Item 1. Financial Statements (Unaudited)

ORACLE CORPORATION

CONDENSED CONSOLIDA****TED BALANCE SHEETS

As of August 31, 2026 and May 31, 2026

(Unaudited)

(in millions, except per share data)		August 31, 2026				May 31, 2026
ASSETS
Current assets:
Cash and cash equivalents		$	36,369			$	31,289
Marketable securities			708				605
Trade receivables, net of allowances for credit losses of $536 and $542 as of August 31, 2026 and May 31, 2026, respectively			11,394				10,385
Prepaid expenses and other current assets			7,159				4,288
Total current assets			55,630				46,567
Non-current assets:
Property, plant and equipment, net			127,845				99,957
Operating lease right-of-use assets			33,967				29,690
Goodwill			62,267				62,261
Deferred tax assets			11,625				11,541
Other non-current assets			11,925				11,743
Total non-current assets			247,629				215,192
Total assets		$	303,259			$	261,759
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Notes payable and other borrowings, current		$	7,625			$	7,199
Accounts payable			11,063				10,977
Accrued compensation and related benefits			1,760				2,225
Deferred revenues			14,686				9,916
Other current liabilities			12,380				11,447
Total current liabilities			47,514				41,764
Non-current liabilities:
Notes payable and other borrowings, non-current			117,712				122,342
Income taxes payable			12,060				11,771
Operating lease liabilities			30,594				26,648
Other non-current liabilities			28,183				16,178
Total non-current liabilities			188,549				176,939
Commitments and contingencies
Oracle Corporation stockholders’ equity:
Preferred stock, $0.01 par value and additional paid in capital—authorized: 1.0 shares; outstanding: 0.05 shares as of each of August 31, 2026 and May 31, 2026, of 6.50% Series D Mandatory Convertible Preferred Stock			4,954				4,954
Common stock, $0.01 par value and additional paid in capital—authorized: 11,000 shares; outstanding: 3,024 shares and 2,880 shares as of August 31, 2026 and May 31, 2026, respectively			64,319				43,243
Accumulated deficit			(1,114	)			(4,309	)
Accumulated other comprehensive loss			(1,387	)			(1,380	)
Total Oracle Corporation stockholders’ equity			66,772				42,508
Noncontrolling interests			424				548
Total stockholders’ equity			67,196				43,056
Total liabilities and stockholders’ equity		$	303,259			$	261,759

See notes to condensed consolidated financial statements.

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ORACLE CORPORATION

CONDENSED CONSOLIDATED S****TATEMENTS OF OPERATIONS

For the Three Months Ended August 31, 2026 and 2025

(Unaudited)

		Three Months Ended August 31,
(in millions, except per share data)		2026				2025
Revenues:
Cloud		$	11,607			$	7,186
Software			5,550				5,721
Hardware			774				670
Services			1,414				1,349
Total revenues			19,345				14,926
Operating expenses:
Cloud and software(1)			6,400				3,607
Hardware(1)			281				178
Services(1)			1,052				1,099
Sales and marketing			1,811				2,063
Research and development			2,401				2,491
General and administrative			376				376
Amortization of intangible assets			202				420
Restructuring and other			94				415
Total operating expenses			12,617				10,649
Operating income			6,728				4,277
Interest expense			(1,428	)			(923	)
Non-operating income, net			307				73
Income before income taxes			5,607				3,427
Provision for income taxes			847				500
Net income		$	4,760			$	2,927
Preferred stock dividends			81				—
Net income available to common shareholders		$	4,679			$	2,927
Earnings per share attributable to common shareholders:
Basic		$	1.58			$	1.04
Diluted		$	1.56			$	1.01
Weighted average common shares outstanding:
Basic			2,966				2,826
Diluted			3,000				2,909

(1)

Exclusive of amortization of intangible assets, which is shown separately.

See notes to condensed consolidated financial statements.

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ORACLE CORPORATION

CONDENSED CONSOLIDATED STATEM****ENTS OF COMPREHENSIVE INCOME

For the Three Months Ended August 31, 2026 and 2025

(Unaudited)

		Three Months Ended August 31,
(in millions)		2026				2025
Net income		$	4,760			$	2,927
Other comprehensive (loss) income, net of tax:
Net foreign currency translation (losses) gains			(7	)			28
Net unrealized gains (losses) on cash flow hedges			2				(24	)
Other, net			(2	)			1
Total other comprehensive (loss) income, net			(7	)			5
Comprehensive income		$	4,753			$	2,932

See notes to condensed consolidated financial statements.

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ORACLE CORPORATION

CONDENSED CONSOLIDATED STATEMEN****TS OF STOCKHOLDERS’ EQUITY

For the Three Months Ended August 31, 2026 and 2025

(Unaudited)

		Three Months Ended August 31,
(in millions, except per share data)		2026				2025
Preferred stock and additional paid in capital
Balance, beginning and end of period		$	4,954			$	—
Common stock and additional paid in capital
Balance, beginning of period		$	43,243			$	37,107
Common stock issued via at-the-market program			19,909				—
Net share issuances from employee stock programs			41				1,153
Stock-based compensation			1,127				1,124
Repurchases of common stock			—				(6	)
Other, net			(1	)			—
Balance, end of period		$	64,319			$	39,378
Accumulated deficit
Balance, beginning of period		$	(4,309	)		$	(15,481	)
Repurchases of common stock			—				(87	)
Preferred stock dividends			(81	)			—
Common stock dividends			(1,484	)			(1,413	)
Net income			4,760				2,927
Balance, end of period		$	(1,114	)		$	(14,054	)
Other stockholders’ equity, net
Balance, beginning of period		$	(832	)		$	(657	)
Other, net			(131	)			(1	)
Balance, end of period		$	(963	)		$	(658	)
Total stockholders’ equity		$	67,196			$	24,666
Preferred stock dividends declared per share		$	1,625			$	—
Common stock dividends declared per share		$	0.50			$	0.50

See notes to condensed consolidated financial statements.

