Oracle Corp. announced its first-quarter FY27 results, exceeding Wall Street expectations with total revenues increasing 30% to $19.3 billion. This growth was primarily propelled by strong demand for its cloud computing services, particularly from the booming artificial intelligence sector. The company's cloud infrastructure (IaaS) business saw a triple-digit growth of 121%, reaching $7.4 billion, surpassing analysts' average estimate of $7.19 billion. Cloud applications (SaaS) revenue also increased by 10% to $4.2 billion, contributing to an overall cloud revenue increase of 62% to $11.6 billion.
Oracle's substantial investments in data centers are proving fruitful, as evidenced by the 850MW of additional datacenter capacity brought online in the June-August quarter. This expansion has enabled the company to secure more enterprise contracts, particularly for AI cloud training and inferencing services. The company's revenue backlog, or Remaining Performance Obligations (RPO), surged to $664 billion, up $209 billion year-over-year, and significantly higher than the analyst estimate of $639.89 billion. Oracle booked over $30 billion in new AI cloud contracts in Q1, with many structured as prepayments or bring-your-own-hardware, minimizing immediate large cash outlays for chips.
The robust financial performance translated into a record Q1 operating cash flow of $23 billion, an increase of 184%. However, free cash flow was negative $5 billion as Oracle continued its heavy investment into cloud infrastructure. GAAP earnings per share rose 55% to $1.56, while non-GAAP earnings per share climbed 30% to $1.92. Despite a year-to-date share decline of over 20%, Oracle's stock rose nearly 7% in extended trading following the announcement, signaling investor confidence in its AI-driven strategy and future growth prospects. The company also delivered over 300,000 GPUs to AI Cloud customers, nearly tripling the capacity from the previous quarter.
