Oracle topped Wall Street’s Q1 estimates and eased investor worries about AI spending, as strong cloud demand pushed its backlog higher.

The results point to growing enterprise demand for the company’s cloud and AI services, at a time when investors had been closely watching how much cash Oracle needed to burn to keep up with that demand.

Revenue for the quarter came in at $19.3 billion, up 30% from a year earlier and ahead of the $19.14 billion analysts had expected. Adjusted earnings landed at $1.92 per share, comfortably above the $1.74 forecast.

The bigger story sits in Oracle’s order book. The company added more than $30 billion in new AI cloud contracts during the quarter, pushing its total revenue backlog to $664 billion.

That figure came in well above the $639.89 billion analysts had projected. What stood out to investors was how Oracle plans to fund all this growth.

The company said most of its new contracts came through prepayments or arrangements where customers bring their own hardware, meaning Oracle does not need to spend heavily out of pocket to deliver on them.

Hilary Maxson, Oracle’s finance chief, said this structure keeps the bulk of new orders from requiring extra capital from the company. This matters because Oracle has faced pressure this year over its capital spending plans.

In July, S&P Global downgraded the company’s credit rating, pointing to weak cash flow and rising business risk. There have also been reports of delays in Oracle’s Stargate AI infrastructure project, tied to labour shortages, permitting issues and power supply constraints.

Against that backdrop, Oracle’s cash burn came in lower than expected. Free cash flow was negative $5.40 billion for the quarter, better than the negative $9.56 billion analysts had modelled.

Capital expenditure stood at $28.50 billion, with about $11.36 billion of that covered by customer prepayments.

Looking ahead, Oracle raised its full-year earnings forecast for fiscal 2027 to $8.10 per share, up from its earlier guidance of $8.05, and expects annual revenue of at least $90 billion.

The company also said it expects roughly half of its current backlog to convert into actual revenue over the next 36 months.

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