$553 Billion Orders on Hand, Oracle Responds to "Bubble" Doubts with Earnings Report

This image may have been AI-generated, showing Larry Ellison holding a silicon-based shovel. The image was AI-generated.

Text | Su Yang

Editor | Xu Qingyang

On March 11, Oracle released its fiscal third quarter 2026 financial report, covering the period from December 2025 to February 2026, ending February 28, 2026.

The report shows that Oracle’s total revenue for the third quarter was $17.2 billion, up 22% year-over-year (18% growth excluding currency impacts). The results exceeded market expectations. According to data from LSEG, analysts had previously expected Oracle’s third-quarter revenue to be $16.91 billion.

Operating profit was $5.5 billion, up 20% from $4.6 billion in the same period last year. Excluding currency effects, this is a 14% increase. On a non-GAAP basis, Oracle’s adjusted operating profit for the third quarter was $7.4 billion, compared to $6.2 billion last year.

Operating profit margin was 32%, compared to 33% in the same period last year. Non-GAAP operating profit margin was 43%, versus 44% last year.

Net income was $3.72 billion, a 26.5% increase from $2.94 billion last year. Excluding currency effects, this is a 21% increase. Non-GAAP net income for the third quarter was $5.2 billion, up 23% from $4.2 billion last year, with an 18% increase excluding currency impacts.

Diluted earnings per share (EPS) was $1.27, up 24% from $1.02 last year. Excluding currency effects, EPS increased 16%. Non-GAAP EPS was $1.79, a 21% increase from last year’s $1.47, with a 16% increase excluding currency impacts.

Following the earnings release, Oracle’s stock rose 9% after hours. Over the past six months, Oracle’s stock has fallen more than 50% from its September high last year and has declined 23% year-to-date, making it one of the weakest performers in the S&P 500.

Oracle also announced a quarterly dividend of $0.50 per share.

01 Cloud Infrastructure Revenue Surges 84%

Cloud computing (IaaS + SaaS) was the star of Oracle’s third-quarter earnings report.

In Q3, Oracle’s cloud revenue reached $8.9 billion, a 44% increase (41% at constant currency). This marked the first time cloud revenue exceeded 50% of total revenue, accounting for 52%, signifying Oracle’s complete transformation into a cloud-centric technology company.

Specifically, cloud infrastructure (IaaS) revenue was $4.9 billion, up 84% (81% at constant currency). This growth exceeded analyst expectations of 79% and accelerated from 68% in the previous quarter. Notably, the growth rate’s acceleration was 16 percentage points higher than in Q2 and 61 percentage points higher than the same period last year.

Meanwhile, Oracle’s cloud database revenue, a key part of IaaS, grew 35% year-over-year. Multi-cloud database revenue soared an astonishing 531%. This indicates that enterprises not only want to migrate databases to the cloud but also desire seamless migration across multiple clouds, with Oracle benefiting the most from this trend.

Oracle’s SaaS cloud application revenue was $4 billion, up 13% (11% at constant currency). While not as dazzling as IaaS, it remains steady.

● Fusion Cloud ERP revenue was $1.1 billion, up 17% (14% at constant currency);

● NetSuite Cloud ERP revenue was $1.1 billion, up 14% (11% at constant currency).

In addition to these results, Oracle executives highlighted in their earnings commentary that all revenue was at the high end of guidance — both total revenue and adjusted EPS exceeded expectations.

“Cloud revenue is at the high end of our guidance, total revenue is at the high end of the fixed currency range and above dollar guidance, and adjusted EPS is above our guidance in both dollars and fixed currency.”

02 Remaining Performance Obligations (RPO) Hit $553 Billion: Customers Are Not Short of Money

Revenue and profit reflect past performance, while RPO indicates future revenue.

As of the end of Q3, Oracle’s RPO reached $553 billion, a 325% increase year-over-year and a $29 billion increase from the previous quarter. This figure was slightly below StreetAccount’s forecast of $556 billion but above Visible Alpha’s average estimate of $540.4 billion.

