On Wednesday, Oracle (NYSE:ORCL) discussed fourth-quarter financial results during its earnings call. The full transcript is provided below.
Watch the full earnings call below:
Oracle Corporation reported a record Q4 with revenue of $19.2 billion, up 21%, driven by strong demand for cloud infrastructure and cloud applications.
Cloud infrastructure revenue surged 93%, with a focus on AI workloads, while cloud applications grew by 10%.
Non-GAAP EPS increased by 24% for the quarter, driven partly by a one-time net gain on investments.
Oracle's remaining performance obligations (RPO) reached $638 billion, providing strong visibility into future revenue growth.
The company plans significant capital investments, with a net cash outlay for capital expenditures at $70 billion, supported by customer demand.
Oracle's fiscal year 2027 guidance includes expected revenue growth of 34% and non-GAAP EPS growth of 18%.
The company is expanding offerings in AI, with over 1,000 AI agents delivered across applications and new pricing models introduced.
Oracle's cloud database business grew by 29%, with multi-cloud revenue increasing by 404% year over year.
The company continues to innovate in cloud infrastructure, with AI infrastructure contracts totaling $67 billion this quarter.
Oracle plans to raise around $40 billion in debt and equity to support continued investment in infrastructure.
Well, good day everyone and welcome to the Oracle Corporation fourth quarter fiscal year 2026 earnings call. Just a reminder, this call is being recorded. If you have a question today, please press Star one on your telephone keypad. Please limit your questions to one. I would now like to hand the conference over to Mr. Ken Bond. Please go ahead, sir.
Thank you Lisa and good afternoon everyone. Welcome to Oracle's fourth quarter and fiscal year 2026 earnings conference call. On the call today are Chief Executive Officer Mike Sicilia, Chief executive officer Clay Magouyrk and Chief Financial Officer Hilary Maxson. A copy of the press release, including financial results tables, supplemental financial metrics and guidance are now available from the Investor Relations website. Also is a slide deck being introduced this quarter which you'll see momentarily, a GAAP to non GAAP reconciliation, other supplemental financial information and list of many customers who purchased Oracle Cloud Services or went live on Oracle Cloud recently. These items will be available after today's call. As a reminder, today's discussion will include forward looking statements and we will make some important comments around factors relating to our business. These forward looking statements are also subject to risks and uncertainties that may cause actual results to differ materially from statements being made today. As a result, we caution you against placing undue reliance on these forward looking statements and we encourage you to to review our most recent reports, including our 10K and 10Q and any applicable amendments.
And finally, we are not obligating ourselves to revise our results or these forward looking statements in light of new information or future events. Before taking any questions, we'll begin with a few prepared remarks and with that I'll turn the call to Hillary.
Hilary Maxson (Chief Financial Officer)
Thanks Ken. Hi everyone. Great to be here with you today. And as new CFO, I thought I'd start with a few thoughts on why I'm so excited to join Oracle at this time. I spent my career all around the world at companies that use technology and data to drive transformation both internally and for customers. And I believe that the most valuable transformational change sits at the intersection of the physical and virtual world across business models, from infrastructure to enterprise software.
Oracle understands that intersection and is now uniquely positioned for one of the most significant technology transitions we've seen in decades. Very few companies can help customers across the entire technology stack. From the cloud infrastructure that powers AI workloads to the mission critical applications that run their businesses, Oracle can do both. Plus, this is a company with deep technical expertise, differentiated technology, and a long history of helping customers turn technology innovation into tangible business value.
And now I've only been here for two months. Everything I've seen has reinforced my confidence in the company's strategy, execution and opportunity ahead. I'm excited to be part of the team and look forward to helping Oracle capitalize on the opportunities in front of us to drive return on investment and shareholder value. And as we pursue these opportunities, we'll remain focused on disciplined capital allocation, maintaining a strong balance sheet and preserving our investment grade credit rating.
With that, let me turn to our Q4 and fiscal year 26 results. And like Ken said, we've introduced a short presentation to accompany our earnings call so you can follow along with the numbers and key comments we'll make today. In terms of Q4, it was a record quarter driven by strength in both our cloud infrastructure and cloud apps. Business revenue was 19.2 billion, up 21% in US dollars. Cloud infrastructure revenue grew 93%, reflecting strong demand for both AI workloads and our database services and cloud apps was up double digit at plus 10%.
And Michael Clay will give more detail on these businesses in just a moment. Our non GAAP operating income increased 22% in US dollars to 8.6 billion driven by our strong revenue progression. Our operating margin increased slightly with our gross margin declining driven by impacts from ramping up our data centers and the acceleration in our infrastructure revenue. This was more than offset in the quarter by a reduction in operating costs and for us that still lines in our P and L. Starting with sales and marketing due to efficiency actions in our cost structure, our non GAAP EPS reached $2.11, an increase of 24% in US dollars for the quarter, partly due to a one time net gain on investment. Excluding this, our non GAAP EPS increased by 20%. Turning to the full year, we surpassed revenues of $67 billion for the first time which translated into strong non GAAP operating income of 29 billion, up 16% in US dollars. For the year.
