Oracle’s Q2 Missed Revenue, $13B Cash Deficit Spurs $50B Raise and Layoffs
Oracle’s Q2 revenue fell to $16.06B versus a $16.21B forecast, with software sales down 3% to $5.88B. The company posted negative $13B free cash flow as RPO surged 438% to $523B, prompting plans for up to $50B in financing and thousands of layoffs.
1. Q2 Revenue and Earnings Shortfall
Oracle reported fiscal Q2 revenue of $16.06 billion, missing the $16.21 billion consensus, while software sales declined 3% to $5.88 billion. This marked the eighth revenue shortfall in ten quarters and contributed to a more than 50% drop in the stock since its September peak.
2. RPO Growth and Cash Flow Deficit
Remaining performance obligations surged 438% year-over-year to $523 billion, reflecting strong contracted revenue but raising concerns about conversion into actual sales. The company recorded negative $13 billion in free cash flow last quarter, well below the negative $5.2 billion consensus.
3. Financing and Cost-Cutting Measures
In September Oracle raised $18 billion via bond sales and struck a $300 billion deal with OpenAI, then announced plans in February to raise up to $50 billion in debt and equity. To alleviate its cash crunch from AI data-center expansion, the company plans to cut thousands of jobs across its operations.
4. Analyst Target Adjustment and Expectations
Analysts forecast Q3 earnings of $1.70 per share on $16.92 billion in revenue, testing the company’s ability to rebound. Barclays lowered its price target to $230 from $310 while maintaining an overweight rating, citing accelerated AI capacity availability boosting near-term revenue potential.