Oracle referred to as the third quarter of fiscal 2026 its finest in 15 years with income up 22% to $17.2 billion and cloud infrastructure up 84% to $4.9 billion. The market rejoiced, sending the fill up practically 10% in after-hours buying and selling on Tuesday.
Regardless of the market’s ebullience, the enterprise software program big is blowing by money at a steadily rising tempo. Simply three quarters in the past, Oracle’s free money move was basically zero, and this quarter it clocked in at damaging $24.7 billion over the trailing 12 months as its capital expenditures rocketed from $21.2 billion in fiscal 2025 to a guided $50 billion this fiscal yr as the corporate forges forward in its AI knowledge middle buildout.
Chief monetary officer Doug Kehring mentioned after the market closed that Oracle would supply up extra details about its capital expenditures for fiscal 2027 subsequent quarter.
“I think we’ll get back to everyone at the end of the fiscal year and talk about next year’s capex at that point,” mentioned Kehring in response to a query. Nevertheless, he flagged that Oracle is engaged on financing constructions the place future spending doesn’t come out of Oracle’s pocket however as a substitute will be paid for by prospects paying for capability and companies. “The most interesting thing that you can start thinking about is the uncoupling of CapEx with capital requirements from Oracle,” Kehring mentioned.
Oracle, whose market cap is greater than $400 billion, has been shadowed by questions on its aggressive capital spending and mounting debt load. The corporate guided capex of $50 billion for the present fiscal yr, a determine that has helped push its whole debt place to greater than $100 billion. Final month, Oracle raised $30 billion by a one-two punch of bonds and most well-liked inventory, and mentioned its order e-book was considerably oversubscribed by buyers.
For now no less than, the corporate is delivering sturdy outcomes because the guess performs out.
On the topline, Oracle on Tuesday reported fiscal third quarter earnings per share up 21% at $1.79, planting it a number of notches above Wall Avenue’s expectations of about $1.71 in adjusted earnings per share. The outcomes despatched the corporate’s inventory value on an instantaneous tear in after-hours buying and selling, an ‘Uno reverse’ on the inventory’s roughly 20% tumble thus far in 2026.
Oracle executives, together with Government Chairman and co-founder Larry Ellison repeatedly burdened that the corporate’s enterprise software program was not prone to being displaced by enterprise prospects utilizing AI instruments to construct their very own variations of the product. Ellison mentioned Oracle is utilizing AI coding instruments to construct ecosystem automation platforms for hospitals, monetary companies corporations, and retail operations.
“That’s what we’re doing at Oracle,” mentioned Ellison. “That’s why we think we’re a disruptor. That’s why we think the ‘Saaspocalpyse’ applies to others, but not to us.”
A half-trillion greenback backlog
Cloud infrastructure income, Oracle’s quickest rising enterprise unit and a key driver behind its AI ambitions, clocked in at $4.9 billion, with 84% progress year-over-year. The determine was consistent with consensus estimates and continues together with Ellison’s imaginative and prescient of competing with Amazon and Microsoft within the cloud market.
Complete cloud income was $8.9 billion and up 44% year-over-year. Its multi-cloud database income slice—the quantity Oracle earns from working its database software program inside opponents’ clouds—was up 531%. That piece is a part of Ellison’s strategic plan of threading Oracle into the ecosystems of Amazon’s AWS, Google Cloud, and Microsoft Azure, moderately than prodding prospects to maneuver their knowledge into Oracle’s infrastructure.
The corporate didn’t give particular numbers for multi-cloud income, however famous that its remaining efficiency obligations (RPO), which refers to its backlog of contracted future work—was $553 billion. That determine is proof of demand outpacing provide, mentioned Magouyrk. He added that Oracle signed greater than $29 billion in new contracts since final quarter, in a mannequin by which prospects fund the capability buildout themselves.
“A combination of bring-your-own hardware and upfront customer payments enables us to continue expanding without any negative cash flow,” mentioned co-CEO Clay Magouyrk. He famous that Oracle delivered greater than 400 megawatts of capability to prospects within the third quarter, with 90% of it on or forward of schedule.
“It’s unprecedented to be scaling capital into a business so quickly while also increasing profitability,” mentioned Magouyrk throughout the convention name. “As our business is going through this hyper-growth phase, that’s the only drag on profitability.”
Melissa Otto, head of analysis at S&P International Seen Alpha, mentioned Oracle’s debt-to-equity ratio stands between 3x and 4x relying on the way it’s outlined, which is “pretty significant leverage.”
“The investment community will want to hear what they’re going to do to ensure that the company remains on the right trajectory given that level of leverage,” mentioned Otto in an interview earlier than the earnings outcomes.
Subsequent quarter, Oracle’s C-suite mentioned it expects income to develop 19% to 21% and income for the complete yr is anticipated to be $67 billion. Fiscal 2027 steerage was raised to $90 billion.
“High-growth companies are willing to take a hit in the near term” in pursuit of an outsized acquire over the long-term, mentioned Otto, however buyers are searching for proof alongside the way in which that capex is translating into return on invested capital, margin growth, and income progress, she mentioned.
“When I look at balance sheets and cash positions of the hyperscalers in the space, they’re very good with the exception of Oracle,” she mentioned.
