Key points
- Cloud infrastructure revenue up 121% to $7.4 billion
- RPO $664 billion on $30 billion of new AI deals
- Free cash flow negative $5 billion, debt $125 billion
- Q2 adjusted EPS guided down on gain-inflated comparison
Oracle's (ORCL) cloud infrastructure revenue rose 121% in the quarter ended August 31. Oracle spent $28.5 billion on capital projects during the quarter and reported negative free cash flow of $5.4 billion. Thursday’s report beat revenue and earnings estimates, but Oracle left its annual data-center spending plan unchanged.
The stock’s initial rise faded. Shares had fallen 5.4% to $152.94 before the after-hours release, then climbed to $159.40 before giving back that gain overnight. By midday Friday the gain was gone. Oracle (ORCL) traded at $151.67 shortly after noon in New York, about 0.8% below Thursday’s close. Options pricing had implied a roughly 11% move for the post-earnings session, which was still underway.
Total revenue rose 30% to $19.35 billion, and adjusted earnings reached $1.92 a share, both above the LSEG estimates reported by CNBC. Cloud infrastructure, which Oracle calls OCI, generated $7.4 billion against an expected $7.09 billion.
| Q1 fiscal 2027 | Result | Consensus | Change y/y |
|---|---|---|---|
| Total revenue | $19.35 billion | $19.14 billion | +30% |
| Cloud infrastructure (OCI) | $7.39 billion | $7.09 billion | +121% |
| Cloud applications | $4.22 billion | +10% | |
| Software licenses and support | $5.55 billion | $5.61 billion | -3% |
| GAAP EPS | $1.56 | +55% | |
| Non-GAAP EPS | $1.92 | $1.74 | +30% |
| Remaining performance obligations | $664 billion | $630.6 billion | +$209 billion |
| Operating cash flow | $23.1 billion | +184% | |
| Free cash flow | -$5.4 billion | from -$362 million |
The figures come from Oracle's September 10 earnings release, furnished to the SEC as Exhibit 99.1 to its Form 8-K. Consensus figures are from LSEG and StreetAccount as reported by CNBC, and from Bloomberg as reported by Benzinga before the release. Oracle hasn't yet filed its fiscal first quarter 10-Q, but the capital spending and cash flow figures below come from the tables in that same exhibit. The total debt figure is from CNBC, and the multicloud growth rate, the utilization number and the renewal pricing come from the earnings call and the company's slides.
What Oracle delivered and booked
The release says Oracle delivered 850 megawatts of additional data center capacity during the quarter, along with more than 300,000 GPUs, almost triple the capacity it delivered in the fourth quarter. Co-chief executive Clay Magouyrk said on the call that almost a gigawatt more is coming in the current one. Capacity that came up for renewal "was renewed or resold at prices 20% above prior contracts," he said. GPU utilization was 97.9%, according to the company's slides.
Remaining performance obligations, the contracted revenue Oracle has not yet recognized, ended the quarter at $664 billion, above the $630.6 billion analysts expected. The release puts the funding question this way: "Based on the structuring of those new contracts, the Company confirms there is no incremental impact on its plans to raise capital." RPO increased by $26 billion from June while Oracle signed more than $30 billion of new AI contracts. The two figures measure different things. New bookings add to the balance, revenue recognized during the quarter draws it down, and other adjustments move it in both directions. Oracle didn't provide a complete reconciliation. S&P Global estimated in July that roughly half of the backlog is tied to OpenAI.
The older businesses were the soft spot. Software license and support revenue slipped 3% and missed estimates, and cloud applications grew 10%. Multicloud database revenue, Oracle's database running inside the Amazon, Microsoft and Google clouds, rose 353%.
How Oracle is paying for it
Hilary Maxson, the chief financial officer Oracle hired from Schneider Electric in April, told reporters the capital spending plan for the year hasn't changed. On the call she said that "if I had to describe this quarter in one word, I think it would be acceleration," and she didn't put a date on free cash flow turning positive. The quarter shows why both things can be true at once. Oracle spent $28.5 billion on capex in thirteen weeks, more than three times what it spent a year earlier, and still reported a free cash flow shortfall of roughly half what analysts had braced for. Customer prepayments were $11.36 billion in the quarter, disclosed in the cash flow statement and again in Oracle's net cash outlay table. Against $28.5 billion of capex, that puts the net cash outlay for capital expenditures at $17.97 billion. Maxson put prepayments at $20 billion to $25 billion for the full year.
| Funding the buildout | Figure |
|---|---|
| Q1 capex | $28.5 billion, from $8.5 billion a year earlier |
| Fiscal 2026 capex | $55.7 billion |
| Fiscal 2027 capex guidance | $90 billion to $95 billion, unchanged |
| Fiscal 2027 net cash outlay | about $70 billion after customer prepayments |
| Debt raised in fiscal 2026 | $43 billion |
| Equity raised in fiscal 2026 | $5 billion |
| At-the-market stock sale completed in Q1 | $20 billion |
| Total debt | $125 billion (CNBC) |
| S&P credit rating | BBB-, cut July 9 |
The debt is what the bears keep pointing to. S&P moved Oracle to its lowest investment-grade rating in July and said it had underestimated what the buildout would cost. Oracle has since finished selling the $20 billion of common stock it announced in February under an equity distribution agreement with its banks. Separately, the diluted share count rose 3%, and the company hasn't published a reconciliation between the two. The 8-K also declared dividends on the common stock and on Oracle's 6.50% Series D Mandatory Convertible Preferred, which converts into common stock on terms set in the offering documents and adds to the share count over time.
Operating margins remained stable, while capital spending drove free cash flow negative. Non-GAAP operating margin stayed at 42% and GAAP operating income rose 57%. Capital spending affects cash flow immediately, while capitalized assets affect earnings over time through depreciation.
Analysts had asked before the report whether the buildout is slipping, after Bloomberg reported that a natural gas pipeline for Oracle's New Mexico data center was behind schedule. "Nothing that we know today would lead us to believe that New Mexico or any of our other sites are delayed relative to the schedules that we included, for example, in our fiscal '27 outlook," Maxson said. Magouyrk added that Oracle is working to obtain an air permit in New Mexico and that six of eight buildings at the Abilene, Texas campus have been handed to the customer. We reported earlier Thursday on Oracle and Nebius turning to Bloom Energy fuel cells after gas permitting delays. The $90 billion revenue target for the year depends in part on those projects remaining on schedule.
The outlook
Guidance for the current quarter sits right on top of what analysts already had: adjusted earnings of $1.85 to $1.93 a share against an LSEG estimate of $1.89, with cloud revenue growing 65% to 71%. The release frames the earnings comparison two ways. Excluding a one-time gain Oracle booked a year ago on the sale of its stake in Ampere, adjusted earnings per share grows 21% to 25% in USD. Including that gain, the release says adjusted earnings per share is "expected to decline between -19% and -15% in constant currency and decline between -18% and -14% in USD."
For the full year, Oracle now expects total revenue of at least $90 billion and non-GAAP earnings of $8.10 a share. The full-year revenue target was unchanged from the figure Oracle confirmed in June. The $8.10 earnings figure is three cents above consensus. Shares were down 21.5% for 2026 at Thursday's close. Oracle's filings are on the ORCL page.
