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    ORCL
    Earnings call· Nov 2025(Q2 FY26)

    ORACLE CORP ORCL

    Dec 10, 2025 Source

    Executive summary

    Oracle Q2 FY26 — Strong Cloud and AI-Driven Growth with Accelerating RPO

    Oracle delivered a robust quarter, marked by accelerating cloud revenue and unprecedented RPO growth, largely fueled by AI demand and strategic partnerships. The company is aggressively expanding its OCI capacity, leveraging diverse financing models to manage capital intensity while maintaining an investment-grade debt rating. Oracle's integrated AI data platform and application suites are driving significant customer upgrades and cross-selling synergies, positioning it uniquely in the enterprise AI landscape.

    Highlights

    5

    • Remaining Performance Obligations (RPO) ended the quarter at $523.3 billion, up 433% year-over-year, driven by significant contracts.

    • Total cloud revenue (applications and infrastructure) grew 33% to $8 billion, accelerating from 24% last year and now accounting for half of total revenue.

    • Cloud infrastructure revenue surged 66% to $4.1 billion, with GPU-related revenue growing 177%.

    • Non-GAAP EPS increased 51% to $2.26, while GAAP EPS rose 86% to $2.10.

    • Total revenues grew 13% to $16.1 billion, continuing a trend of accelerating double-digit growth for three consecutive quarters.

    Concerns

    2

    • Free cash flow was negative $10 billion, and CapEx was $12 billion, reflecting significant investments in growth.

    • Fiscal 2026 CapEx is now expected to be $15 billion higher than previously forecasted due to increased RPO monetization.

    Guidance & targets

    11
    CategoryTargetConfidence
    Total cloud revenue growth (constant currency)
    37% to 41%
    high materiality
    High
    Total cloud revenue growth (USD)
    40% to 44%
    high materiality
    High
    Total revenues growth (constant currency)
    16% to 18%
    high materiality
    High
    Total revenues growth (USD)
    19% to 21%
    high materiality
    High
    Non-GAAP EPS growth (constant currency)
    12% to 14%
    high materiality
    High
    Non-GAAP EPS (constant currency)
    $1.64 to $1.68
    high materiality
    High
    Non-GAAP EPS growth (USD)
    16% to 18%
    high materiality
    High
    Non-GAAP EPS (USD)
    $1.70 to $1.74
    high materiality
    High
    Additional revenue
    $4 billion
    high materiality
    High
    Full year FY26 revenue expectation
    $67 billion
    high materiality
    High
    Fiscal 2026 CapEx
    $15 billion higher than forecasted after Q1
    high materiality
    High

    Segment performance

    11
    SegmentRevenueYoYQoQMargin
    Total Cloud Revenue (Applications and Infrastructure)
    Significant acceleration from 24% growth last year, now accounting for half of Oracle's overall revenue.
    		$8 billion33%——
    Cloud Infrastructure
    Growing much faster than competitors, with contributions from cloud native, dedicated regions, and Multicloud.
    GPU-related revenue growth: 177%
    		$4.1 billion66%——
    Cloud Database Services
    Strong demand across all clouds, with significant growth in Multicloud consumption.
    Autonomous Database revenue growth: 43%Multicloud consumption growth: 817%
    		—30%——
    Cloud Applications
    Expected to drive higher growth rates in the future due to cross-selling synergies and sales force reorganization.
    		$3.9 billion11%——
    Strategic Back-Office Applications
    Part of the Cloud Applications segment, showing strong growth.
    		$2.4 billion16%——
    Fusion ERP
    Strong growth within Cloud Applications.
    		—17%——
    Fusion SCM
    Strong growth within Cloud Applications.
    		—18%——
    Fusion HCM
    Strong growth within Cloud Applications.
    		—14%——
    NetSuite
    Solid growth within Cloud Applications.
    		—13%——
    Fusion CX
    Solid growth within Cloud Applications.
    		—12%——
    Industry Cloud (Hospitality, Construction, Retail, Banking, Restaurants, Local Governments, Communications)
    Combined growth for specialized industry applications.
    		—21%——

    Operational metrics

    21
    Non-GAAP EPS
    $2.26up 51%
    Q2 FY26

    Reported on a non-GAAP basis.

    GAAP EPS
    $2.10up 86%
    Q2 FY26

    Reported on a GAAP basis.

    Operating income
    $6.7 billiongrew 8%
    Q2 FY26

    Reported on a non-GAAP basis.

    Pretax gain from sale of Ampere interest
    $2.7 billion
    Q2 FY26

    Recognized in the quarter.

    CapEx
    $12 billion
    Q2 FY26

    Reflects investments being made to support accelerating growth, primarily for revenue-generating equipment in data centers.

    Currency impact on Q2 revenue
    1%positive impact
    Q2 FY26

    Positive impact on reported revenue.