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ORACLE CORPORATION

CONDENSED CONSOLIDATED S****TATEMENTS OF CASH FLOWS

For the Three Months Ended August 31, 2026 and 2025

(Unaudited)

		Three Months Ended August 31,
(in millions)		2026				2025
Cash flows from operating activities:
Net income		$	4,760			$	2,927
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation			3,156				1,351
Amortization of intangible assets			202				420
Deferred income taxes			(73	)			515
Stock-based compensation			1,127				1,124
Other, net			(4	)			164
Changes in operating assets and liabilities:
Increase in trade receivables, net			(1,009	)			(245	)
Decrease in prepaid expenses and other assets			114				59
Decrease in accounts payable and other liabilities			(1,076	)			(334	)
Increase (decrease) in income taxes payable			546				(391	)
Increase in deferred revenues from customer prepayments with significant financing component			11,363				—
Increase in other deferred revenues			3,997				2,550
Net cash provided by operating activities			23,103				8,140
Cash flows from investing activities:
Purchases of marketable securities and other investments			(306	)			(471	)
Proceeds from sales and maturities of marketable securities and other investments			225				255
Capital expenditures			(28,499	)			(8,502	)
Net cash used for investing activities			(28,580	)			(8,718	)
Cash flows from financing activities:
Proceeds from issuances of common stock via at-the-market program, net of issuance costs			19,909				—
Net proceeds from employee stock programs			41				1,153
Payments of dividends to stockholders			(1,565	)			(1,413	)
Repayments of commercial paper, net			—				(238	)
(Repayments of) proceeds from short-term financing related to capital expenditures, net			(830	)			1,958
Repayments of senior notes, term loan credit agreements and other borrowings			(4,202	)			(1,052	)
Other financing activities, net			(242	)			(198	)
Net cash provided by financing activities			13,111				210
Effect of exchange rate changes on cash, cash equivalents and restricted cash			11				27
Net increase (decrease) in cash, cash equivalents and restricted cash			7,645				(341	)
Cash, cash equivalents and restricted cash at beginning of period			31,289				10,786
Cash, cash equivalents and restricted cash at end of period		$	38,934			$	10,445
Non-cash investing activities:
Unpaid capital expenditures		$	6,247			$	4,010

See notes to condensed consolidated financial statements.

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ORACLE CORPORATION

NOTES TO CONDENSED CONSOLID****ATED FINANCIAL STATEMENTS

August 31, 2026

(Unaudited)

1.

BASIS OF PRESENTATION, RECENT ACCOUNTING PRONOUNCEMENTS AND OTHER

Basis of Presentation

We have prepared the condensed consolidated financial statements included herein pursuant to the rules and regulations of the United States (U.S.) Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP) have been condensed or omitted pursuant to such rules and regulations. However, we believe that the disclosures herein are adequate to ensure the information presented is not misleading. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended May 31, 2026.

We believe that all necessary adjustments, which consisted only of normal recurring items, have been included in the accompanying financial statements to present fairly the results of the interim periods. The results of operations for the interim periods presented are not necessarily indicative of the operating results to be expected for any subsequent interim period or for the fiscal year ending May 31, 2027. We reclassed certain prior period balances presented in our condensed consolidated financial statements to conform to the current period’s presentation. Such reclassifications did not affect total revenue, income from operations, net income, total assets or cash flows.

We believe that our current cash, cash equivalents and marketable securities balances, together with cash generated from operations and available financing arrangements, will be sufficient to meet our working capital, committed capital expenditures and contractual obligations for at least the next twelve months. Thereafter, we expect that our existing sources of liquidity, together with potential access to additional financing, will continue to be sufficient for the foreseeable future. Further, we have flexibility in managing the timing of certain discretionary capital expenditures.

In the first quarter of fiscal 2027, we adopted Accounting Standards Update (ASU) 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (ASU 2025-06) on a prospective basis effective June 1, 2026. ASU 2025-06 modernizes the accounting for internal-use software costs, including the criteria for capitalizing software development costs. The adoption did not have a material impact on our condensed consolidated financial statements. There have been no changes to our significant accounting policies as disclosed in our Annual Report on Form 10-K for the fiscal year ended May 31, 2026 that had a significant impact on our condensed consolidated financial statements or notes thereto as of and for the three months ended August 31, 2026.

Cash, Cash Equivalents and Restricted Cash

Restricted cash as of August 31, 2026 was $2.6 billion and was included within prepaid expenses and other current assets as presented within our condensed consolidated balance sheets. Restricted cash as of May 31, 2026 was immaterial.

Remaining Performance Obligations from Contracts with Customers

Trade receivables, net of allowances for credit losses, and deferred revenues are reported net of related uncollected deferred revenues in our condensed consolidated balance sheets as of August 31, 2026 and May 31, 2026. The revenues recognized during the three months ended August 31, 2026 and 2025 that were included in the opening deferred revenues balances as of May 31, 2026 and 2025 were approximately $4.0 billion during each period. Revenues recognized from performance obligations satisfied in prior periods and impairment losses recognized on our receivables were immaterial in each of the three months ended August 31, 2026 and 2025.

