Oracle Q2 Earnings Beat Estimates, Cloud Growth Fuels Revenue Rise

Oracle ORCL reported second-quarter fiscal 2026 non-GAAP earnings of $2.26 per share, which beat the Zacks Consensus Estimate pegged by 38.65% and surged 54% year over year in USD and 51% in constant currency (cc).

Revenues climbed 14% in USD and 13% in cc year over year to $16.1 billion, driven by explosive growth in cloud infrastructure as Oracle continues to establish itself as the destination of choice for AI workloads. The company added $68 billion in new commitments during the quarter from customers, including Meta, NVIDIA and others, bringing total Remaining Performance Obligations to $523 billion. The figure lagged the Zacks Consensus Estimate by 0.55%.

Revenues from the Americas increased 17.2% year over year to $10.47 billion, accounting for 65.2% of total revenues. Europe/Middle East/Africa climbed 11.2% year over year to $3.76 billion and contributed 23.4% of total revenues. The remaining revenues came from the Asia Pacific region, which increased 4.9% year over year to $1.83 billion, representing 11.4% of total revenues.

Oracle Corporation Price, Consensus and EPS Surprise

Oracle Corporation price-consensus-eps-surprise-chart | Oracle Corporation Quote

ORCL's Q2 Top-Line Details

Cloud Infrastructure revenues surged 68% in USD and 66% in cc to $4.1 billion, with GPU-related revenues growing 177%. Oracle's Cloud Infrastructure business continues to grow substantially faster than competitors, driven by unprecedented AI demand.

Cloud database services revenues climbed 30%, with Autonomous Database revenues rising 43% and Multicloud consumption exploding 817% year over year. The company launched 11 Multicloud regions during the quarter, bringing the total to 45 regions live across AWS, Azure and Google Cloud Platform, with 27 more planned.

Cloud application revenues were $3.9 billion, up 11% in both USD and cc. Strategic back-office application revenues totaled $2.4 billion, up 16% in cc. Fusion Cloud ERP revenues reached $1.1 billion, up 18% in USD and 17% in cc. NetSuite Cloud ERP revenues hit $1 billion, growing 13% in both USD and cc. Fusion HCM grew 14% while Fusion CX expanded 12%.

Total cloud revenues (SaaS plus IaaS) surged 34% in USD and 33% in cc to $8 billion, representing a significant acceleration from the 24% growth rate reported in the prior year quarter. Cloud revenue now accounts for 50% of Oracle's overall revenue.

Software revenues declined 3% in USD and 5% in cc to $5.9 billion. Software license revenues decreased 21% in USD to $939 million, reflecting the ongoing transition from on-premise to cloud-based solutions. Software support revenues remained essentially flat at $4.94 billion, up 1% in USD.

Hardware revenues came in at $776 million, up 7% in USD and 5% in cc.

Services revenues increased 7% in USD and 6% in cc to $1.43 billion. Oracle now operates 147 live customer-facing regions with 64 more planned. The company delivered close to 400 megawatts of data center capacity to customers during the quarter and delivered 50% more GPU capacity compared to Q1. The SuperCluster in Abilene, TX, remains on track with more than 96,000 NVIDIA Grace Blackwell GB200 chips delivered.

Oracle now operates 147 live customer-facing regions with 64 more planned. The company delivered close to 400 megawatts of data center capacity to customers during the quarter and delivered 50% more GPU capacity compared to the fiscal first quarter. The SuperCluster in Abilene, TX, remains on track with more than 96,000 NVIDIA Grace Blackwell GB200 chips delivered.

Operating Details of Oracle

Non-GAAP total operating expenses increased 17% in USD and 16% in cc year over year to $9.3 billion. Cloud and software expenses rose 45% to $3.99 billion, reflecting investments in expanding cloud infrastructure capacity.

Non-GAAP operating income was $6.7 billion, up 10% in USD and 8% in cc. Operating margin stood at 42% on a non-GAAP basis. GAAP operating income reached $4.7 billion, up 12% in USD and 9% in cc, with GAAP operating margin at 29%.

ORCL’s Q2 Balance Sheet & Cash Flow

As of Nov. 30, 2025, Oracle had cash and cash equivalents of $19.2 billion compared with $10.8 billion as of Aug. 31, 2025. Operating cash flow for the quarter was approximately $0.8 billion.

Capital expenditures totalled approximately $8.1 billion for the quarter ended Nov. 30, 2025, as Oracle continues aggressive investments in data centre build-outs to support accelerating cloud demand.

Free cash flow was negative $7.3 billion for the second quarter. The vast majority of CapEx investments are for revenue-generating equipment going into data centers, not for land, buildings or power, which are covered via leases.

Oracle's Remaining Performance Obligations reached $523 billion, up $68 billion sequentially and 438% from the prior year, highlighted by new commitments from Meta, NVIDIA and others. RPO expected to be recognized in the next 12 months grew 40% year over year. Approximately 33% of total RPO is expected to be recognized as revenues over the next 12 months.

The company repurchased shares for $95 million and paid out $2.85 billion in dividends during the six-month period for fiscal 2025. Oracle also announced that it would pay a quarterly cash dividend of 50 cents per share of outstanding common stock. This dividend will be paid to stockholders of record as of the close of business on Jan. 9, 2026, with a payment date of Jan. 23, 2026.

Total notes payable and borrowings stood at $108.1 billion as of Nov. 30, 2025, up from $92.6 billion as of May 31, 2025, reflecting increased debt to fund cloud infrastructure expansion.

Guidance

For the third quarter of fiscal 2026, Oracle provided specific financial targets assuming current currency exchange rates. Total cloud revenue is expected to grow from 37% to 41% in cc and is expected to grow from 40% to 44% in USD. Total revenues are expected to grow from 16% to 18% in cc and are expected to grow from 19% to 21% in USD. Non-GAAP earnings per share are expected to grow between 12% to 14% and be between $1.64 and $1.68 in cc. Non-GAAP earnings per share are expected to grow 16% to 18% and be between $1.70 and $1.74 in USD.

For full-year fiscal 2026, management maintained its revenue expectation of $67 billion. However, given the $68 billion in added RPO during fiscal second quarter that can be monetized quickly, Oracle now expects $4 billion of additional revenues in fiscal 2027. Fiscal 2026 CapEx is now expected to be approximately $15 billion higher than previously forecasted. The earnings per share guidance assumes a non-GAAP effective tax rate of approximately 20.8%. Currency is expected to have a 2% to 3% positive effect on revenues and a 6-cent positive effect on EPS for fiscal Q3.

ORCL’s Zacks Rank and Stocks to Consider

Currently, Oracle carries a Zacks Rank #3 (Hold).

Amphenol APH, NVIDIA NVDA and CommScope COMM are some better-ranked stocks in the broader Zacks Computer & Technology sector.

Amphenol, NVIDIA and CommScope sport a Zacks Rank #1 (Strong Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Amphenol’s shares have appreciated 88.4% in the trailing 12 months. The Zacks Consensus Estimate for Amphenol’s 2025 earnings is pegged at $3.29 per share, up 7 cents over the past 30 days, indicating an increase of 74.07% year over year.

NVIDIA shares have appreciated 33.8% in the trailing 12 months. The Zacks Consensus Estimate for NVIDIA’s 2025 earnings is pegged at $4.62 per share, up 16 cents over the past 30 days, indicating an increase of 54.52% year over year.

CommScope shares have appreciated 250.2% in the trailing 12 months. The Zacks Consensus Estimate for CommScope’s 2025 earnings is pegged at $1.64 per share, unchanged over the past 30 days, indicating an increase of 5566.67% year over year.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research