tkal · Oracle Q1 FY27 — The Customer Became the Lender.

Oracle Q1 FY27 — The Customer Became the Lender.

Oracle printed a record quarter — revenue $19,345M (+29.61%), cloud infrastructure $7,388M (+120.73%), non-GAAP EPS $1.92 (+30.61%), operating cash flow $23,103M (+183.82%), a $664 billion backlog — and spent $28,499M on capital expenditure to do it, 147.32% of the revenue it earned. Here is the claim: this quarter Oracle stopped funding the AI buildout and started intermediating it, and the evidence is a single new line in the cash-flow statement. $11,363M of that record operating cash flow is "customer prepayments with significant financing component" — a line that was zero a year ago, that is 49.18% of the quarter's operating cash flow, and that Oracle's own 10-Q says it discounts at "our incremental borrowing rate." Strip it and free cash flow goes from negative $5,396M to negative $16,759M. That is not a cash-generation event; it is a borrowing, booked above the financing section. It also worked: total borrowings fell $4,204M on the quarter. The test is dated and the company set it. Oracle says the imputed interest on those prepayments was "immaterial" in Q1, because the money landed mid-quarter; Q2 FY27 carries a full quarter of it. If the Q2 print shows a second tranche of roughly $10B or more of financing-component prepayment and the interest stays immaterial, this is cheap structured funding and I am wrong about its cost. If the prepayment does not repeat, net cash capital expenditure — $18,000M in Q1, annualising to $72,000M against a stated ceiling of $70,000M — breaks its own guide in the first half.

Published September 11, 2026 · Post-print synthesis (quarter ended August 31, 2026, reported after the close September 10, 2026) · ORCL · NYSE · Committed analyst read — not advice · For analysts covering AI infrastructure, hyperscaler capex, and the credit chain that funds it

Revenue

$19.35B

+29.61% YoY

Cloud infrastructure

$7.39B

+120.73% YoY

Capital expenditure

$28.50B

147.32% of revenue

Customer prepayments

$11.36B

49.18% of op. cash flow

Quarter ended August 31, 2026 · reported September 10, 2026 · figures from the Q1 FY27 8-K Exhibit 99.1, the Form 10-Q filed September 11, 2026, and the earnings call

A record, and a shrug

Every headline in this release beat. Revenue of $19,345M grew 29.61%. Cloud infrastructure grew 120.73% to $7,388M — an acceleration off the 93% Oracle printed in Q4, which was itself an acceleration off 84% and 68%. GAAP operating income rose 57.31% to $6,728M. Non-GAAP EPS of $1.92 beat the $1.47 of a year ago by 30.61%. Operating cash flow set a record at $23,103M, up 183.82%. The backlog reached $664 billion. Fiscal 2027 guidance went to at least $90 billion, which is 33.62% growth on a $67,357M base.

The stock closed the reaction day at $150.28, down 1.74% from $152.94. Not a crash — a shrug. That is the more interesting response, because it had already crashed: $150.28 is 54.20% below the fifty-two-week high of $328.15 and 51.19% below the $307.86 close a year earlier. The market spent the last twelve months repricing this name around exactly one question, and the quarter answered it in a way nobody had modelled.

The question, since the June print, has been who ultimately pays for the capex. Oracle's Q4 answer was: Oracle does, with roughly $40 billion of new capital including a $20 billion equity sale. That plan is now complete — 141 million shares issued for net proceeds of $19,909M, about $141.20 a share, 56.97% below the fifty-two-week high. Oracle sold nearly a twentieth of itself into its own drawdown, and the proceeds are 82.47% of the entire $24,140M increase in stockholders' equity this quarter. Earnings were not what built the equity base. Issuance was.

And then, in the same quarter, Oracle found a different lender.

Cloud is 60.0% of revenue and supplied every dollar of the increase. Of the revenue dollar, 60.0% survives the cost of delivery, 34.8% survives operating expense, and 24.6% lands as net income — before the carrying cost that is still capitalised on the balance sheet. Oracle presents expenses by function with no gross-profit line. Cost of revenue here is the cloud and software, hardware and services expense lines ($6,400M + $281M + $1,052M = $7,733M); gross profit is revenue less that sum. Below the line, interest expense of $1,428M is shown net of $307M of non-operating income.

