Oracle makes money from cloud subscriptions and from software licences plus annual support. In fiscal 2026 (the year to 31 May 2026) cloud revenue was $34.0 billion, 51% of $67.4 billion total revenue, and software brought in $24.5 billion; services and hardware added the rest. The growth now comes from Oracle Cloud Infrastructure (OCI), which rents AI training and inference capacity under long contracts and is funded by record capital spending.
OCI sells compute, storage and AI capacity. Revenue was $18,101 million in fiscal 2026, up 77%, the fastest-growing line.
02
Cloud applications
Subscriptions to Oracle's ERP, HCM and industry applications earned $15,888 million in fiscal 2026, up 11%.
03
Licences and support
Customers buy a licence ($4,737 million in fiscal 2026, down 9%) and then pay for support, which Oracle generally prices as a percentage of the net licence fee ($19,804 million, up 1%).
04
Services and hardware
Consulting and other services earned $5,743 million and hardware $3,084 million in fiscal 2026.
What changed in 2025-26
A backlog over nine times annual revenue
Remaining performance obligations rose from $138 billion to $638 billion between 31 May 2025 and 31 May 2026, which Oracle attributes mainly to significant cloud contracts. It expects to recognise about 12% of that in the next twelve months.
Spending ahead of revenue
Capital expenditure grew from $21.2 billion in fiscal 2025 to $55.7 billion in fiscal 2026, so free cash flow as Oracle defines it was minus $23.7 billion; net income was $17.1 billion, helped by a $2.7 billion gain on the sale of its Ampere stake (10-K, fiscal 2026).
The first quarter of fiscal 2027
In the quarter to 31 August 2026 revenue rose 30% to $19.3 billion and cloud infrastructure revenue rose 121% to $7.4 billion, while software revenue fell 3% to $5.5 billion. RPO reached $664 billion, and Oracle sold $20 billion of common stock to fund its capital programme (earnings release, 10 September 2026).
AI products on top of the database
Oracle says it booked more than $30 billion of additional AI cloud contracts in that quarter and delivered more than 300,000 GPUs to AI cloud customers since the end of fiscal 2026. It also launched an AI Data Platform that generates an enterprise ontology automatically, and expects fiscal 2027 revenue of at least $90 billion.
Oracle revenue lines, fiscal 2026
Cloud infrastructure
Revenue (FY2026)$18.1B
Change vs FY2025+77%
Cloud applications
Revenue (FY2026)$15.9B
Change vs FY2025+11%
Software support
Revenue (FY2026)$19.8B
Change vs FY2025+1%
Software licence
Revenue (FY2026)$4.7B
Change vs FY2025-9%
Services
Revenue (FY2026)$5.7B
Change vs FY2025+10%
Hardware
Revenue (FY2026)$3.1B
Change vs FY2025+5%
What it means for you
Investors: watch the gap between RPO and revenue; Oracle expects only about 12% of the $638 billion backlog to turn into revenue within a year.
Track free cash flow, not just growth: in fiscal 2026 capital spending of $55.7 billion exceeded operating cash flow.
Buyers of Oracle software: expect continued pressure to move support contracts to cloud subscriptions, where Oracle's growth sits.
Builders renting AI capacity: OCI competes on contracted capacity, so lock price and term in the contract, not the list price.
Read the risk factors: Oracle warns that long data-centre lease terms do not always match customer contract terms.
The Business Engineer lens
Oracle has turned a high-margin software maintenance business into the collateral for an AI infrastructure build-out: support revenue funds the base while contracted GPU capacity drives the growth. The Business Engineer’s view is that the outcome depends on whether the backlog converts to cash before the capital and lease bills fall due.
Mainly from cloud subscriptions ($34.0 billion in fiscal 2026) and software licences and support ($24.5 billion); services ($5.7 billion) and hardware ($3.1 billion) make up the rest of $67.4 billion.
What is Oracle's biggest revenue source?
By line, software support ($19.8 billion in fiscal 2026); by business, cloud, which was 51% of revenue. Cloud infrastructure is the fastest-growing line, up 77% in fiscal 2026 and 121% in the first quarter of fiscal 2027.
What are Oracle's remaining performance obligations?
Contracted revenue not yet recognised: $638 billion at 31 May 2026 and $664 billion at 31 August 2026.
How much is Oracle spending on data centres?
Capital expenditure was $55.7 billion in fiscal 2026, up from $21.2 billion, leaving free cash flow of minus $23.7 billion as Oracle defines it.
The complete explainer, cleaned up and reformatted for mobile.
How we source: figures on this page come from the company’s own filings (SEC 10-K, 10-Q and earnings releases, or its annual report), with the period stated next to each number. Last refreshed October 2026. Our methodology.
