After the U.S. market closed on June 10th, Oracle (ORCL.US) released its financial results for the fourth quarter and full fiscal year 2026. Driven by extremely robust demand for AI computing power and its multi-cloud database strategy, the company's order backlog, revenue growth, and future capital expenditure plans have all reached staggering scales. By the end of the fourth fiscal quarter, Oracle's Remaining Performance Obligations (RPO) hit a record $638 billion, with a net increase of $85 billion for the quarter, representing a staggering year-over-year surge of 363%. This provides exceptionally high visibility into the company's revenue growth for the coming years. Consequently, management has issued a high growth guidance of 34% for fiscal 2027 revenue. Based on fiscal 2026 revenue exceeding $67 billion, achieving 34% growth would bring fiscal 2027 revenue close to the $90 billion mark.
However, concerns over data center costs have intensified. Oracle's capital expenditure for fiscal 2027 is projected to be around $70 billion, with plans to double financing to $40 billion in the new fiscal year. Management emphasized that they do not anticipate taking on additional debt within the 2026 calendar year. New CFO Hilary Maxson sought to ease market worries, stating that once infrastructure projects reach a steady state, the project-level return on invested capital can reach the high 20% range. Management also reiterated that the infrastructure business can achieve long-term operating margins between 30% and 40%.
AI Demand Materializes in Record RPO Growth
The most astonishing metric in this earnings report was the RPO. The $638 billion figure, with its 363% annual increase, offers a high degree of certainty for Oracle's revenue growth in the next few years. The source of this massive order influx was explained by CEO Clay Magouyrk during the call: the company signed $67 billion worth of AI infrastructure contracts this quarter, predominantly under a "Bring Your Own Hardware" (BYOH) or prepaid model. The cumulative total for these types of contracts has now reached $75 billion. Magouyrk expressed excitement about the surging demand, stating that the AI infrastructure market makes the existing cloud infrastructure market seem small by comparison, and that all indicators point to a market worth trillions of dollars annually. He also addressed concerns about an "AI compute glut," noting the company's global GPU utilization rate is 97.5%. In Q4, 35,000 GPUs from 59 different customers were up for renewal, with 49% of those customers renewing 92% of the GPUs. The remaining 8% were not idle but were largely resold to other customers within the same quarter.
Capital Expenditure and Financing Plans to Support Growth
The surge in orders necessitates significant capital expansion. CFO Hilary Maxson indicated that net cash capital expenditures for fiscal 2027 are expected to be approximately $70 billion. To support this plan, the company expects to raise about $40 billion in debt and equity financing during fiscal 2027, including a previously announced $20 billion equity offering. Maxson clarified there are no plans for additional debt financing in the 2026 calendar year to protect the company's investment-grade credit rating. While this heavy asset expansion plan sparked short-term market concern after hours, management views it as a necessary cost to secure future revenue. Magouyrk explained that Oracle signs fixed-price contracts when costs are determinable and uses floating mechanisms when they are not, ensuring the company is not exposed to margin compression. To alleviate investor concerns about the asset-heavy model, Maxson outlined the economics, suggesting that at steady state, large infrastructure projects can achieve a return on invested capital (ROIC) in the high 20% range, which is even higher for BYOH arrangements.
AI Monetization Across Software and Database
Beyond foundational compute, Oracle's AI monetization in software and databases is also accelerating. CEO Mike Sicilia noted that customers are moving past the experimentation phase and are ready to deploy enterprise-grade, agentic AI solutions. To lower the adoption barrier and provide quick ROI, Oracle is introducing disruptive business models like "pay-for-outcome" pricing, where AI agents are priced based on results, such as the number of candidates screened or the percentage of upsell transactions completed. The company also launched "Token bundles" allowing prepurchase for advanced AI inference capabilities. In the database segment, AI data strategies are fueling exponential multi-cloud growth. Cloud database revenue grew 29% in Q4, with multi-cloud revenue soaring 404% year-over-year and bookings up 325%, making it one of the fastest-growing business lines.
Financial Outlook and Guidance
Looking ahead, Oracle expects total revenue growth to accelerate to 27%-29% in fiscal Q1 2027, with cloud revenue growth leaping to 57%-64%. The company maintains its full-year revenue target of $90 billion and raised its non-GAAP EPS guidance to $8.05 (representing approximately 18% growth year-over-year excluding one-time gains), demonstrating confidence in converting its massive order backlog into actual profits.
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