Barclays Keches ORCL F1Q27 Results Momentum Builds as ATM Completed

FICC Research Credit Research 10 September 2026

Momentum Builds as ATM Completed The $20bn equity raise was fully executed, another $26bn of Andrew Keches, CFA "good" backlog was added, management downplayed project delays, and alluded to having capex levers. We remain BCI, US

positive despite recent rally. Remy Neuhaus BCI, US Trade idea: Buy ORCL 6.70% 2056s

Buyside sentiment was fairly positive into results and ORCL cleared what we believe was a high bar. Funding and capex guidance/messaging was reiterated and management leaned slightly further into their ability to add backlog without growing capital needs. Margins stepped down, but as expected with large assets going online in the quarter and this year.

Our expectation is for sentiment to strengthen post results, with ORCL having now strung together three consecutive credit-positive quarters. While we are cognizant that ORCL is at the local tights, it is still a fair amount wider since 4Q26 results while the credit story continues to strengthen. We see the October investor day as a possible catalyst and remain positive on spreads.

Barclays Rating: Overweight Moody's/S&P/Fitch: Baa2(N)/BBB-(S)/BBB(S)

Relevant Research • ORCL: Quick Take - S&P Downgrades to BBB-/Stable (July 9, 2026)

• ORCL: Feedback and debates post-results (June 17, 2026)

• ORCL F4Q26 Results: The Customer Comes (and Pays) First (June 10, 2026)

• ORCL: Bull Case Still Intact (May 7, 2026)

• ORCL: F3Q26 Results: Credit narrative starting to strengthen (March 10 , 2026)

This document is intended for institutional investors and is not subject to all of the independence and disclosure standards applicable to debt research reports prepared for retail investors under U.S. FINRA Rule 2242. Barclays trades the securities covered in this report for its own account and on a discretionary basis on behalf of certain clients. Such trading interests may be contrary to the recommendations offered in this report. Please see analyst certifications and important disclosures beginning on page 6.

Credit Highlights and Relative Value • RPO rises without incremental funding needs. RPO increased from $638bn to $664bn q/q (+$209bn y/y), while noting that there is no incremental funding for the business due to the structuring of those contracts. This is consistent with the company's recent messaging that customer prepayments will play a growing role in the business (see more below), and management noted that the new RPO will not impact capex or revenues until FY28 or beyond. Given that the initial $300bn of contracts with OpenAI has likely begun to burn off to some extent, OAI now likely represents at most ~45% of the total backlog.

• $20bn ATM program completed; leverage moves lower. Oracle confirmed it completed its full $20bn ATM equity program during the quarter. Cash from ops was a record $23.1bn and gross capex was $28.5bn, while net "cash" capex was $18bn, after adjusting for $11.4bn of customer prepayments and an $830mn outflow tied to the timing of working capital financing. Net of the $1.6bn dividend, FCF was a $7.0bn burn ($7.8bn including working capital financing). Management reiterated FY27 capex guidance of $90–95bn gross and no more than $70bn net, consistent with its RPO commentary. We estimate gross and net leverage fell from 4.2x and 3.4x to 3.9x and 3.1x, respectively, driven by EBITDAR growth, a higher cash balance, and $4.2bn of debt paid down, slightly more than their $3bn July maturity.

• Top-line ahead; software remains subdued. Revenue in the quarter was slightly ahead ($19.3bn vs. $19.1bn est), increasing sequentially between 4Q and 1Q for the first time, while Cloud Infrastructure revenue printed ahead of estimates as well ($7.4bn vs. $7.2bn est). Software fell sequentially, and was down 3% y/y, largely attributed to the Support sub- segment. Gross margins were lower, as expected, in the quarter, near 60% due to an acceleration in data center capacity coming online. F2Q27 revenue is expected to grow between 30% and 34% in USD terms, while the company guided total revenue for FY27 of at least $90bn.

• Capacity deliveries and site updates. Oracle delivered 850MW of capacity in 1Q containing more than 300,000 GPUs…