The record cash flow is a loan, and the note says so

Operating cash flow of $23,103M is a genuine record and it is genuinely not operations. Net income supplied $4,760M of it, or 20.60%. Deferred revenues supplied $15,360M, or 66.48%. And $11,363M of that deferred revenue sits on a line that has never appeared in an Oracle cash-flow statement before: "increase in deferred revenues from customer prepayments with significant financing component."

The 10-Q is unusually plain about what this is. "During the first quarter of fiscal 2027, we received $11.4 billion of prepayments from customers that included a significant financing component. No prepayments from customers that included a significant financing component were received during the first quarter of fiscal 2026." A year-ago comparative of zero is the cleanest kind of disclosure — there is no trend to argue about, no mix to decompose. Something began this quarter.

The next sentence is the one that matters. "We determine the discount rate based on a rate that reflects the credit characteristics of the party receiving financing, which is generally consistent with our incremental borrowing rate." Read the subject carefully. In a customer prepayment the customer hands over cash before delivery, so the party receiving financing is Oracle. Oracle is telling you that it priced these contracts off its own cost of debt — which is the definition of a borrowing, written by the borrower, in the borrower's own filing. Accounting agrees: the effects "are reflected in deferred revenues," and deferred revenue is a liability. This is prepaid growth is a customer loan in a cash-flow costume in its purest form to date, and for once the analyst does not have to infer it. The issuer named the instrument.

The costume matters because of where the line lands. A bond issue appears in financing activities and every leverage screen on earth picks it up. This appears in operating activities, where it inflates the single metric — cash from operations — that investors use to decide whether a capital programme is self-funding. Oracle's own free-cash-flow table reports operating cash flow at 485% of net income this quarter, against 187% for fiscal 2026 as a whole. Strip the financing component and operating cash flow is $11,740M, free cash flow is negative $16,759M instead of negative $5,396M, and the quarter looks like what it physically was: $28,499M of concrete and silicon against $19,345M of revenue.

Management is not hiding this. Hilary Maxson put the arithmetic on the call: "Our CapEx for the quarter was $28 billion leading to negative free cash flow of $5 billion," then immediately, "Our net cash CapEx, so net of pre was $18 billion for the quarter" (unverified pending the official transcript). The company has coined its own metric — capital expenditure net of prepayments — and it is the metric the guide is now set in.

Customer prepayments carrying a significant financing component contributed $11,363M — 49.18% of the quarter's operating cash flow, against nothing in the year-ago quarter. Net income supplied 20.60%. All components are lines in the condensed consolidated statement of cash flows. 'All other working capital' nets deferred income taxes $(73)M, other $(4)M, trade receivables $(1,009)M, prepaid expenses and other assets $114M, accounts payable and other liabilities $(1,076)M and income taxes payable $546M.

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The series kills the obvious finding
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Sources

