Oracle Q1 Earnings Call Highlights

Oracle’s fiscal Q1 revenue rose 30% to $19.3 billion, driven by a 121% surge in cloud infrastructure revenue to $7.4 billion. Non-GAAP EPS increased 30% to $1.92. Oracle delivered 850 megawatts of AI capacity and more than 300,000 GPUs, while quarterly capital expenditures reached $28 billion. The company expects full-year capital spending of $90 billion to $95 billion and has not set a timetable for returning to positive free cash flow. Oracle now expects at least $90 billion in fiscal-year revenue and non-GAAP EPS of $8.10, supported by growing AI contracts, rising cloud infrastructure demand and stronger conversion of its remaining performance obligations. Oracle NYSE: ORCL reported record first-quarter fiscal 2027 revenue as cloud infrastructure growth accelerated and the company brought substantial new AI computing capacity online. The company also raised its full-year revenue and non-GAAP earnings outlook, while maintaining plans for heavy capital spending to support demand. Total first-quarter revenue reached $19.3 billion, up 30% from a year earlier in U.S. dollars, according to Chief Financial Officer Hilary Maxson. Oracle’s cloud infrastructure revenue rose 121% to $7.4 billion, while cloud applications revenue increased 10%. “If I had to describe this quarter in one word, I think it would be acceleration,” Maxson said, citing progress across cloud infrastructure, database services and applications. Oracle said first-quarter revenue grew sequentially for the first time, contrasting with its historical pattern in which a record fourth quarter was typically followed by a lighter first quarter. Oracle’s non-GAAP operating income increased 31% to $8.2 billion, and non-GAAP earnings per share rose 30% to $1.92. Non-GAAP operating margin remained about flat year over year at 42%. Maxson said gross margin declined as expected because Oracle is ramping data centers and infrastructure revenue is becoming a larger portion of the business. Lower operating costs and operating leverage tied to simplification and efficiency actions offset the gross-margin impact during the quarter. Cash flow from operations reached a record $23 billion in the quarter, aided by customer prepayments. Capital expenditures totaled $28 billion, resulting in negative free cash flow of $5 billion. Net cash capital expenditures, after customer prepayments, were $18 billion. Oracle continues to expect full-year capital expenditures of $90 billion to $95 billion, with net cash capital expenditures not exceeding $70 billion. The company also completed its previously disclosed $20 billion at-the-market equity issuance during the first quarter. During the question-and-answer session, Maxson said Oracle had not provided a specific timetable for returning to positive free cash flow. However, she said projects become strong free-cash-flow generators shortly after ramping, with potential free-cash-flow conversion of about 100% of post-tax EBITDA. Remaining performance obligations, or RPO, increased by $26 billion from the fourth quarter. Maxson said most new contracts used customer prepayments, bring-your-own-hardware arrangements or similar structures that will not require incremental capital from Oracle. The new RPO is not expected to affect Oracle’s capital expenditures or revenue until fiscal 2028 or later.