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Oracle's $20B cap leaves out the $288B it signed in data center leases
At its Investor Day on Oct 28, Oracle capped new money at $20B through fiscal 2030 and said new contracts will not need incremental capital from Oracle. Both promises leave out leases.
At its Investor Day on Oct 28, Oracle capped new money at $20B through fiscal 2030 and said new contracts will not need incremental capital from Oracle. Both promises leave out leases.
In the first quarter of fiscal 2027, Oracle added $26B of backlog and $28B of data center leases that have not started yet. The database is a toll gate.
The GPU business is a spread business, and the leases are where the spread gets paid for. This research reads the filings, the Investor Day release and the Sep 10 call to separate the two.
| Scorecard | Read |
|---|---|
| Thesis | The database is the toll gate. Oracle owns the record and now sits inside rival clouds. Rented GPU capacity is a spread business funded by leases that run 15 to 19 years [2] |
| What proves it wrong | Lease commitments keep growing faster than backlog after FY28, or renewal pricing on older GPUs falls below prior contracts |
| Key multiple | Net debt to adjusted EBITDA of 3.03x on Oracle's own definition, our calculation, against a target below 3.5x in FY29 [1] |
| Balance sheet | $125.34B of borrowings, $43.81B of booked leases, $288B of leases not yet started, $36.37B of cash and securities [2] |
| Owner cash | Twelve-month free cash flow of -$28.72B; -$33.53B after stock pay, our calculation [2][3] |
| Gate test | Owns the record: yes. Owns the connection: yes, through multicloud database. Outcome pricing: no. R&D on the gate: flat to down |
1. What Oracle is today
Oracle is two companies sharing one balance sheet. The first is the database and the applications built on it: software license and support of $24.54B in FY26 and cloud applications of $15.89B [3].
That business runs on contracts customers rarely leave, because the record of the business lives in it. The second is Oracle Cloud Infrastructure, which grew from $10.23B to $18.10B in FY26 (76.87%) and from $3.35B to $7.39B in the first quarter (120.73%) [3][4].
Cloud infrastructure is now 38.19% of quarterly revenue, up from 22.42% a year earlier [4].
Total revenue was $67.36B in FY26 and $19.35B in the quarter to Aug 31 [3][4]. Management reaffirmed at least $90B of FY27 revenue and set a target of more than $225B for FY30 [1].
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