Oracle shares climbed approximately 7% in extended trading on Thursday following the release of quarterly financial results that exceeded analyst expectations across both revenue and profit margins.
The software giant reported adjusted earnings per share of $1.92, surpassing the consensus estimate of $1.74, according to LSEG data. Total revenue came in at $19.35 billion, beating the expected $19.14 billion. Revenue growth accelerated to nearly 30% year-over-year for the fiscal first quarter, which concluded on August 31.
Net income for the period reached $4.68 billion, or $1.56 per share, a significant increase from the $2.93 billion, or $1.01 per share, reported in the same timeframe last year. Adjusted earnings figures exclude stock-based compensation expenses.
A primary driver of the positive results was the company’s expanding footprint in cloud infrastructure. Revenue from cloud infrastructure more than doubled, reaching $7.4 billion and exceeding the StreetAccount consensus of $7.09 billion. Overall cloud revenue soared 62% to $11.61 billion, topping the $11.51 billion forecast.
However, the strong performance came with substantial capital investment. Capital expenditures in the fiscal first quarter jumped to $28.5 billion from $8.5 billion a year earlier. The company also reported negative free cash flow of $5.4 billion, compared to negative $362 million in the prior year period. Oracle currently carries $125 billion in debt and holds a lower credit rating than its hyperscaler competitors.
During the quarter, Oracle stated it delivered 850 megawatts of data center capacity, underscoring its efforts to capture more value from the artificial intelligence boom. Despite these investments, Oracle stock has declined 22% year-to-date through Thursday’s close, while the S&P 500 has gained roughly 11% over the same period.
Looking ahead, Oracle provided guidance for the fiscal second quarter projecting adjusted earnings per share between $1.85 and $1.93, with revenue growth anticipated between 30% and 34%. Analysts surveyed by LSEG were expecting $1.89 in adjusted earnings and $21.20 billion in revenue.
For the full fiscal year 2027, the company expects adjusted earnings per share of $8.10 on revenue of at least $90 billion. This guidance slightly exceeds the LSEG consensus of $8.07 per share and $89.76 billion in revenue. Hilary Maxson, Oracle’s finance chief, confirmed that capital spending guidance for the full year remains unchanged.
Maxson also addressed recent reports regarding delays in a natural gas pipeline for a data center in New Mexico, which Bloomberg had noted could be pushed to 2027. She stated during a briefing with reporters that there are no known issues causing delays at the New Mexico site or other locations relative to the fiscal 2027 outlook.
In the software segment, revenue contributed $5.55 billion, reflecting a roughly 3% decline and falling short of the StreetAccount consensus of $5.61 billion. Meanwhile, Oracle’s remaining performance obligations stood at $664 billion at the end of the quarter, above the $630.6 billion consensus estimate. This figure encompasses contracted but unrecognized revenue, deferred revenue, and uncollected invoices.
The company also noted that new artificial intelligence contracts will not affect its plans to raise capital. During the quarter, Oracle announced the introduction of AI agents designed for human resources teams.
Wait, $28.5 billion in capex? I wonder how they’re funding all this expansion with so much debt already.
Finally some growth! The AI push seems to be paying off faster than analysts predicted.
Cloud doubling is impressive, but burning that much cash for a stock down 22% this year feels risky.