Oracle's stock price increased by 12% after the company projected a revenue of $225 billion for fiscal 2030, suggesting an average annual growth rate of 35%. This forecast is particularly important as it comes after a challenging year where Oracle's stock had dropped about one-third due to concerns over rising interest rates and a substantial debt load of $117 billion.
At its investor day, Oracle outlined a financing strategy for fiscal 2027 to 2030, planning to raise $20 billion through a balanced mix of equity and debt. The company also highlighted that vendor financing and customer prepayments would help mitigate upfront cash requirements as it transitions to positive free cash flow.
Analysts had anticipated a more modest revenue growth of 8% for fiscal 2027, with a significant acceleration expected thereafter. Oracle's capital expenditures have dramatically increased, more than doubling to $55.7 billion in fiscal 2026 and projected to rise by 65% to $91.9 billion this fiscal year, emphasizing the need for revenue growth to offset these costs.
The company aims to achieve an operating margin exceeding 40% by fiscal 2030 and expects to turn free cash flow positive by the second half of fiscal 2028, with projections of over $30 billion in free cash flow in fiscal 2029.
Despite current negative free cash flow estimates of $35 billion for this fiscal year, the positive outlook on revenue growth and strategic financial management may alleviate some investor concerns, as reflected in the tightening of credit default swap spreads