Oracle — 2026Q3 earnings

“Total quarterly revenues increased 30% to $19.3 billion, reflecting strong execution in our infrastructure business, with the delivery of 850MW additional datacenter capacity. Cloud revenues (IaaS + SaaS) increased 62% to $11.6 billion, driven by 121% growth in Cloud Infrastructure (IaaS), and 10% growth in Cloud Applications (SaaS).”

“Q1 GAAP earnings per share increased to $1.56, up 55%, and non-GAAP earnings per share climbed to $1.92, up 30%.”

“Software revenues were down 3% to $5.5 billion, reflecting our customers’ continuing migration from on-premises software to the Cloud. Services revenues were $1.4 billion, up 5%, and Hardware revenues were $0.8 billion, up 15%.”

“Customer demand for AI Cloud Training and Inferencing Services continues to grow faster than supply. Oracle booked more than $30 billion of additional AI cloud contracts in Q1 increasing its RPO to $664 billion. Based on the structuring of those new contracts, the Company confirms there is no incremental impact on its plans to raise capital. Since the end of Q4, Oracle also delivered more than 300,000 GPUs to its AI Cloud customers and almost triple the capacity delivered in Q4 FY26.”

“Oracle’s strong operating income translated to a record Q1 operating cash flow of $23 billion, up 184%. Free cash flow was negative $5 billion for Q1 as Oracle continued to execute on investments to support the growth of its Cloud Infrastructure business.”

“During Q1 FY 2027, Oracle successfully completed the sale of $20 billion of common stock (before commissions) through an At-the-Market (ATM) equity program, as part of its previously disclosed capital investment program.”

“For fiscal year 2027, we now expect total revenue to be at least $90 billion, and non-GAAP EPS to be at $8.10.”

“Non-GAAP earnings per share is expected to be between $1.83 and $1.91 in constant currency and between $1.85 and $1.93 in USD, which represents growth of 19% to 23% in constant currency and 21% to 25% in USD excluding a one-time gain from Q2 FY2026”

“Q2 FY26 results included a one-time net investment gain from the sale of Oracle's interest in Ampere. Including the investment gain, Q2 FY27 non-GAAP earnings per share is expected to decline between -19% and -15% in constant currency and decline between -18% and -14% in USD.”

“If I had to describe this quarter in 1 word, I think it would be acceleration as we are seeing an acceleration in execution across the company translating into our top and bottom line results.”

“And for the first time, Q1 total revenue grew sequentially, an important sign of our continued progress in building scaled infrastructure. Historically, a record Q4 was followed by a lighter Q1. But as we accelerate across the full technology stack, from infrastructure to database to software, that is no longer the case.”

“Our gross margin did decline as expected driven by impacts from ramping up our data centers and the acceleration of infrastructure revenue. However, this was offset in the quarter by lower operating costs and strong operating leverage tied to simplification and efficiency actions. Net, our operating margin remained around flat for the quarter at 42%, on a non-GAAP basis.”

“First, we continued to grow our RPO during the quarter to support future revenues, and the vast majority of those new contracts were via prepay or bring your own hardware or a similar mechanic so will not require incremental capital from Oracle. Also, that new RPO will not impact our CapEx or revenues until fiscal 28 or beyond.”

“We now expect around half of our RPO to convert into sales over the next 36 months.”

“To note, our CapEx will not be linear throughout the year. We continue to anticipate $90 billion to $95 billion in CapEx for the full year with not more than $70 billion in net cash CapEx.”

“The other question I think you asked was about free cash flow. We have not given a particular time frame on that. Yet, and we do not expect to give that today.”

“I did not say and I do not I do not think myself nor Hillary said that it does not require additional CapEx. We said it does not require additional cash from Oracle.”

“Of all the GPUs that came up for renewal in Q1, that capacity was renewed or resold at a 20% premium to prior contracts. The majority of those GPUs are 4 years or older.”

“We just delivered 850 megawatts in Q1. And what that means is that and as you can see, neither Shackleford nor New Mexico or Wisconsin or Michigan were delivered in Q1.”

“anyone that is been in the business of doing construction or large scale infrastructure development if they if their plan relies on 100% achievement of every 1 of their deliverables, We have a term for that. it is called a bad plan.”

“Over the next couple of years, as we finish the ramp up, you can reasonably expect that gross margin would flatten, I would say. But we have not given any part particular guidance today.”