Executive Summary
Oracle reported a solid top-line result for QQ1 2026, with revenue of $14.926B, up 4.5% year-over-year and 5.63% quarter-over-quarter, underscoring ongoing demand for enterprise software and cloud offerings. The gross profit reached $14.506B, yielding an exceptionally high gross margin of approximately 97.2%, which reflects Oracle’s software-centric mix and licensing/subscription revenue. Operating income was $4.278B (margin ~28.7%), while net income stood at $2.927B (net margin ~19.6%), accompanied by diluted EPS of $1.01. Despite this profitability, Oracle reported negative free cash flow of $-3.62B as capital expenditures surged to $8.502B, driving strong operating cash flow of $8.14B but consuming cash in investments in cloud infrastructure and product development. Ending cash and short-term investments totaled about $11.0B against total debt of $105.4B, leaving net debt of roughly $95.0B, with long-term debt at $96.3B. The quarter highlights Oracle’s continued profitability strength within a capital-intensive cloud strategy, requiring ongoing investor attention to cash flow discipline and debt management as cloud initiatives scale. The investment thesis remains focused on Oracle’s ability to translate software margins into sustainable cash generation while expanding cloud revenues through Fusion Cloud, NetSuite, Oracle Autonomous Database, and AI-enabled offerings. Near-term concerns include elevated leverage and negative free cash flow, balanced against a robust operating cash flow base and a clear long-term strategic path toward cloud leadership.
Key Performance Indicators
QoQ: -1.86% | YoY:-12.34%
Key Insights
Revenue: $14.926B, YoY +4.47%, QoQ +5.63% | Gross Profit: $14.506B, YoY +50.77%, QoQ +46.01%, Gross Margin ~97.2% | Operating Income: $4.277B, YoY -12.34%, QoQ -1.86%, Operating Margin ~28.65% | Net Income: $2.927B, YoY -6.90%, QoQ -0.31%, Net Margin ~19.61% | EPS (Diluted): $1.01, YoY -8.77%, QoQ -0.95% | Operating Cash Flow: $8.14B | Capital Expenditures: $8.502B | Free Cash Flow: -$3.62B | Cash at End of Period: $10.445B; Cash at Beginning: $10.786B; Net Change: -$0.341B | Total Current Asset...
Financial Highlights
Revenue: $14.926B, YoY +4.47%, QoQ +5.63% | Gross Profit: $14.506B, YoY +50.77%, QoQ +46.01%, Gross Margin ~97.2% | Operating Income: $4.277B, YoY -12.34%, QoQ -1.86%, Operating Margin ~28.65% | Net Income: $2.927B, YoY -6.90%, QoQ -0.31%, Net Margin ~19.61% | EPS (Diluted): $1.01, YoY -8.77%, QoQ -0.95% | Operating Cash Flow: $8.14B | Capital Expenditures: $8.502B | Free Cash Flow: -$3.62B | Cash at End of Period: $10.445B; Cash at Beginning: $10.786B; Net Change: -$0.341B | Total Current Assets: $24.634B; Total Assets: $180.449B | Total Current Liabilities: $39.874B; Total Liabilities: $155.783B; Total Stockholders' Equity: $24.154B | Total Debt: $105.409B; Net Debt: $94.964B | Dividends Paid: $1.413B; Share Repurchases: $-1.12B; Shares Issued: $1.17B | Shares Outstanding (Avg): 2.826B (Basic), 2.909B (Diluted)
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
14.93B |
4.47% |
5.63% |
| Gross Profit |
14.51B |
50.77% |
46.01% |
| Operating Income |
4.28B |
-12.34% |
-1.86% |
| Net Income |
2.93B |
-6.90% |
-0.31% |
| EPS |
1.04 |
-8.77% |
-0.95% |
Management Commentary
Transcript data not provided in the dataset. Unable to extract management commentary or quotes from the earnings call to pair with the financials.
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Forward Guidance
No explicit forward guidance is included in the provided data for QQ1 2026. The outlook therefore relies on qualitative assessment of Oracle’s cloud strategy, product cadence, and industry dynamics. Investors should monitor: (1) Cloud revenue growth trajectory across Oracle Fusion Cloud applications and Oracle Cloud Infrastructure; (2) AI feature adoption and monetization, including Autonomous Database and related analytics capabilities; (3) Margin stability and progression of operating leverage as cloud mix increases; (4) Cash flow generation towards free cash flow optimization, capex discipline, and debt refinancing activity; (5) Portfolio integration gains from NetSuite, Oracle Fusion, and vertical industry solutions; (6) Enterprise IT spending trends and competitive positioning against hyperscalers (e.g., Microsoft, AWS) and ERP players (e.g., SAP, Salesforce). Given the current negative FCF and high leverage, the key near-term concern is achieving a more favorable cash conversion while sustaining growth in high-margin software and cloud revenues.