Oracle (ORCL): Build Today, Tighten Tomorrow

Oracle's F1Q results provided further evidence that its massive backlog is beginning to convert, with OCI growth accelerating as new capacity comes online and management maintaining an aggressive buildout through FY27 and FY28. Revenue increased 30% y/y to $19.3bn, OCI revenue rose 120% y/y to $7.4bn, operating income increased 31% to $8.2bn with operating margin roughly flat at 42%. RPO reached $664bn, up $26bn q/q, with ~50% expected to convert over the next three years. Management maintained FY27 capex guidance of $90-95bn, though customer prepayments and BYOH agreements will reduce net cash outflow to ~$70bn;