Sep 10, 2026 earnings call — Cloud infrastructure and apps accelerate revenue conversion
Record total revenue of $19.3 billion, up 30% year over year.
Revenue $19.3B (est $19.1B) · EPS $1.92 (est $1.74)
Key quotes
"We delivered 850 megawatts of AI capacity containing more than 3 thousand GPUs to customers since the end of Q4."
"At AI World in October, we will unveil a new agentic AI accelerator poised to redefine how customers deploy Oracle applications."
"Our CapEx for the quarter was $28 billion leading to negative free cash flow of $5 billion."
Analyst Q&A 7
AI spending and free cash flow timing
Q (Brad Zelnick · Deutsche Bank): Will Oracle slow AI infrastructure spending after fiscal 27–28 if others keep spending, and could peaks go higher? When will Oracle return to positive free cash flow given the current backlog?
A: Management said Oracle can spread capital in several ways besides its own CapEx, including supplier relationships and bring-your-own-hardware, so Oracle CapEx is not the only source of funding. They did not give a specific time frame for returning to positive free cash flow, but said the projects are strong free cash flow generators and can deliver conversion ratios like "something like 100% to post tax EBITDA."
"What I would say though is that each of these projects that we are doing, by nature, is a strong free cash flow generating project." — Hilary Barbara Maxson (CFO)
New Mexico/Wisconsin data center timelines
Q (Siti Panigrahi · Mizuho): Can you update the status of the New Mexico and Wisconsin data centers, any risk to the FY2027 revenue guide from their timelines, and ability to secure capacity as RPO grows?
A: They said New Mexico and Wisconsin are important but not the only sites; capacity is delivered across many sites and is phased over quarters so single-site delays are not a quarter-breaking issue. Clayton said New Mexico construction is on track while they work through an air permit and will deploy bloom fuel cells, Wisconsin is on track using grid power, and he said neither site will impact the company’s previously stated FY2027 revenue or earnings guidance; they are confident they can bring capacity online to meet current and future RPO.
"To the question about impact on f y 2027 revenue, the neither of these sites will have any impact into our f y you know, our previously stated f y 2027 revenue or earnings guidance." — Clayton Magouyrk
Pricing and gross margin outlook
Q (Raimo Lenschow · Barclays): How are contract and spot pricing evolving with component cost increases, and does the prior gross margin framework still hold?
A: They said when demand exceeds supply prices go up and they pass through higher costs by charging more, and that the previous gross margin guidance still holds. Clayton added that winning renewals at higher prices—"to the tune of 20%"—is a positive sign for continued demand and profitability.
"No. We do not we do not expect this to have an impact on our gross margins." — Clayton Magouyrk
RPO funding models and sovereign cloud
Q (Mark Moerdler · Bernstein): What drives RPO growth that does not require Oracle cash (prepaid, BYO chips)? Is demand from AI labs, semiconductor companies, or sovereign cloud, and how does sovereign cloud affect CapEx and margins?
A: They clarified they did not say no CapEx is required, only that it does not always require Oracle to front cash. Clayton explained multiple models: supplier financing, customers buying hardware but using Oracle operations, or customer prepayments; demand is broad based, and their sovereign/alloy business is doing well with partners in Japan, the Middle East and elsewhere, with GPU capabilities for sovereign workloads and a growing general purpose cloud business.
"Now the question becomes, well, how do you do that? Well, we have a variety of different models." — Clayton Magouyrk
Gross margin vs operating margin outlook
Q (John DiFucci · Guggenheim): Gross margins fell meaningfully this quarter despite capacity coming online. How should we think about gross margins going forward and the relation to operating margins?
A: Hilary said gross margin is an important health indicator, but operating margin is the key metric tied to value. She reiterated they expected a step down in gross margins this year and that, as the ramp finishes over the next couple of years, "you can reasonably expect that gross margin would flatten," with more detail to be discussed at the October investor day.
"Over the next couple of years, as we finish the ramp up, you can reasonably expect that gross margin would flatten, I would say." — Hilary Barbara Maxson (CFO)
SaaS growth and AI impact
Q (Brent Thill · Jefferies): How will Oracle keep sustainable double-digit SaaS growth with AI changes in the industry?
A: Mike said Oracle’s SaaS strength is end-to-end industry suites and embedding AI into those workflows, plus the Fusion AgenTic AI Studio that lets customers build agents on the same platform. He also described AI-assisted go-lives that speed deployments (examples include health care and NetSuite) and said SaaS also drives OCI adoption because SaaS customers often use OCI for other workloads.
"First is we have a highly differentiated offering and that we have end to end suites that automate complete industries." — Michael D. Sicilia (CEO)
AI Data Platform business model
Q (Kirk Materne · Evercore): Does the AI Data Platform drive more OCI and Oracle Database consumption, or is it a standalone software opportunity?
A: Michael said the business model is "all the above": the platform is agnostic and can automate ontologies from hundreds of data sources, so it can be used standalone, with applications, or with OCI. He also said the Oracle Database remains a primary custodian for mission-critical data, the platform helps drive multicloud database growth, and they will deploy forward-deployed engineers and services to help customers go live quickly.
"I think I think you clicked on the answer really to the business model is all the above." — Michael D. Sicilia (CEO)