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ORACLE CORP (ORCL) Q1 2026 Earnings Summary

Executive Summary

  • Q1 FY26 was a transformational quarter: RPO surged to $455B (+359% YoY), total revenue grew 12% to $14.9B, and cloud revenue rose 28% to $7.2B, driven by IaaS up 55% and SaaS up 11% .
  • Non‑GAAP EPS was $1.47 and GAAP EPS $1.01; Street slightly higher on both metrics, implying a small miss versus consensus; management cited a higher non‑GAAP tax rate (20.5% vs 19% guided) and strong CapEx build for AI capacity as near‑term headwinds . Q1 consensus EPS was $1.479* and revenue $15.043B*, vs actual $1.47 and $14.926B respectively. Values retrieved from S&P Global.
  • Guidance strengthened: OCI revenue expected to grow 77% to $18B in FY26, with a multi‑year ramp to $144B over five years; Q2 revenue growth guided to 14–16% (USD) and non‑GAAP EPS $1.61–$1.65 (USD) .
  • Stock narrative catalyst: record multi‑billion AI contracts (OpenAI, xAI, others), multi‑cloud expansion to 71 embedded regions across AWS/Azure/GCP, and introduction of the “Oracle AI Database” to unlock enterprise inferencing demand .

What Went Well and What Went Wrong

What Went Well

  • RPO exploded to $455B (+359% YoY), driven by four multi‑billion‑dollar contracts; CEO Safra Catz: “It was an astonishing quarter…RPO is likely to exceed half-a-trillion dollars” .
  • Cloud momentum: IaaS revenue $3.3B (+55% YoY) and OCI consumption +57%; Larry Ellison: “AI Changes Everything” and highlighted multi‑cloud database revenue growth of 1,529% in Q1 .
  • Strategic product positioning: unveiling of the Oracle AI Database enabling customers to use Gemini/ChatGPT/Grok/Llama directly on Oracle Database; Ellison emphasized secure vectorized data and inferencing at scale .

What Went Wrong

  • Small miss vs Street consensus: revenue $14.926B vs $15.043B* and non‑GAAP EPS $1.47 vs $1.479*; tax rate came in higher than expected, reducing EPS by ~$0.03 . Values retrieved from S&P Global.
  • Software revenue decline: total software revenue fell 1% YoY to $5.7B amid license softness; software support was roughly flat, underscoring mix shift toward cloud .
  • Free cash flow pressure from accelerated AI capacity build: Q1 CapEx was $8.5B and FY26 CapEx guided to ~$35B; trailing four-quarter FCF at $(5.9)B amid data center scaling .

Financial Results

Headline Financials vs Prior Periods and Estimates

MetricQ3 2025Q4 2025Q1 2026
Total Revenue ($USD Billions)$14.130 $15.903 $14.926
GAAP EPS ($USD)$1.02 $1.19 $1.01
Non-GAAP EPS ($USD)$1.47 $1.70 $1.47
GAAP Operating Income ($USD Billions)$4.358 $5.109 $4.277
GAAP Operating Margin (%)31% 32% 29%
Non-GAAP Operating Income ($USD Billions)$6.195 $7.035 $6.236
Non-GAAP Operating Margin (%)44% 44% 42%
Street Revenue Consensus ($USD Billions)——$15.043*
Street EPS Consensus ($USD)——$1.479*

Values retrieved from S&P Global.

Notes:

  • YoY Q1 revenue +12% and cloud revenue +28% .
  • EPS miss driven by tax rate (non‑GAAP 20.5% vs 19% guided) .

Segment Breakdown

Segment MetricQ3 2025Q4 2025Q1 2026
Cloud Revenue ($USD Billions)$6.210 $6.737 $7.186
Cloud Infrastructure (IaaS) Revenue ($USD Billions)$2.652 $2.995 $3.347
Cloud Applications (SaaS) Revenue ($USD Billions)$3.558 $3.742 $3.839
Total Software Revenue ($USD Billions)$5.926 $6.968 $5.721
Hardware Revenue ($USD Billions)$0.703 $0.850 $0.670
Services Revenue ($USD Billions)$1.291 $1.348 $1.349

Note: Cloud applications and infrastructure components also disclosed in supplemental tables .

