Oracle AI/Cloud Pipeline World's Largest, Topping Microsoft's

**Bob Evans** (0:00)
Hello, my friends, welcome back to Cloud Wars Minute. I talked last week a little bit about Oracle's Q4 results, very strong across the board. Wanted to go into a little more detail today about one number in particular, their RPO, remaining performance obligation. It's contracted business, not yet recognized as revenue. Some people refer to it as RPO, it's also known as pipeline or backlog. But with what Oracle reported for Q4, it's now AI and Cloud Backlog or Pipeline or RPO, is now the largest in the world, $638 billion. It's even bigger than Microsoft. And I expect that over the quarters, Microsoft's on a quarterly calendar, Oracle reports its numbers a month before or two months after the quarterly calendars. So they might go back and forth. But very interesting, because of the relative sizes of those two companies and revenue. This reveals a lot about who's got momentum into the future. So as I said, Oracle's RPO for the, that it reported for the year, the quarter ended May 31st was 638 billion up 363 percent.
A couple of months ago when Microsoft reported its calendar or its fiscal Q3 and calendar Q1 numbers for the period ended March 31st, they reported RPO of 627 billion dollars up 99 percent. So Oracle beats them slightly on the total RPO, but look at the difference in the growth rate, 99, 363 percent.
Now, what's fascinating about this is if you look at the current size of the revenue for their businesses, right, Microsoft is by far the largest Cloud and AI provider in the world. Their latest quarterly Cloud revenue was 54.5 billion dollars. That's 5.5 times bigger than the Oracle Cloud revenue of 9.9 billion.
So, if Microsoft is such a dominant player right now, you know, wouldn't that you might think that would carry on into the future. But when we flip the era of time from the recent past, which revenue reflects into the future, that's where we see Oracle is just winning an outlandish share of the business going forward, even more than Microsoft. So right now, Microsoft's business is five and a half times bigger than that of Oracle. Oracle has been growing so much faster and some people say the growth rate doesn't matter because Oracle is so much smaller. But this is what starts to happen because of that growth rate.
This RPO pipeline, it talks about into the future, who's winning the future business. We're seeing more and more of that pipeline or RPO over time will convert to revenue for both of these companies. Oracle is expecting that because of a lot of this giant RPO moving into revenue over the next quarters, it believes that its cloud business will have a growth rate of about 60% for Q1, which runs through the end of August. So you see these growth rates and for the cloud revenue for the most recent quarter, the one that just finished Q4, the cloud growth rate was 47%. So it's seeing that jump up to 60% for Q1. So these are these multiplier effects. And again, my point here is about who's growing faster and who is moving into the leadership positions going forward. Clearly, it's Microsoft and AWS. And so to the first chapter of the cloud, here in the AI chapter, the leaders jumping out in front, growing faster, new ways of doing things are Oracle and Google Cloud. And that's reflected in the Cloud Wars Top 10, where now I've got Google Cloud Number 1, Oracle Number 2, Microsoft Number 3, and AWS down at Number 7 Speaking of AWS, how does it fit in this RPO whole tail of the tape?
AWS refers to this as backlog. And in its most recent quarter, ended March 31st, it said that its backlog was $364 billion, up 49%. Now in absolute terms, that is phenomenal, right? They've got more than a third of a trillion dollars already committed, not yet recognized as revenue growing at 49%. That is great. But relative to its competitors, it is not so hot. And for Google Cloud, these numbers, its backlog $462 billion, growing at 98 or 99%. Let's call it 98%.
So clearly, all three companies are out doing AWS in this backlog RPO space. And that's so important because it's a reflection of where the future of the business is headed. Got a detailed article with a lot of, a lot more info on this in context on cloudwars.com. I hope you'll check that out. Thanks for being with us here at Cloud Wars Minute. I hope you have a fantastic day.