EARNINGS REVIEW
Oracle, FY27 Q1 Earnings Results
IaaS growth of +121% lifted revenue slightly above the high end of guidance.
AI infrastructure investment is demonstrably converting into revenue. Consolidated cash flow is currently influenced by both large investments and customer prepayments and equity issuance.
Results versus expectations · Revenue of 19.345 B$ was 0.090 B$ above the high end of previous guidance. IaaS contributed 4.0 B$ of the 4.4 B$ increase in total revenue.
The difference between earnings and cash · GAAP operating margin +6.1%p; adjusted operating margin +0.4%p. OCF of 23.103 B$ includes customer prepayments with a financing component of 11.363 B$, while FCF was −5.396 B$.
Implications of the annual target · Reaching minimum FY27 revenue of 90.0 B$ requires average revenue of 23.552 B$ in the remaining 3 quarters. Annual CapEx guidance and derived remaining investment are excluded from the assessment pending verification of an official call source.
Key official release statements
2026.09.10 earnings release · Not call quotations“Total quarterly revenues increased 30% to $19.3 billion”Quarterly revenue increased 30% to 19.3 B$. The release also reported delivery of 850MW of additional data center capacity.
Official earnings release ↗“the Company confirms there is no incremental impact on its plans to raise capital”The company stated that the structure of the new AI contracts has no incremental impact on its capital-raising plans. Changes in plans are distinct from cash already raised.
Official earnings release ↗01 Results versus expectations · Revenue slightly above the high end; cloud within range
| Metric · B$ | Previous guidance | Actual | Difference and interpretation |
|---|---|---|---|
| Total revenue | 18.956~19.255 | 19.345 | +0.090 B$ above the high end YoY 29.6%, exceeding the 29% high end by 0.6%p |
| Cloud revenue | 11.354~11.785 | 11.607 | Within guidance range YoY 61.5% / Guidance range 58~64% |
The USD growth rates guided by the company on 2026.06.10 were applied to disclosed prior-year revenue. This is not a comparison with market consensus. Previous guidance ↗ · Actual results ↗
Year over year · Revenue +4.4 B$, operating income +2.5 B$
Revenue was 14.926 → 19.345 B$ (+29.6%, +4.419 B$). The IaaS revenue increase of 4.041 B$ accounted for 91.4% of total revenue growth. Revenue by business disclosure ↗
Key development · Drivers and implications of IaaS growth of +121%
- Verified figures
- IaaS Revenue 3.347 → 7.388 B$, +4.041 B$. Company-reported growth was 121%; calculation from disclosed amounts gives 120.7%. The previous quarter's company-reported YoY growth was 93%.
- Capacity expansion
- This quarter, the company delivered 850MW of capacity and more than 300,000 GPUs. As new capacity entered operation, more revenue was recognized from existing contracts. Earnings release ↗
- Demand evidence
- The CEO cited GPU utilization of 97.9% and, for GPU capacity renewed or resold this quarter, a 20% price premium over the previous contracts. This does not mean prices for all GPUs increased by 20%. CEO prepared remarks ↗
- Interpretation
- IaaS's share of total revenue increased from 22.4% → 38.2%. Contracts are converting into actual revenue faster, and the revenue mix is shifting toward infrastructure.
Operating income 4.277 → 6.728 B$ (+57.3%, +2.451 B$), Operating margin 28.7% → 34.8% (+6.1%p).
Quarter over quarter · Revenue +0.2 B$, operating income +0.6 B$
Revenue · FY26 Q4 → FY27 Q1
Increase of 0.161 B$ · QoQ +0.8%
Operating income · FY26 Q4 → FY27 Q1
Increase of 0.595 B$ · QoQ +9.7%
Operating margin was 32.0% → 34.8%, +2.8%p. Cloud revenue rose from 9.913 → 11.607 B$, an increase of 17.1%, or 1.694 B$, while software revenue fell from 6.824 → 5.550 B$, a decline of 18.7%, or 1.274 B$, leaving only a small increase in total revenue. Previous-quarter release ↗
02 Earnings sustainability · Distinguishing growth effects from cost reductions
Alongside revenue growth, reductions in restructuring costs of 0.321 B$, sales and marketing expenses of 0.252 B$, and intangible asset amortization of 0.218 B$ contributed to the year-over-year earnings improvement. A higher infrastructure revenue mix and initial costs at new data centers reduced gross margin.