Our non GAAP EPS was up 27% in US dollars to $7.63 including one time gains on investment. Excluding these gains are non GAAP EPS was $6.83 for the full year. Our gross margin stepped down around five points as expected as we start to see the impact from the build out of our infrastructure business and the acceleration in its revenues, primarily offset by lower operating costs as a percentage of revenue driven by operating efficiencies. All of this translated into strong cash flow from operations of $32 billion, up 54%.
We did continue with our program of capital investments tied to unlocking the strong growth opportunities in front of us. Our net cash outlay for capital expenditures for the full year was $48 billion, taking into account prepayments and timing impacts of around $8 billion. You can see the table showing the details of net cash outlay for capex in our press release. We think this measure is important to better understand our funding needs and our remaining performance obligations or RPO finished at $638 billion, up 363%.
This unprecedented level of RPO provides exceptional visibility into our future revenue growth, while all supported by long term contractual customer commitments and reflect the strong customer demand we see across both AI infrastructure and cloud services. To give a bit more detail on our RPO, we expect 12% to be recognized in the next 12 months and another 34% between 13 and 36 months and these percentages are both expected to accelerate over the coming quarters based on our current long term outlook.
Mike and Clay will now get into a bit more detail on our cloud businesses and then I'll be back with our outlook for fiscal year 27 and Q1.
Thank you Hilary and welcome to Oracle. So I'm going to cover our cloud apps and cloud database business in a bit more detail, both of which performed quite well in Q4. We're on the front end of one of the most interesting times in the technology business. Our customers are now focused on how to leverage AI in their own businesses. They want AI to increase productivity, enhance customer service and create real competitive advantages. They want to do it quickly and within their existing budget envelope. Oracle's unique advantage is that we deliver the applications, the data, the infrastructure, the AI tooling and the industry expertise together. That combination invariably puts us at the center of customer conversations, whether they're existing Oracle customers or not. And our customers have moved past the experiment stage with AI.
Differentiation comes in many forms. Technological innovation, supply chain execution, operational ability and more. We created OCI as the most highly secure, highest performance, most flexible, lowest cost infrastructure available anywhere. We deliver that through innovation across all layers. From deploying the smallest and the largest clouds to inventing technologies like Acceleron that provide the highest performance and lowest cost networks.
I look forward to speaking further with all of you over the next few weeks and months leading into our Q1 and at our next Oracle Investor Day scheduled for October 28th in Las Vegas. With that, I'll turn the call back to Ken for the Q and A.
Lisa, if you'd please poll the audience for any questions they might have. Absolutely. And ladies and gentlemen, once again, that is Star One. If you have a question, we ask that you limit your questions to 1. The first question comes from John De Fucci from Guggenheim Securities.
John De Fucci (Equity Analyst at Guggenheim Securities)
You know, this has been an issue for a lot of software companies and large cloud companies. I don't think it's as much of an issue for you given my understanding of how you construct your contracts. But can you explain that to investors? Like when it comes to these very long term contracts like between you and the end customer and the suppliers? Sure. Yeah.
But when the costs do go up, we have a, I think a very robust set of mechanisms that ensure that Oracle is not sitting there with reduced margins.
That is really helpful. It makes a ton of sense. And if I could just a quick one. Hillary kind of alluded to what I'm going to ask, but this is the second question I get a ton of questions on. You have a, you have long term targets out there, you're a new cfo, right? And congrats, it's great to have you
Exactly. So full reconfirmation from my side on the long term targets. All very clear.
Thank you very much. Nice job you guys.
The next question comes from Brad, Deutsche Bank.
Thank you so much for taking the question. And Hilary, welcome to Oracle. Hillary, as you come to Oracle from a capital intensive business in another industry, how would you suggest that investors evaluate Oracle's progress and returns during this period of heavy investment?
That's really helpful, Hillary, thank you. And congrats to the whole team on the execution this quarter.
Nice shop to everybody. Thank you.
Mark Mordler (Equity Analyst at Bernstein)
That's ultimately the job that that is on our shoulders and what we've been doing over the past decade, it's why the biggest and most robust customers come our way.
Keith Bachman (Equity Analyst at Bank of Montreal)
And 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, you know, certainly should, should be helpful for our growth story as well.
Ramo Lenshau (Equity Analyst at Barclays)
Kirk Matern (Equity Analyst at Evercore ISI)
But what I can say is that I think you'll continue to see innovation and evolution in this model, given the rapid changes that are happening across this entire ecosystem.
And also from an economic standpoint, of course, because we're collecting money up front. So in normal cases we would put out the capex amount and then later we would collect money from customers. Here we collect money from customers upfront. And actually so that doesn't come out of our funding to pay for the capex or not 100% of it. Therefore, the return on capital is going to be a bit better as well.
Thank you Hillary. Very helpful. Thank you all.
to Lisa for closing. And once again, ladies and gentlemen, that does conclude today's conference. We would like to thank you all for your participation today.