(Bloomberg) — Oracle Corp. reported weaker cloud sales growth in the quarter, dampening enthusiasm for the software maker’s expansion efforts in a competitive market. The shares were down about 5% in extended trading.
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Cloud revenue, a growth bet closely watched by investors, jumped 30% to $4.6 billion. Of this, $1.5 billion came from computing power and Internet storage and $3.1 billion from applications. The cloud growth rate was lower than the 54% jump from the previous quarter.
Total sales rose 9 percent to $12.5 billion in the first quarter of the fiscal year, the company said in a statement Monday. Analysts on average estimate $12.5 billion, according to data compiled by Bloomberg. Profit, excluding certain items, was $1.19 a share, compared with the average estimate of $1.15.
The Austin, Texas-based company, best known for its database software, is focused on expanding its cloud infrastructure business and has partnered with Amazon.com Inc., Microsoft Corp. And to compete aggressively with Alphabet Inc.’s Google. Investors hope Oracle will gain market share as demand for artificial intelligence products, which require more computing power, increases.
For Oracle now, “it’s all about the cloud, it’s about expanding the business,” said CFRA analyst Angelo Zino.
Oracle Chairman Larry Ellison said the demand for AI is growing, saying companies in the region have “signed contracts to buy more than $4 billion in capacity” from Oracle’s cloud services. The figure is more than double what Oracle had at the end of the previous quarter, it said in a statement.
Revenue from the cloud infrastructure business increased 66 percent as of Aug. 31 — “much faster than our hyperscale cloud infrastructure competitors,” CEO Safra Katz said in a statement. This figure was 76 percent in the previous quarter.
The stock fell to $118.67 in extended trading after closing at a record high of $126.70 in New York. Shares are up 55% this year.
Sales of Fusion software for managing corporate finances rose 21 percent in the quarter, compared with 26 percent growth in the prior period. Revenue from NetSuite, an enterprise planning tool focused on small and midsize companies, jumped 21 percent compared to 22 percent in the fiscal fourth quarter.
(Updates with analyst comments on the fifth paragraph.)
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