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ORACLE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

August 31, 2026

(Unaudited)

Remaining performance obligations were $664 billion as of August 31, 2026, of which we expect to recognize approximately 13% as revenues over the next twelve months, 37% over the subsequent month 13 to month 36, 34% over the subsequent month 37 to month 60 and the remainder thereafter. We have elected the optional exemption to not disclose the variable consideration for contracts in which the variable consideration expected to be received over the duration of the contract is allocated entirely to the wholly unsatisfied performance obligations. Refer to Note 1 of Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended May 31, 2026 for more information about our remaining performance obligations.

Customer Prepayments and Sales of Financing Receivables

Certain of our customer contracts include a significant financing component either because the customer has made significant prepayments before the corresponding performance obligations are delivered or because we have provided long-term payment plans to the customer. In determining whether a contract contains a significant financing component, we consider: (1) the expected timing between the transfer of goods and services and customer payment; (2) the difference between the promised consideration and the cash selling price; and (3) prevailing market interest rates. We apply the practical expedient and do not adjust the promised amount of consideration for the effects of a significant financing component when the period between the transfer of goods or services and customer payment is one year or less. During the first quarter of fiscal 2027, we received $11.4 billion of prepayments from customers that included a significant financing component. No prepayments from customers that included a significant financing component were received during the first quarter of fiscal 2026. We recognize interest expense related to significant financing components separately from revenue. During the first quarter of fiscal 2027, such amounts were immaterial. We determine the discount rate based on a rate that reflects the credit characteristics of the party receiving financing, which is generally consistent with our incremental borrowing rate. The effects of significant financing components are reflected in deferred revenues and recognized over the period of performance.

We offer certain of our customers the option to acquire certain of our products and services offerings through separate long-term payment contracts. We generally sell these contracts that we have financed for our customers on a non-recourse basis to financial institutions within 90 days of the contracts’ dates of execution. We record the transfers of amounts due from customers to financial institutions as sales of financing receivables because we are considered to have surrendered control of these financing receivables. Financing receivables sold to financial institutions were $652 million and $756 million for the three months ended August 31, 2026 and 2025, respectively.

Non-Marketable Investments

Our non-marketable equity securities and debt investments totaled $2.4 billion and $2.3 billion as of August 31, 2026 and May 31, 2026, respectively, and substantially all of the balance is included in other non-current assets in the accompanying condensed consolidated balance sheets and is subject to periodic credit losses and impairment reviews. Certain of these non-marketable equity securities are adjusted for observable price changes from orderly transactions. The substantial majority of the non-marketable investments we held as of August 31, 2026 were with TikTok USDS Joint Venture LLC, an equity method investee in which we have an ownership interest of 15%.

Non-Operating Income, net

Non-operating income, net consists primarily of interest income, net foreign currency exchange losses, the noncontrolling interests in the net profits of our majority-owned subsidiaries (primarily Oracle Financial Services Software Limited and Oracle Corporation Japan), net gains and losses related to marketable and non-marketable investments, including net gains and losses attributable to equity method investments and net other income and expenses, including net gains and losses from our investment portfolio related to our deferred compensation plan, for which an equal and offsetting amount was recorded to our operating expenses during the same period, and non-service net periodic pension income and losses.

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ORACLE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

August 31, 2026

(Unaudited)

		Three Months Ended August 31,
(in millions)		2026				2025
Interest income		$	306			$	103
Foreign currency losses, net			(16	)			(31	)
Noncontrolling interests in income			(53	)			(47	)
Gains (losses) from marketable and non-marketable investments, net			53				(52	)
Other income, net			17				100
Total non-operating income, net		$	307			$	73

Recent Accounting Pronouncements

Income Statement**:** In November 2024, the Financial Accounting Standards Board (FASB) issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses and also issued subsequent guidance clarifying the effective date of the initial guidance (collectively, Subtopic 220-40), which enhances the disclosures required for expense disaggregation in our annual and interim consolidated financial statements. This guidance is effective for us for our annual reporting for fiscal 2028 and for interim period reporting beginning in fiscal 2029 on a prospective basis. Both early adoption and retrospective application are permitted. We are currently evaluating the impact of our pending adoption of Subtopic 220-40 on our consolidated financial statements.

2.

FAIR VALUE MEASUREMENTS

We perform fair value measurements in accordance with FASB Accounting Standards Codification (ASC) 820, Fair Value Measurement (ASC 820). ASC 820 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at their fair values, we consider the principal or most advantageous market in which we would transact and consider assumptions that market participants would use when pricing the assets or liabilities, such as inherent risk, transfer restrictions and risk of nonperformance.

ASC 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. An asset’s or a liability’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 establishes three levels of inputs that may be used to measure fair value:

Level 1: quoted prices in active markets for identical assets or liabilities;

Level 2: inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; or

Level 3: unobservable inputs that are supported by little or no market activity and that are significant to the fair values of the assets or liabilities.

