Table of Contents
a. Key Points
Cloud growth was a bit lighter than expected.
Reiterated 2027 guidance.
Gross margin pressure being offset by operating expense discipline to enable operating margin expansion.
Reiterated multi-year guidance under the new CFO.
b. Demand
Beat revenue estimate & guide by 0.5% each.
Software revenue fell by 2% Y/Y due to ongoing customer migrations to cloud-based deployments.
Cloud revenue missed estimates by 0.9%. 46% constant currency (CC) cloud growth missed 48% growth guidance.
Beat remaining performance obligation (RPO) estimate by 8%.
c. Profits
Beat EBIT estimate by 4%. EBIT rose by 22% Y/Y.
Beat $1.97 EPS estimate by $0.14 & beat guide by $0.13.
EPS rose by 20% Y/Y excluding the impact of equity investment gains. It rose by 24% Y/Y when including this help.
CapEx was $16.5B vs. $11.2B expected. FCF was -$1.9B vs. -$3.5B expected.
GPM for the full year fell by 5 points due to ongoing infrastructure investments. EBIT margin was still able to expand Y/Y despite this challenge due to strong OpEx discipline.
d. Balance Sheet
$32B in cash & equivalents.
$130B in total borrowings.
1.5% Y/Y dilution.
Oracle plans to raise $40B in a mixture of debt and equity for fiscal 2027 compared to $48B in 2026. This is to support their ballooning backlog and expectations for significant (and profitable) infrastructure growth ahead.
CapEx for the year was $55.7B vs. $21.2B Y/Y. They expect that to rise to about $92.5B next year, which is far higher than ~$65B estimates. Notably, the massive $92.5B figure includes $22.5B in deals that involve prepaid contracts and bring your own hardware (BYOH) structures. These types of deals are becoming a much larger part of Oracle’s CapEx plans, as they move from 14% of total CapEx to 24% of total CapEx Y/Y. Importantly, this helps ease cash outlay requirements and improves cash collection cycles as well. This should continue, with the majority of their new backlog now coming from prepaid or BYOH formats.
e. Guidance & Valuation
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