Oracle Q4 Earnings: Cloud, AI Surge As Spending Spikes

‘Our customers have moved past the experiment stage with AI,’ says Oracle co-CEO Mike Sicilia.

Demand for artificial intelligence and compute pushed Oracle to new revenue milestones in its latest fiscal quarter and year—although continued eye-popping spending to meet AI demand continues to give investors pause—as solution providers continue to work on delivering AI products and services to customers.

The Austin, Texas-based provider of cloud, AI and database products held its latest quarterly earnings call Wednesday, covering the three months and fiscal year ended May 31. Oracle co-CEO Mike Sicilia (pictured above) said on the call that the vendor’s full-stack approach across applications, data, infrastructure, AI tooling and industry expertise gives the company a “unique advantage” in the AI age.

“Our customers are now focused on how to leverage AI in their own businesses,” Sicilia said. “Our customers have moved past the experiment stage with AI. They are ready to implement enterprise-grade complete agentic solutions to help run their businesses.”

Oracle Q4 Earnings Snapshot

This marked the first Oracle earnings call for Hilary Maxson since the vendor made her its new CFO hired back in April. In a rarity for the company, the call did not feature comments from Larry Ellison, Oracle’s co-founder and chief technology officer.

Oracle’s partnerships with AI upstarts including ChatGPT creator OpenAI have opened business opportunities for solution providers including PwC. The consulting giant’s U.S. data, analytics and AI practice leader Rima Safari told CRN in a recent interview that PwC collaborated with OpenAI to build a new offering on top of an Oracle platform to enable users to ask questions in natural language to improve the financial reporting process.

She characterized the PwC-OpenAI collaboration as “a major step forward towards redefining the entire future of finance.”

More connectors across different vendors and different systems like enterprise resource planning (ERP) and customer relationship management (CRM) software will help with governance and trust in AI products and services, Safari said.

AI Pricing Models: Token Bundles, Outcome-Based Approach Expand

Just as solution providers from various partner ecosystems have experimented with more outcome-based approaches with customers, Oracle’s Sicilia told analysts on the call that the vendor has also looked to expand the model across its offers.

Solution providers have told CRN that charging by outcomes makes more sense as AI agents bring down the time and effort it takes to complete IT projects and services for customers.

Oracle has traditionally leveraged outcome-based pricing in its construction, hospitality and health care businesses and is moving the model into all of its applications, Sicilia said. The vendor’s full-stack offers spanning AI models and horizontal and industry apps makes the approach possible.

“One of the things we’re increasingly hearing from customers is: How much am I going to spend on AI, and how do I get ROI very quickly?” he said. “We have a very unique advantage. … We are naturally generating these outcomes for customers, and it really gives us the ability to help them understand their own AI budgets, as well as align that to the value.”

Oracle is also offering token bundles customers can purchase across app suites for more predictable budgeting—although a lot of Oracle’s AI innovations are available at no extra charge within its products and services, Sicilia said. The vendor saw 33 customers participate in the limited roll out of buying token bundles in the quarter.

“We’re allowing as much flexibility as much aligned with the value in our pricing models across our entire application suite as we possibly can,” he said. “I expect that that will continue to resonate well with customers as it did in the quarter and as we roll it out across our entire fleet.”

Asked about the effect on Oracle due to the “SaaSpocalypse” decreases of software-as-a-service vendors’ stock prices, Sicilia said that a couple quarters ago customers did delay decision cycles somewhat, but customers moved on pretty fast in the mission-critical system space.

“Enterprise software, particularly when you have AI built into our SaaS solutions, is certainly a very good approach and is necessary to move forward for the modernization and protection of their businesses,” he said. “I expect that our applications business will continue to be a healthy contributor to Oracle, as it has been.”

The AI era and move to inferencing is also proving a boon for Oracle’s database business as well, he said.

Oracle’s AI agent innovation over the past year includes more than 1,000 agents delivered across app suites, he said.

“The quickest, most affordable and most productive way customers can begin consuming AI is just to continue using Oracle’s applications since every three months they get more and more of the AI features built for them and ready to go,” he said. “This is a major shift in enterprise software, and Oracle is uniquely positioned to lead it.”

Last quarter, Oracle took thousands of customers live with 300 Fusion customers alone, he said.

Cloud applications revenue for the quarter grew 9 percent, hitting $4.1 billion. Oracle’s cloud apps revenue for the year hit $15.9 billion in the quarter, up 10 percent year on year.

Oracle’s multicloud AI database business more than quintupled in the quarter, becoming the vendor’s fastest growing business in company history, according to Oracle. Its cloud database business revenue grew 29 percent in the quarter.

The vendor expects a new AI version of the Cerner hospital and clinic patient care management system to put its health business in a double-digit growth rate in fiscal year 2027.

