Oracle Q1 revenue jumps 30% to $19.3B, but capex triples and free cash flow turns deeply negative

Total revenues increased 30% year-over-year in Q1 FY27 to $19.3 billion, compared with 12% growth in Q1 FY26. The acceleration was driven primarily by cloud infrastructure revenue, which more than doubled.

Cloud infrastructure revenue grew 121% year-over-year in Q1 FY27 to $7.4 billion, up from 55% growth in Q1 FY26. This segment is now the primary driver of Oracle's overall revenue acceleration.

Capital expenditures more than tripled year-over-year to $28.5 billion in Q1 FY27, up from $8.5 billion in Q1 FY26. The company attributes the increase to data center expansion to meet cloud demand.

Free cash flow was negative $5.4 billion in Q1 FY27, compared with negative $362 million in Q1 FY26. The deterioration reflects the surge in capital expenditures outpacing operating cash flow.

Remaining performance obligations grew to $664 billion as of August 31, 2026, up from $455 billion a year earlier. The increase was driven by significant cloud contracts signed during the period.

Oracle fully utilized its at-the-market equity offering program during Q1 FY27, raising $19.9 billion in net proceeds. This is a new financing activity not present in the prior-year filing.

Interest expense increased 55% year-over-year to $1.4 billion in Q1 FY27, driven by higher average borrowings from $43 billion of senior notes issued in fiscal 2026. This is a significant increase from the 10% growth in the prior year.

Working capital swung from a deficit of $15.2 billion in Q1 FY26 to a positive $8.1 billion in Q1 FY27. The improvement was driven by net income, ATM proceeds, and customer prepayments, partially offset by capital expenditures.

Cloud revenue as a percentage of total revenue increased to 60% in Q1 FY27 from 48% in Q1 FY26. The company expects this trend to continue as cloud offerings grow faster than other segments.

The restructuring discussion now explicitly ties the 2026 Restructuring Plan to adoption of AI technologies, a new detail not present in the prior-year filing. Restructuring expenses declined significantly year-over-year.

Oracle issued 0.05 shares of 6.50% Series D Mandatory Convertible Preferred Stock during fiscal 2026, which did not exist in the prior year. This introduces preferred stock dividends and affects earnings per share calculations.

Oracle established a $20 billion at-the-market offering program in February 2026 and fully utilized it during the first quarter of fiscal 2027, raising $19.9 billion in net proceeds. This is a major capital raise not present in the baseline.

Remaining performance obligations grew from $455.3 billion to $664 billion, a 46% increase, with a higher proportion expected to be recognized in the next twelve months (13% vs 10%). This reflects strong bookings growth.

Oracle received $11.4 billion in customer prepayments with a significant financing component in Q1 FY2027, compared to none in the prior year. This is a new disclosure reflecting a change in customer payment terms.

Oracle's primary non-marketable investment shifted from Ampere Computing Holdings (29% ownership) to TikTok USDS Joint Venture LLC (15% ownership). The Ampere investment was likely disposed of or written down following SoftBank's acquisition.

The estimated cost of the 2026 Restructuring Plan increased from $1.6 billion to $2.1 billion, with an additional $700 million supplement announced after quarter-end. This indicates a larger restructuring effort than initially planned.

Additional lease commitments for data centers nearly tripled from $99.8 billion to $288 billion, with longer terms (15-19 years vs 10-16 years). This reflects a massive expansion of Oracle's data center capacity.

Oracle added a new disclosure of $34.15 billion in unconditional purchase obligations, primarily for cloud infrastructure components and data center power supply. This was not disclosed in the baseline.

A new securities class action was filed against Oracle and certain executives alleging false and misleading statements about the cloud infrastructure business. This litigation did not exist in the baseline.

The Netherlands privacy class action progressed significantly: the Supreme Court ruled in July 2026 that the Court of Appeal applied the wrong standard and remanded the case. The baseline described the case as still pending before the Supreme Court.

Total deferred revenues more than doubled from $13.4 billion to $30.8 billion, driven by the $11.4 billion in customer prepayments with significant financing component and strong cloud bookings.

Net property, plant and equipment more than doubled from $0.1M to $127.8 billion, reflecting massive capital expenditures on data centers and cloud infrastructure.

Capital expenditures increased from $8.5 billion to $28.5 billion, a 235% increase, consistent with the expansion of data center capacity and cloud infrastructure.

Cash and cash equivalents increased from $10.4 billion to $36.4 billion, primarily due to the $19.9 billion ATM offering and strong operating cash flow.

Total assets grew from $180.4 billion to $303.3 billion, a 68% increase, driven by the expansion of property, plant and equipment and cash balances.

Non-current borrowings increased from $82.2 billion to $117.7 billion, reflecting additional debt issuance to fund capital expenditures.

Non-current operating lease liabilities more than doubled from $14.1 billion to $30.6 billion, consistent with the significant increase in data center lease commitments.

Total stockholders' equity increased from $24.7 billion to $67.2 billion, primarily due to the $19.9 billion ATM offering and strong net income.

Cloud infrastructure revenue more than doubled from $3.3 billion to $7.4 billion, reflecting strong demand for Oracle's cloud infrastructure services.

Total revenues increased 30% from $14.9 billion to $19.3 billion, driven primarily by cloud infrastructure growth.

Operating income increased 57% from $4.3 billion to $6.7 billion, reflecting strong revenue growth and operating leverage.

Net income increased 63% from $2.9 billion to $4.8 billion, driven by higher operating income and non-operating income.

Depreciation expense more than doubled from $1.4 billion to $3.2 billion, reflecting the significant increase in property, plant and equipment.

Interest expense increased 55% from $923 million to $1.4 billion, consistent with higher debt levels.

The detailed disclosure about Oracle's investment in Ampere Computing Holdings was removed. The current filing instead discloses a 15% ownership interest in TikTok USDS Joint Venture LLC as the primary non-marketable investment.