Operating income → Net income · Financing costs and taxes
Operating income 6.728 − Interest expense 1.428 + Other non-operating income/loss 0.307 − Income taxes 0.847 = Consolidated net income 4.760 B$
Consolidated net income was YoY +62.6%, +1.833 B$ / QoQ +10.6%, +0.456 B$. Interest expense rose by 0.505 B$, from 0.923 → 1.428 B$ year over year. Operating income growth flowed through to net income, but the financing cost burden also increased. Income statement ↗
Consolidated net income of 4.760 B$ is before preferred dividends of 0.081 B$. It is distinguished from net income attributable to common shareholders of 4.679 B$, and the OCF reconciliation below uses consolidated net income from the cash flow statement.
03 Cash flow quality · Net debt improved, FCF deteriorated
Net debt · Previous quarter → Current quarter
Cash and liquid assets: 31.894 → 37.077 B$
Borrowings: 129.541 → 125.337 B$
Quarterly FCF · Previous quarter → Current quarter
Operating cash flow: 14.620 → 23.103 B$
Cash CapEx: 16.493 → 28.499 B$
The cash CapEx increase of 12.006 B$ exceeded the operating cash flow increase of 8.483 B$, widening the FCF deficit.
Consolidated net income → OCF → FCF · B$
- Consolidated net income
- 4.760
- Non-cash adjustments, including depreciation, amortization and stock-based compensation
- +4.408
- Customer prepayments with a financing component
- +11.363
- Other increase in deferred revenue
- +3.997
- Remaining working capital changes, including receivables and payables
- −1.425
- Operating cash flow · OCF
- 23.103
- Less cash CapEx
- −28.499
- Free cash flow · FCF
- −5.396
Non-cash adjustments include depreciation of 3.156 B$, intangible asset amortization of 0.202 B$, and stock-based compensation of 1.127 B$. Stock-based compensation does not involve a current-period cash outflow but is an expense that may dilute shareholders. Cash flow statement ↗
Common stock issuance raised, before fees, 20.0 B$, with net proceeds of 19.909 B$. This is financing cash flow. The 9.387 B$ improvement in net debt reflects the combined effects of equity issuance and customer prepayments, rather than internally generated positive FCF. Equity issuance and cash flow release ↗
Cash and liquid assets = cash and cash equivalents + current marketable securities. FCF = operating cash flow − cash CapEx; it does not deduct all investing cash flow.
04 Future funding burden · Distinguishing cash balances from the timing of payment obligations
As of 2026.08.31, Cash and liquid assets 37.077 B$, Borrowings 125.337 B$, of which current borrowings were 7.625 B$. Restricted cash of 2.565 B$ is excluded from cash and liquid assets.
Annual CapEx guidance · Official-source verification pending. Remaining nine-month investment derived from the plan in a third-party transcript is not displayed. Q1 cash CapEx of 28.499 B$ remains a verified disclosed result.
| Item · B$ | Remaining 9 months of FY27 2026.09~2027.05 | FY28 2027.06~2028.05 | Nature |
|---|---|---|---|
| Operating lease payments | 3.219 | 4.135 | Contractual cash payments for leases already commenced |
| Finance lease payments | 0.620 | 0.852 | Undiscounted, including principal and interest |
| Long-term purchase and other obligations | 5.449 | 6.176 | Purchase commitments for infrastructure components, power and other items |
These items may overlap and are not added together. Lease and purchase obligations are disclosed contractual schedules and are not combined with unverified annual CapEx guidance. 10-Q Note 6 ↗
Additional long-term commitments · Uncommenced lease commitments, primarily for data centers, total 288.0 B$. They are expected to commence in FY27 Q2~FY29, with terms of 15~19 years. This is the total committed over a long period, distinct from current borrowings or payments due within the next 1 year. Unpaid CapEx of 6.247 B$ is also separately disclosed.
Financing plans and additional liquidity
In its 2026.06 announcement, the company expected approximately 40.0 B$ of FY27 debt and equity financing, including 20.0 B$ of at-the-market equity issuance. The September release stated that this equity issuance was complete and that the new AI contracts did not change its additional financing plans. Financing plans are distinguished from cash actually secured. June financing plan ↗ · September progress update ↗
As of the 2026.05.31 annual filing, the 10.0 B$ revolving credit facility was undrawn, with maturity in 2031.03. This facility, reported as of a different date, is not added to available cash at the end of August. 10-K borrowings note ↗
05 Investment and recovery · Expanded capacity is reflected in revenue; cash recovery continues
Cash CapEx increased year over year from 8.502 → 28.499 B$ (+235.2%, +19.997 B$). Over the same period, IaaS revenue rose from 3.347 → 7.388 B$ (+120.7%, +4.041 B$). Expanded supply capacity is translating into revenue, but quarterly investment supports both current and future revenue, so dividing the two figures is not treated as a return on investment.
