Q1 FY2027 results
| Metric | Result | Change |
|---|---|---|
| Total Revenue | $19.3 billion | Up 30% |
| Cloud Infrastructure Revenue | $7.4 billion | Up 121% |
| Non-GAAP Operating Income | $8.2 billion | Up 31% |
| Non-GAAP EPS | $1.92 | Up 30% |
| Operating Margin | 42% | Flat |
Guidance and outlook
- Q2 total revenue growth is expected between 30% and 34%.
- Q2 cloud revenue growth is expected between 65% and 71%.
- Q2 non-GAAP EPS is expected between $1.85 and $1.93.
- Full-year revenue guidance is raised to at least $90 billion.
- Full-year CapEx is anticipated to be between $90 billion and $95 billion.
How management sounded
Positive (+7 on our -10 to +10 scale). Management highlighted record results, raised full-year revenue guidance, and emphasized strong execution in AI infrastructure and cloud services. Management sounded more upbeat than on 48% of the 190 calls we cover; most companies sound positive on their own calls, so the comparison says more than the label.
Q&A summary
CapEx and Free Cash Flow
Asked: Brad Zelnick from Deutsche Bank asked about peak CapEx years and when the company will return to positive free cash flow.
Answer: Management explained that projects are self-funding over time and that they have various financing models to manage capital without requiring additional cash from Oracle.
Data Center Delivery
Asked: Siti Panigrahi from Mizuho asked about potential delays in New Mexico and Wisconsin data centers.
Answer: Management stated that these sites are on track and that they have a diverse set of developments globally, noting that they do not rely on 100% achievement of every deliverable.
Gross Margins
Asked: John DiFucci from Guggenheim Securities asked about the decline in gross margins and how to view them alongside operating margins.
Answer: Management noted that while gross margin is an important health indicator, operating margin is the key metric for driving value and remains the primary focus.
SaaS Growth
Asked: Brent Thill from Jefferies asked about the sustainability of double-digit SaaS growth given AI industry trends.
Answer: Management emphasized that their end-to-end suites and embedded AI capabilities provide rapid ROI, making their SaaS offerings highly differentiated and a driver for OCI consumption.
What to watch before the next call
- Progress on data center construction in New Mexico and Wisconsin.
- Conversion of RPO into revenue over the next 36 months.
- Updates on the AI Data Platform and its impact on database and OCI consumption.