In short
Oracle makes money in two ways: cloud subscriptions and software licences with annual support. In fiscal 2026 (year to 31 May 2026), cloud revenue was $34.0B, about half of $67.4B total revenue, and software brought in $24.5B. Oracle is spending heavily to meet contracted demand: capital expenditure reached $55.7B, against remaining performance obligations of $638B.
Correction (10 Oct 2026): an earlier section on this page showed unsourced figures; it has been removed.
How Oracle Corporation (NYSE: ORCL) makes money, FY2026: the income statement as a flow, to scale. Cloud became half of Oracle's revenue as capex nearly tripled. Source: Oracle Corporation (NYSE: ORCL) Form 10-K for fiscal 2026 (filed 2026-06-22). Gross profit, margins and shares calculated.
Watch (61 seconds): Oracle: where the money comes from, step by step, with captions. Figures from the filing named at the end.
What drives Oracle’s revenue
Oracle reports four revenue lines. In fiscal 2026, cloud brought in $34.0B, software $24.5B, services $5.7B and hardware $3.1B. Cloud customers pay subscriptions for a stated period. Software customers buy perpetual licences and then pay for annual support, which Oracle says is generally priced as a percentage of the net licence fee.
Oracle revenue by fiscal year, FY2022 to FY2026, from the company's filings. Chart: The Business Engineer.
Cloud infrastructure (OCI) is now the main growth engine. Its revenue rose 77% to $18.1B, and Oracle says it accounted for 84% of constant-currency cloud growth. Cloud applications grew 11% to $15.9B. Software support, at $19.8B, is still the largest single offering, but it grew only 1%.
How Oracle compares
Compared with its own history, revenue rose from $42.4B in fiscal 2022 to $67.4B in fiscal 2026. Growth sped up to 17% in fiscal 2026, from 8% the year before.
Margins differ widely by segment. Cloud and software earned a total margin of 59% in fiscal 2026, down from 63%. Hardware held at 65%, and services rose from 19% to 27%. Oracle attributes the fall in the cloud and software margin to higher infrastructure costs for OCI.
Contracted backlog jumped. Remaining performance obligations rose from $138B to $638B, which Oracle attributes to significant cloud contracts signed during the year. It expects to recognise about 12% of that amount as revenue in the next twelve months.
Oracle revenue by line, prior year against FY2026, as reported. Chart: The Business Engineer.
Spending rose faster than revenue. Capital expenditure grew from $21.2B to $55.7B, and free cash flow, as Oracle defines it, was minus $23.7B. Borrowings rose to $129.5B. Net income increased to $17.1B, helped by a $2.7B gain on the sale of Oracle’s stake in Ampere. Oracle also changed how it reports revenue, splitting it into cloud and software, and restated prior years on the same basis.
What to watch
Oracle says it expects capital expenditure to keep rising in fiscal 2027 and later years. It also holds $260B of data centre lease commitments that start between fiscal 2027 and fiscal 2029, with terms of 15 to 19 years.
Oracle warns that these lease terms do not always match its customer contracts. It also says some OCI offerings depend on a concentrated group of large customers, some of which may be highly leveraged.
Frequently asked questions
How does Oracle make money?
Mainly from cloud subscriptions ($34.0B in fiscal 2026) and from software licences and support ($24.5B). Services ($5.7B) and hardware ($3.1B) make up the rest of the $67.4B total.
What is Oracle's biggest revenue source?
Cloud, at $34.0B in fiscal 2026, or about 50% of revenue. Within cloud, infrastructure brought in $18.1B (+77%) and applications $15.9B (+11%).
What are Oracle's remaining performance obligations?
$638B as of 31 May 2026, up from $138B a year earlier. Oracle expects to recognise about 12% of it as revenue in the next twelve months.
How much is Oracle spending on capex?
$55.7B in fiscal 2026, up from $21.2B, mainly on expanding its data centres. Operating cash flow was $32.0B, so free cash flow as Oracle defines it was minus $23.7B.
Correction (10 Oct 2026): an earlier section on this page showed unsourced figures; it has been removed.
Oracle is a behemoth software company founded in 1977 by Larry Ellison, Bob Miner, and Ed Oates. The company followed the on-premise software model but mostly successfully transitioned to the cloud model. Indeed its lineup of software products comprises MySQL, Java, Middleware, Oracle Linux, and many others.
Origin Story
Oracle is a multinational computer technology corporation founded in 1977 by Larry Ellison, Bob Miner, and Ed Oates.
Originally known as Software Development Laboratories (SDL), Ellison, in particular, became inspired by a 1970 paper written by Edgar F. Codd on database management systems.
Oracle had early success using the C programming language to implement its products.
Its products and services were expanded following the successful acquisitions of PeopleSoft, NetSuite, and BEA Systems.
The company now sells database software and technology, cloud-engineered systems, and enterprise software products.
While Larry Ellison is a shareholder in various tech companies (such as Tesla), his primary wealth comes from his ownership stake in the company he founded, Oracle.