Oracle Corporation — Q1 FY2027 earnings press release (Form 8-K, Exhibit 99.1), filed September 10, 2026, accession 0001193125-26-387905 — the primary source for every reported figure in this piece unless otherwise marked. Quarter ended August 31, 2026 against the quarter ended August 31, 2025, dollars in millions. Revenues: cloud 11,607 / 7,186 (+62% in US$, +61% constant currency); software 5,550 / 5,721 (−3% / −3%); hardware 774 / 670 (+15% / +16%); services 1,414 / 1,349 (+5% / +5%); total revenues 19,345 / 14,926 (+30% / +30%). Operating expenses: cloud and software 6,400 / 3,607 (+77% / +78%); hardware 281 / 178 (+58% / +57%); services 1,052 / 1,099 (−4% / −4%); sales and marketing 1,811 / 2,063 (−12% / −12%); research and development 2,401 / 2,491 (−4% / −3%); general and administrative 376 / 376 (0% / 0%); amortization of intangible assets 202 / 420 (−52% / −52%); restructuring and other 94 / 415 (−77% / −77%); total operating expenses 12,617 / 10,649 (+18% / +19%). Operating income 6,728 / 4,277 (+57% / +57%), at 35% and 29% of revenues. Interest expense (1,428) / (923), +55%. Non-operating income, net 307 / 73, +323% / +331%. Income before income taxes 5,607 / 3,427. Provision for income taxes 847 / 500. Net income 4,760 / 2,927 (+63% / +62%). Preferred stock dividends 81 / —. Net income available to common shareholders 4,679 / 2,927. Basic EPS $1.58 / $1.04; diluted EPS $1.56 / $1.01. Weighted average shares: basic 2,966 / 2,826; diluted 3,000 / 2,909. Non-GAAP reconciliation: total operating expenses 11,194 / 8,690 after adjustments of (1,423) and (1,959); stock-based compensation 1,127 / 1,124; operating income 8,151 / 6,236 (+31%), operating margin 42% and 42%, up 35 basis points; income tax effects 1,191 / 1,103; net income 5,839 / 4,283 (+36%); net income available to common shareholders 5,758 / 4,283 (+34%); diluted EPS $1.92 / $1.47 (+30%). Effective GAAP tax rate 15.1% and 14.6%; effective non-GAAP tax rate 16.9% and 20.5%. Stock-based compensation by line: cloud and software 134 / 156, hardware 6 / 7, services 51 / 49, sales and marketing 171 / 177, research and development 667 / 647, general and administrative 98 / 88. Estimated future amortization of intangible assets: remainder of fiscal 2027 529, fiscal 2028 694, fiscal 2029 620, fiscal 2030 582, fiscal 2031 377, fiscal 2032 182, thereafter 43, total 3,027. Balance sheet at August 31, 2026 against May 31, 2026: cash and cash equivalents 36,369 / 31,289; marketable securities 708 / 605; trade receivables, net 11,394 / 10,385; prepaid expenses and other current assets 7,159 / 4,288; total current assets 55,630 / 46,567; property, plant and equipment, net 127,845 / 99,957; operating lease right-of-use assets 33,967 / 29,690; goodwill 62,267 / 62,261; deferred tax assets 11,625 / 11,541; other non-current assets 11,925 / 11,743; total non-current assets 247,629 / 215,192; total assets 303,259 / 261,759; notes payable and other borrowings, current 7,625 / 7,199; accounts payable 11,063 / 10,977; accrued compensation and related benefits 1,760 / 2,225; deferred revenues 14,686 / 9,916; other current liabilities 12,380 / 11,447; total current liabilities 47,514 / 41,764; notes payable and other borrowings, non-current 117,712 / 122,342; income taxes payable 12,060 / 11,771; operating lease liabilities 30,594 / 26,648; other non-current liabilities 28,183 / 16,178; total non-current liabilities 188,549 / 176,939; stockholders' equity 67,196 / 43,056. Cash flows for the three months ended August 31, 2026 against August 31, 2025: net income 4,760 / 2,927; depreciation 3,156 / 1,351; amortization of intangible assets 202 / 420; deferred income taxes (73) / 515; stock-based compensation 1,127 / 1,124; other, net (4) / 164; increase in trade receivables, net (1,009) / (245); decrease in prepaid expenses and other assets 114 / 59; decrease in accounts payable and other liabilities (1,076) / (334); increase (decrease) in income taxes payable 546 / (391); increase in deferred revenues from customer prepayments with significant financing component 11,363 / —; increase in other deferred revenues 3,997 / 2,550; net cash provided by operating activities 23,103 / 8,140; purchases of marketable securities and other investments (306) / (471); proceeds from sales and maturities 225 / 255; capital expenditures (28,499) / (8,502); net cash used for investing activities (28,580) / (8,718); proceeds from issuances of common stock via at-the-market program, net of issuance costs 19,909 / —; net proceeds from employee stock programs 41 / 1,153; payments of dividends to stockholders (1,565) / (1,413); repayments of commercial paper, net — / (238); (repayments of) proceeds from short-term financing related to capital expenditures, net (830) / 1,958; repayments of senior notes, term loan credit agreements and other borrowings (4,202) / (1,052); other financing activities, net (242) / (198); net cash provided by financing activities 13,111 / 210; effect of exchange rate changes 11 / 27; net increase (decrease) in cash 7,645 / (341); cash at beginning of period 31,289 / 10,786; cash at end of period 38,934 / 10,445. Free-cash-flow table, fiscal 2026 by quarter then total, and fiscal 2027 Q1: GAAP operating cash flow 8,140 / 2,066 / 7,151 / 14,620 / 31,977 and 23,103; capital expenditures (8,502) / (12,033) / (18,635) / (16,493) / (55,663) and (28,499); free cash flow (362) / (9,967) / (11,484) / (1,873) / (23,686) and (5,396); operating cash flow growth over prior year 10% / 58% / 21% / 137% / 54% and 184%; GAAP net income 2,927 / 6,135 / 3,721 / 4,304 / 17,087 and 4,760; operating cash flow as a percentage of net income 278% / 34% / 192% / 340% / 187% and 485%. Headline and narrative disclosures: Q1 GAAP EPS up 55% in US$ and 54% in constant currency to $1.56, non-GAAP EPS up 30% to $1.92; record Q1 total revenues up 30% to $19.3 billion; record Q1 total cloud revenues up 62% in US$ and 61% in constant currency to $11.6 billion; Cloud Infrastructure (IaaS) up 121% in US$ and 120% in constant currency to $7.4 billion; Cloud Applications (SaaS) up 10% to $4.2 billion; software revenues down 3% to $5.5 billion; services $1.4 billion, up 5%; hardware $0.8 billion, up 15%; GAAP operating income $6.7 billion, up 57%; non-GAAP operating income $8.2 billion, up 31%; GAAP net income available to common shareholders $4.7 billion, up 60%; non-GAAP net income available to common shareholders $5.8 billion, up 34%; record Q1 operating cash flow of $23 billion, up 184%; free cash flow negative $5 billion; "the delivery of 850MW additional datacenter capacity"; remaining performance obligations up $209 billion year-over-year to $664 billion; "Oracle booked more than $30 billion of additional AI cloud contracts in Q1 increasing its RPO to $664 billion. Based on the structuring of those new contracts, the Company confirms there is no incremental impact on its plans to raise capital."; "Since the end of Q4, Oracle also delivered more than 300,000 GPUs to its AI Cloud customers and almost triple the capacity delivered in Q4 FY26."; "During Q1 FY 2027, Oracle successfully completed the sale of $20 billion of common stock (before commissions) through an At-the-Market (ATM) equity program, as part of its previously disclosed capital investment program." Guidance for Q2 FY2027: total revenues to grow between 30% and 34% in constant currency and US$; total cloud revenue to grow between 64% and 70% in constant currency and between 65% and 71% in US$; non-GAAP EPS between $1.83 and $1.91 in constant currency and between $1.85 and $1.93 in US$, representing growth of 19% to 23% in constant currency and 21% to 25% in US$ excluding a one-time gain from Q2 FY2026, and including that gain a decline of between 19% and 15% in constant currency and between 18% and 14% in US$. Guidance for full fiscal 2027: total revenue of at least $90 billion and non-GAAP EPS of $8.10. Quarterly cash dividend of $0.50 per share, record date October 9, 2026, payment date October 23, 2026
Oracle Corporation — Quarterly Report on Form 10-Q for the quarter ended August 31, 2026, filed September 11, 2026, accession 0001193125-26-389274 — source for the disaggregation, the commitment notes and the financing-component disclosure. Cloud revenues by offering, three months ended August 31, 2026 against August 31, 2025: cloud applications 4,219 / 3,839; cloud infrastructure 7,388 / 3,347; total cloud revenues 11,607 / 7,186. Revenues by geography: Americas 13,711 / 9,662; EMEA 3,726 / 3,481; Asia Pacific 1,908 / 1,783. Software licence revenue 655 for the current quarter. Remaining performance obligations: "Remaining performance obligations were $664 billion as of August 31, 2026, of which we expect to recognize approximately 13% as revenues over the next twelve months, 