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ORACLE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

August 31, 2026

(Unaudited)

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Our assets and liabilities measured at fair value on a recurring basis consisted of the following (Level 1 and Level 2 inputs are defined above):

		August 31, 2026												May 31, 2026
		Fair Value Measurements Using Input Types												Fair Value Measurements Using Input Types
(in millions)		Level 1				Level 2				Total				Level 1				Level 2				Total
Assets:
Money market funds		$	28,204			$	—			$	28,204			$	23,387			$	—			$	23,387
Time deposits and other			85				759				844				68				671				739
Derivative financial instruments			—				38				38				—				36				36
Total assets		$	28,289			$	797			$	29,086			$	23,455			$	707			$	24,162

Our cash equivalents and marketable securities investments consist of money market funds, time deposits and marketable equity securities. Marketable securities as presented per our condensed consolidated balance sheets included debt securities with original maturities at the time of purchase greater than three months and the remainder of the debt securities were included in cash and cash equivalents. We classify our marketable debt securities as available-for-sale debt securities at the time of purchase and reevaluate such classification as of each balance sheet date. As of August 31, 2026 and May 31, 2026, all of our marketable debt securities investments mature within one year. Our valuation techniques used to measure the fair values of our instruments that were classified as Level 1 in the table above were derived from quoted market prices and active markets for these instruments that exist. Our valuation techniques used to measure the fair values of Level 2 instruments listed in the table above were derived from the following: non-binding market consensus prices that were corroborated by observable market data, quoted market prices for similar instruments, or pricing models, such as discounted cash flow techniques, with all significant inputs derived from or corroborated by observable market data including reference rate yield curves, among others.

Based on the trading prices of the $125.0 billion and $128.1 billion of senior notes and other long-term borrowings and the related fair value hedges, if any, that we had outstanding as of August 31, 2026 and May 31, 2026, respectively, the estimated fair values of the senior notes and other long-term borrowings and the related fair value hedges, if any, using Level 2 inputs at August 31, 2026 and May 31, 2026 were $105.7 billion and $114.4 billion, respectively.

3.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment, net consisted of the following:

(Dollars in millions)		Estimated Useful Life		August 31, 2026				May 31, 2026
Computer, network, machinery and equipment		1-6 years(1)		$	77,755			$	59,634
Buildings and improvements		1-40 years			25,539				21,263
Furniture, fixtures and other		5-15 years			427				452
Land		—			1,329				1,329
Construction in progress(2)		—			48,546				39,973
Total property, plant and equipment		1-40 years			153,596				122,651
Accumulated depreciation					(25,751	)			(22,694	)
Total property, plant and equipment, net				$	127,845			$	99,957

(1)

Comprised primarily of servers and networking equipment with estimated useful life of six years.

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ORACLE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

August 31, 2026

(Unaudited)

(2)

Comprised primarily of servers, networking equipment and leasehold improvements to be deployed at our data centers.

Depreciation expenses on property, plant and equipment during the three months ended August 31, 2026 and 2025 were $3.2 billion and $1.4 billion, respectively. Property, plant and equipment, net includes right-of-use (ROU) assets recorded in connection with lease arrangements that are accounted for as finance leases, totaling $8.9 billion and $7.5 billion as of August 31, 2026 and May 31, 2026, respectively.

4.

RESTRUCTURING AND OTHER EXPENSES

The restructuring and other expenses line item on our condensed consolidated statement of operations consist of restructuring expenses for employee severance costs, contract termination costs and certain other exit costs to improve our cost structure prospectively. The restructuring expenses resulted from the execution of management-approved restructuring plans that were developed for certain strategic initiatives and/or to improve operational efficiencies, as further described below; and other operating expenses, net.

		Three Months Ended August 31,
(in millions)		2026				2025
Restructuring		$	165			$	402
Other, net			(71	)			13
Total restructuring and other expenses		$	94			$	415

Fiscal 2026 Oracle Restructuring Plan

During fiscal 2026, our management approved, committed to, initiated and further supplemented plans to restructure to implement certain strategic measures and further improve operational efficiencies, including through the adoption and integration of artificial intelligence technologies across certain functions and other operational activities (2026 Restructuring Plan). The total estimated restructuring costs associated with the 2026 Restructuring Plan are up to $2.1 billion as of August 31, 2026. Subsequent to August 31, 2026, our management supplemented the 2026 Restructuring Plan by approximately $700 million to reflect additional actions that we expect to take. These costs will be recorded to the restructuring and other expense line item within our condensed consolidated statements of operations through the end of the plan. We recorded $167 million and $415 million of restructuring expenses in connection with the 2026 Restructuring Plan for the three months ended August 31, 2026 and 2025, respectively. Any changes to the estimates of executing the 2026 Restructuring Plan will be reflected in our future results of operations.

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ORACLE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

August 31, 2026

(Unaudited)

Summary of All Plans

		Accrued				Three Months Ended August 31, 2026																Accrued				Total Costs				Total Expected
(in millions)		May 31, 2026**(2)**				Initial Costs**(3)**				Adj. to Cost**(4)**				Cash Payments				Others**(5)**				August 31, 2026**(2)**				Accrued to Date				Program Costs
2026 Restructuring Plan(1)
Cloud and software		$	219			$	69			$	1			$	(120	)		$	—			$	169			$	729			$	776
Hardware			29				10				—				(15	)			—				24				88				93
Services			149				30				(1	)			(75	)			—				103				336				399
Other			170				52				6				(114	)			—				114				818				835
Total 2026 Restructuring Plan		$	567			$	161			$	6			$	(324	)		$	—			$	410			$	1,971			$	2,103
Total other restructuring plans(6)		$	86			$	—			$	(2	)		$	(6	)		$	1			$	79
Total restructuring plans		$	653			$	161			$	4			$	(330	)		$	1			$	489

(1)

Restructuring costs recorded to each of the operating segments presented primarily related to employee severance costs. Other restructuring costs represented employee severance costs not related to our operating segments and certain other restructuring plan costs.

(2)

The balances as of August 31, 2026 and May 31, 2026 included $422 million and $581 million, respectively, recorded in other current liabilities, and $67 million and $72 million, respectively, recorded in other non-current liabilities within our condensed consolidated balance sheets.

(3)

Costs recorded for the respective restructuring plans during the period presented.

(4)

All plan adjustments were changes in estimates whereby increases and decreases in costs were generally recorded to operating expenses in the period of adjustments.

