⚠ $288 Billion of Leases Not Yet BegunHigh threat

Oracle (ORCL) — threat to the moat

Oracle has signed $288 billion of data center leases that have not started, nearly as much as everything on its balance sheet, for longer than its customers have committed.

The largest number in Oracle's accounts is not on its balance sheet. At the end of August 2026 Oracle had $288 billion of additional lease commitments, substantially all related to data centers, expected to commence between the second quarter of fiscal 2027 and fiscal 2029, for terms of fifteen to nineteen years1. Its total assets on the same date were $303,259 million2.

Lease commitments not yet commenced ($bn)43.4May 202599.8Aug 2025248Nov 2025261Feb 2026260May 2026288Aug 2026Oracle Forms 10-K FY2025-FY2026 and 10-Q Q1 FY2026 to Q1 FY2027
Six times as large in fifteen months.

The figure has grown faster than anything else Oracle reports. It was $43.4 billion in May 20253, $99.8 billion in August 20254, $248 billion in November 20255, $261 billion in February 20266, $260 billion in May 20267 and $288 billion in August8. It is about 2.3 times Oracle's borrowings9.

The problem is the length of the promise against the length of the revenue. Oracle's annual report says the terms, renewal options and pricing of its long-term data center leases "typically do not align with the duration and pricing of customer contracts"10. A lease of fifteen to nineteen years is funding customer contracts that, on Oracle's own timing, deliver most of their revenue within five years11.

Some of the risk is already visible. One of the leases carries an Oracle guarantee of up to $3.3 billion of the lessor's borrowing, maturing in September 202612. Operating lease cost was $2,794 million in fiscal 2026 against $1,159 million in fiscal 202413, and will rise sharply as the new leases begin.

The leases already on the balance sheet show the direction. Oracle recognised $30,190 million of operating lease liabilities and $7,701 million of finance lease liabilities at the end of May 202614, and obtained $18,246 million of operating and $4,946 million of finance lease assets in fiscal 2026 alone15. The weighted average remaining term of its operating leases rose to 12 years from 1016, and the discount rate to 5.7% from 5.3%17. The leases are getting longer and more expensive at the same time.

The timing is close. The leases are generally expected to commence between the second quarter of fiscal 2027 and fiscal 202918, so the rent will begin arriving while most of the backlog is still more than a year away. Oracle's other purchase obligations, largely for data center power, totalled $13,309 million at the end of May 202619.

This is the threat most likely to decide Oracle's fate. The number to follow is lease commitments against remaining performance obligations; if leases keep growing while new bookings slow, Oracle will be renting buildings for longer than its customers have agreed to use them.

The number that tests this threat
Reported
Lease commitments not yet commenced
$288bn (Aug 2026), from $260bn in May

The promise to landlords; growth faster than new bookings would mean Oracle is renting capacity ahead of its customers.