37% over the subsequent month 13 to month 36, 34% over the subsequent month 37 to month 60 and the remainder thereafter," and "$664 billion and $455 billion as of August 31, 2026 and 2025, respectively," with the increase "primarily attributable to certain significant cloud contracts that were entered into during the period." Significant financing component: "Certain of our customer contracts include a significant financing component either because the customer has made significant prepayments before the corresponding performance obligations are delivered or because we have provided long-term payment plans to the customer... During the first quarter of fiscal 2027, we received $11.4 billion of prepayments from customers that included a significant financing component. No prepayments from customers that included a significant financing component were received during the first quarter of fiscal 2026. We recognize interest expense related to significant financing components separately from revenue. During the first quarter of fiscal 2027, such amounts were immaterial. We determine the discount rate based on a rate that reflects the credit characteristics of the party receiving financing, which is generally consistent with our incremental borrowing rate. The effects of significant financing components are reflected in deferred revenues and recognized over the period of performance." Lease maturities at August 31, 2026, operating then finance: remainder of fiscal 2027 3,219 / 620; fiscal 2028 4,135 / 852; fiscal 2029 4,097 / 923; fiscal 2030 4,109 / 947; fiscal 2031 4,089 / 971; fiscal 2032 4,030 / 996; thereafter 24,371 / 9,886; total lease payments 48,050 / 15,195; less imputed interest (13,429) / (6,010); total lease liability 34,621 / 9,185. Operating lease cost 4,903 against 3,181; finance leases 1,539 against 1,122. Not-yet-commenced leases: "As of August 31, 2026, we had $288 billion of additional lease commitments, substantially all related to data center arrangements, that are generally expected to commence between the second quarter of fiscal 2027 and fiscal 2029 and for terms of fifteen to nineteen years that were not reflected on our condensed consolidated balance sheets as of August 31, 2026 or in the maturities table above." Unconditional purchase and certain other obligations with terms of one year or greater, "primarily related to long-term supply arrangements for purchasing components for cloud infrastructure assets and power supply arrangements for data centers": remainder of fiscal 2027 5,449; fiscal 2028 6,176; fiscal 2029 3,863; fiscal 2030 4,318; fiscal 2031 6,768; fiscal 2032 954; thereafter 6,622; total 34,150. ATM programme: an equity distribution agreement entered February 2, 2026, amended June 23, 2026, for aggregate sales proceeds of up to $20 billion; "During the first quarter ended August 31, 2026, we fully utilized the ATM Program and issued 141 million shares of common stock under the ATM Program for net proceeds of $19.9 billion." Management's discussion: "Net cash provided by operating activities increased by $15.0 billion in the first quarter of fiscal 2027, relative to the first quarter of fiscal 2026, primarily due to higher net income adjusted for certain non-cash charges and higher cash favorable working capital changes, net, which includes $11.4 billion cash inflows from customer prepayments with a significant financing component," and the working-capital walk citing "$19.9 billion of cash proceeds from the issuance of common stock via the ATM Program, net of issuance costs; and $11.4 billion of customer prepayments with a significant financing component, partially offset by $28.5 billion of cash used for capital expenditures; $4.6 billion of long-term borrowings that were reclassified to current liabilities; and $1.6 billion of cash used to pay dividends," together with "$3.1 billion of cash used for scheduled repayments of debt; $2.6 billion of restricted cash that was reclassed to prepaid expenses and other current assets; $1.1 billion of cash used for repayment of commercial paper; $830 million of cash outflows for short-term financing related to capital expenditures, net; and $242 million of cash outflows for other financing activities, net"
