Oracle Q1 2027 earnings: AI cloud demand drives profit beat and raised outlook
Oracle topped profit expectations on surging AI-driven cloud infrastructure demand, though revenue landed just under estimates; management raised its full-year outlook on a record contracted backlog.
| Q1 2027 | Reported | Expected | Surprise |
|---|---|---|---|
| EPS | $1.92 | $1.78 | +8.1% |
| Revenue | $19.34B | $19.53B | -0.9% |
Key takeaways
- Earnings per share of $1.92 came in well above the roughly $1.78 analysts expected, while revenue of about $19.35 billion landed slightly below the roughly $19.53 billion consensus estimate even though it was still up about 30% from a year earlier.
- The standout driver was Oracle’s cloud infrastructure (OCI) business — the computing power it rents out, increasingly for AI workloads — which more than doubled, growing about 121% year over year to roughly $7.4 billion. Combined with its other cloud offerings, total cloud revenue rose about 62% to $11.6 billion.
- Oracle’s remaining performance obligations (RPO) — essentially contracted future revenue not yet delivered — jumped to roughly $638 billion, up from about $553 billion the prior quarter, as the company signed more large, multi-year AI computing contracts than it can yet fulfill.
- To keep up with that demand, Oracle added about 850 megawatts of new data center capacity and more than 300,000 GPUs during the quarter — nearly three times the pace of the prior quarter — and said its AI computing capacity is running at close to full utilization.
- Management raised its outlook, telling investors it now expects total revenue of at least $90 billion for the current fiscal year, alongside adjusted earnings per share of around $8.10, as more of the contracted cloud backlog is expected to convert into recognized revenue.
- Profitability metrics over the trailing twelve months show a company whose profits are growing faster than its sales: revenue was up about 17% year over year while earnings per share grew about 35%, a sign that as the cloud business scales up, more of each new revenue dollar is flowing through to profit.
- Oracle’s trailing-twelve-month gross margin of roughly 66% and operating margin of about 31% indicate the company keeps a substantial share of sales after covering the cost of running its cloud and software operations, while a return on equity above 50% points to strong profit generation relative to shareholders’ invested capital.
Q1 2027 in context
| Metric | Aug 2026 | Aug 2025 | Change |
|---|---|---|---|
| Revenue | $19.3B | $14.9B | +29.6% |
| Net income | $4.8B | $2.9B | +62.6% |
| Free cash flow | -$5.4B | -$362M | -1390.6% |
| Diluted EPS | $1.56 | $1.01 | +54.5% |
| Operating margin | 34.8% | 28.7% | +6.1 pts |
| Net margin | 24.6% | 19.6% | +5.0 pts |
Figures for the quarter ended Aug 2026 and the quarter ended Aug 2025, as reported to the SEC.
How the stock took it
Oracle Corp closed at $161.63 on Sep 9, 2026, the last session before the report, and at $150.28 on Sep 11, 2026, the first session after it — -7.0% across the report.
| Earlier report | Close before | Close after | Change |
|---|---|---|---|
| Mar 11, 2026 | $149.40 | $159.16 | +6.5% |
| Dec 11, 2025 | $223.01 | $189.97 | -14.8% |
| Sep 10, 2025 | $241.51 | $307.86 | +27.5% |
Closes from the market's daily record. Each figure spans the report date — from the last session that closed before it to the first that closed after — because a company may report before the open or after the close.
Fundamentals
| Metric | Value | Period |
|---|---|---|
| Gross margin | 65.8% | Trailing 12 months |
| Operating margin | 30.6% | Trailing 12 months |
| Net profit margin | 25.4% | Trailing 12 months |
| Pretax margin | 29.0% | Trailing 12 months |
| EPS | $5.86 | Trailing 12 months |
| Revenue growth (YoY) | 17.4% | Trailing 12 months |
| EPS growth (YoY) | 35.0% | Trailing 12 months |
| Return on equity | 50.4% | Trailing 12 months |
Sources: company report · earnings call