Oracle Posts Record-Breaking First Quarter with 30% Revenue Growth
Oracle Corporation has reported a record-breaking first quarter for fiscal year 2027, with total revenue reaching $19.3 billion, a 30% increase from the same period last year in US dollars.
The company's Chief Financial Officer, Hilary Maxson, described the quarter as one of "acceleration" during the conference call on September 10th, highlighting strength in both its cloud infrastructure and cloud apps businesses. This acceleration has resulted in record-breaking results for Q1, driven by a significant increase in cloud infrastructure revenue to $7.4 billion, up 121% year-over-year.
The strong execution in cloud infrastructure was supported by the company's ability to bring online record levels of new megawatt capacity and meet a continued strong demand environment for compute and database services. Meanwhile, cloud apps were up 10%, with Fusion and industry apps tracking well above that.
Oracle's non-GAAP operating income increased 31% in USD to $8.2 billion during the quarter, driven by revenue progression and operating leverage. Gross margin did decline due to the impacts of ramping up data centers and acceleration of infrastructure revenue; however, this was offset by lower operating costs and strong operating leverage tied to simplification and efficiency actions.
As a result, Oracle's non-GAAP earnings per share (EPS) rose 30% in USD to $1.92 for the quarter. Furthermore, the company's remaining performance obligations (RPO) increased by $26 billion from Q4, driven by growth in prepay or bring your own hardware contracts that will not require incremental capital and will not impact CapEx or revenues until fiscal 2028 or beyond.
This marks a significant inflection point for Oracle as the company has started to see a strong conversion of its RPO into revenues this quarter. As such, management now expects around half of their RPO to convert into sales over the next 36 months. This expected acceleration in RPO conversion will likely continue throughout the remainder of fiscal 2027 and beyond.
The company's ability to drive growth across both cloud infrastructure and cloud apps businesses is a testament to its strategic direction and commitment to innovation. As the tech landscape continues to evolve, Oracle remains well-positioned to capitalize on emerging trends and maintain its position as a leader in the industry.