Prior-period Oracle filings, for the multi-period series this piece reads the quarter against: Form 10-K for fiscal 2026, filed June 22, 2026 — "Remaining performance obligations were $638 billion and $138 billion as of May 31, 2026 and 2025, respectively," of which approximately 12% was expected to be recognised over the next twelve months, 34% over months 13 to 36 and 34% over months 37 to 60; "As of May 31, 2026, we had $260 billion of additional lease commitments... These additional lease commitments include a lease for which we have guaranteed up to $3.3 billion of the lessor's borrowing, which matures in September 2026"; unconditional purchase and certain other obligations, "primarily related to data center power arrangements," of fiscal 2027 1,841, fiscal 2028 1,034, fiscal 2029 1,053, fiscal 2030 952, fiscal 2031 896, thereafter 7,533, total 13,309; and the subsequent-event disclosure, "Subsequent to May 31, 2026, we entered into an additional $19 billion of unconditional purchase commitments for cloud infrastructure assets that commence in fiscal 2027 and have a term of five years"; also the February 5, 2026 issuance of 100,000,000 depositary shares representing 50,000 shares of 6.50% Series D Mandatory Convertible Preferred Stock at a $100,000 per share liquidation preference. Form 10-Q for the quarter ended February 28, 2026 — remaining performance obligations of $552.6 billion, of which approximately 12% over the next twelve months, and $261 billion of additional lease commitments. Form 10-Q for the quarter ended November 30, 2025 — remaining performance obligations of $523.3 billion, approximately 10% over the next twelve months, and $248 billion of additional lease commitments "substantially all related to data centers and cloud capacity arrangements." Form 10-Q for the quarter ended August 31, 2025 — remaining performance obligations of $455.3 billion, approximately 10% over the next twelve months, and $99.8 billion of additional lease commitments
Oracle fiscal 2027 first-quarter earnings conference call, September 10, 2026 — prepared remarks and Q&A of Clay Magouyrk (chief executive officer) and Hilary Maxson (chief financial officer). unverified pending the official company transcript; the figures below are as transcribed by a third party and are used only where the filing corroborates the direction. Source for: Maxson, "Our CapEx for the quarter was $28 billion leading to negative free cash flow of $5 billion"; "Our net cash CapEx, so net of pre was $18 billion for the quarter"; "We continue to anticipate $90 billion to $95 billion in CapEx for the full year with not more than $70 billion in net cash CapEx"; "Remaining performance obligations or RPO increased $26 billion from Q4"; "The vast majority of those new contracts were via prepay or bring your own hardware"; "Our gross margin did decline as expected driven by impacts from ramping up our data centers," with infrastructure described as "a lower gross margin business... much lower R&D and sales associated with it" and the expectation that "gross margin would flatten"; "We are quite pleased to announce that we completed our previously disclosed $20 billion equity issuance in entirety during the Q1." Magouyrk, "We closed more than $30 billion of additional AI contracts in Q1 without requiring additional capital from Oracle"; "Sometimes it is working with our suppliers through different financing arrangements that allows us to pay for the capacity as the customers pay us"; "A customer says, hi. I would like to pay for the hardware, but use your operational ability... that is a different option"; "The customer has been able to raise money... I would like to pay you upfront... that does not require you to front the cash"; "We have invested very heavily in relationships with different suppliers and vendors, invented new business models, including bring your own hardware"; and the capacity detail of 850 megawatts delivered since the end of Q4, 131 thousand GPUs delivered at one site in Q1 at 1.9x the volume delivered in Q4, and six of eight campus buildings representing 618 megawatts and 75% of total capacity delivered. The GPU count quoted on the call as transcribed conflicts with the press release's "more than 300,000 GPUs"; this piece uses the press-release figure
