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Today at a glance:
☁️ Oracle: Backlog vs. Balance Sheet
🎨 Adobe: Freemium Bet
✍️ DocuSign: IAM Crosses 13% of ARR
🎿 Vail Resorts: Worst Season On Record
🐶 Chewy: Stretched But Steady
1. ☁️ Oracle: Backlog vs. Balance Sheet
Oracle beat on revenue, beat on earnings, and grew its backlog by $85 billion during the quarter to $638 billion. The stock fell 12% anyway, its worst day since December.
The quarter wasn’t the problem. The incoming bill was. New CFO Hilary Maxson guided FY27 gross margins to “step down” and laid out ~$70 billion in net cash outlay, partly funded by a fresh ~$40 billion raise. Investors naturally scrutinize the cost of converting that backlog.
Q4 FY26 in numbers
Revenue grew 21% Y/Y to $19.2 billion ($0.1 billion beat). Oracle Cloud Infrastructure (OCI) remains the main driver:
☁️ Cloud +47% Y/Y to $9.9 billion (OCI +93% to $5.8 billion).
🌐 Software -2% Y/Y to $6.8 billion.
🖥️ Hardware +9% Y/Y to $0.9 billion.
💼 Services +13% Y/Y to $1.5 billion.
Margin trends: The operating margin remained flat at 32%, while gross margin compressed by 5pp to 65% as lower-margin IaaS scaled.
Cash flow: For the full year FY26, operating cash flow was $32 billion (+54% Y/Y), but that’s not enough to fund the CapEx ramp. Free cash flow stayed deeply negative (-$24 billion) as CapEx hit $56 billion, above the $50 billion plan.
Balance sheet: Oracle raised $43 billion in debt and $5 billion in equity in FY26 and expects another ~$40 billion in debt and equity financing in FY27. Oracle now has a net debt of $124 billion, including operating lease liabilities.
FY27 guidance: Management reaffirmed FY27 revenue guidance of ~$90 billion, implying ~34% growth. Capital spending is expected to reach roughly $70 billion of Oracle’s own cash outlay. Oracle expects to raise about $40 billion through debt and equity, with any new debt likely pushed to calendar 2027.
So what to make of all this?
📈 The beat the market ignored: RPO jumped 363% Y/Y and 15% Q/Q to $638 billion, well above the ~$590 billion analysts expected. But the market has stopped paying for backlog alone and started pricing the cost of delivering it.
⚖️ Less funding pressure, still massive funding needs: Roughly $75 billion of Oracle’s large AI contracts is prepaid or customer-supplied hardware. That helps. But FY27 capital outlays are still enormous, and Oracle still needs external financing. The funding story improved at the margin. The absolute numbers got bigger.
📉 Margins are the new fault line: Oracle is building capacity before it fully bills. That creates a timing gap: CapEx now, revenue later. Management says infrastructure margins recover quickly once utilization ramps, but investors want proof.
🧱 The old Oracle is now shrinking: Software revenue fell 2% Y/Y. Oracle still needs that legacy cash engine to help fund the AI infrastructure buildout, and a contracting base makes the math harder.
Takeaway: Oracle delivered 1.2 gigawatts of incremental data center capacity in FY26 and expects Q1 FY27 delivery to approach 1 gigawatt. The bull case is becoming more concrete, but so are the capital intensity, margin pressure, and financing needs. Oracle is now a bet on execution.