Oracle shares slid 7% in extended trading on Monday after the database software company reported fiscal second-quarter results that fell short of analysts’ estimates and issued a weaker-than-expected forecast.
Here is how Oracle did compared to LSEG consensus:
Earnings per share: $1.47 adjusted vs. $1.48 expected
Revenue: $14.06 billion vs. $14.1 billion expected
Oracle’s second-quarter sales grew 9% year over year.
Net income increased 26% to $3.15 billion, or $1.10 a share, from $2.5 billion, or 89 cents a share, a year earlier. Revenue in Oracle’s cloud services business jumped 12% from a year earlier to $10.81 billion, accounting for 77% of total revenue.
Oracle’s biggest growth engine has been cloud infrastructure, where it’s competing with Amazon, Microsoft and Google as businesses move workloads out of their own data centers.
The business is booming due to soaring demand for computing power that can handle artificial intelligence projects. Oracle said revenue in its cloud infrastructure unit soared 52% from a year earlier to $2.4 billion.
Oracle said that it just signed an agreement with Meta, allowing the social media company to use its infrastructure to help with various projects related to the Llama family of large language models.
“Oracle Cloud Infrastructure trains several of the world’s most important generative AI models because we are faster and less expensive than other clouds,” Oracle founder Larry Ellison said in a statement.
For the current quarter, Oracle expects revenue growth of 7% to 9%. At the midpoint of that range, revenue would be about $14.3 billion. Analysts were expecting sales of $14.65 billion, according to LSEG. The company said it expects adjusted earnings of $1.50 to $1.54 per share. Analysts were calling for EPS of $1.57.
In September, Oracle it raised its fiscal 2026 revenue guidance to $66 billion, which was about $1.5 billion more than what analysts projected. During that month, Oracle also announced that its cloud unit would start taking customer orders for so-called computing clusters derived from over 131,000 Nvidia “Blackwell” graphics processing units, used for AI-model training and related tasks.
As of Monday’s close, the stock is up more than 80% this year, headed for its best annual performance since 1999.
Across the world, companies rely on Microsoft and Google to administer email accounts for employees. Keeping all those mailboxes secure, however, is a business opportunity.
Proofpoint went public in 2012, and as enterprises migrated to the cloud, many adopted the company’s secure email gateway software as a precautionary measure. But private equity firm Thoma Bravo bought Proofpoint in 2021, and another provider, Mimecast, went private in 2022.
Then generative artificial intelligence took off. The trending technology gave more ammunition to hackers, as well as new tools for security companies that promise to defend clients against attacks.
Now, a new set of companies are gaining traction in a mature market.
Investors valued startup Material Security at $1.1 billion in a 2022 funding round. In August, Abnormal Security, which calls itself “AI-native,” said it was worth $5.1 billion after a funding round involving CrowdStrike and Wellington Management. And on Thursday, Sublime Security, co-founded by U.S. Defense Department cybersecurity veteran Josh Kamdjou, said it had raised a round totaling $60 million.
Kamdjou, who is also Sublime’s CEO, had spent his former career showing companies how he could break into their networks and avoid being stymied by email security products. Then he decided to work on a solution.
“I decided to build something that would stop me as an attacker,” he said.
Business credit card issuer Brex had been using Material with Google inboxes, but after testing out Sublime, Brex switched, the startup’s chief information security officer, Mark Hillick, told CNBC in an interview. There were many problem emails that Material allowed but Sublime did not, Hillick said.
“All they need is one person to click on it, and then they go from there,” he said, referring to hackers. “That’s why false negatives are pretty dangerous.”
Abnormal Security is considerably larger than Material and Sublime, with over $200 million in annualized revenue. It’s quickly gaining market share, according to Peter Firstbrook, vice president and distinguished analyst at industry researcher Gartner.
Some companies use Abnormal Security as an add-on to Mimecast or Proofpoint, he said. For years, businesses have called in Proofpoint to filter messages before sending them along to Microsoft-based inboxes, he said, adding that Proofpoint’s year-over-year revenue growth rate is now in the teens after being in the thirties as recently as 2018.
Brex briefly looked at Abnormal but decided not to implement it, Hillick said.
“I don’t believe in black box as a philosophy,” he said. “It reduces visibility, so I can’t see how Brex is going to be attacked. I can’t see what tactics or techniques are being used. With Sublime, I can do that.”
Hillick said that in his experience, Sublime provides better coverage of new threats. Abnormal’s website says its software “detects hyper-personalized, never before seen attacks with no traditional indicators of compromise.”
Sublime’s Kamdjou said attacks still make it through the defenses of large email providers such as Google and Microsoft, even when companies pay extra for higher tiers of service.
“That’s why we’re seeing so much success, basically,” Kamdjou said. “We’re here to catch everything they don’t.”
