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By Brian Nelson, CFA
Oracle (ORCL) recently reported fiscal first quarter fiscal 2027 results that came in better than the consensus forecasts on both the top and bottom lines. The company posted record first quarter total revenue of $19.3 billion, up 30%, while non-GAAP earnings per share increased at a similar pace, to $1.92. Consensus was at $19.1 billion in revenue and $1.75 in adjusted earnings.
Total cloud revenues were a record in the period, up 61% in constant currency, to $11.6 billion. First quarter cloud infra (IaaS) revenue advanced 120% in constant currency, while first quarter cloud apps (SaaS) revenue increased 10% in constant currency. Remaining performance obligations increased $209 billion year-over-year, to $664 billion.
Oracle’s strong performance translated to record first quarter operating cash flow of $23 billion, up 184%, but free cash flow was negative $5 billion as the company continues to invest heavily to support its cloud infrastructure business. As of August 31, Oracle had $37.1 billion in cash and marketable securities versus short- and long-term debt of $125.4 billion. Oracle’s financial health continues to be a concern among investors, as the firm burns through cash due to elevated investment and sits on a large net debt position. Such a condition has pressured shares.
Looking to the second quarter of fiscal 2027, total revenues are expected to grow between 30%-34% in constant currency and USD. Total cloud revenue is expected to grow between 64%-70% in constant currency and between 65%-71% in USD. Non-GAAP earnings per share is expected to be between $1.83-$1.91 in constant currency and between $1.85-$1.93 in USD, representing 19%-23% growth in constant currency and 21%-25% growth in USD. For full year fiscal 2027, management now expects total revenue to be at least $90 billion, and non-GAAP earnings per share to be at $8.10. Though Oracle’s free cash flow and balance sheet leave a lot to be desired, the company continues to execute well. We continue to like shares.
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Brian Nelson owns shares in SPY, SCHG, QQQ, QQQM, DIA, VOT, RSP, and IWM. Valuentum owns SPY, SCHG, QQQ, QQQM, VOO, and DIA. Brian Nelson’s household owns shares in HON, DIS, HAS, NKE, DIA, RSP, SCHG, QQQ, QQQM, and VOO. Some of the other securities written about in this article may be included in Valuentum’s simulated newsletter portfolios. Contact Valuentum for more information about its editorial policies.
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