Source: Oracle Form 10-Q, Q1 FY2027 ↗
References
  1. ReportedAt the end of August 2026 Oracle had $288 billion of additional lease commitments, substantially all related to data centers, expected to commence between the second quarter of fiscal 2027 and fiscal 2029, for terms of fifteen to nineteen years.
    Oracle Form 10-Q for the quarter ended 31 August 2026 - segments, leases not yet commenced, the ATM share programme, RPO timing and shares outstanding. — Q1 FY2027 · publ. 11 September 2026 · source ↗
  2. ReportedIts total assets on the same date were $303,259 million.
    Oracle first-quarter fiscal 2027 results release, Form 8-K exhibit 99.1, with supplemental tables - income statement, cash flow statement and balance sheet. — Q1 FY2027 · publ. 10 September 2026 · source ↗
  3. ReportedIt was $43.4 billion in May 2025, $99.8 billion in August 2025, $248 billion in November 2025, $261 billion in February 2026, $260 billion in May 2026 and $288 billion in August.
    Oracle Form 10-K for fiscal 2025 - revenue by ecosystem, lease commitments, employees and borrowings. — FY2025 · publ. June 2025 · source ↗
  4. ReportedIt was $43.4 billion in May 2025, $99.8 billion in August 2025, $248 billion in November 2025, $261 billion in February 2026, $260 billion in May 2026 and $288 billion in August.
    Oracle Form 10-Q for the quarter ended 31 August 2025 - lease commitments not yet commenced. — Q1 FY2026 · publ. September 2025 · source ↗
  5. ReportedIt was $43.4 billion in May 2025, $99.8 billion in August 2025, $248 billion in November 2025, $261 billion in February 2026, $260 billion in May 2026 and $288 billion in August.
    Oracle Form 10-Q for the quarter ended 30 November 2025 - lease commitments not yet commenced. — Q2 FY2026 · publ. December 2025 · source ↗
  6. ReportedIt was $43.4 billion in May 2025, $99.8 billion in August 2025, $248 billion in November 2025, $261 billion in February 2026, $260 billion in May 2026 and $288 billion in August.
    Oracle Form 10-Q for the quarter ended 28 February 2026 - lease commitments not yet commenced. — Q3 FY2026 · publ. March 2026 · source ↗
  7. ReportedIt was $43.4 billion in May 2025, $99.8 billion in August 2025, $248 billion in November 2025, $261 billion in February 2026, $260 billion in May 2026 and $288 billion in August.
    Oracle Corporation Form 10-K for fiscal 2026 (year ended 31 May 2026) - financial statements and notes: income statement, cash flow, borrowings, leases, equity and commitments. — FY2026 · publ. 22 June 2026 · source ↗
  8. ReportedIt was $43.4 billion in May 2025, $99.8 billion in August 2025, $248 billion in November 2025, $261 billion in February 2026, $260 billion in May 2026 and $288 billion in August.
    Oracle Form 10-Q for the quarter ended 31 August 2026 - segments, leases not yet commenced, the ATM share programme, RPO timing and shares outstanding. — Q1 FY2027 · publ. 11 September 2026 · source ↗
  9. Moat Explorer calcIt is about 2.3 times Oracle's borrowings.
    Moat Explorer calculation from Oracle's reported figures ($ millions unless stated; fiscal years end 31 May). Revenue lines: software support 19,804 / 19,365 - 1 = 2.3% (FY2022-FY2026); support share 19,804 / 67,357 = 29.4%; support Q1 FY2027 4,895 / 4,955 - 1 = -1.2%; licences FY2026 4,737 / 5,201 - 1 = -8.9%; licences Q1 FY2027 655 / 766 - 1 = -14.5%; licences FY2017 to FY2026 4,737 / 6,523 - 1 = -27.4%; fourth-quarter licences 1,881 / 4,737 = 39.7%. Software (licence plus support) FY2022 5,878 + 19,365 = 25,243; FY2023 5,779 + 19,426 = 25,205; FY2026 24,541 / 24,724 - 1 = -0.7%; software share 24,541 / 67,357 = 36.4%. Cloud infrastructure FY2026 18,101 / 10,234 - 1 = 76.9%; FY2024 to FY2026 18,101 / 6,840 = 2.6 times; share 18,101 / 67,357 = 26.9%; Q1 FY2027 share 7,388 / 19,345 = 38.2%; annual run rate 7,388 x 4 = 29,552. Cloud applications FY2025 14,272 / 12,934 - 1 = 10.3%; FY2026 15,888 / 14,272 - 1 = 11.3%; share 15,888 / 67,357 = 23.6%; trailing twelve months 15,888 - 3,839 + 4,219 = 16,268. Applications ecosystem revenue 18,172 / 16,651 - 1 = 9.1%; 19,383 / 18,172 - 1 = 6.7%. Hardware segment margin 2,017 / 3,084 = 65.4% (FY2026); 1,709 / 4,152 = 41.2% (FY2017); 1,903 / 3,443 = 55.3% (FY2020); 1,932 / 3,274 = 59.0% (FY2023); 