Oracle's own 10-K puts free cash flow at negative $23.7 billion

Most companies leave you to compute free cash flow yourself, which is why the same company can be reported three different ways depending on who is doing the arithmetic. Oracle does not. Its 10-K for the year ended 31 May 2026 contains a table, in the non-GAAP section, that does the subtraction in public.

FY2026      FY2025
Net cash from operating activities  $31,977M    $20,821M
Capital expenditures               −$55,663M   −$21,215M
──────────  ──────────
Free cash flow                     −$23,686M      −$394M
Free cash flow as % of net income      −139%         −3%

Negative $23.7 billion, disclosed by the company, against net income of $17.1 billion in the same year.

How it got there

Oracle’s capital expenditure over six fiscal years:

Capital expenditure in fiscal 2026 was 82.6% of revenue and 174.1% of operating cash flow. For a company that spent most of the last decade as a mature software licensor returning cash to shareholders, that is a different business.

Where the money came from

The 10-K says so directly, in its explanation of why interest expense rose 29%:

Interest expense increased in fiscal 2026 relative to fiscal 2025 primarily due to higher average borrowings from the issuances of $43.0 billion of senior notes in fiscal 2026 and an aggregate of $14.0 billion of senior notes in fiscal 2025

$57 billion of senior notes across two fiscal years. Interest expense of $4,599 million is the early cost of that, and it will rise as the full-year effect of fiscal 2026’s issuance lands. Rising interest expense is not particular to Oracle. Across a consistent panel of 191 listed non-financial companies, aggregate interest expense rose again in 2025, the second full year of Fed cuts.

What is on the other side

The build is against contracted demand, and the scale of that changed too.

A 4.6x increase in one year, which Oracle attributes primarily to “certain significant cloud contracts that were entered into during the period.”

$638 billion is roughly nine and a half times fiscal 2026 revenue. Remaining performance obligations are contracted revenue that has not yet been recognised — they are firmer than a pipeline and softer than cash, and the timing over which they convert is not specified in that figure.

This is the symmetry that makes the negative free cash flow legible rather than alarming on its face: the spending is against contracts, and the contracts grew faster than the spending did. What the filing does not tell you is the margin those contracts carry, or the schedule on which the assets being built now must be replaced.

A note on Oracle’s fiscal year

Oracle closes on 31 May. Fiscal 2026 covers June 2025 through May 2026.

This matters more than it sounds, because the SEC’s XBRL frames data assigns each annual period to the nearest calendar frame — and Oracle’s fiscal 2026 is filed under CY2025. Any screen that compares it against a December-year company is comparing periods that differ by five months, during a stretch when Oracle’s capital spending was rising faster than at almost any large company on the market.

If you are pulling these figures programmatically, check the period start and end dates rather than the frame label. The mechanics are described in our note on how reported capex understates spending.

What would make this wrong

• Negative free cash flow is not a distress signal here. A company that borrows to build assets against contracted revenue will report negative free cash flow by construction. The measure is descriptive, not a verdict, and Oracle presents it without softening.
• Free cash flow as Oracle defines it deducts only capex. It does not deduct finance-lease principal or other financing-shaped obligations. A stricter definition would produce a larger negative number.
• Remaining performance obligations are not a schedule. $638 billion says what is contracted, not when it converts or at what margin. Concentration matters too, and the annual report discusses significant contracts without quantifying every counterparty.
• Interest expense understates the run rate. $4,599 million reflects a partial-year effect of fiscal 2026’s $43.0 billion issuance. The full-year cost is higher, all else equal.
• Depreciation on assets being built now has not arrived yet. Capital spending shows up in cash flow immediately and in earnings over years. The reported margin today does not yet carry the cost of what is currently under construction.
• These are audited annual figures, but the comparison years are as originally filed and may have been restated.

Check it yourself

The free cash flow table is in the liquidity section of the fiscal 2026 10-K, under non-GAAP measures. The senior notes sentence is in the interest expense discussion in the same document. Remaining performance obligations are stated in management’s discussion and detailed in Note 1.

Oracle also appears on two of our screens: it ranked sixth among companies whose capital spending exceeded operating cash flow in 2025, and it was the second-largest contributor to the increase in US corporate capital spending in our comparison of capex against buybacks.

If a figure here does not match the filing, tell us and it will be corrected on the article and on the corrections log, with the date.