Representatives from Abnormal, Material, Microsoft, Mimecast and Proofpoint did not immediately respond to requests for comment.
The challenge facing incumbents such as Mimecast and Proofpoint is less about losing customers and more about missing out on new business from young companies that go with a next-generation tool such as Abnormal, according to Mark Alley, an email security consultant in Alabama. But some companies have switched to Sublime from Mimecast and from Proofpoint, Kamdjou said.
Proofpoint appears to be aware of the challenge, having acquired AI startup Tessian last year. Sumit Dhawan, CEO of Proofpoint, said in October that the company was 12 to 18 months away from going public again. He said he saw interesting potential acquisition targets but that prices remained high.
Sublime lacks a billion-dollar valuation. Unlike many richly valued startups, it has not resorted to splashy marketing, and it’s not big on placing cold calls, either.
Kamdjou said the startup did reach out to Donald Trump’s 2024 presidential campaign but didn’t get anywhere. In August, the campaign said a foreign adversary had obtained documents after breaching its email system.
“We’re very fortunate, because the majority of folks have heard about us just from word of mouth,” Kamdjou said.
They can then get a sense of Sublime’s abilities by uploading emails to a free service called EML Analyzer, which will use AI to predict if messages are likely benign, suspicious or malicious. It can pick up on phrases that often show up in business-email compromise attempts.
The sales-light approach won’t be changing now that Sublime has more capital to work with.
“Our mindset is we’re going to go and spend a bunch of money on R&D still,” co-founder Ian Thiel said.
OpenAI CEO Sam Altman visits “Making Money With Charles Payne” at Fox Business Network Studios in New York on Dec. 4, 2024.
Mike Coppola | Getty Images
OpenAI said Wednesday it was working to fix an outage after its popular ChatGPT assistant and Sora video generator were left inaccessible.
“We have identified the issue and are working to roll out a fix,” OpenAI said in a post on X.
Earlier this month, OpenAI CEO Sam Altman said the company’s technology was reaching 300 million active users each week. Earlier on Wednesday, Apple released new versions of its software for the iPhone, iPad and Mac that bring integrations with ChatGPT.
ChatGPT has been down for over three hours. An outage in June lasted for over five hours.
OpenAI was valued at $157 billion in a funding round in October that included participation from existing backer Microsoft as well as chipmaker Nvidia. The company’s rapid ascent began with the launch of ChatGPT in late 2022 and has been the biggest story in the tech industry over the last couple years.
On Monday OpenAI said it was releasing Sora to people in the U.S. and most other countries, but on Tuesday, Altman wrote on X that “we significantly underestimated demand for sora; it is going to take awhile to get everyone access.”
Vahe Kuzoyan, left, and Ara Mahdessian, the founders of ServiceTitan.
ServiceTitan
ServiceTitan, a provider of cloud software to contractors, priced its IPO at $71 a share on Wednesday, above the expected range.
The company is set to debut on the Nasdaq on Thursday under ticker symbol “TTAN.” ServiceTitan previously raised its price range to between $65 and $67.
ServiceTitan sold 8.8 million shares in the offering, which would amount to a raise of almost $625 million. At the IPO price, ServiceTitan is worth about $6.3 billion.
Technology IPOs have been sparse since late 2021, when inflation and rising interest rates pushed investors out of riskier assets. Cloud software stocks quickly went out of favor after remote work during the pandemic had accelerated their growth.
In March of this year, social network Reddit went public, followed by data management company Rubrik the following month. In September, less than two weeks after the Federal Reserve lowered its benchmark rate for the first time since 2020, chipmaker Cerebras filed for an IPO. However, the company has yet to debut on the market.
ServiceTitan, based in Glendale, California, filed to go public on Nov. 18. The company has said some proceeds would go toward redeeming all outstanding shares of its non-convertible preferred stock. It had issued that stock in 2022 to repay loans to finance the $577 million acquisition of pest control software provider FieldRoutes.
While raising money in 2022, ServiceTitan agreed to “compounding ratchet” terms that encourage the company to quickly go public and prevent unnecessary dilution, according to an analysis from venture firm Meritech Capital.
Bessemer Venture Partners, TPG and Iconiq are among the company’s top shareholders, alongside founders Vahe Kuzoyan and Ara Mahdessian.
Mahdessian’s father had a contracting business, and Kuzoyan’s father dealt in plumbing, according to the Los Angeles Times. The founders said in a pre-recorded IPO roadshow that they saw technology as a way to modernize their family businesses. Their software can help with marketing, sales, scheduling and customer service.
ServiceTitan’s preliminary results for the October quarter show a net loss of about $47 million on $198.5 million in revenue. That suggests approximately 24% year-over-year revenue growth, the highest rate since mid-2023. But the company’s net loss widened from around $40 million in the October quarter last year.