Oracle is planning to expand its data center footprint significantly in the near future.
In the company’s Q2 2024 earnings call this week, founder and CTO Larry Ellison said the company is in the process of expanding 66 of its existing cloud data centers and building 100 new cloud data centers.
Oracle generally relies on leasing space from third-party data center providers rather than building its own facilities. Rivals Microsoft, Amazon, and Google also use wholesale providers, but at the same time spend billions on their own infrastructure.
“We have to build 100 additional cloud data centers because there are billions of dollars more in contracted demand than we currently can supply,” said Ellison. “Cloud infrastructure demand is huge and growing at an unprecedented rate. In the next few weeks, we expect to sign a couple more billion-dollar cloud infrastructure contracts.
“We're able to build new data centers rapidly and operate them inexpensively because all of our data centers are architecturally identical, highly automated, with an identical high-performance RDMA network, autonomous services, and applications,” Ellison added.
Oracle CEO Safra Catz said the company now has 66 customer-facing cloud regions live; 45 public cloud regions globally, with another six being built. The company has 10 dedicated regions live and 13 more planned; nine national security regions; and two EU sovereign regions live.
Ellison said Oracle will launch in 20 Microsoft data centers in the coming months, totaling more than 2,000 racks, as part of the effort to offer Oracle services through Azure.
“It wasn't us that decided 2,000 was the right number of Exadata machines to install in those 20 data centers. That was Microsoft. The demand is enormous.”
During the call, Ellison said that the 100-figure will include Oracle Cloud regions as well as deployments in Microsoft’s facilities.
“We're building our own public regions based on direct customer demand and then we're building partner regions like the 20 data centers from Microsoft. The combination of the two adds up to 100,” he said.
He also noted that “several nation-states” have ordered multiple sovereign data centers to be built within their country, including Japan, Italy, Saudi Arabia, Bangladesh, and New Zealand.
Ellison also noted that Elon Musk’s AI venture xAI is a major Oracle customer: “We got enough Nvidia GPUs for Elon Musk's company xAI to bring up the first version, the first available version of their large language model called Grok. They got that up and running. But, boy, did they want a lot more. Boy, did they want a lot more GPUs than we gave them.”
For the quarter, Oracle posted total revenues of $12.9 billion, up five percent year-on-year. GAAP operating income was $3.6 billion. GAAP net income was $2.5 billion.
Cloud Revenue (IaaS plus SaaS) totaled $4.8 billion, up 25 percent; Cloud Infrastructure (IaaS) revenue totaled $1.6 billion, up 52 percent. Cloud license and on-premise license revenues were down 18 percent to $1.2 billion.
CEO Catz said: “Our cloud businesses are now at nearly a $20 billion annual revenue run rate, and cloud services demand continues to grow at unprecedented levels. Business is good and getting better."
For Q1 2024 - posted in September 2023 - Oracle posted total revenues of $12.5 billion, up nine percent, and a net income of $2.42bn. Cloud services and license support revenues increased by 13 percent to $9.5bn. Cloud license and on-premise license revenues, however, were down 10 percent to $800 million.
