1.74 billion, or 63 cents per share, in the same quarter last year. 

Looking forward, Oracle expects net income for Q3 to be in the range of $1.35 to $1.39 per share, compared to the analysts’ expectations of $1.37. The software firm estimates revenue to grow between 6% and 8% in the current quarter, with the midpoint of that range missing the analyst’s growth outlook of 7.6%.

Oracle Can Still Be Proud of its Year So Far

Oracle’s price action in today’s premarket represents a significant percentage drop, but overall, 2023 has been a favorable year for the cloud software provider.

The company’s shares are still up more than 37% year-to-date and around 41% over the past year, outperforming the broader S&P 500 index, whose gains have mainly been fueled by the AI-powered Big Tech companies.

Prior to this year’s performance, Oracle was mainly viewed as a technology has-been rather than an innovative company, falling behind the cloud giants like Salesforce. However, this year has seen Oracle pick up pace and reclaim analysts’ trust thanks to the craze around generative AI, a revolutionary technology capable of producing impressive text or media content using just a few words of human input.

Oracle is also a major investor in Cohere, a $2 billion enterprise-focused generative AI startup focused on copywriting, search, and summarization.

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