Revenue of $19.3 billion beat the $19.13 billion estimate by 0.9%, and non-GAAP EPS of $1.92 beat the $1.74 estimate by 10.3%.
Guidance went up: the full-year revenue guide was raised to at least $90 billion, +34% year over year, with full-year non-GAAP EPS of $8.10; Q2 total revenue growth is guided to 30% to 34% and Q2 non-GAAP EPS to $1.85 to $1.93.
Cloud infrastructure revenue of $7.4 billion grew 121%, following 93% growth in Q4, on 850 megawatts and more than 300,000 GPUs delivered since the end of Q4 — almost three times the capacity delivered in all of Q4.
The one thing that matters: the $26 billion of remaining performance obligations added this quarter is not what pays for the raised fiscal 2027 guide, because management said those contracts do not touch revenue or CapEx until fiscal 2028 or beyond — the upgrade rests on capacity already on the ground, bought with $28 billion of CapEx and negative $5 billion of free cash flow.
Guidance & KPIs
Item
New guidance
Prior guidance
Q2 FY2027 total revenue growth
between 30% and 34% in US dollars
—
Q2 FY2027 non-GAAP EPS
between $1.85 and $1.93, up between 21% and 25% in US dollars
—
FY2027 total revenue
at least $90 billion, a year-over-year increase of +34%
—
FY2027 non-GAAP EPS
$8.10
—
FY2027 CapEx
$90 billion-$95 billion
—
FY2027 net cash CapEx
not more than $70 billion
—
Management commentary
Management framed the quarter as acceleration, pointing to Q1 total revenue growing sequentially for the first time after a record Q4, against a history of lighter first quarters.
On funding, management drew a distinction the numbers do not: the new contracts require capital expenditure but not additional cash from Oracle, via supplier financing, customer prepayments and bring-your-own-hardware arrangements.
GPUs that came up for renewal in Q1 were renewed or resold at a 20% premium to prior contracts, with the majority four years or older — the answer offered to the useful-life question.
Neither New Mexico nor Wisconsin was delivered in Q1, and management said neither site will have any impact on previously stated fiscal 2027 revenue or earnings guidance.
No timeframe was given for a return to positive free cash flow, only that "each of these projects that we are doing, by nature, is a strong free cash flow generating project."
Quality of earnings
The beat is a cost story, not a revenue story. Revenue cleared the estimate by only 0.9% while non-GAAP EPS cleared it by 10.3%; gross margin declined on the data-center ramp, and non-GAAP operating income still rose 31% to $8.2 billion with operating margin held around flat at 42% on lower operating costs.
The forward growth rate is measured against a restated base: the Q2 non-GAAP EPS guide of $1.85 to $1.93, up 21% to 25%, excludes the gains from Ampere booked in Q2 of last year.
Gotchas & watch items
Growth is cash-negative: $28 billion of CapEx against a record $23 billion of operating cash flow left free cash flow at negative $5 billion, and the previously disclosed $20 billion at-the-market equity issuance was completed in its entirety during the quarter.
Mix is moving against gross margin: cloud infrastructure revenue grew 121% to $7.4 billion while cloud applications grew 10%, and management described infrastructure as the lower gross margin business with no gross margin guidance given.
The full-year spending plan of $90 billion to $95 billion in CapEx sits above the at-least $90 billion revenue guide, with net cash CapEx capped at not more than $70 billion.