Oracle Corp.’s stock is down today after the company offered lower quarterly revenue guidance stemming from a plan to make a massive increase in its cloud computing investment.

The announcement followed a solid fourth quarter in which the database giant easily beat Wall Street’s expectations.

The company reported a profit before certain costs such as stock compensation of $1.54 per share on revenue of $11.2 billion for the quarter, up 8% from a year ago. The company’s net income rose 20%, to $4.5 billion. Analysts had been expecting Oracle to report earnings of just $1.31 per share on revenue of $11.04 billion.

For the full fiscal year 2021, Oracle reported profit rose 21%, to $4.67 per share, on a 4% rise in revenue, to $40.5 billion.

“Our Q4 performance was absolutely outstanding,” Oracle Chief Executive Safra Catz (pictured) said in a statement.

Oracle showed enormous strength in its biggest business unit, cloud services and license support, with sales of $7.39 billion during the quarter. That was up 8% from a year ago and above the average analyst forecast of $7.32 billion in revenue.

That segment is home to Oracle’s cloud application portfolio, and the company offered some very impressive numbers for those too. Fusion ERP, which is the company’s financial software suite for large enterprises, saw revenue grow by 46%. Fusion HCM, its human resources software offering, saw revenue jump by 35%, while NetSuite ERP, which is financial software for small and medium-sized businesses, reported sales growth of 26%.

Oracle said Oracle Cloud Infrastructure consumption revenue rise 103% during the quarter but it didn’t provide a number in dollars. What it did say is that about half of that revenue comes from Oracle Database workloads, with the other half coming from everything else.

In a conference call with analysts, Catz attributed the earnings growth to accelerating growth rates of both its applications and infrastructure cloud businesses. “That is the fourth consecutive year of double-digit earnings per share growth at Oracle Corporation,” she noted.

Elsewhere in Oracle’s business, cloud license and on-premises license revenue rose 9% from a year ago, to $2.14 billion, while hardware sales added $882 million, down 2% from last year.

Analyst Holger Mueller of Constellation Research Inc. told SiliconANGLE that Oracle didn’t just have an outstanding quarter, but in fact, an outstanding year, breaking the $40 billion a year revenue mark. “The next milestone to watch is the $30 billion in cloud services and license support revenue,” he said. “Not only has Oracle done well with its traditional Oracle Database and Oracle mySQL offerings, it also has shown strength with its SaaS portfolio for ERP as well as HCM.”

The bigger news, though, was undoubtedly Oracle’s investment plans. Catz said the company is planning to invest back into the business at a greater rate than before in order to accelerate its top-line growth. She explained that executives see the company’s cloud business as “fundamentally more profitable” than on-premises software.

“We expect to roughly double our cloud capex spend in FY 2022 to nearly $4 billion,” Catz said. “We are confident that the increased return in the cloud business more than justifies this increased investment, and our margins will expand over time.”

Justified or not, the extra investment inevitably means taking a short-term hit, and Catz said the company is looking at first-quarter earnings of just 94 to 98 cents per share with revenue growth of 3% to 5%. Wall Street had earlier called for first-quarter earnings of $1.03 per share on revenue growth of 3%.

Mueller told SiliconANGLE that Oracle had already boosted its capital expenditures to an all-time high during the quarter just gone, and that today’s announcement is a sign the company sees its cloud business improving. “Building out cloud is not cheap, but it is a strategic investment in the future,” he said.

Despite an initial gain, Oracle’s stock lost almost 5% in after-hours trading.

Charles King, an analyst with Pund-IT Inc., told SiliconANGLE that Oracle’s additional investment in its cloud business is a wise move given its current minimal market share. But he said the announcement likely prompted some investors to take profits while the going is good.

“Lowering guidance due to the increased capex that its plans will require isn’t the sort of thing that appeals to investors, many of whom have helped boost Oracle shares by some 26% since the beginning of the year,” King said. “At least some of those folks interpreted the news as a signal to take profits and, perhaps, return to Oracle at some future date.”

Patrick Moorhead of Moor Insights & Strategy said the sell-off was not surprising as many Wall Street investors have a hard time seeing past the short-term spreadsheet. “Oracle’s cloud infrastructure success appears to be driving increased capital expenditures, and that is a good thing. This is a good move by Oracle, not a negative,” he added.

In any case, Oracle’s cloud business is widely expected to continue growing. Along with the additional investment, the company announced the availability of new cloud computing instances powered by Arm Ltd.-based processors during the quarter, making it only the second major public cloud provider to do so.

Photo: Oracle PR/Flickr