Oracle beat market expectations on the back of demand for artificial intelligence (AI) infrastructure.
Oracle said on the 10th (local time) that revenue for the first quarter of fiscal 2027 (June–August) rose 29.6% from a year earlier to $19.3 billion (about 25.9 trillion won). It topped the market estimate of $19.13 billion compiled by FactSet. Adjusted earnings per share (EPS) were $1.92, above the $1.73 estimate.
The driver of growth was the cloud business. Cloud infrastructure (OCI) revenue was $7.4 billion, up 120.7% from a year earlier. In the quarter, Oracle brought an additional 850 megawatts (MW) of data center capacity online and supplied more than 300,000 graphics processing units (GPUs), three times the previous quarter.
New AI cloud contracts also surpassed $30 billion. Remaining performance obligations (RPO), which will be recognized as future revenue, were $664 billion, up $209 billion from a year earlier. That also beat the market estimate of $639.89 billion. Oracle said it covered $11.36 billion of capital expenditures with customer prepayments. It also emphasized that many of the new contracts do not require additional large-scale investment.
Oracle projected fiscal 2027 revenue will exceed $90 billion and adjusted EPS will reach $8.10. It guided for a second-quarter revenue growth rate of 30%–34% and a cloud growth rate of 64%–70%. Net income was $4.7 billion in the first quarter, up 60% from a year earlier.
On the strong results, shares rose more than 7% at one point in after-hours trading. However, with $28.5 billion spent on data centers and other items in the first quarter, free cash flow was a negative $5.4 billion. That was better than the market estimate for a negative $9.56 billion. As aggressive AI investment translated into actual revenue and contract growth, some of the market's concerns over liabilities and cash flow have eased, analysts said.