    Currency impact on Q2 EPS
    $0.03positive impact
    Q2 FY26

    Positive impact on reported EPS.

    Currency impact on Q3 revenue
    2% to 3%positive effect
    Q3 FY26

    Expected positive effect assuming current exchange rates.

    Currency impact on Q3 EPS
    $0.06positive effect
    Q3 FY26

    Expected positive effect depending on rounding, assuming current exchange rates.

    Total revenues growth
    13%higher than 9% last year
    Q2 FY26

    Continuing trend of accelerating total revenue growth, three consecutive quarters of double-digit growth.

    OCI live customer-facing regions
    147
    Q2 FY26

    Expanding global footprint.

    Data center capacity handed over
    400 megawatts
    Q2 FY26

    Capacity delivered to customers in the last quarter.

    GPU capacity delivered
    50%more than Q1
    Q2 FY26

    Accelerating pace of capacity delivery.

    NVIDIA Grace Blackwell GB200 delivered
    96,000+
    Q2 FY26

    Delivered to the SuperCluster in Abilene, Texas.

    Multicloud regions launched
    11
    Q2 FY26

    Expanding Multicloud presence.

    Dedicated Region and Alloy consumption growth
    69%year-over-year
    Q2 FY26

    Strong growth in specialized cloud deployments.

    Live dedicated regions
    39
    Q2 FY26

    Expanding dedicated cloud deployments.

    Clinical AI agent customers live in production
    274
    Q2 FY26

    Number continues to rise daily.

    Cloud apps customer go-lives
    330
    Q2 FY26

    Multiple go-lives per day across various applications.

    Cloud application deferred revenue growth
    14%
    Q2 FY26

    Higher than the 11% Cloud apps revenue growth, indicating future acceleration.

    Marketplace consumption growth
    89%year-over-year
    Q2 FY26

    Powered by partners like Broadcom and Palo Alto.

    Industry KPIs

    7
    MetricValueDetails
    Capacity CAPEX$12 billionUSD
    Revenue growth$16.1 billionUSD
    Arr net new arr$16 billionUSD
    Rpo current rpo$523.3 billionUSD
    Customer account count274customers
    Multi product platform attach400+features
    Ai product adoption monetization274customers

    Orderbook & backlog

    2
    Remaining Performance Obligations (RPO)$523.3 billionQ2 FY26 end

    up 433% from last year; up $68 billion since end of August

    Driven by contracts signed with Meta, NVIDIA and others, diversifying customer backlog.

    RPO expected to be recognized in next 12 months40%Q2 FY26 end

    year-over-year growth

    Compared with 25% last quarter and 21% last year, indicating faster conversion.

    Product announcements

    9
    ProductTypeDetails
    Oracle AI databaselaunch
    Oracle AI data platformlaunch
    Acceleronlaunch
    AI agent servicelaunch
    Multicloud Universal Creditslaunch
    Multicloud channel reseller programlaunch
    Oracle Autonomous AI Lakehouselaunch
    Dedicated Region 25launch
    AI-based ambulatory EHRlaunch

    Deals & partnerships

    13
    MetaSignificant contract contributing to RPO growth

    One of the key drivers for the $68 billion increase in RPO since August.

    NVIDIASignificant contract contributing to RPO growth

    One of the key drivers for the $68 billion increase in RPO since August.

    GoogleAdded new AI models to OCI

    Ensuring customers have the latest and greatest AI capabilities.

    OpenAIAdded new AI models to OCI

    Ensuring customers have the latest and greatest AI capabilities.

    xAIAdded new AI models to OCI

    Ensuring customers have the latest and greatest AI capabilities.

    BroadcomPartner driving OCI consumption

    Building their SaaS businesses on OCI, contributing to marketplace consumption growth.

    Palo AltoPartner driving OCI consumption; released SASE and Prisma Access platform on OCI

    Building their SaaS businesses on OCI, contributing to marketplace consumption growth.

    CybereasonPartner scaling their SaaS business on OCI

    Continues to scale their businesses rapidly on OCI.

    Newfold DigitalPartner scaling their SaaS business on OCI

    Continues to scale their businesses rapidly on OCI.

    ITHCA GroupLaunched one dedicated region

    Dedicated region launched in Oman.

    NTT DataLaunched one Alloy region

    Enables partners to become cloud providers themselves.

    SoftBankLaunched one Alloy region

    Enables partners to become cloud providers themselves.

    TIM BrasilSigned new 5-year expansion to accelerate AI adoption and transform customer experience on OCI5 years

    Extension of a partnership that began with full data center migration to OCI in 2021. Building AI agents for customer interactions, with 24 projects in motion, 7 in production.

    Capital programs

    1
    Abilene SuperClusteron track

    Benefit: 96,000+ NVIDIA Grace Blackwell GB200

    The SuperCluster in Abilene, Texas is on track with more than 96,000 NVIDIA Grace Blackwell GB200 delivered.

