0001193125-25-315925
SEC filingCloud revenue growth drove 14% total revenue increase, but operating margin fell to 29% due to higher infrastructure and restructuring costs.
In Q2 FY2026, total revenues increased 14% to $16.058B, driven by cloud growth (cloud infrastructure +68%, cloud applications +11%) and a 1% increase in software support. Operating income rose 12% to $4.731B, but operating margin contracted 100 bps to 29% as expenses grew faster: cloud and software costs surged 49%, restructuring expenses jumped to $406M, and R&D increased 4%. Net income was boosted by a $2.7B gain on sale of Ampere investments, leading to an effective tax rate of 3.3% (down from 7.1%).
Cloud and Software segment revenue grew 15% to $13.854B, with cloud infrastructure contributing 81% of cloud revenue growth. Total margin declined to 59% from 63% due to higher infrastructure costs. Hardware revenue increased 7% to $776M, with margin down to 66% from 68%. Services revenue rose 7% to $1.428B, with margin improving to 24% from 19% due to higher revenues and lower bad debt expenses.
Management expects total cloud and software revenues to continue increasing on a constant currency basis, driven by cloud growth and software demand. Capital expenditures will remain elevated to expand data center capacity. The company issued $18B in senior notes in September 2025 for general corporate purposes. No quantitative guidance for upcoming quarters was provided, but the restructuring plan is expected to improve cost structure.
As of November 30, 2025, Oracle held $19.2 billion in cash and cash equivalents, plus $0.5 billion in marketable securities. Total debt stood at $108.1 billion ($8.1 billion current and $100.0 billion non-current), resulting in a net debt position of $88.3 billion. Stockholders' equity was $30.5 billion. The company's current assets of $34.4 billion comfortably cover current liabilities of $37.8 billion, with a current ratio of 0.91x.
Oracle disclosed significant off-balance-sheet commitments. Remaining performance obligations (RPO) totaled $523.3 billion, of which approximately 10% is expected to be recognized as revenue over the next twelve months. Additionally, the company had $248 billion of additional lease commitments, substantially all related to data centers and cloud capacity arrangements, expected to commence between fiscal 2026 and 2028 with terms of 15-19 years. Unconditional purchase obligations amounted to $10 billion, primarily for cloud capacity. These commitments underscore Oracle's massive infrastructure buildout.
During the six months ended November 30, 2025, Oracle repurchased 0.4 million shares for $93 million, leaving $6.3 billion remaining under the buyback authorization. The company declared a quarterly dividend of $0.50 per share in December 2025, up from $0.40 in the prior year. Total dividends paid were $2.8 billion. In September 2025, Oracle issued $18.0 billion of fixed-rate senior notes with maturities from 2030 to 2065, increasing total debt by $17.9 billion net. Capital expenditures surged to $20.5 billion (66.3% of sales), reflecting investment in cloud infrastructure.
Oracle's three business segments reported the following for the three months ended November 30, 2025: Cloud and Software (revenue $13.9B, margin $8.2B), Hardware ($0.8B, $0.5B), and Services ($1.4B, $0.3B). Segment margins exclude R&D, G&A, and other corporate costs. Geographically, Americas contributed 65% of total revenues ($10.5B), EMEA 23% ($3.8B), and Asia Pacific 11% ($1.8B). Within software, support revenues of $4.9B dwarfed license revenues of $0.9B. Cloud revenues split into applications ($3.9B) and infrastructure ($4.1B), with infrastructure growing 68% YoY.
No cash flow statement figures were presented in the provided text. The document consists of notes to the condensed consolidated financial statements, including details on restricted cash, remaining performance obligations, sales of financing receivables, non-marketable investments, acquisition-related expenses, and non-operating income. Without the actual statement of cash flows, it is impossible to analyze CFO, capex, free cash flow, or capital returns. The only cash-related figures disclosed are non-operating income items (e.g., interest income, gains from investments) and proceeds from the sale of Ampere interests ($4.3 billion), which are not part of the cash flow statement proper. Thus, no meaningful cash flow analysis can be performed.