Oracle's stock edges up on earnings beat as cloud infrastructure revenue more than doubles

Primary Journalistic Dispatch & Direct Reporting

Oracle shares moved 4% higher in extended trading on Thursday after the software vendor issued stronger-than-expected quarterly results.

Here's how the company performed relative to LSEG consensus:

Oracle's revenue grew almost 30% year over year in the fiscal first quarter, which ended on Aug. 31, according to a statement . Net income of $4.68 billion, or $1.56 per share, was up from $2.93 billion, or $1.01 per share, a year ago. Adjusted earnings exclude stock-based compensation expense.

In-Depth Developments & Factual Context

For the fiscal second quarter, Oracle called for $1.85 to $1.93 in adjusted earnings per share, with revenue growth between 30% and 34%. Analysts surveyed by LSEG were looking for $1.89 in adjusted earnings per share, with $21.20 billion in revenue, which would indicate 32% growth.

Much of Oracle's expansion is tied to data center growth, as the company tries to become a bigger player in the artificial intelligence boom. But Oracle has a weaker cash position than hyperscaler competitors and a lower credit rating. The company now sits on $125 billion in debt, and negative free cash flow came in at $5.4 billion, compared with negative $362 million a year earlier.

Capital expenditures in the fiscal first quarter soared to $28.50 billion from $8.50 billion last year. During the quarter, the company said it delivered 850 megawatts of data center capacity.

Industry Impact & Strategic Analysis

Oracle shares have dropped 22% this year as of Thursday's close, while the S&P 500 has gained roughly 11%.

Cloud revenue soared 62% in the quarter to $11.61 billion, topping the $11.51 billion consensus among analysts polled by StreetAccount. Revenue from cloud infrastructure more than doubled to $7.4 billion, beating the $7.09 billion consensus estimate.

For the 2027 fiscal year, Oracle now sees $8.10 in adjusted earnings per share on at least $90 billion in revenue. The LSEG consensus called for $8.07 earnings per share and $89.76 billion in revenue. Guidance on capital spending for the full year is unchanged, Hilary Maxson, Oracle's finance chief, said in a briefing with reporters.

Forward Outlook & Market Perspective

Heading into the results, analysts were looking for information on hiccups in Oracle's data center buildout, after Bloomberg reported that a natural gas pipeline for a New Mexico data center was running behind schedule.

"Nothing that we know today would lead us to believe that New Mexico or any of our other sites are delayed relative to the schedules that we included, for example, in our fiscal '27 outlook," Maxson said in the briefing.

Oracle is working to acquire an air permit in New Mexico, CEO Clay Magouyrk said on a conference call with analysts.

The company's software category contributed $5.55 billion in revenue, down about 3% and lower than StreetAccount's $5.61 billion consensus.

At the end of the quarter Oracle's remaining performance obligations stood at $664 billion, above StreetAccount's $630.6 billion consensus. The sum includes contracted but unrecognized revenue, deferred revenue and uncollected invoices.

"We closed more than $30 billion of additional AI contracts in Q1 without requiring additional capital from Oracle," Magouyrk said.

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