Enterprise software giant Oracle (NYSE: ORCL) reported Q1 CY2026 results topping the market’s revenue expectations, with sales up 21.7% year on year to $17.19 billion. The company expects next quarter’s revenue to be around $19.08 billion, close to analysts’ estimates. Its non-GAAP profit of $1.79 per share was 5.7% above analysts’ consensus estimates.
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Oracle (ORCL) Q1 CY2026 Highlights:
- Revenue: $17.19 billion vs analyst estimates of $16.93 billion (21.7% year-on-year growth, 1.5% beat)
- Adjusted EPS: $1.79 vs analyst estimates of $1.69 (5.7% beat)
- Adjusted Operating Income: $7.38 billion vs analyst estimates of $7.20 billion (42.9% margin, 2.4% beat)
- Revenue Guidance for Q2 CY2026 is $19.08 billion at the midpoint, roughly in line with what analysts were expecting
- Adjusted EPS guidance for Q2 CY2026 is $1.98 at the midpoint, above analyst estimates of $1.92
- Operating Margin: 31.8%, in line with the same quarter last year
- Free Cash Flow was -$24.74 billion compared to -$9.97 billion in the previous quarter
- Billings: $16.97 billion at quarter end, up 24.1% year on year
- Market Capitalization: $435.6 billion
Company Overview
Starting as a database company in 1977 and now powering mission-critical systems across the globe, Oracle (NYSE: ORCL) provides enterprise software and hardware products and services that help businesses manage their information technology needs.
Revenue Growth
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years. Over the last five years, Oracle grew its sales at a 10.1% annual rate. Though this growth is acceptable on an absolute basis, we need to see more than just topline growth for the software sector, which can display significant earnings volatility. This means our bar for the sector is particularly high, reflecting the non-essential and hit-driven nature of the products and services offered. Additionally, five-year CAGR starts around Covid, when revenue was depressed then rebounded.
Long-term growth is the most important, but within software, a half-decade historical view may miss new innovations or demand cycles. Oracle’s annualized revenue growth of 10.5% over the last two years aligns with its five-year trend, suggesting its demand was consistently weak. 
This quarter, Oracle reported robust year-on-year revenue growth of 21.7%, and its $17.19 billion of revenue topped Wall Street estimates by 1.5%. Company management is currently guiding for a 20% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 25.7% over the next 12 months, an improvement versus the last two years. This projection is eye-popping for a company of its scale and suggests its newer products and services will fuel better top-line performance.
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Remaining Performance Obligations
In addition to reported revenue, it is useful to analyze RPO, or remaining performance obligations, for Oracle because it shows the value of contracted services to be delivered in the future. It therefore gives visibility into future revenue.
Oracle’s RPO punched in at $553 billion in Q1, and over the last four quarters, its growth was fantastic as it averaged 291% year-on-year increases. This alternate topline metric grew faster than total sales, which likely means contracted services not yet delivered are growing faster than services already delivered (the criteria for revenue recognition). That could be a good sign for future revenue growth. 
Customer Acquisition Efficiency
The customer acquisition cost (CAC) payback period represents the months required to recover the cost of acquiring a new customer. Essentially, it’s the break-even point for sales and marketing investments. A shorter CAC payback period is ideal, as it implies better returns on investment and business scalability.
Oracle is extremely efficient at acquiring new customers, and its CAC payback period checked in at 0.9 months this quarter. The company’s rapid recovery of its customer acquisition costs indicates it has a highly differentiated product offering and a strong brand reputation due to its scale. These dynamics give Oracle more resources to pursue new product initiatives while maintaining the flexibility to increase its sales and marketing investments. 
Key Takeaways from Oracle’s Q1 Results
We enjoyed seeing Oracle beat analysts’ billings expectations this quarter. We were also glad its EPS guidance for next quarter exceeded Wall Street’s estimates. On the other hand, its revenue guidance for next quarter was in line. Overall, this print had some key positives. The stock traded up 8.2% to $162.39 immediately following the results.
Oracle had an encouraging quarter, but one earnings result doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here (it’s free).
