Oracle Corp Earnings - Q2 2025 Analysis & Highlights
Key Takeaways
Oracle's Q1 2026 earnings call highlighted strong growth in cloud revenue, driven by AI workloads and infrastructure demand, with a focus on AI inferencing and training markets. The company is leveraging its database technology and cloud infrastructure to capitalize on these trends, while also focusing on internal AI adoption and application generation.
Key Financial Results:
Total revenues for the quarter were $14.9 billion, up 11% from last year.
Non-GAAP EPS was $1.47 in US dollars, while GAAP EPS was $1.01 in US dollars.
Operating income grew 7% to $6.2 billion.
Remaining performance obligations (RPO) topped $455 billion, up 359% from last year.
Operating cash flow for Q1 was $8.1 billion, while free cash flow was a negative $362 million with CapEx of $8.5 billion.
Business Segment Results:
Total cloud revenue (apps and infrastructure) was up 27% to $7.2 billion.
Cloud Infrastructure revenue was $3.3 billion, up 54%.
OCI consumption revenue was up 57%.
Cloud database services were up 32%, with annualized revenues of nearly $2.8 billion.
Autonomous database revenue was up 43%.
MultiCloud database revenue grew 1,529% in Q1.
Cloud Application revenue was $3.8 billion, up 10%.
Strategic back-office application revenue was $2.4 billion, up 16%.
Total software revenue for the quarter was $5.7 billion, down 2%.
Capital Allocation:
The company repurchased 440,000 shares for a total of $95 million this quarter.
Dividends of $5 billion were paid out over the last 12 months.
A quarterly dividend of $0.50 per share was declared.
Fiscal year 2026 CapEx is expected to be around $35 billion.
Industry Trends and Dynamics:
Oracle has become the go-to place for AI workloads.
Demand for OCI continues to build.
The AI inferencing market will be much larger than the AI training market.
Oracle is aggressively pursuing the AI inferencing market as well as the AI training market.
Competitive Landscape:
Oracle builds gigawatt scale data centers that are faster and more cost-efficient at training AI models than anyone else in the world.
Oracle is by far the world's largest custodian of high-value private enterprise data.
Oracle has the most advanced application generator of any company.
Oracle's networking capabilities and GPU superclusters provide performance advantages.
Growth Opportunities and Strategies:
Oracle is focused on the AI training and inferencing markets.
The company is developing an AI database to allow customers to vectorize their data and connect it to AI models.
Oracle is building AI application generators to create new applications more efficiently.
The company is offering private versions of the Oracle Cloud with every feature for $6 million.
Financial Guidance and Outlook:
Operating income is expected to grow mid-teens this year and higher still in FY 2027.
Oracle Cloud Infrastructure is expected to grow 77% to $18 billion this fiscal year, and then increase to $32 billion, $73 billion, $114 billion, and $144 billion over the following four years.
The company remains confident and committed to full year total revenue growth of 16% in constant currency for fiscal year 2026.
For Q2, total revenues are expected to grow from 12% to 14% in constant currency and from 14% to 16% in US dollars.
Total cloud revenue is expected to grow from 32% to 36% in constant currency and from 33% to 37% in USD for Q2.
Non-GAAP EPS is expected to grow between 8% to 10% and be between $1.58 and $1.62 in constant currency for Q2.
Non-GAAP EPS is expected to grow 10% to 12% and be between $1.61 and $1.65 in USD for Q2.
EPS guidance for Q2 assumes a base tax rate of 90%.