(5)

Represents foreign currency translation and certain other non-cash adjustments.

(6)

Other restructuring plans presented in the table above included condensed information for other Oracle based plans and other plans associated with certain of our acquisitions whereby we continued to make cash outlays to settle obligations under these plans during the periods presented but for which the periodic impact to our condensed consolidated statements of operations was not significant.

5.

DEFERRED REVENUES

Deferred revenues consisted of the following:

(in millions)		August 31, 2026				May 31, 2026
Cloud		$	6,348			$	3,228
Software			7,284				5,662
Hardware			577				521
Services			477				505
Deferred revenues, current			14,686				9,916
Deferred revenues, non-current (in other non-current liabilities)			16,103				5,479
Total deferred revenues		$	30,789			$	15,395

Deferred cloud revenues, deferred software revenues and deferred hardware revenues substantially represent customer payments made in advance for cloud or support contracts that are billed in advance with corresponding revenues generally being recognized ratably or based upon customer usage over the respective contractual periods. Deferred services revenues include prepayments for our services business and revenues for these services are generally recognized as the services are performed.

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ORACLE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

August 31, 2026

(Unaudited)

6.

LEASES AND OTHER COMMITMENTS

Leases

We have operating and finance leases that primarily relate to our data centers and real estate facilities.

The components of lease expense were as follows:

		Three Months Ended August 31,
(in millions)		2026				2025
Operating lease expense		$	1,101			$	575
Finance lease expense:
Amortization of ROU assets		$	149			$	59
Interest on lease liabilities			126				48
Total finance lease expense		$	275			$	107

Supplemental balance sheet information related to leases was as follows:

(in millions)		August 31, 2026				May 31, 2026
Operating leases:
Operating lease ROU assets		$	33,967			$	29,690
Operating lease liabilities:
Operating lease liabilities, current		$	4,027			$	3,542
Operating lease liabilities, non-current			30,594				26,648
Total operating lease liabilities		$	34,621			$	30,190
Finance leases:
Finance lease ROU assets		$	8,856			$	7,464
Finance lease liabilities:
Finance lease liabilities, current		$	749			$	620
Finance lease liabilities, non-current			8,436				7,081
Total finance lease liabilities		$	9,185			$	7,701

Supplemental cash flow information related to leases was as follows:

		Three Months Ended August 31,
(in millions)		2026				2025
Cash paid for amounts included in the measurement of lease liabilities:
Operating leases		$	950			$	567
Finance leases		$	186			$	86
ROU assets obtained in exchange for lease obligations:
Operating leases		$	4,903			$	3,181
Finance leases		$	1,539			$	1,122

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Maturities of lease liabilities were as follows as of August 31, 2026 (in millions):

		Operating Leases				Finance Leases
Remainder of fiscal 2027		$	3,219			$	620
Fiscal 2028			4,135				852
Fiscal 2029			4,097				923
Fiscal 2030			4,109				947
Fiscal 2031			4,089				971
Fiscal 2032			4,030				996
Thereafter			24,371				9,886
Total lease payments			48,050				15,195
Less: imputed interest			(13,429	)			(6,010	)
Total lease liability		$	34,621			$	9,185

As of August 31, 2026, we had $288 billion of additional lease commitments, substantially all related to data center arrangements, that are generally expected to commence between the second quarter of fiscal 2027 and fiscal 2029 and for terms of fifteen to nineteen years that were not reflected on our condensed consolidated balance sheets as of August 31, 2026 or in the maturities table above.

Unconditional Obligations

In the ordinary course of business, we enter into certain unconditional purchase obligations with our suppliers. These are agreements that are enforceable and legally binding and specify terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the payment. As of August 31, 2026, our unconditional purchase and certain other obligations with terms of one year or greater, which were primarily related to long-term supply arrangements for purchasing components for cloud infrastructure assets and power supply arrangements for data centers, were as follows (in millions):

Remainder of fiscal 2027		$	5,449
Fiscal 2028			6,176
Fiscal 2029			3,863
Fiscal 2030			4,318
Fiscal 2031			6,768
Fiscal 2032			954
Thereafter			6,622
Total		$	34,150

7.

STOCKHOLDERS’ EQUITY

Common Stock

On February 2, 2026, we entered into an equity distribution agreement with certain sales agents party thereto, as amended on June 23, 2026, pursuant to which we may sell shares of our common stock having aggregate sales proceeds of up to $20 billion from time to time through an “at-the-market” offering program (the ATM Program).

During the first quarter ended August 31, 2026, we fully utilized the ATM Program and issued 141 million shares of common stock under the ATM Program for net proceeds of $19.9 billion. The proceeds from offerings under the ATM Program will be used for general corporate purposes, which may include capital expenditures, repayment of

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indebtedness, future investments or acquisitions and payment of cash dividends on or repurchases of our common stock.

Common Stock Repurchases

Our Board of Directors (the Board) has approved a program for us to repurchase shares of our common stock. As of August 31, 2026, approximately $6.3 billion remained available for stock repurchases pursuant to our stock repurchase program. There was no stock repurchase activity for the three months ended August 31, 2026. We repurchased 0.4 million shares for $93 million during the three months ended August 31, 2025 under the stock repurchase program.

Our stock repurchase authorization does not have an expiration date and the pace of any future repurchase activity will depend on factors such as our working capital needs, our cash requirements for capital expenditures, acquisitions and dividend payments, our debt repayment obligations or repurchases of our debt, our stock price and economic and market conditions. Our stock repurchases may be effected from time to time through open market purchases or pursuant to a Rule 10b5-1 trading plan. Our stock repurchase program may be accelerated, suspended, delayed or discontinued at any time.

