Oracle Earnings: IaaS Signings More Than Makes Up for Miss; Raising Fair Value to $98 From $84

Narrow-moat Oracle’s fourth quarter missed consensus expectations on the top and bottom line. Despite the miss, Oracle’s remaining performance obligations increased by 44%, which amounted to $98 billion, largely due to the firm’s growing infrastructure as a service business. We previously expected Oracle’s potential in the hyperscaler sphere to be dramatically capped due to what we saw as more niche attributes stemming from their roots in all things relational. However, we now think the firm’s lower IaaS pricing will bring in additional broader workloads than we had baked in. In turn, this will positively affect margins from such additional scale.