452 / 774 = 58.4% (Q1 FY2027); hardware revenue 3,084 / 4,152 - 1 = -25.7%; 3,084 / 5,205 - 1 = -40.7%; share 3,084 / 67,357 = 4.6%. Services margin 1,533 / 5,743 = 26.7% (FY2026); 993 / 5,233 = 19.0% (FY2025); 698 / 3,359 = 20.8% (FY2017); 450 / 3,106 = 14.5% (FY2020); 1,104 / 5,594 = 19.7% (FY2023); 445 / 1,414 = 31.5% (Q1 FY2027); services growth 5,743 / 5,233 - 1 = 9.7%; share 5,743 / 67,357 = 8.5%; revenue per services employee 5,743 / 34,000 = about $169,000. Cloud and software segment margin 20,801 / 30,452 = 68.3% (FY2017); 23,169 / 34,101 = 67.9% (FY2021); 26,126 / 41,086 = 63.6% (FY2023); 28,514 / 44,464 = 64.1% (FY2024); 30,930 / 49,230 = 62.8% (FY2025); 34,468 / 58,530 = 58.9% (FY2026); 7,691 / 12,907 = 59.6% (Q1 FY2026); 9,358 / 17,157 = 54.5% (Q1 FY2027); segment expenses 16,850 / 8,783 - 1 = 91.8%; segment revenue 58,530 / 44,464 - 1 = 31.6%; Q1 segment revenue 17,157 / 12,907 - 1 = 32.9%. Revenue growth 67,357 / 57,399 - 1 = 17.3%; FY2022 to FY2026 67,357 / 42,440 - 1 = 58.7%; Cerner share of FY2023 revenue 5,900 / 49,954 = 11.8%. Research and development 10,272 / 5,524 = 1.9 times; 10,272 / 67,357 = 15.3%. Sales and marketing 8,274 / 52,961 = 15.6% (FY2024); 8,651 / 57,399 = 15.1% (FY2025); 8,331 / 67,357 = 12.4% (FY2026); 8,331 / 8,651 - 1 = -3.7%; revenue per dollar of selling 52,961 / 8,274 = 6.4 and 67,357 / 8,331 = 8.1. Operating margin 15,353 / 52,961 = 29.0%; 17,678 / 57,399 = 30.8%; 20,606 / 67,357 = 30.6%; before amortisation (15,353 + 3,010) / 52,961 = 34.7%, (17,678 + 2,307) / 57,399 = 34.8%, (20,606 + 1,671) / 67,357 = 33.1%; amortisation 1,671 / 67,357 = 2.5%; non-GAAP less GAAP operating income 28.9 - 20.6 = 8.3 bn. Headcount 162,000 - 141,000 = 21,000, 21,000 / 162,000 = 13%. Headcount against the fiscal 2023 peak 164,000 - 141,000 = 23,000. Hardware FY2015 to FY2026 3,084 / 5,205 - 1 = -40.7%. Amortisation Q1 420 - 202 = 218. Stock compensation plus restructuring FY2026 4,811 + 1,838 = 6,649. Americas 44,478 / 36,339 - 1 = 22.4%; Americas share 23,679 / 42,440 = 55.8% (FY2022), 33,122 / 52,961 = 62.5% (FY2024), 44,478 / 67,357 = 66.0% (FY2026), 13,711 / 19,345 = 70.9% (Q1 FY2027); Asia Pacific 7,582 / 6,750 - 1 = 12.3%; EMEA plus Asia Pacific Q1 FY2027 3,726 + 1,908 = 5,634. US long-lived assets 102,717 / 45,439 = 2.3 times. Free cash flow FY2025 20,821 - 21,215 = -394; FY2024 18,673 - 6,866 = 11,807. Capital expenditure share of revenue 6,866 / 52,961 = 13%; 21,215 / 57,399 = 37%; 55,663 / 67,357 = 83%; 28,499 / 19,345 = 147%. Property added 127,845 - 99,957 = 27,888. Q1 FY2027 operating cash flow excluding prepayments 23,103 - 11,363 = 11,740; prepayments share 11,363 / 23,103 = 49%; free cash flow excluding prepayments -5,396 - 11,363 = -16,759. Borrowings 130,105 / 87,202 - 1 = 49%; net debt May 2025 92,568 - 10,786 - 417 = 81,365; May 2026 129,541 - 31,289 - 605 = 97,647; August 2026 7,625 + 117,712 - 36,369 - 708 = 88,260. Interest 1,428 / 923 - 1 = 55%; interest over operating income 1,428 / 6,728 = 21%. Leases not yet commenced over borrowings 288 / 125.3 = 2.3 times; over total assets 288 / 303.3 = 95%. Depreciation 3,156 / 1,351 = 2.3 times. Diluted shares 3,000 / 2,823 - 1 = 6.3%, 3,000 - 2,823 = 177 million; Ellison 1,158.2 / 3,023.7 = 38.3%; pledged 346 / 1,158 = 30%. Remaining performance obligations: 664 / 138 = 4.8 times; 664 / 455 - 1 = 46%; next twelve months 12% x 638 = 77 bn and 13% x 664 = 86 bn; beyond 36 months 100% - 13% - 37% = 50%; quarterly increases 455 - 138 = 317, 523 - 455 = 68, 553 - 523 = 30, 638 - 553 = 85, 664 - 638 = 26. Targets: 225 / 67.357 = 3.3 times; 225 - 24.5 = about 200 bn; 144 / 18 = 8 times; 20 / 2.4 = 8.3 times; Q1 FY2027 revenue 19,345 / 90,000 = 21.5% of guidance. Other: total assets 303,259 - 261,759 = 41,500 in one quarter; revenue FY2026 against FY2023 67,357 / 49,954 - 1 = 34.8%; cloud infrastructure Q1 FY2027 over Q4 FY2026 7,388 - 5,787 = 1,601; quarterly steps 4,079 - 3,347 = 732, 4,888 - 4,079 = 809, 5,787 - 4,888 = 899; cloud applications share 3,839 / 14,926 = 25.7% (Q1 FY2026) and 4,219 / 19,345 = 21.8% (Q1 FY2027); dividends over support 5,787 / 19,804 = 29.2%; interest, research and dividends 4,599 + 10,272 + 5,787 = 20,658; support FY2015 to FY2026 19,804 - 18,847 = 957; US revenue share 39,835 / 67,357 = 59.1%. Trailing twelve months to August 2026: revenue 67,357 - 14,926 + 19,345 = 71,776; net income 17,087 - 2,927 + 4,760 = 18,920; diluted EPS 5.83 - 1.01 + 1.56 = 6.38; P/E 421,930 / 18,920 = 22.3; P/S 421,930 / 71,776 = 5.88 - cash flow, capital spending, debt, leases, shares and backlog. — FY2015-Q1 FY2027 · publ. September 2026 · source ↗
