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ORCL
Earnings call · Aug 2026 (Q1 FY27)

ORACLE Q1 FY27 earnings call ORCL

Sep 10, 2026 Source

Executive summary

Oracle Q1 FY27 — Record Revenue and Accelerated Cloud Growth

Oracle achieved record Q1 FY27 results, driven by significant acceleration in its Cloud Infrastructure and Cloud Apps businesses. The company is successfully converting its remaining performance obligations into revenue, supported by substantial AI capacity deployments and innovative business models that optimize capital expenditure. Management remains confident in continued growth and profitability, with a focus on AI integration across its application suites and infrastructure offerings.

Highlights

5

  • Total revenue reached a record $19.3 billion, up 30% year-over-year.

  • Cloud Infrastructure revenue grew 121% year-over-year to $7.4 billion.

  • Non-GAAP operating income increased 31% to $8.2 billion.

  • Non-GAAP EPS rose 30% to $1.92.

  • Remaining Performance Obligations (RPO) increased by $26 billion from Q4, with strong conversion into revenue.

Concerns

2

  • Gross margin declined as expected due to impacts from ramping up data centers and acceleration of infrastructure revenue.

  • Free cash flow was negative $5 billion in Q1, driven by CapEx of $28 billion.

Guidance & targets

CategoryTargetConfidence
Total Revenue Growth
30% to 34%
high materiality
High
Cloud Revenue Growth
65% to 71%
high materiality
High
Non-GAAP EPS
$1.85 to $1.93
high materiality
High
Total Revenues
at least $90 billion
high materiality
High
Non-GAAP EPS
$8.10
high materiality
High
CapEx
$90 billion to $95 billion
medium materiality
High
Net Cash CapEx
not more than $70 billion
medium materiality
High

Segment performance

SegmentRevenueYoYQoQMargin
Cloud Infrastructure
Reflecting strong execution and continued strong demand for compute and database services.
$7.4 billion121%——
Cloud Apps
Tracking well with Fusion and industry apps.
—10%——
Fusion
Part of the strong SaaS offerings.
—14%——
Industry Apps
Growing very nicely, part of the complete suite offering.
—>20%——
SaaS
Driven by demand environment and AI integration.
—10%——
Multicloud Database
Growing quickly, with expanded Azure and AWS regional footprint.
Customer growth: 180% YoY
—353%——

ORCL operating KPIs by quarter

ORCL operating KPIs stated on its earnings calls, by fiscal quarter
KPI Feb 2025 Q3 FY25 May 2025 Q4 FY25 Aug 2025 Q1 FY26 Nov 2025 Q2 FY26 Feb 2026 Q3 FY26 May 2026 Q4 FY26This call Aug 2026 Q1 FY27Change vs prior quarter
Remaining performance obligation (RPO)
$130B Our RPO balance is now $130 billion, up from $97 billion last quarter and up from $80 billion last year. Source transcript
$138B Our remaining performance obligations now stand at $138 billion, up $8 billion from last quarter and up 41% from last year, and yet the best is still to come. Source transcript
$455B At the end of Q1, remaining performance obligations, or RPO, now to $455 billion. Source transcript
$523.3B Remaining performance obligations, or RPO, ended the quarter at $523.3 billion, up 433% from last year and up $68 billion since the end of August, driven by contracts signed with Meta, NVIDIA and others as we continue to diversify our customer backlog. Source transcript
$553B This is directly visible in our $553 billion RPO. Source transcript
$638B And our remaining performance obligations, or RPO, finished at $638 billion, up 363%. Source transcript
—+15.4%
Live Database at Cloud Services cloud regions
18 We are currently live in 18 cloud regions with Database at Cloud Services with our partners and have another 40 planned with Azure, Google and AWS. Source transcript
23 We are currently live in 23 cloud regions with database at cloud services and have another 47 planned. Source transcript
34 And finally, the Oracle database is booming with 34 multi-cloud data centers now live inside of Azure, GCP and AWS, and we will deliver another 37 data centers for a total of 71. Source transcript
————+47.8%
Contract bookings AI infrastructure—————
$67B We signed $67 billion in AI infrastructure contracts this quarter, the majority of which was either bring-your-own-hardware or prepaid. Source transcript
$30B+ We closed more than $30 billion of additional AI contracts in Q1 without requiring additional capital from Oracle. Source transcript
—
Global GPU utilization rate —————
97.5% Our global GPU utilization rate is 97.5%. Source transcript
97.9% GPU utilization remains extremely high at 97.9% in Q1. Source transcript
+0.4 pt

Operating figures the company states on every call, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Orderbook & backlog

Remaining Performance Obligations (RPO) $26 billion Q1 FY27

increase from Q4

~50% expected to convert into sales over the next 36 months

AI contracts $30 billion Q1 FY27

Additional AI contracts closed without requiring additional capital from Oracle

Product announcements

ProductTypeDetails
NetSuite Nextlaunch
NetSuite AI Connector servicelaunch
Agentic Care Management Systemlaunch
Oracle Interconnect for AWSlaunch
Apex Langlaunch
Oracle AI Data Platform integrationsupdate

Deals & partnerships

OpenAI Expanded relationship to offer OpenAI API access, ChatGPT for Work, and [ Codex ] through Oracle Marketplace.

Includes GPT 6 Astra.

Google (Gemini) Bringing Gemini models to Oracle's enterprise applications.

