Oracle’s Quarterly Capital Spending Outpaces Cash Flow by $5.4 Billion

Oracle’s capital expenditures exceeded operating cash flow by $5.4 billion in the quarter ended Aug. 31, as its data center expansion added to the financing demands behind a growing cloud business.

For the three months ended Aug. 31, 2026, Oracle recorded $28.5 billion in capital expenditures and $23.1 billion in operating cash flow. That left free cash flow negative by $5.4 billion. The operating cash total included $11.4 billion in customer prepayments with a significant financing component.

At quarter’s end, Oracle carried $117.7 billion in noncurrent notes and other borrowings, plus $7.6 billion in current notes and other borrowings. It also had $288 billion in additional lease commitments, substantially all related to data centers. Those leases had not commenced and were absent from its balance sheet and lease maturity schedule.

The lease commitments represent future obligations distinct from the notes and other borrowings already on Oracle’s balance sheet. Their size shows the scale of capacity Oracle has arranged as it expands its data center business. The timing of revenue and customer payments will matter as that capacity comes into use.

Quarterly cloud infrastructure revenue rose 121% year over year to $7.4 billion. Oracle also had $664 billion in remaining performance obligations at Aug. 31. That measure represents contracted revenue the company has yet to recognize, rather than cash already generated from the contracts.

Oracle raised $19.9 billion in net proceeds from share sales during the quarter, adding funding outside its operating cash flow. Preserving an investment-grade rating is a priority in its financing plan. S&P Global Ratings lowered Oracle’s rating to BBB- in July, leaving it one notch above speculative grade.

Oracle expects to recognize about 13% of its remaining performance obligations as revenue over the 12 months following Aug. 31.