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By Brian Nelson, CFA
On March 10, Oracle (ORCL) reported better than expected third quarter fiscal 2026 results with revenue and non-GAAP earnings per share exceeding the consensus estimates. Third quarter total revenue of $17.2 billion was up 22% in USD and up 18% in constant currency and better than consensus of $16.9 billion in revenue. Non-GAAP earnings per share increased 21%, to $1.79, in the quarter, better than consensus of $1.70.
“This third quarter was the first quarter in over 15 years where organic total revenue and non-GAAP earnings per share both grew at 20% or more in USD.” Third quarter cloud revenue (IaaS plus SaaS) was $8.9 billion, up 44% in USD and up 41% in constant currency. Remaining performance obligations were $553 billion at the end of the quarter, up 325% year-over-year.
Most of the increase in RPO in Q3 related to large scale AI contracts where Oracle does not expect to have to raise any incremental funds to support these contracts as most of the equipment needed is either funded upfront via customer prepayments so Oracle can purchase the GPUs, or the customer buys the GPUs and supplies them to Oracle.
In February, we announced our intent to raise up to $50 billion dollars in debt and equity financing, along with the statement that we do not expect to issue any additional bonds beyond this amount in calendar year 2026. Within days of the announcement, Oracle raised $30 billion through a combination of investment grade bonds and mandatory convertible preferred stock, with a record order book that was substantially oversubscribed. We have not yet initiated the at-the-market equity portion of the financing program.
Looking to the fourth quarter of fiscal 2026, total revenues are expected to grow 18%-20% in constant currency and 19%-21% in USD. Total cloud revenue is expected to grow between 44%-48% in constant currency and 46%-50% in USD. Non-GAAP earnings per share is expected to grow between 15%-17% and be between $1.92-$1.96 in constant currency and grow between 15%-17% and be between $1.96-$2.00 in USD.
Oracle reiterated its fiscal 2026 guidance calling for revenue of $67 billion and capital expenditures of $50 billion. For fiscal 2027, it raised its total revenue guidance to $90 billion. We continue to monitor Oracle’s capital spending plans as well as its overall debt load, as both of these items remain elevated. For now, we continue to include Oracle in the newsletter portfolios.
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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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