Dividends on Preferred and Common Stock

In September 2026, the Board declared a quarterly cash dividend of $1,625 per share of our outstanding Mandatory Convertible Preferred Stock and $0.50 per share of our outstanding common stock. The Mandatory Convertible Preferred Stock dividend is payable on October 15, 2026 to stockholders of record as of the close of business on October 1, 2026 and the common stock dividend is payable on October 23, 2026 to stockholders of record as of the close of business on October 9, 2026. Future declarations of dividends on Oracle securities and the establishment of future record and payment dates for our common stock are subject to the final determination of the Board.

Fiscal 2027 Stock‑Based Awards Activity and Compensation Expense

During the first quarter of fiscal 2027, we issued 2 million restricted stock-based units (RSUs) and stock options (SOs) for approximately 400,000 shares of common stock, all of which are subject to service-based vesting restrictions. These fiscal 2027 stock-based award issuances were offset by stock-based award forfeitures and cancellations of 4 million shares during the first quarter of fiscal 2027.

The SOs were granted with an exercise price not less than the closing share price of our common stock on the grant date, generally become exercisable over four years of service, and generally expire ten years from the date of grant. We estimated the fair values of our SOs using the Black-Scholes-Merton option-pricing model, which was developed for use in estimating the fair values of SOs. Option valuation models, including the Black-Scholes-Merton option-pricing model, require the input of assumptions, including stock price volatility. Changes in the input assumptions can affect the fair value estimates and ultimately how much we recognize as stock-based compensation expense. The RSUs that were granted during the three months ended August 31, 2026 generally vest over four years of service and were valued using methodologies of a similar nature as those described in Note 11 of Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended May 31, 2026.

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Stock-based compensation expense is included in the following operating expense line items in our condensed consolidated statements of operations:

		Three Months Ended August 31,
(in millions)		2026				2025
Cloud and software		$	134			$	156
Hardware			6				7
Services			51				49
Sales and marketing			171				177
Research and development			667				647
General and administrative			98				88
Total stock-based compensation		$	1,127			$	1,124

8.

INCOME TAXES

Our effective tax rates for each of the periods presented are the result of the mix of income earned and losses incurred in various tax jurisdictions that apply a broad range of income tax rates. Our provision for income taxes varied from the tax computed at the U.S. federal statutory income tax rate for the periods presented primarily due to earnings in foreign operations, state taxes, the U.S. research and development tax credit, settlements with tax authorities, the tax effects of stock-based compensation, the Foreign Derived Intangible Income deduction and the tax effect of Global Intangible Low-Taxed Income. Our effective tax rates were 15.1% and 14.6% for the three months ended August 31, 2026 and 2025, respectively.

Our net deferred tax assets were $11.3 billion and $11.2 billion as of August 31, 2026 and May 31, 2026, respectively. We believe that it is more likely than not that the net deferred tax assets will be realized in the foreseeable future. Realization of our net deferred tax assets is dependent upon our generation of sufficient taxable income in future years in appropriate tax jurisdictions to obtain benefit from the reversal of temporary differences, net operating loss carryforwards and tax credit carryforwards. The amount of net deferred tax assets considered realizable is subject to adjustment in future periods if estimates of future taxable income change.

Domestically, U.S. federal and state taxing authorities are currently examining income tax returns of Oracle and various acquired entities for years through fiscal 2025. Our U.S. federal income tax returns have been examined for all years prior to fiscal 2013 and, with some exceptions, we are no longer subject to audit for those periods. Our U.S. state income tax returns, with some exceptions, have been examined for all years prior to fiscal 2010, and we are no longer subject to audit for those periods.

Internationally, tax authorities for numerous non-U.S. jurisdictions are also examining or have examined returns of Oracle and various acquired entities for years through fiscal 2025. Many of the relevant tax years are at an advanced stage in examination or subsequent controversy resolution processes. With some exceptions, we are generally no longer subject to tax examinations in non-U.S. jurisdictions for years prior to fiscal 2001.

We are under audit by the U.S. Internal Revenue Service and various other domestic and foreign tax authorities with regards to income tax and indirect tax matters and are involved in various challenges and litigation in a number of countries, including, in particular, Australia, Brazil, Canada, Egypt, India, Indonesia, Ireland, Israel, Pakistan, Saudi Arabia, South Korea and Spain, where the amounts under controversy are significant. In some, although not all, cases, we have reserved for potential adjustments to our provision for income taxes and accrual of indirect taxes that may result from examinations by, or any negotiated agreements with, these tax authorities or final outcomes in judicial proceedings and we believe that the final outcome of these examinations, agreements or judicial proceedings will not have a material effect on our results of operations. If events occur which indicate payment of these amounts is unnecessary, the reversal of the liabilities would result in the recognition of benefits in the period

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we determine the liabilities are no longer necessary. If our estimates of the federal, state and foreign income tax liabilities and indirect tax liabilities are less than the ultimate assessment, it could result in a further charge to expense.

We believe that we have adequately provided under GAAP for outcomes related to our tax audits. However, there can be no assurances as to the possible outcomes or any related financial statement effect thereof.

9.

SEGMENT INFORMATION

ASC 280, Segment Reporting, establishes standards for reporting information about operating segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. Our chief operating decision makers (CODMs) are our Chief Executive Officers and Chief Technology Officer. We are organized by line of business and geographically. While our CODMs evaluate results in a number of different ways, the line of business management structure is the primary basis for which the allocation of resources and financial results are assessed.