Oracle explained: “Most of the RPO growth is related to large AI contracts, and we do not expect to need additional funding to support these contracts.”

This statement significantly eased investor concerns, as funding sources had been a key issue when Oracle’s stock previously plummeted.

Previously, Oracle relied on borrowing to build data centers. If demand fell short, debt could have overwhelmed the company. Now, most of the required equipment is either pre-paid by customers—who fund Oracle’s purchase of NVIDIA GPUs—or customers buy GPUs directly and provide them to Oracle.

In other words, customers are “voting with their dollars” for their needs.

Oracle added in its earnings report: “Some of the largest AI cloud consumers have recently strengthened their financial positions.” By the end of February, OpenAI completed a $11 billion funding round, with Amazon and NVIDIA among the investors.

Big clients are “not short of money,” which naturally reduces Oracle’s collection risk.

03 Capital Expenditures Reach $18.6 Billion, Free Cash Flow Negative $1.1 Billion

Capital expenditure (CapEx) is another key data point in Oracle’s earnings report.

In Q3, CapEx totaled $18.6 billion, exceeding analyst expectations of $14 billion. For the full fiscal year 2026, Oracle projects CapEx of $50 billion, consistent with previous guidance.

Large investments depend on stable cash flow. That quarter, Oracle’s free cash flow was negative $1.1 billion, wider than the negative $1 billion in Q2. Over the past 12 months, free cash flow totaled negative $13.18 billion.

This has been a source of investor anxiety: massive investments paired with ongoing cash outflows could become problematic if financing falls short.

However, Oracle’s logic is that current investments are aimed at securing future returns. The $553 billion RPO represents “future revenue.” Additionally, widespread customer prepayment models are expected to gradually ease future CapEx pressures.

In February, Oracle announced plans to raise up to $50 billion through debt and equity financing. The latest earnings report disclosed: “Within days of the announcement, Oracle raised $30 billion through a combination of investment-grade bonds and mandatory convertible preferred stock, with oversubscription recorded.”

With this $30 billion already secured, the remaining $20 billion in “market value equity” financing has not yet started, giving Oracle ample flexibility to adapt to market conditions.

“Order book oversubscription” also indicates that, in investors’ eyes, Oracle’s creditworthiness and story remain attractive. Even after a significant stock decline, bond markets still welcome the company.

04 Upgraded 2027 Guidance to $90 Billion

Looking ahead to the next quarter, Oracle provided an optimistic outlook:

Oracle expects revenue growth of 19% to 21% in Q4, in line with the average analyst forecast of 20.2% to $19.12 billion, based on LSEG surveys.

Similarly, the company projects cloud revenue growth of 46% to 50%, aligning with estimates of 48% to $9.98 billion.

Oracle also expects adjusted EPS between $1.96 and $2.00, above the analyst estimate of $1.94.

The company raised its full-year 2027 revenue forecast to $90 billion, higher than the previous market consensus of $86.6 to $86.7 billion. This adjustment is based on a core belief: “Demand for cloud computing for AI training and inference continues to outpace supply growth.”

eMarketer analyst Jacob Bourne commented: “Oracle’s quarterly results are a victory for AI transactions and a stress test for the sector. As a major player with the highest debt risk in AI infrastructure, Oracle’s report indicates that AI spending, beyond hype, shows potential health.”

Of course, challenges remain.

Sources say Oracle plans to lay off thousands to control costs. The company disclosed $1.6 billion in restructuring costs in Q3, its highest ever. Oracle explained this as a move toward technological efficiency: “AI code generation technology allows us to build more software in less time with fewer people.”

Since last September’s peak, Oracle’s stock has experienced rollercoaster swings. But this earnings report at least proves one thing: the AI story is not only alive but transforming into tangible orders and revenue. Whether it can sustain depends on the $553 billion RPO already in place.