    Method: Arithmetic on figures reported in Oracle's Forms 10-K and 10-Q, results releases and market data; operands shown in the source line.
  10. ReportedOracle's annual report says the terms, renewal options and pricing of its long-term data center leases "typically do not align with the duration and pricing of customer contracts".
    Oracle Corporation Form 10-K for fiscal 2026 (year ended 31 May 2026) - Item 1A risk factors: customer concentration and credit, multicloud, lease terms, credit ratings, export rules. — FY2026 · publ. 22 June 2026 · source ↗
  11. ReportedA lease of fifteen to nineteen years is funding customer contracts that, on Oracle's own timing, deliver most of their revenue within five years.
    Oracle Corporation Form 10-K for fiscal 2026 (year ended 31 May 2026) - Item 7 MD&A and segment note: revenue by line, segment margins, geography and remaining performance obligations. — FY2026 · publ. 22 June 2026 · source ↗
  12. ReportedOne of the leases carries an Oracle guarantee of up to $3.3 billion of the lessor's borrowing, maturing in September 2026.
    Oracle Corporation Form 10-K for fiscal 2026 (year ended 31 May 2026) - notes on borrowings, leases, commitments and guarantees. — FY2026 · publ. 22 June 2026 · source ↗
  13. ReportedOperating lease cost was $2,794 million in fiscal 2026 against $1,159 million in fiscal 2024, and will rise sharply as the new leases begin.
    Oracle Corporation Form 10-K for fiscal 2026 (year ended 31 May 2026) - notes on borrowings, leases, commitments and guarantees. — FY2026 · publ. 22 June 2026 · source ↗
  14. ReportedOracle recognised $30,190 million of operating lease liabilities and $7,701 million of finance lease liabilities at the end of May 2026, and obtained $18,246 million of operating and $4,946 million of finance lease assets in fiscal 2026 alone.
    Oracle Corporation Form 10-K for fiscal 2026 (year ended 31 May 2026) - notes on borrowings, leases, commitments and guarantees. — FY2026 · publ. 22 June 2026 · source ↗
  15. ReportedOracle recognised $30,190 million of operating lease liabilities and $7,701 million of finance lease liabilities at the end of May 2026, and obtained $18,246 million of operating and $4,946 million of finance lease assets in fiscal 2026 alone.
    Oracle Corporation Form 10-K for fiscal 2026 (year ended 31 May 2026) - notes on borrowings, leases, commitments and guarantees. — FY2026 · publ. 22 June 2026 · source ↗
  16. ReportedThe weighted average remaining term of its operating leases rose to 12 years from 10, and the discount rate to 5.7% from 5.3%.
    Oracle Corporation Form 10-K for fiscal 2026 (year ended 31 May 2026) - notes on borrowings, leases, commitments and guarantees. — FY2026 · publ. 22 June 2026 · source ↗
  17. ReportedThe weighted average remaining term of its operating leases rose to 12 years from 10, and the discount rate to 5.7% from 5.3%.
    Oracle Corporation Form 10-K for fiscal 2026 (year ended 31 May 2026) - financial statements and notes: income statement, cash flow, borrowings, leases, equity and commitments. — FY2026 · publ. 22 June 2026 · source ↗
  18. ReportedThe leases are generally expected to commence between the second quarter of fiscal 2027 and fiscal 2029, so the rent will begin arriving while most of the backlog is still more than a year away.
    Oracle Form 10-Q for the quarter ended 31 August 2026 - segments, leases not yet commenced, the ATM share programme, RPO timing and shares outstanding. — Q1 FY2027 · publ. 11 September 2026 · source ↗
  19. ReportedOracle's other purchase obligations, largely for data center power, totalled $13,309 million at the end of May 2026.
    Oracle Corporation Form 10-K for fiscal 2026 (year ended 31 May 2026) - notes on borrowings, leases, commitments and guarantees. — FY2026 · publ. 22 June 2026 · source ↗
Sources
Generated September 25, 2026