Capital Spending Jumps As Oracle Accelerates AI Buildout

Higher-than-expected spending in capital expenditures in the quarter came not just from higher component costs the entire IT industry has experienced, but also speeding up spending to get to revenue faster, Oracle Co-CEO Clay Magouyrk said on the call.

When Oracle has enough certainty on the cost of meeting a customer’s project, the vendor is comfortable doing fixed-price contracts. Increasing costs are not reducing Oracle margins, he said.

On the call, CFO Maxson said that Oracle is still on track to hit long-term targets, including compound annual growth rates (CAGRs). She said that she foresees return on invested capital in the high 20s at a steady state, so expect to continue seeing eye-popping spending by Oracle to meet the AI moment. Sometimes projects can see higher margins if customers supply their own chips, as an example.

Asked on the call about increased competition in the data center and cloud computing space from NeoClouds and companies like SpaceX, Magouyrk said he’s not worried

“Several years in, there’s still a massively higher demand than there is supply,” he said. “They’re going to be more and more people trying to figure out how to meet that demand, but I don’t worry about that. I really focus on how do we make sure that we can meet as much of that demand at a reasonable margin profile.”

Total cloud revenues for the quarter grew 46 percent year on year to a record $9.9 billion. Within those cloud revenues, cloud infrastructure revenue hit $5.8 billion, up 92 percent year on year ignoring foreign exchange.

The vendor reported record total cloud revenues of $34 billion for the year. That’s an increase of 37 percent year on year. Within that business, cloud infrastructure revenue for the year grew 75 percent year on year ignoring foreign exchange, reaching $18.1 billion.

Within those total cloud revenues, cloud infrastructure grew 75 percent year on year to $18.1 billion.

Oracle forecasted growth of 27 percent to 29 percent in total revenues in the first quarter of fiscal year 2027 compared to the same period a year ago. Total cloud revenue should grow 57 percent to 63 percent, ignoring foreign exchange.

The vendor still expects $90 billion in total revenue for the 2027 fiscal year.

Oracle Q4, FY 2026 Results: Cloud Growth Leads Annual Performance

Oracle’s latest quarter saw a series of record financial milestones, including record remaining performance obligations of $638 billion, up $85 billion—about 15 percent—from the prior quarter, according to the vendor. That RPO more than quadrupled the figure reported for the same period a year ago.

The vendor expects 12 percent of that RPO to be recognized as revenue in the next 12 months and another 34 percent recognized in the next 13 to 36 months, Maxson said. Those percentages should accelerate over the coming quarters.

Oracle credited most of the RPO increase to large-scale AI contracts where customers prepaid for graphics processing units or supplied their own GPUs to Oracle. Those prepaid or supplied GPU customers total $75 billion and brought down the amount of capital Oracle needs to raise for AI data center build out, according to the vendor.

As part of that AI data center build out, Oracle raised $43 billion in debt financing and $5 billion in equity financing in fiscal year 2026.

Even after all that financing, the vendor wants to raise about $40 billion in debt and equity financing in fiscal year 2027—including its previously disclosed $20 billion at-the-market equity issuance. Oracle doesn’t expect to issue more debt this calendar year, according to the vendor.

Total revenues for the quarter grew 20 percent year on year ignoring foreign exchange to a record $19.2 billion.

Oracle’s software revenues fell 2 percent to $6.8 billion as customers continued to migrate to the cloud from on-premises software, according to the vendor.

Services revenues grew 13 percent to $1.5 billion. Hardware revenues grew 9 percent to about $1 billion.

Oracle operating income for the quarter using Generally Accepted Accounting Principles was $6.1 billion, up 20 percent. Without GAAP, it was a record $8.6 billion, up 22 percent.

GAAP net income reached $4.2 billion, up 23 percent. Non-GAAP net income was $6.2 billion, up 26 percent.

For Oracle’s 2026 fiscal year, the vendor reported a record $67.4 billion in total revenues, up 16 percent year on year ignoring foreign exchange.

Software revenue for the fiscal year fell 1 percent to $24.5 billion. Services revenue grew 10 percent, reaching $5.7 billion for the year. Hardware revenues grew 5 percent to $3.1 billion.

Fiscal year 2026 GAAP operating income was $20.6 billion, up 17 percent, according to Oracle. Non-GAAP operating income hit a record $28.9 billion, up 16 percent. GAAP net income available was $17.0 billion, up 36 percent. Non-GAAP net income was $22.2 billion, up 29 percent.

The vendor saw a record fiscal year operating cash flow of $32 billion, up 54 percent year on year, according to Oracle.

Oracle’s stock fell about 11 percent after market close Wednesday, trading at about $180 a share.