0001193125-26-101045
SEC filingCloud and software business drove 86% of revenues, with operating margin at 32% for Q3 FY2026.
Total revenues for the third quarter of fiscal 2026 increased by $3.1 billion, or 22% in reported currency, to $17.19 billion, compared to $14.13 billion in the same period last year. Constant currency revenue growth was 18%. The increase was driven primarily by a $2.9 billion rise in cloud and software revenues, with cloud infrastructure contributing 85% of cloud growth. Total operating expenses increased by $2.0 billion to $11.73 billion, due to higher cloud infrastructure expenses, research and development costs, and restructuring expenses, partially offset by declines in amortization of intangible assets and sales and marketing costs. Operating margin improved to 32% from 31% in the prior year, reflecting strong revenue growth. The effective tax rate for the quarter was 15.7%, up from 14.9% in the prior year, driven by higher income before taxes and reduced stock-based compensation tax benefits.
The cloud and software segment generated $15.03 billion in revenue, up 24% year-over-year (20% constant currency). Cloud infrastructure revenues more than doubled to $4.89 billion, while cloud applications grew 13% to $4.03 billion. Software license revenue was flat at $1.15 billion, and software support grew 4% to $4.97 billion. Segment margin decreased to 58% from 63% due to a 70% increase in cloud and software expenses, largely driven by infrastructure investments. The hardware segment revenue increased 2% to $714 million, with constant currency decline of 2%, as sales volumes were impacted by the shift to cloud; however, Oracle Exadata and strategic hardware offerings showed growth. Hardware margin improved to 68% from 64% due to lower expenses. Services revenue grew 12% to $1.44 billion, driven by consulting services, with margin expanding to 28% from 20% as employee-related costs decreased.
Management expects total cloud and software revenues to continue increasing on a constant currency basis, supported by growth in cloud offerings and continued demand for software. Cloud revenue proportion is expected to trend higher. The company anticipates ongoing growth in cloud and software expenses and capital expenditures to expand data center capacity and geographic footprint. Capital expenditures increased from $12.1 billion to $39.2 billion in the first nine months of fiscal 2026, with the upward trend expected to persist through the remainder of fiscal 2026 and beyond. The company remains focused on its acquisition program and has recently raised $43 billion in senior notes, $5 billion from mandatory convertible preferred stock, and established a $10 billion revolving credit facility to support these investments.
As of February 28, 2026, Oracle holds $38.5B in cash and equivalents plus $0.7B marketable securities. Total debt (current and non-current notes payable) stands at $134.6B, up from $92.6B at May 31, 2025, primarily from $43B in senior notes issued during the nine months. Stockholders' equity grew to $39.1B, boosted by a $5.0B mandatory convertible preferred stock issuance. Deferred revenues total $11.2B, while remaining performance obligations (RPO) reached a staggering $552.6B, reflecting massive long-term cloud contracts. The effective tax rate for the quarter was 15.7%.
Oracle discloses $261B in off-balance sheet data center lease commitments not yet reflected on the balance sheet, expected to commence between Q4 FY2026 and FY2028 with 15-19 year terms. Additionally, unconditional purchase obligations of $11B, primarily for power arrangements, bring total purchase commitments to $272B. On-balance sheet operating lease liabilities total $21.3B and finance leases $6.3B. The company also guarantees up to $2.2B of a lessor's borrowing under one such commitment.
Oracle spent $39.2B on capital expenditures (81.3% of revenue) in the first nine months, primarily for cloud infrastructure. Debt capital raised was $44.5B (net $42.4B after repayments). Stock buybacks totaled only $93M (0.4M shares), with $6.3B remaining under the repurchase program. A new $20B ATM program for common stock was established but unused. Dividends increased 25% to $0.50 per share quarterly, totaling $4.3B paid. The mandatory convertible preferred stock carries a 6.5% annual dividend.
Cloud and Software generated $15.0B revenue in Q3 FY2026 (up 23.9% YoY) with a segment margin of 57.9%. Hardware revenue was flat at $0.7B (margin 67.9%), and Services contributed $1.4B (up 11.8%, margin 27.7%). These segment margins exclude R&D, G&A, amortization, restructuring, and stock-based compensation. Geographically, Americas contributed 66% of total revenue, EMEA 23%, and Asia Pacific 11%.
The provided excerpt from Oracle Corporation's Form 10-Q for the nine months ended February 28, 2026 does not include the consolidated statement of cash flows. The document contains only narrative notes (e.g., on non-marketable investments, acquisition costs, and non-operating income). Therefore, no operating cash flow (CFO), net income, capital expenditures (capex), free cash flow (FCF), or capital returns (share repurchases/dividends) are disclosed in the excerpt. Without these primary cash flow metrics, an assessment of cash flow quality, intensity, or anomalies such as working capital swings or one-time payments is impossible.
Notable disclosures include a $4.3 billion cash receipt from the sale of Ampere equity interests (November 2025) and a corresponding $2.7 billion realized gain, but these are recorded in non-operating income, not operating cash flow. Additionally, sales of financing receivables were $333 million (three months) and $1.4 billion (nine months) ended February 28, 2026. However, the cash flow statement itself is absent, precluding any structured analysis or computation of free cash flow or CFO trends.