We have three businesses: (1) cloud and software, (2) hardware and (3) services—each of which is comprised of a single operating segment. The tabular information below presents financial information, including information on segment revenues and significant segment expenses included within each segment’s measure of profit or loss, that is regularly provided to our CODMs for their review and assists our CODMs with evaluating the company’s performance and allocating company resources.

Our cloud and software business engages in the sale, marketing and delivery of our enterprise applications and infrastructure technologies through cloud and on-premise deployment models, including our cloud offerings and our software offerings. Cloud revenues are generated from applications and infrastructure offerings that are typically contracted with customers directly, delivered to customers over time with our revenue recognition occurring over the contractual terms and renewed by customers upon completion of the contractual terms. Our cloud contracts provide customers with access to the latest technological updates as they become available and for which the customer contracted together with related technical support services over the contractual term. Software revenues represent:

(1) fees earned from granting customers software licenses, generally on a perpetual basis, to use our database and middleware and our applications software products within cloud and on-premise information technology (IT) environments. We generally recognize revenues at the point in time the software is made available to the customer to download and use, which typically is immediate upon signature of the license contract; and

(2) software support revenues, which are typically contracted with customers directly, billed to customers in advance, delivered to customers over time with our revenue recognition occurring over the contractual terms and renewed by customers upon completion of the contractual terms.

Software support contracts provide customers with technical support services and unspecified license upgrades and enhancements during the term of the support period. In each fiscal year, our cloud and software business’ contractual activities, excluding the impact of timing of booking of large contracts, are typically highest in our fourth fiscal quarter, and the related cash flows are typically highest in the following quarter (i.e., in the first fiscal quarter of the next fiscal year) as we receive payments from these contracts. Costs associated with our cloud and software business are largely infrastructure- and personnel-related, including the cost of providing our cloud and software offerings, salaries and commissions earned by our sales force for the sale of our cloud and software offerings and marketing program costs.

Our hardware business provides infrastructure technologies including Oracle Engineered Systems, servers, storage, industry-specific hardware, operating systems, virtualization, management and other hardware-related software to

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support diverse IT environments. Our hardware business also offers hardware support, which provides customers with software updates for the software components that are essential to the functionality of their hardware products and can also include product repairs, maintenance services and technical support services that are typically delivered and recognized ratably over the contractual term. Costs associated with our hardware business include the cost of hardware products, which consists of expenses for materials and labor used to produce these products by our internal manufacturing operations or by third-party manufacturers; the cost of materials used to repair customer products with eligible support contracts; the cost of labor and infrastructure to provide support services; and sales and marketing expenses, which are largely personnel-related and include variable compensation earned by our sales force for the sales of our hardware offerings.

Our services business provides services to customers and partners to help maximize the performance of their investments in Oracle applications and infrastructure technologies and include our consulting services and customer success services offerings. Costs associated with our services business consist primarily of personnel-related expenses, technology infrastructure expenditures, facilities expenses and external contractor expenses.

We do not track our assets for each business. Consequently, it is not practical to show assets by operating segment.

The following table presents summary results for each of our three businesses:

		Three Months Ended August 31,
(in millions)		2026				2025
Cloud and software:
Revenues		$	17,157			$	12,907
Cloud and software expenses			6,235				3,418
Sales and marketing expenses			1,564				1,798
Margin(1)		$	9,358			$	7,691
Hardware:
Revenues		$	774			$	670
Hardware expenses			272				169
Sales and marketing expenses			50				54
Margin(1)		$	452			$	447
Services:
Revenues		$	1,414			$	1,349
Services expenses			969				1,017
Margin(1)		$	445			$	332
Totals:
Revenues		$	19,345			$	14,926
Expenses			9,090				6,456
Margin(1)		$	10,255			$	8,470

(1)

The margins reported reflect only the direct controllable costs of each line of business and do not include allocations of research and development, general and administrative and certain other allocable expenses, net. Additionally, the margins reported above do not reflect amortization of intangible assets, restructuring and other expenses, stock-based compensation, interest expense or certain other non-operating income, net. Refer to the table below for a reconciliation of our total margin for operating segments to our income before income taxes as reported per our condensed consolidated statements of operations.

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The following table reconciles total margin for operating segments to income before income taxes:

		Three Months Ended August 31,
(in millions)		2026				2025
Total margin for operating segments		$	10,255			$	8,470
Research and development			(2,401	)			(2,491	)
General and administrative			(376	)			(376	)
Amortization of intangible assets			(202	)			(420	)
Restructuring and other			(94	)			(415	)
Stock-based compensation for operating segments			(362	)			(389	)
Expense allocations and other, net			(92	)			(102	)
Interest expense			(1,428	)			(923	)
Non-operating income, net			307				73
Income before income taxes		$	5,607			$	3,427

Disaggregation of Revenues

We have considered information that is regularly reviewed by our CODMs in evaluating financial performance and disclosures presented outside of our financial statements in our earnings releases and used in investor presentations to disaggregate revenues to depict how the nature, amount, timing and uncertainty of revenues and cash flows are affected by economic factors. The principal category we use to disaggregate revenues is the nature of our products and services as presented in our condensed consolidated statements of operations.

The following table presents a summary of our total revenues by geographic region, which are generally based on the location of our customers:

		Three Months Ended August 31,
(in millions)		2026				2025
Americas		$	13,711			$	9,662
EMEA(1)			3,726				3,481
Asia Pacific			1,908				1,783
Total revenues		$	19,345			$	14,926

(1)

Comprises Europe, the Middle East and Africa

The following table presents our cloud revenues by offerings:

		Three Months Ended August 31,
(in millions)		2026				2025
Cloud applications		$	4,219			$	3,839
Cloud infrastructure			7,388				3,347
Total cloud revenues		$	11,607			$	7,186

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The following table presents our software revenues by offerings:

		Three Months Ended August 31,
(in millions)		2026				2025
Software license		$	655			$	766
Software support			4,895				4,955
Total software revenues		$	5,550			$	5,721

10.

EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income available to common shareholders for the period by the weighted-average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income available to common shareholders for the period by the weighted-average number of common shares outstanding during the period, plus the dilutive effect of outstanding restricted stock-based awards, stock options and shares issuable under the employee stock purchase plan as applicable pursuant to the treasury stock method and the dilutive effect of Mandatory Convertible Preferred Stock pursuant to the if-converted method. The following table sets forth the computation of basic and diluted earnings per share attributable to common shareholders:

		Three Months Ended August 31,
(in millions, except per share data)		2026				2025
Net income		$	4,760			$	2,927
Preferred stock dividends			81				—
Net income available to common shareholders		$	4,679			$	2,927
Weighted-average common shares outstanding			2,966				2,826
Dilutive effect of employee stock plans			34				83
Dilutive weighted-average common shares outstanding			3,000				2,909
Basic earnings per share attributable to common shareholders		$	1.58			$	1.04
Diluted earnings per share attributable to common shareholders		$	1.56			$	1.01
Stock awards and shares excluded from calculation(1)			64				2

(1)

Consists of: (1) anti-dilutive restricted stock-based awards and stock options, both of which were service-based, as calculated using the treasury stock method, (2) anti-dilutive Mandatory Convertible Preferred Stock as calculated using the if-converted method and (3) contingently issuable shares pursuant to performance-based stock option arrangements as the performance conditions were not yet met. These excluded stock awards and shares could be dilutive in the future.

11.

LEGAL PROCEEDINGS

Netherlands Privacy Class Action

On August 14, 2020, The Privacy Collective (TPC), a foundation having its registered office in Amsterdam, filed a purported class action lawsuit against Oracle Nederland B.V., Oracle Corporation and Oracle America, Inc. (the Oracle Defendants), Salesforce.com, Inc. and SFDC Netherlands B.V. in the District Court of Amsterdam. TPC alleges that the Oracle Defendants’ Data Management Platform product violates certain articles of the European Union Charter of Fundamental Rights, the General Data Protection Regulation (GDPR) and the Dutch Telecommunications Act (Telecommunicatiewet). TPC claims damages under a number of categories, including: “immaterial damages” (at a fixed amount of €500 per Dutch internet user); “material damages” (in that the costs of loss of control over personal data should be equated to the market value of the personal data for parties like the Oracle Defendants); compensation for losses suffered due to an alleged data breach (at a fixed amount of €100 per Dutch internet user);

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and compensation for the costs of the litigation funder (10% to 25% of the compensation awarded); and the (actual) cost of the proceedings and extrajudicial costs.

We filed our defense on March 3, 2021, and on December 29, 2021, the District Court issued a judgment, holding that all of TPC’s claims were deemed inadmissible because of fundamental procedural flaws. TPC filed an appeal with the Court of Appeal in Amsterdam challenging the District Court’s judgment, except for the claims regarding the alleged data breach, which were dropped. On June 18, 2024, the Court of Appeal overturned the District Court’s decision regarding admissibility, thus permitting the case to proceed. The Court of Appeal granted Oracle’s request for an interim appeal to the Supreme Court, and on July 17, 2026, the Supreme Court found that the Court of Appeal had applied the wrong standard for evaluating a class action and remanded the case to the Court of Appeal for further proceedings. On July 27, 2026, Oracle filed and served a Writ of Summons to the Court of Appeal with the first court date being on August 4, 2026 and a submission following referral by the Supreme Court due on September 15, 2026.

On September 24, 2025, TPC filed a motion in the District Court to lift the suspension of proceedings. On September 25, 2025, Oracle opposed that motion. The court has not yet ruled on that motion.

We believe that we have meritorious defenses against this action, including defenses to the quantum of damages claimed, and we will continue to vigorously defend it.

While the final outcome of this matter cannot be predicted with certainty, we do not believe that it will have a material impact on our financial position or results of operations.

Securities Class Action Regarding Oracle Cloud Infrastructure

On February 3, 2026, a putative class action, brought by an alleged stockholder of Oracle, was filed in the U.S. District Court for the District of Delaware, and on July 14, 2026, the plaintiff filed an amended class action complaint against us, our Chief Technology Officer, one of our Chief Executive Officers, two other Oracle executives, and one member of the Board. The plaintiff seeks to represent a class of Oracle stockholders, alleging that the defendants made or are responsible for false and misleading statements regarding Oracle’s cloud infrastructure business. The plaintiff seeks a ruling that this case may proceed as a class action and seeks damages, equitable relief, and attorneys’ fees and costs. The defendants must respond to the amended complaint by September 16, 2026. If the defendants move to dismiss the amended complaint, that motion will be fully briefed by December 18, 2026.

We believe that we have meritorious defenses against this action, and we will continue to vigorously defend it.

While the final outcome of this matter cannot be predicted with certainty, we do not believe that it will have a material impact on our financial position or results of operations.

Other Litigation

We are party to various other legal proceedings and claims, either asserted or unasserted, which arise in the ordinary course of business, including proceedings and claims that relate to acquisitions we have completed or to companies we have acquired or are attempting to acquire. While the outcome of these matters cannot be predicted with certainty, we do not believe that the outcome of any of these matters, individually or in the aggregate, will result in losses that are materially in excess of amounts already recognized, if any.

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