Now I'd like to turn this call over to K.K., Senior Vice President, JPAC and Japan CFO.
Thank you, Nishio-san. Good afternoon, everyone, and welcome to Oracle Japan's earnings conference call. We made a strong start to fiscal year 2027 with solid growth and broad-based strength across our business. We saw strong performance across key industries including public sector communication, financial services, and manufacturing.
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Our cloud businesses continue to perform well with strong momentum across both Oracle Cloud Infrastructure and Oracle Fusion Cloud Applications Suite. We are helping customers modernize their IT infrastructure while also improving the core business processes that run their organizations.
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The ability to support both is an important strength of Oracle Japan and gives us multiple avenues for growth.
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At the same time, our established customer base remains a strong foundation for our business. Many customers continue to rely on Oracle to run their most critical systems.
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Our long-standing relationships and experience in supporting these operations position us well to help customers take the next step in their technology investments. This combination of cloud growth and a resilient core business remains one of our key strengths.
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AI adds a further dimension to this opportunity. We see AI not only as a source of new workloads, but also as a way to increase the value of our customers' existing data and business applications.
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By bringing AI together with trusted enterprise data and established business processes, we can help customers improve productivity and get more from the systems they already use.
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This is particularly relevant to our applications business, where AI can enhance the value of an integrated suite by helping customers work more effectively across their core business functions.
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We are also seeing customers put AI to work through our cloud and database services. In July, we announced that Japan's Ministry of Health, Labour and Welfare is building an AI platform using Oracle Autonomous AI Database and OCI to improve the efficiency of its information disclosure operations.
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The initial document search system is already operational, helping staff find relevant documents and previous cases more efficiently. This illustrates how our cloud database and AI capabilities can work together to address specific operational needs and make better use of information the organization already holds.
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As customers continue to modernize their systems and adopt AI, we believe these investments will create further opportunities across infrastructure, database services, and cloud applications. Our focus on helping customers translate those investments into business value while building sustainable growth across our business.
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Also, Oracle AI World 2026 will take place in Las Vegas from October 25- 28, showcasing our latest innovations in AI, cloud infrastructure, databases, and applications. Selected content will also be available online, and we encourage you to watch and learn more about Oracle, more about how Oracle is helping customers put AI to work.
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With that, let me turn to our financial results for the first quarter ended August 31, 2026. Total revenue was JPY 74,861,000,000 , up 13% year- over- year.
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Total cloud revenue was JPY 25,143,000,000 , up 31.7% and represented 34% of total revenue.
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Operating income was JPY 25,918,000,000, an increase of 22.7%.
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Net income was JPY 18,245,000,000 , an increase of 23.2%.
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These results provide a solid foundation for fiscal year 2027. Our priorities are to sustain momentum across our cloud infrastructure and application businesses, building on our customer relationships and help customers realize value from AI.
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With that, I turn this over for Q&A. Thank you very much.
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We have received a question from Tanaka-san of BofA . Two questions. We will start from the first one. Software license is growing, but is it due to large deals or is it a combination of multiple deals? And is this sustainable?
License revenue, always in the past also historically, has been a volatile business for us. As and when the customer requirements pile up, they come and buy additional licenses. In this particular quarter, there were not too many significant large deals. There were a few. There were one or two big ones. But other than that, it was generally robust demand across industries and enterprises. Nothing special contributed to this strong number. Is this sustainable?
I think as cloud, the revenue growth definitely will continue to be strong, whether it comes from licenses or cloud will sometimes interchange in between quarters. Overall, customers can use our licenses either on-premise or on cloud. That is what Oracle just wants to make sure that the customer gets value out of our products wherever he uses them.
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The second question from Tanaka. SG&A was JPY 7.1 billion. Are there any special factors included in this amount? And will you be able to maintain this level going forward? Please share with me the direction of SG&A.
SG&A expense is a result of operational efficiencies that we are gaining. As you can see from our headcount numbers that have dropped. Partly it is from efficiencies gained. And also there are some one-time reversal of expense accruals that also contributed to the number. Whether we can sustain these levels in the future, I think we definitely will be. The run rate SG&A expense will be lower than the past, obviously because of our headcount levels. And it definitely will be sustainable. We'll continue to look at opportunities to invest in people in the right areas. But I think we should be able to more or less maintain similar levels of headcount in the future.
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Next question is from Kikuchi-san of SMBC Nikko. The cloud revenue reached a record high in the previous quarter at JPY 2.6 billion. Were there any contributions from Alloy or timing of the payment? Were there any special factors?
I'm glad that you noticed that our cloud business is strong quarter- over- quarter. I think as we've been saying, we have deployed infrastructure in Japan, not only our own OCI infrastructure, but also the different Alloys and DRCCs that we have placed with our partners. A lot of those Alloys are starting to consume and giving us revenue, and that is one of the catalysts for the growth. I cannot say that the growth is attributed to Alloys, but Alloys are one of the factors that is contributing to the growth. Overall, in general, we see a very strong offtake for Oracle's cloud products in the market, and we see a lot of cloud migrations across different industries and multiple enterprises.
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Moving on to the next question from Kikuchi-san as well. This is about the headcount. The headcount is decreasing and the HR expense is also coming down. Can you give me the guidance for the end of second quarter?
I think I did respond to this question partially. I don't have a number for the second quarter. As I said, we will continue to look at efficiencies and we will continue to invest in the right areas. You will continue to see the company make progress in this direction, but I don't have an end of second quarter guidance.
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Next is a question from Mr. Henderson. This is about the HR expense. You mentioned that there was a one-time reversal, but can you give me a rough size of that?
I don't get into that kind of specifics. And it's not very relevant for our discussion. There are journal entries, we accrue journal entries the previous year. There is an estimate that we take and then if that doesn't materialize, we have to reverse the accrual. So it's an ordinary, very normal transaction. It just affected us this quarter, that's all. Partially, and that's not the only reason why the expense is down. As I said, expenses are down because headcount is down.
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Another question from Mr. Henderson. This is regarding a loan to the parent company. This was down by JPY 50 billion, and partially was allocated to the special dividend. The remaining balance is about JPY 160 billion, which will reach maturity in December. Has there been any changes in the cash demand by the parent company?
I don't think it relates to any cash demand from the parent company at all. It is just the way we have been parking our funds from I don't know how many years even before I became the CFO of this company. Even when Japan was negative interest rates, we used to get paid for keeping the money with the corporation. So we continued to do that. It's got nothing to do with the corporation's demand or their need for money at all.
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Moving on to the next question from Ayako-san, Sumitomo Mitsui DS Asset. Support business is coming down in terms of revenue, however, the profit is up by close to 40%. If you could give me the details, I understand that there is an impact from the type of the deal, such as outsourcing ratio and the timing of the acceptance, but if you could elaborate a little more, that will be helpful。
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Just to note that it says support business, but this is believed to be consulting service business.
I think it is consulting service because, again, I don't see support declining yet. This quarter was a decline, but as I said, our profits are better. We are looking at deploying AI as part of our service delivery, and that is leading to more efficient delivery of services apart from utilizing outsourced consultants as well. We just want to be nimble in the new world, and we want to adopt all the latest technologies to make sure that our customers get the benefit out of the Oracle products, and also they get benefit at the lowest cost possible。
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