tkal — "Oracle Q4 FY26 — The Backlog Compounds, the Funding Bill Arrives", published June 10, 2026 — the prior call graded here. Source for the fiscal 2026 figures this piece reads against: fiscal 2026 revenue $67,357M (+17%), cloud $33,989M (+39%), operating cash flow $31,977M (+54%), capital expenditures $55,663M, free cash flow negative $23,686M; Q4 FY26 revenue $19,184M (+21%), total cloud $9,913M (+47%), Cloud Infrastructure $5,787M (+93%), accelerating from +84% in Q3 FY26, +68% in Q2 FY26 and +55% in Q1 FY26, Cloud Applications $4,126M (+10%), legacy software $6,824M (−2%), GAAP operating income $6,133M at a 32% margin, non-GAAP operating income $8,590M at 45%, non-GAAP EPS $2.11 (+24%) and GAAP EPS $1.45 (+21%), an $823M restructuring charge against $83M a year earlier, Q4 non-GAAP EPS of $2.03 and fiscal 2026 non-GAAP EPS of $6.83 excluding one-time investment gains against $7.63 including them, property, plant and equipment rising from $43.5B to $100.0B, total borrowings of roughly $129.5B against $31.3B of cash, Q4 interest expense of $1,438M (+47%), approximately $5.0B of mandatory convertible preferred raised during the year with $81M of dividends in Q4, and the fiscal 2027 funding plan of approximately $40 billion including the $20 billion at-the-market equity issuance; the regular-session close of $203.47 on June 10, 2026
Market data: Oracle closed at $150.28 on September 11, 2026, the reaction day, against a September 10 close of $152.94. Fifty-two-week high $328.15 and low $114.99; the close one year earlier was $307.86, the close three months earlier $184.10, the close six months earlier $163.12 and the year-to-date reference close $194.91. Closing prices across the June-to-August fiscal quarter include $184.10 on June 11, $192.64 on June 15, $114.99 on July 24 and $149.12 on August 31
Derived figures, stated as such: Growth rates computed from the filing's own dollars rather than its rounded percentages — total revenue +29.61%, cloud +61.52%, cloud infrastructure +120.73%, cloud applications +9.90%, software −2.99%, hardware +15.52%, services +4.82%, cloud and software operating expense +77.43%, sales and marketing −12.22%, research and development −3.61%, total operating expenses +18.48%, GAAP operating income +57.31%, interest expense +54.71%, net income +62.62%, net income available to common +59.86%, non-GAAP operating income +30.71%, non-GAAP net income available to common +34.44%, depreciation +133.60%, Americas +41.91%, EMEA +7.04% and Asia Pacific +7.01%. Revenue rose $4,419M, of which the Americas supplied $4,049M (91.63%), EMEA $245M (5.54%) and Asia Pacific $125M (2.83%); cloud infrastructure alone supplied $4,041M, or 91.45%. Cloud and software revenue of $17,157M against $12,907M is +32.93%, while the cloud and software expense line rose 77.43%, taking that cost ratio from 27.95% to 37.30%, a 9.36 percentage-point increase. Cost of revenue is the sum of the cloud and software, hardware and services expense lines, $6,400M + $281M + $1,052M = $7,733M, giving gross profit of $11,612M at a 60.03% margin against 67.26%; operating expense below that line totals $4,884M, and the operating margin is 34.78% against 28.65%. Depreciation plus interest expense is $4,584M against $2,274M, +101.58%, equal to 68.13% of GAAP operating income against 53.17%, and 23.70% of revenue against 15.24%; the quarter's depreciation annualises to $12,624M, and the 12.63% annual rate implied on opening property, plant and equipment would run at $4,037M a quarter, or $16,146M a year, on the closing balance. Free cash flow of negative $5,396M is operating cash flow less capital expenditure. Deferred-revenue inflows of $11,363M and $3,997M total $15,360M, or 66.48% of operating cash flow, of which the financing-component line alone is 49.18%; excluding it operating cash flow is $11,740M and free cash flow negative $16,759M, and excluding both deferred lines operating cash flow is $7,743M and free cash flow negative $20,756M. Net income is 20.60% of operating cash flow. The residual working-capital step of negative $1,502M is the sum of deferred income taxes $(73)M, other $(4)M, trade receivables $(1,009)M, prepaid expenses $114M, accounts payable and other liabilities $(1,076)M and income taxes payable $546M. Capital expenditure of $28,499M is 51.20% of the entire fiscal 2026 outlay of $55,663M, is +235.20% year on year, rose $12,006M sequentially, and equals 147.32% of the quarter's revenue against 56.96% a year earlier and 82.64% for fiscal 2026 as a whole. Against the call's net cash capital expenditure of $18,000M, $10,499M — 36.84% — was funded from outside Oracle's