Oracle caps new funding at $20 billion; half its 2030 revenue target remains unsigned
Oracle will sell no more than $20 billion of securities after the $20 billion of stock it sold in the summer. If customer prepayments stop, its plan is about $35 billion short, and signed contracts cover only half of the $225 billion fiscal 2030 target.
Oracle gave investors a $225 billion revenue target for fiscal 2030 and a ceiling on new capital. The ceiling leaves the cash plan about $35 billion short if customer prepayments stop. Its shares still rose about 11% on Wednesday afternoon, CNBC reported.
The cap comes on top of money already raised. In its Investor Day release, Oracle limited additional capital raises for the fiscal 2027 to 2030 investment cycle to $20 billion. That is "in addition to the $20 billion at-the-market equity raise completed in the first quarter of fiscal 2027".
Outside capital for the whole cycle is therefore $40 billion. Chief financial officer Hilary Maxson said at the Investor Day in Las Vegas that the up to $20 billion is "for the remainder of our fiscal 2027". So the second $20 billion is spent within this fiscal year. The harder test is fiscal 2028, the second of two peak capital spending years, fiscal 2027 and 2028, in Oracle's words.
Oracle has raised $19.9 billion already. The 10-Q for the quarter to 31 August shows 141 million shares sold under its at-the-market programme, about $141 a share. The split is currently expected to be $10 billion of equity and $10 billion of gross debt. Refinancing of existing debt is excluded. Equity is $30 billion of the $40 billion, or 75%.
Fiscal 2027 runs to 31 May 2027. Fiscal 2028 then starts with the cap used up, so it has to be paid for by something other than new securities.
How Oracle plans to fund the gap
Oracle names the sources. Vendor financing, customer provided hardware and customer prepayments are expected to reduce upfront cash needs until free cash flow turns positive. The company targets that turn in the second half of fiscal 2028. It targets free cash flow of $30 billion or more in fiscal 2029.
The starting point is deep in the red. The 10-K shows free cash flow of minus $23.7 billion in the year to 31 May 2026, with capital spending of $55.7 billion. In the August quarter capital spending was $28.5 billion, about half of last year's total. Operating cash flow was $23.1 billion, so free cash flow was minus $5.4 billion.
The August figure makes cash consumption look lower. Operating cash flow included $11.4 billion of customer prepayments, which the 10-Q says carry a significant financing component. Before them, free cash flow was about minus $16.8 billion.
The $20 billion alone does not fund the bridge. Cash and securities of $37.1 billion plus $20 billion of new money is $57.1 billion. Oracle expects free cash flow to turn positive in the second half of fiscal 2028. That cash must last five more quarters, from September 2026 to November 2027.
The burn rate decides the outcome. Holding the August quarter's rate, five quarters at minus $5.4 billion cost $27.0 billion. At minus $16.8 billion, the rate before prepayments, they cost $84.0 billion.
Dividends add $7.8 billion over those quarters at the latest rate, preferred stock included. If prepayments keep arriving at the August pace, about $22 billion is left. If they stop, the plan is about $35 billion short.
Notes due within a year add $7.6 billion unless Oracle refinances them, which its cap excludes. Counting them, the shortfall is up to about $42 billion. Vendor financing and customer hardware would have to fill that gap.
The 10-Q also says fiscal 2027 capital spending will be higher than fiscal 2026. Any rise widens the gap beyond those figures. For suppliers and for ORCL holders, the question is whether prepayments repeat in the November quarter.
What the revenue target requires
The revenue target asks for faster growth than Oracle has guided for this year. Fiscal 2026 revenue was $67.4 billion. Fiscal 2027 guidance is at least $90 billion, up 34%. Reaching $225 billion in fiscal 2030 then needs about 36% a year for three more years. Across the whole span that is the "more than 35%" compound rate in the release.
Oracle's signed work covers about half of fiscal 2030. The 10-Q puts remaining performance obligations, meaning signed work not yet recognised as revenue, at $664 billion. About 13% falls in the next twelve months, 37% in months 13 to 36 and 34% in months 37 to 60. That is roughly $123 billion a year in the middle bucket and $113 billion a year in the last.
Fiscal 2030 ends in May 2030, around months 34 to 45 from September 2026. Assuming even conversion inside each bucket, scheduled backlog supplies about $115 billion of it, or 51% of the target. The other $110 billion or so must come from contracts signed after August.
Oracle's 664 billion dollar backlog is scheduled to convert at about 86 billion in the next twelve months, 123 billion a year over months 13 to 36 and 113 billion a year over months 37 to 60, against a fiscal 2030 revenue target of 225 billion.
View data
| Period | Billions of dollars |
|---|---|
| Backlog due in months 1 to 12 | 86.3 |
| Backlog per year, months 13 to 36 | 122.8 |
| Backlog per year, months 37 to 60 | 112.9 |
| Fiscal 2030 revenue target | 225 |
Reaching the target depends on new bookings. Backlog rose from $638 billion at 31 May to $664 billion at 31 August while Oracle recognised $19.3 billion of revenue. Gross new backlog was therefore about $45 billion in the quarter. At that pace it takes about two and a half quarters of new contracts to fill the $110 billion gap. They must also land early enough to convert by May 2030.
Signed contracts still need to be delivered. That takes data centres and chips, which the $20 billion must help fund. Bookings do not supply that funding.
The cost for shareholders and bondholders
Shareholders carry most of the cost. The $10 billion of equity still to be sold at $145.56 a share would be about 69 million shares. That is 2.3% of the 3.02 billion outstanding. The first tranche added 141 million shares, 4.9% of the 2.88 billion in May.
Bondholders face a different gap. Oracle says net debt to adjusted EBITDA will be below 3.5 times in fiscal 2029. Its definition also counts leases and vendor financing. Counting borrowings and leases only, since the 10-Q does not total vendor financing, net debt at 31 August was about $132 billion. That is $125.3 billion of borrowings and $43.8 billion of leases, less $37.1 billion of cash and securities.
The numeric target applies in fiscal 2029. The fiscal 2028 credit commitment is to maintain investment grade ratings.
Reuters reports the OpenAI partnership has added hundreds of billions of dollars to Oracle's cloud backlog. A large part of the signed half therefore rests on one counterparty.
Oracle reports its fiscal second quarter, which ends 30 November, in December. Two figures decide the story. Backlog against $664 billion at 31 August shows whether bookings of about $45 billion a quarter continue. Operating cash flow shows whether prepayments repeat, and without them the $35 billion hole opens.