Oracle has surprised the Wall Street on March 10 by reporting its best fiscal quarter in 15 years. Revenue for the third quarter of fiscal; 2026 has increased 22% to $17.2 billion, while the cloud infrastructure revenue jumped 85% to $4.9 billion. According to a report by Fortune, the earnings per share increased 21% to $1.79, beating the expectations of $1.71 of the analysts. After the strong results, the Oracle stock soared by nearly 10% in the after-hours trading and reversed the 20% decline reported earlier this year. Oracle co-founder and executive chairman Larry Ellison emphasised that Oracle’s enterprise software still remains resilient despite the rise in the AI tools. “That’s why we think we’re a disruptor. That’s why we think the ‘Saaspocalypse’ applies to others, but not to us,” Ellison said, highlighting Oracle’s use of AI coding tools to build automation platforms for industries like healthcare and finance.
Cloud momentum and backlog
The cloud business of Oracle still continues to be its fast-growing segment. The total cloud event hit $8.9 billion, up by 44% year-over-year. On the other hand, the multi-cloud database revenue enabled Oracle’s software to run inside competitors’ clouds soared 531%, underscoring Ellison’s strategy of embedding Oracle into ecosystems like AWS, Google Cloud, and Microsoft Azure.Oracle has also reported that a staggering $553 billion backlog in remaining performance obligations, evidence of demand outpacing supply. Oracle signed more than $29 billion in new contracts last quarter, with many customers funding capacity buildouts themselves.
Oracle’s big worry: Cash burn and debt
However, despite the stellar quarterly results, Oracle is still facing mounting concerns over its aggressive spending. Free cash flow over the trailing 12 months came in at negative $24.7 billion, as capital expenditures skyrocketed from $21.2 billion last year to a guided $50 billion this fiscal year.Along with this, the debt load of Oracle has also exceeded $100 billion, with $30 billion raised last month through bonds and preferred stock. Analysts warn that Oracle’s debt-to-equity ratio, between 3x and 4x, represents “significant leverage.”CFO Doug Kehring acknowledged investor concerns, saying Oracle is exploring financing structures where future spending could be offset by customer payments for capacity. “The most interesting thing you can start thinking about is the uncoupling of CapEx with capital requirements from Oracle,” he said.