own cash generation; the fiscal 2027 plan of $90,000M to $95,000M gross against not more than $70,000M net implies $20,000M to $25,000M, or 22.22% to 26.32%, so the external share falls rather than rises. Q1 is 30.00% to 31.67% of the gross capital-expenditure guide, leaving $61,501M to $66,501M across the remaining three quarters, an average of $20,500M to $22,167M and a sequential step of −28.07% to −22.22% from the reported quarter; $18,000M of net cash capital expenditure annualises to $72,000M against the $70,000M ceiling, a 2.86% overshoot, and represents 25.71% of that ceiling against the 25.00% a straight quarter would take. Property, plant and equipment rose $27,888M, or 27.90%, against capital expenditure less depreciation of $25,343M. Total borrowings of $125,337M are the current $7,625M plus non-current $117,712M, against $129,541M three months earlier, a reduction of $4,204M. Stockholders' equity rose $24,140M, of which the $19,909M of net at-the-market proceeds is 82.47%, and those proceeds are 29.63% of total equity; 141 million shares for $19,909M is approximately $141.20 a share, 4.75% of the 2,966M basic shares outstanding, 56.97% below the $328.15 fifty-two-week high and 6.04% below the reaction-day close. Deferred revenues rose $4,770M (+48.10%) in current liabilities and other non-current liabilities rose $12,005M (+74.21%), together $16,775M. Total assets rose 15.85%. Diluted shares rose 3.13% and basic shares 4.95%; non-GAAP net income available to common rose 34.44% against non-GAAP EPS of 30.61%, a 3.83 percentage-point gap. Preferred dividends of $81M a quarter annualise to $324M. Committed obligations total $491,293M — borrowings $125,337M, on-balance-sheet operating and finance lease liabilities of $34,621M and $9,185M, the $288,000M of not-yet-commenced leases and $34,150M of unconditional purchase obligations — equal to 73.99% of the $664B backlog; the not-yet-commenced leases alone are 94.97% of total assets. Unconditional purchase obligations rose 156.59% from $13,309M at the fiscal year end. Remaining performance obligations by quarter are $455.3B, $523.3B, $552.6B, $638B and $664B, for sequential increments of $68.0B, $29.3B, $85.4B and $26.0B; the share recognisable within twelve months went 10%, 10%, 12%, 12% and 13%, taking that near-term slice from $76.56B to $86.32B, an increase of $9.76B or 12.75%, and covering 95.91% of the $90B revenue guide; 84% of the backlog is consumed within sixty months, leaving 16%, or $106.2B, beyond it. Not-yet-commenced lease commitments by quarter are $99.8B, $248B, $261B, $260B and $288B. Quarterly capital expenditure is $8,502M, $12,033M, $18,635M, $16,493M and $28,499M. Fiscal 2027 guidance of at least $90,000M is +33.62% on fiscal 2026 revenue of $67,357M, and non-GAAP EPS of $8.10 is +6.16% on $7.63 including prior-year gains or +18.59% on the $6.83 excluding them; capital expenditure at guide is 100.00% to 105.56% of revenue at guide. The reaction-day move of −1.74% is arithmetic on the $152.94 prior close; $150.28 is 54.20% below the fifty-two-week high, 51.19% below the close a year earlier and 26.14% below the $203.47 close on the day of the Q4 print. At $150.28 on 3,000M diluted shares the market capitalisation is approximately $450.84B and the multiple on the $8.10 guide is 18.55x; enterprise value adding borrowings and deducting cash and marketable securities is approximately $539.10B, or 5.99x the $90B revenue guide, and approximately $870.91B including both lease books, or 9.68x; the $331,806M gap between those two enterprise values is exactly the two lease books, $288,000M not yet commenced plus $43,806M on balance sheet. Remaining performance obligations grew 4.08% sequentially, from $638B to $664B, against 12.75% growth in the twelve-month recognisable slice; the sequential increment of $26.0B is 69.55% below the $85.4B added in the preceding quarter. Leases commencing between the second quarter of fiscal 2027 and fiscal 2029 for terms of fifteen to nineteen years run to approximately 2041 at the near end of that window and approximately 2048 at the far end. Non-GAAP EPS guidance of $8.10 on 3,000M diluted shares implies approximately $24,300M of non-GAAP net income

Oracle Q1 FY27 — The Customer Became the Lender.

A record, and a shrug

The record cash flow is a loan, and the note says so

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