Quarterly cash dividend payments were 1.565 B$, with no share repurchases. This capital allocation structure uses external capital and customer prepayments while funding large capital expenditure and dividends. Investment, dividend and repurchase disclosures ↗
RPO · 664.0 B$
YoY +45.8%, +208.7 B$ · 455.3 → 664.0 B$
QoQ +4.1%, +26.0 B$ · 638.0 → 664.0 B$
The official release states that the structure of the new AI contracts has no incremental impact on capital-raising plans. The call-only assertion that the contracts affect revenue and CapEx from FY28 onward is excluded from the assessment pending verification of an official source. Official earnings release ↗
The company expects to recognize approximately 13% of RPO as revenue within the next 12 months. Total RPO does not convert into revenue or cash in the short term. RPO disclosure ↗
06 Outlook change · Emphasis on an annual revenue floor requires growth in the remaining quarters
FY27 annual revenue: previously 90.0 B$ → now a minimum of 90.0 B$. The same figure is now presented as a floor; the revenue target amount itself has not increased. FY27 covers 2026.06~2027.05. Previous outlook ↗ · Current outlook ↗
Next quarter, FY27 Q2 · 2026.09~11
+4.817~5.460 B$QoQ +7.9~11.2%
+1.530~2.173 B$
The amounts apply the company's USD revenue growth guidance to prior-year revenue of 16.058 B$. Cloud revenue YoY guidance of 65~71% is above the Q1 actual growth rate of 61.5%. Official Q2 guidance ↗
Remaining results required to achieve the annual target
Total revenue required in Q2~Q4
Annual floor 90.000 − Q1 actual 19.345
Average revenue required in the remaining 3 quarters
Quarterly average 21.7% above Q1 actual
Quarterly results · CY-aligned view
Amounts in B$ · Margins in % · Changes in % / %pThis comparison table aligns the requested FY groupings with CY quarters. Figures have not been recalculated into actual calendar quarters; the actual reporting period is shown in each column.
| CY alignment | 2025 · 4 quarters | 2026 · 3 quarters | Change this quarter | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Metric | 2025 total¹4-quarter totalBalances are at period end† | 1QFY25 Q324.12–25.02 | 2QFY25 Q425.03–05 | 3QFY26 Q125.06–08 | 4QFY26 Q225.09–11 | 2026 YTD¹Q1~Q3 totalBalances are at period end‡ | 1QFY26 Q325.12–26.02 | 2QFY26 Q426.03–05 | 3QFY27 Q126.06–08 | QoQvs FY26 Q4 | YoYvs FY26 Q1 |
| Revenue | 61.017 | 14.130 | 15.903 | 14.926 | 16.058 | 55.719 | 17.190 | 19.184 | 19.345 | +0.8%+0.161 B$ | +29.6%+4.419 B$ |
| Operating income | 18.475 | 4.358 | 5.109 | 4.277 | 4.731 | 18.325 | 5.464 | 6.133 | 6.728 | +9.7%+0.595 B$ | +57.3%+2.451 B$ |
| Operating margin | 30.3% | 30.8% | 32.1% | 28.7% | 29.5% | 32.9% | 31.8% | 32.0% | 34.8% | +2.8%p | +6.1%p |
| FCF | −13.181 | 0.071 | −2.923 | −0.362 | −9.967 | −18.753 | −11.484 | −1.873 | −5.396 | −3.523 B$ | −5.034 B$ |
| Operating cash flow | 22.296 | 5.933 | 6.157 | 8.140 | 2.066 | 44.874 | 7.151 | 14.620 | 23.103 | +58.0%+8.483 B$ | +183.8%+14.963 B$ |
| Cash CapEx | 35.477 | 5.862 | 9.080 | 8.502 | 12.033 | 63.627 | 18.635 | 16.493 | 28.499 | +72.8%+12.006 B$ | +235.2%+19.997 B$ |
| Net cash² | −88.309 | −78.453 | −81.365 | −80.310 | −88.309 | −88.260 | −95.473 | −97.647 | −88.260 | +9.387 B$ | −7.950 B$ |
| Cash and liquid assets | 19.766 | 17.823 | 11.203 | 11.005 | 19.766 | 37.077 | 39.132 | 31.894 | 37.077 | +16.3%+5.183 B$ | +236.9%+26.072 B$ |
| Borrowings | 108.075 | 96.276 | 92.568 | 91.315 | 108.075 | 125.337 | 134.605 | 129.541 | 125.337 | −3.2%−4.204 B$ | +37.3%+34.022 B$ |
Indented rows are components of, or reference items for, the parent metric. Net cash = cash and liquid assets − borrowings. Depending on company definitions, FCF may include additional adjustments such as lease principal and therefore differ from operating cash flow − cash CapEx. See the cash flow discussion for the detailed definition.