KPIs

KPIQ3 2025Q4 2025Q1 2026
Remaining Performance Obligations (RPO) ($USD Billions)$130 (+62% YoY) $138 (+41% YoY) $455 (+359% YoY)
Short-term Deferred Revenue ($USD Billions)$9.0 $9.4 $12.1
OCI Consumption Revenue Growth (%)—+62% +57%
Multi-Cloud Database Revenue Growth (%)+92% in 3 months +115% Q/Q +1,529% YoY
Autonomous Database Revenue Growth (%)——+43% YoY
Cloud DB Services Annualized Revenue ($USD Billions)——~$2.8
Trailing 4Q Operating Cash Flow ($USD Billions)$20.745 $20.821 $21.534
Trailing 4Q Free Cash Flow ($USD Billions)$5.812 $(0.394) $(5.880)
Q1 CapEx ($USD Billions)——$8.502
Dividend per Share ($USD)$0.50 $0.50 $0.50

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Revenue Growth (Constant Currency)FY26+15% (from Q3 press release) +16% (Q1 call) Raised
Cloud Infrastructure (OCI) RevenueFY26Growth >70% (to >$? not specified) $18B (+77%) with multi‑year path to $32B/$73B/$114B/$144B Raised/Specified
Total Cloud Growth Rate (Apps + Infra)FY26>40% Commentary reaffirmed higher cloud growth; OCI detailed above Maintained/Expanded detail
Q2 Revenue Growth (USD)Q2 FY26—14–16% New
Q2 Total Cloud Revenue Growth (USD)Q2 FY26—33–37% New
Q2 Non‑GAAP EPS (USD)Q2 FY26—$1.61–$1.65 (base tax rate 19%) New
Currency ImpactQ2 FY26—+$0.03 EPS and +1% revenue tailwind (at current FX) New
FY26 CapExFY26—~$35B (may be higher if capacity delivered faster) New
DividendOngoing$0.50 per share $0.50 per share declared for Oct 23, 2025 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 FY25 and Q4 FY25)Current Period (Q1 FY26)Trend
AI Training DemandGPU consumption +244% YoY; record demand; planning “Stargate” opportunity Continued record demand; gigawatt‑scale data centers; faster networks = lower cost per training hour Strengthening
AI Inferencing on Enterprise DataIntroduced Oracle AI Data Platform; connecting ChatGPT/Grok/Llama to Oracle DB Launching Oracle AI Database; vectorized secure enterprise data combined with LLMs (Gemini/ChatGPT/Grok/Llama) Accelerating
Multi‑Cloud Expansion23 multi‑cloud DCs live; +47 building (12 months) 34 live; delivering +37 more to hyperscaler partners (total 71) Rapid build‑out
RPO & ContractingRPO $130B (+62%) with $48B quarterly sales; FY26 revenue +15% expected RPO $455B (+359%); multiple multi‑billion contracts; FY26 revenue +16% CC guided Dramatically higher
CapEx & CapacityFY25 CapEx $21.2B; plan to double capacity FY26 CapEx ~$35B; asset‑light model focused on equipment; rapid acceptance (1 week) Scaling aggressively
Tax/PolicyStable non‑GAAP tax rates ~19–20% Non‑GAAP 20.5% in Q1; OBBBA net tax expense $958M (GAAP) Near‑term headwind
Applications & AI AgentsSuites strategy; increasing apps cloud growth Intent‑based app generation; apps “are AI”; vertical industry suites (healthcare, banking, etc.) Expanding capability