Expanding AI model offerings on OCI.

Continuum Multiyear partnership to offer its Helios quantum computer through OCI. multiyear

Helios will operate in a U.S.-based OCI AI data center, enabling hybrid quantum and AI workloads.

Capital programs

Abilene campus underway

Benefit:618 megawatts (75% of total capacity)

Six of the eight campus buildings, representing 618 megawatts and 75% of total capacity, have been delivered to the customer. Customer acceptance has compressed to only 24 hours.

Shackelford campus underway

Next gigawatt scale campus and is progressing well. NVIDIA Vera Rubin systems are performing better than expected.

New Mexico data center underway

Benefit:1 gigawatt (estimated)

Construction is on track, going through the process of acquiring an air permit. Deploying Bloom fuel cells for on-site power generation. No impact on FY27 revenue or earnings guidance.

Wisconsin data center underway

Benefit:1 gigawatt (estimated)

Data center delivery is on track and going well, working with partners to design and deliver energy capability through the grid. No impact on FY27 revenue or earnings guidance.

Risks & headwinds

Gross margin decline Q1 FY27

Declined in Q1 FY27

Mitigation:Offset by lower operating costs and strong operating leverage; expected to flatten over the next couple of years as ramp-up finishes.

Negative free cash flow Q1 FY27

$5 billion negative

Mitigation:Each project is designed to be strongly free cash flow generative shortly after ramp-up; decision to deploy more growth CapEx.

Data center project delays (New Mexico, Wisconsin) Ongoing

Permitting and energy delivery processes are complex

Mitigation:Diversified data center development, phased capacity delivery, robust planning, and backup options; no impact on FY27 revenue/earnings guidance.

What to watch in Q2 FY27

Gross margin trajectory

Next couple of years (starting Q2 FY27)
Current Declined in Q1 FY27
Target Flattening or stabilization

Why it matters

Gross margin is a key health indicator, and its stabilization is important for overall profitability as infrastructure revenue scales.

Over the next couple of years, as we finish the ramp-up, you can reasonably expect that gross margin would flatten, I would say.

Q&A highlights

Will Oracle slow CapEx beyond FY28 given competitors' spending, or could it increase? When will the company return to positive free cash flow?

Clay explained that Oracle uses diverse funding mechanisms (supplier financing, customer-supplied hardware, prepayments) to grow capacity without solely relying on its own CapEx, suggesting CapEx is not a limitation to growth. Hilary stated that each project is designed to be strongly free cash flow generative shortly after ramp-up, but did not provide a specific timeline for returning to positive free cash flow, noting the decision to deploy more growth CapEx.

“I think we see ways that -- we see ways that clearly, capital is still required to do this work. But it doesn't all have to flow from Oracle's side, doesn't have to be Oracle CapEx.”

asked by Brad Zelnick · answered by Clay Magouyrk

2 min read 6 chapters

Detailed narrative

Cloud Infrastructure Momentum

Oracle's Cloud Infrastructure (OCI) revenue surged 121% in Q1 FY27 to $7.4 billion, following a 93% growth in Q4 FY26. This acceleration is attributed to bringing record levels of new megawatt capacity online, supported by strong demand for compute and database services. The company delivered 850 megawatts of AI capacity, including over 300,000 GPUs, in Q1, nearly three times the volume of Q4 FY26.

AI-Driven Application Innovation

The applications business, particularly Fusion and industry apps, saw strong growth, with Fusion up 14% and industry apps over 20%. Oracle is integrating AI agents into its application suites, enabling end-to-end automation and faster ROI for customers. New offerings like NetSuite Next and an agentic care management system leverage AI to simplify workflows and accelerate deployments, with AI agents executing over 3.5 million times in production.

Strategic Capital Deployment & RPO Conversion

Oracle's remaining performance obligations (RPO) increased by $26 billion from Q4, with a strong conversion into revenues, as approximately 50% is expected to convert over the next 36 months. The company is employing innovative financing models, including customer prepayments and 'bring your own hardware,' to fund AI capacity expansion without solely relying on Oracle's cash. This strategy aims to sustain growth while managing CapEx, with over $30 billion in new AI contracts closed in Q1.

Data Center Expansion and Risk Management

Oracle is expanding its data center footprint globally, with significant projects in New Mexico and Wisconsin. Management emphasizes a diversified approach, noting that capacity delivery is phased and not reliant on any single site. While acknowledging the complexity of large-scale infrastructure, Oracle expresses confidence in its ability to meet RPO growth and manage potential delays through robust planning and backup options, stating neither site will impact FY27 revenue guidance.

Multicloud Database and Ecosystem Expansion

The multicloud database business grew 353% YoY, expanding to 70 regions and 119 availability zones. Oracle Interconnect for AWS is now generally available, providing private high-speed connections to all hyperscalers without data transfer charges. Partnerships with OpenAI and Gemini, along with new Grok models and an open-source model catalog, are expanding OCI's AI ecosystem, further integrating AI capabilities across platforms.

Gross Margin vs. Operating Margin Dynamics

While gross margin declined as expected due to the ramp-up of data centers and the acceleration of lower-gross-margin infrastructure revenue, non-GAAP operating margin remained flat at 42%. Management views operating margin as the key metric for driving business value, noting that infrastructure has much lower associated R&D and sales costs compared to software, and expects gross margins to flatten over the next couple of years.

AI-generated summary of the company's earnings call. Not investment advice.