    Risks & headwinds

    2
    Capital intensity of AI infrastructure build-outFY26

    CapEx was $12 billion in Q2 FY26; FY26 CapEx expected to be $15 billion higher than Q1 forecast.

    Mitigation: Diverse financing options (customer-supplied chips, vendor leasing), rigorous contract evaluation for profitability, commitment to investment-grade debt rating, and focus on quick conversion of CapEx to revenue.

    Maintaining profitability requirements amidst high demandOngoing

    Free cash flow was negative $10 billion in Q2 FY26.

    Mitigation: Pursuing business expansion only when it meets profitability requirements and capital is available on favorable terms; optimizing the process to quickly convert cash spent into revenues earned.

    What to watch in Q3 FY26

    5

    Total cloud revenue growth (USD)

    Q3 FY26
    Current33% (Q2 FY26)
    Target40% to 44%

    Why it matters

    This is a key indicator of Oracle's overall cloud momentum and the success of its AI-driven strategy.

    Total cloud revenue is expected to grow from 37% to 41% in constant currency and is expected to grow from 40% to 44% in USD.

    Q&A highlights

    6

    How much money does Oracle need to raise to fund its AI growth plans, given the capital-intensive nature of the business?

    Oracle has diverse financing options, including customers bringing their own chips and vendors renting capacity, which reduce upfront capital needs. The company is committed to maintaining its investment-grade debt rating and expects to need substantially less than the $100 billion some analysts project for its AI build-out.

    “we expect we will need less, if not substantially less money raised than that amount to go and fund this build out.”

    asked by Brad Zelnick · answered by Clay Magouyrk

    2 min read6 chapters

    Detailed Narrative

    01

    Accelerating Cloud Infrastructure Growth and Capacity Expansion

    Oracle's Cloud Infrastructure (OCI) revenue grew 66% year-over-year, with GPU-related revenue soaring 177%. This acceleration is driven by strong demand for AI infrastructure, alongside growth in cloud native, dedicated regions, and Multicloud. OCI now operates 147 live customer-facing regions with 64 more planned. The company delivered close to 400 megawatts of data center capacity and 50% more GPU capacity this quarter, including 96,000 NVIDIA Grace Blackwell GB200 units at its Abilene SuperCluster.

    02

    Strategic Approach to AI Infrastructure Investment

    Oracle employs a rigorous process for accepting AI customer contracts, ensuring profitability and timely delivery by evaluating land, power, component supply (GPUs, network gear), labor costs, and engineering capacity. The company is exploring diverse financing models, including customers bringing their own chips and vendors renting capacity, to minimize upfront capital expenditure and maintain its investment-grade debt rating. Management expects to need substantially less than $100 billion in raised funds for its AI build-out.

    03

    AI Data Platform and Multicloud Strategy

    Oracle is integrating its database, applications, and cloud offerings with AI, developing an AI database and AI data platform. This platform enables AI models (OpenAI, ChatGPT, xAI Grok, Google Gemini, Metalama) to perform multi-step reasoning on private enterprise data, including Oracle databases, applications, and external data sources like object stores and other clouds. The Multicloud strategy is expanding, with 11 new Multicloud regions launched this quarter, bringing the total to 45 across AWS, Azure, and GCP, with 27 more planned.

    04

    Applications Business Acceleration and Go-to-Market Synergy

    Cloud applications revenue grew 11% to a $16 billion annualized run rate, with Fusion ERP up 17%, SCM up 18%, and HCM up 14%. Industry cloud applications combined grew 21%. Oracle attributes this acceleration to its comprehensive application suites, built-in AI features (over 400 in Fusion), and a major sales force reorganization combining industry and Fusion sales teams. This '1 Oracle' approach drives larger, multi-component deals and upgrades from on-premise customers, resulting in a 3 to 5x annual revenue lift.

    05

    Customer Success and AI Adoption Examples

    Oracle highlighted several customer successes, including Uber surpassing 3 million cores on OCI and Temu scaling to nearly 1 million cores for Black Friday/Cyber Monday. TIM Brasil, a 5G leader, signed a 5-year expansion to accelerate AI adoption on OCI, with AI agents already improving issue resolution by 18% and customer satisfaction by 16%. Oracle's clinical AI agent now has 274 customers live in production, with a new AI-based ambulatory EHR generally available and U.S. regulatory approved.

    06

    Deferred Revenue and Future Growth Outlook

    Cloud application deferred revenue increased 14%, outpacing the 11% in-quarter revenue growth, signaling continued acceleration in the applications business. The company expects revenue and earnings growth to accelerate off an even larger base, driven by the AI halo effect on cloud applications and the unique value proposition of its AI data platform combined with its application suite.

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