Glance At The Oracle Business Model
As the company highlights in its financials:
Oracle provides products and services that address enterprise information technology (IT) environments. Our products and services include applications and infrastructure โ as explored in the economics of AI compute infrastructure โ offerings that are delivered worldwide through a variety of flexible and interoperable IT deployment models. These models include onโpremise deployments, cloudโbased deployments, and hybrid deployments (an approach that combines both on-premise and cloudโbased deployment) such as our Oracle Cloud at Customer offering (an instance of Oracle Cloud in a customerโs own data center). Accordingly, we offer choice and flexibility to our customers and facilitate the product, service and deployment combinations that best suit our customersโ needs. Through our worldwide sales force and Oracle Partner Network, we sell to customers all over the world including businesses of many sizes, government agencies, educational institutions and resellers.
Oracle, therefore, is a behemoth whose software business ranges across the old and the new way (from on-premise to cloud and a hybrid between the two).
Oracle’s three primary lines of business comprise:
Cloud and license: representing 83% of the company’s total revenues for 2020. This operating segment sells and delivers a broad spectrum of applications and infrastructure technologies through our cloud and license offerings.
Hardware: it represented 9% of the company’s revenue in 2020 and it provides a broad selection of hardware products including Oracle Engineered System.
And services: which represented 8% of the company’s revenue in 2020, primarily focused on helping customers and partners to use at the best the suite of Oracle products.
Oracle revenue generation
Oracle makes money by designing, manufacturing, and selling hardware and software products.
More specifically, revenue comes from software subscriptions, license, hardware, and service fees.
Through its numerous acquisitions, it also offers extensive complimentary services in consulting, hosting, financing, and training.
Ultimately, Oracle sells enterprise-level technology to large enterprises.
Let’s take a look at some of the major products and services.
Oracle Cloud Infrastructure
Some of the more notable organizations utilizing OCI are Zoom, 7-Eleven, and FedEx.
Given that this is an enterprise solution, prices are available on request. Alternatively, a business can estimate its potential costs using a simple unit cost model.
Software
Central to the Oracle software offering is their flagship product Oracle Database 19c.
This gives organizations cost-efficient access to the industry’s most reliable, scalable, and secure database technology.
Other on-premise products include:
MySQL.
Java.
Middleware โ a cloud platform for digital businesses.
Oracle Linux โ guiding leveraging Linux OS to deploy enterprise applications more rapidly.
Engineered Systems โ designed to integrate, test, and optimize software and hardware products.
GraalVM โ enabling interoperability between programming languages in a shared runtime.
Analytics Server โ for detailed customer analytics.
Oracle Autonomous Database
Prices are available by contacting an Oracle expert.
Hardware
Oracle Hardware is a suite of scalable and engineered systems, storage, and servers. This hardware delivers many benefits to enterprises, including lower costs, better cloud integration, optimized performance, and more robust data.
Again, prices are available upon request. Current Oracle Hardware customers include Toyo, Halliburton, and Exelon.
How AI Is Changing This
Oracle is leveraging AI to transform its revenue streams, particularly through its Oracle Cloud Infrastructure (OCI) and autonomous database offerings. A concrete example is Oracle’s Autonomous Database, which uses machine learning to automatically patch, tune, and secure databases without human intervention. The autonomous capabilities create a compelling value proposition that drives cloud migration from on-premises solutions, generating recurring revenue โ as explored in the shift from SaaS to agentic service models โ instead of one-time license fees. Additionally, Oracle integrates AI across its enterprise applications like HCM and ERP, enabling predictive analytics and intelligent automation features that justify higher subscription tiers. This AI-first approach is shifting Oracle from a traditional software licensing model to a more profitable, recurring cloud services business, with cloud revenue growing over 30% year-over-year as customers adopt these intelligent, self-managing solutions.
Oracle is a behemoth software company founded in 1977 by Larry Ellison, Bob Miner, and Ed Oates. The company followed the on-premise software model but mostly successfully transitioned to the cloud model. Indeed its lineup of software products comprises MySQL, Java, Middleware, Oracle Linux, and many others.
Gennaro Cuofano is a CRO and tech executive who has worked in AI since late 2015, starting with bringing NLP, natural-language generation, voice and chatbot products to the marketing industry. His background is in law and finance: he holds a Master's degree in Law and an International MBA with an emphasis on corporate finance (LUISS Business School and the University of San Diego, 2012), and worked as a financial analyst at a real-estate investment firm in San Diego and as an assistant controller. His work focuses on business model strategy, business engineering and, more broadly, structural analysis: how companies make money, read from their own filings. He created FourWeekMBA and leads research there and at The Business Engineer, his newsletter on AI and business strategy, with over 95,000 subscribers and more than 1,000 published analyses. His writing has also appeared on Entrepreneur (for example, How to Digitize a Family Business in Europe) and HackerNoon. Find him on LinkedIn and Substack. See how we source.
