Key Takeaways
- Oracle (ORCL) maintained its massive FY2027 capital expenditure guidance of $90 billion to $95 billion, driven by aggressive AI data center expansion.
- Remaining Performance Obligations (RPO) surged to a record $664 billion, a $209 billion increase year-over-year, following $30 billion in new AI cloud contracts.
- CFO Hilary Maxson expects approximately 50% of the current RPO to convert into revenue over the next 36 months, though newly booked backlog is not expected to impact financials until FY2028.
- Cloud Infrastructure (OCI) revenue skyrocketed 121% to $7.4 billion in Q1, fueling a 30% jump in total quarterly revenue to $19.35 billion.
- Free cash flow remained negative at $5.4 billion for the quarter as the company prioritized infrastructure buildouts over immediate liquidity.
Oracle (ORCL) reaffirmed its commitment to a massive infrastructure buildout during its fiscal first-quarter 2027 earnings call on Thursday. The enterprise giant maintained its full-year capital expenditure forecast at $90 billion to $95 billion, noting that spending will likely be uneven throughout the year as new data centers come online. This aggressive investment strategy is designed to meet "unprecedented" demand for AI training and inferencing services.
The company’s Remaining Performance Obligations (RPO) reached a staggering $664 billion, bolstered by more than $30 billion in new AI cloud contracts signed during the quarter. Chief Financial Officer Hilary Maxson highlighted that roughly 50% of this backlog is expected to be recognized as revenue within the next three years. However, she cautioned that the most recent bookings are structured such that they will not impact revenue or capital requirements until FY2028 or later.
Oracle's (ORCL) cloud infrastructure business continues to be the primary growth engine, with OCI revenue more than doubling to $7.4 billion, up 121% year-over-year. To support this growth, the company delivered 850 megawatts of new data center capacity and more than 300,000 GPUs to customers in Q1 alone. Management noted that the scale of these deployments is nearly triple the capacity delivered in the previous quarter.
Despite the top-line strength, the heavy spending continues to weigh on the company's cash position. Oracle (ORCL) reported a record $23.1 billion in operating cash flow, yet free cash flow was a negative $5.4 billion due to the $28.5 billion in quarterly capital outlays. To fund the gap, the company has utilized debt and equity financing, including a $20 billion at-the-market stock sale completed during the quarter.
Looking ahead, Oracle (ORCL) raised its full-year revenue guidance to a minimum of $90 billion and adjusted earnings to $8.10 per share. For the second quarter, the company expects total revenue growth of 30% to 34%. While the transition from legacy on-premises software continues to see minor declines, the rapid acceleration of the cloud segment has positioned the company as a top-tier "hyperscaler" alongside industry leaders.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.