Management Commentary

  • Safra Catz: “We signed four multi‑billion‑dollar contracts…RPO…increasing 359% to $455 billion…we expect OCI revenue to grow 77% to $18 billion this fiscal year—and then increase to $32 billion, $73 billion, $114 billion, and $144 billion over the subsequent four years” .
  • Larry Ellison: “We will introduce…‘Oracle AI Database’…enables customers to use the LLM of their choice…directly on top of the Oracle Database to easily access and analyze all their existing database data…AI Changes Everything” .
  • Safra Catz (on Q2 guidance): “Total revenue…grow from 14% to 16% in U.S. dollars…non‑GAAP EPS…between $1.61 and $1.65 in USD…base tax rate of 19%” .
  • Larry Ellison (on differentiation): “Our networks move data very, very fast…if we’re twice as fast, we’re half the cost” .

Q&A Highlights

  • Demand breadth beyond training: inferencing capacity constraints emerging; Oracle positioned to serve secure inferencing on private enterprise data via AI Database and vectorization .
  • CapEx, ROI and asset‑light model: focus on revenue‑generating equipment with fast customer acceptance; FY26 CapEx ~$35B with consumption‑based economics; embedded deployments in partner clouds (AWS/Azure/GCP) .
  • Application strategy: AI‑generated applications, suite‑level integration reduces customer integration burden; vertical solutions expanding (e.g., Oracle Health) .
  • Multi‑cloud ramp: 34 live embedded regions; path to 71; rapid acceptance cycle for large halls supports quicker revenue conversion .

Estimates Context

  • Q1 results vs consensus: Revenue $14.926B vs $15.043B*; non‑GAAP EPS $1.47 vs $1.479*—a slight miss on both. Management cited a higher tax rate (20.5% vs 19% guided) as a ~$0.03 headwind to EPS . Values retrieved from S&P Global.
  • Q2 consensus context: EPS ~$1.636* and revenue ~$16.198B* sits within management’s EPS range ($1.61–$1.65 USD) and implied top‑line growth (14–16% USD), suggesting alignment and room for modest upward revisions if RPO conversion and capacity delivery pace exceed expectations . Values retrieved from S&P Global.

Key Takeaways for Investors

  • The step‑function increase in RPO and multi‑year OCI revenue targets materially de‑risks forward growth; near‑term estimate volatility likely shifts to pace of capacity delivery and tax rate variability .
  • Slight Q1 miss should be weighed against unprecedented demand signals (multi‑billion contracts, inferencing appetite) and strengthened FY26 outlook; bias to upward revisions if execution on embedded multi‑cloud regions accelerates .
  • Oracle’s differentiated AI positioning—secure vectorized enterprise data, bundled LLM access, and fast networks—supports durable share gains in inferencing and training; pricing power via performance/cost advantages .
  • Elevated CapEx (~$35B FY26) is a feature of revenue conversion, not a bug; evidence of rapid acceptance cycles and asset‑light real estate model mitigate ROI concerns .
  • Watch Q2 metrics: OCI growth (33–37% USD), EPS delivery within $1.61–$1.65, and signs of RPO conversion into revenue/consumption; any upside from additional multi‑billion customers is a catalyst .
  • Application suites and AI agents enhance Oracle’s vertical competitiveness (healthcare, banking, etc.), supporting SaaS growth resilience even as legacy software declines .
  • Governance and leadership transitions (promotion of Clay Magouyrk and Mike Sicilia to CEOs; Safra Catz as Executive Vice Chair) aim to institutionalize AI‑first execution across OCI and industries; guidance reaffirmed .
Values marked with * are retrieved from S&P Global (Capital IQ).

Citations:

  • Q1 FY26 8‑K press release, financial tables and supplemental disclosures:
  • Q1 FY26 earnings call transcript:
  • Q4 FY25 8‑K press release and financials:
  • Q3 FY25 8‑K press release and financials:
  • Additional relevant press releases: Gartner leadership in HCM ; leadership promotions and reaffirmed guidance

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