¹ 2025 total = Sum of the 4 quarters from 2024.12~2025.11. 2026 YTD = Sum of the 3 quarters from 2025.12~2026.08, not full-year results. The two totals cover different durations and are not directly compared as annual results.
Operating margin equals each period's total operating income ÷ total revenue. Balance sheet items are not summed; they are ending balances as of † 2025.11.30 and ‡ 2026.08.31.
² Net cash = cash and liquid assets − borrowings. A negative value indicates net debt. FCF and net cash QoQ/YoY changes are shown as B$ amounts rather than percentages; + indicates improvement and − deterioration.
Comparison bases, calculations and quarterly sources
Presentation and rounding · All amounts are in B$. Changes in titles and key summaries are shown to one decimal place, and disclosed amounts in the text and tables to three decimal places. Disclosures in millions of dollars were preserved by dividing by 1,000. Growth rates and margins are calculated before display rounding and may differ from the company's integer growth rates. IaaS growth of 121% is the company-reported rate. Quarterly disclosed amounts are not adjusted to match annual totals.
Management statements · The quotations above are short excerpts from the official earnings release dated 2026.09.10. Management quotations, annual CapEx guidance, new-contract timing and FCF Q&A from the third-party call transcript are excluded from the assessment pending an official source. Earnings-release verification and complete call verification are separate.
Earnings and cash flow · The default earnings measure is GAAP operating income, with adjusted figures shown separately. Directly disclosed standalone quarterly OCF and cash CapEx take priority; where only cumulative figures are available, the preceding cumulative amounts in the same fiscal year are subtracted. FCF is calculated from these two cash flow items.
Net cash and net debt · Cash and liquid assets equal Cash and cash equivalents + Marketable securities. Borrowings are the balance-sheet carrying amount of Notes payable and other borrowings (current + non-current). Separate lease liabilities, preferred stock and customer advances are not added; restricted cash is excluded from cash and liquid assets. Net debt is net cash with the sign reversed.
RPO · FY27 Q1 664.0 B$ and FY26 Q4 638.0 B$ retain the precision of their respective disclosures. The prior-year comparison uses 455.3 B$ from the original quarterly filing. Growth rates may differ slightly from those using the rounded 455 B$ in the latest release.
Guidance and required results · Previous Q1 revenue guidance = FY26 Q1 14.926 B$ × 1.27~1.29; cloud = 7.186 B$ × 1.58~1.64. Next Q2 revenue = FY26 Q2 16.058 B$ × 1.30~1.34. Remaining revenue = annual minimum 90.000 − Q1 19.345. Calculations use unrounded amounts and officially released guidance, distinguishing reported results, company outlook and author-derived requirements. Calculations based on unverified CapEx guidance are excluded.
Operating income, net income and cash reconciliation · Consolidated net income of 4.760 B$ is before preferred dividends. Non-cash adjustments 4.408 = depreciation 3.156 + intangible asset amortization 0.202 − deferred income tax 0.073 + stock-based compensation 1.127 − other 0.004. Remaining working capital −1.425 = receivables −1.009 + prepaid expenses and other items 0.114 − payables and other items 1.076 + income taxes payable 0.546. Prepayment inflows are reflected only once in OCF.
Payment obligations · Current borrowings are carrying amounts and may differ from the contractual principal maturity schedule. The remaining FY27 period and FY28 cover different periods. Uncommenced leases of 288.0 B$ are long-term undiscounted commitments and are not added to net debt. Leases, purchase commitments, unpaid CapEx and the annual CapEx plan may overlap and are not simply summed.