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Oracle Corporation (ORCL)
:ORCL
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Oracle
(NYSE:ORCL)75Outperform
Positive Factors
AI Infrastructure
Oracle's participation in the Stargate Project, a massive $500B initiative, showcases its leadership in AI infrastructure development.
Revenue Growth
Oracle's total organic revenue growth is accelerating into double digits for the first time in a dozen years, highlighting its strong financial performance.
Negative Factors
Margins Pressure
Margins will likely remain under pressure if Oracle provides just raw AI compute for Stargate.
Oracle (ORCL) vs. S&P 500 (SPY)
Market Cap
$440.44B
Dividend Yield0.99%
Average Volume (3M)12.83M
Price to Earnings (P/E)38.5
Beta (1Y)1.53
Revenue Growth6.40%
EPS Growth12.83%
CountryUS
Employees159,000
SectorTechnology
Sector Strength48
IndustrySoftware
Share Statistics
EPS (TTM)4.09
Shares Outstanding2,796,956,000
10 Day Avg. Volume9,451,038
30 Day Avg. Volume12,832,312
Financial Highlights & Ratios
PEG Ratio3.00
Price to Book (P/B)N/A
Price to Sales (P/S)8.25
Price to Cash Flow (P/CF)86.90
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$194.38Price Target Upside23.44% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering26
Oracle Business Overview & Revenue Model
Company DescriptionOracle Corporation, headquartered in Austin, Texas, is a global leader in enterprise software and information technology solutions. The company specializes in developing and marketing database software and technology, cloud-engineered systems, and enterprise software products—particularly its own brands of database management systems. Oracle’s offerings span a comprehensive range of sectors including cloud computing, database management, application development, and business analytics, serving a vast array of industries worldwide.
How the Company Makes MoneyOracle makes money primarily through the sale of software licenses, cloud services, and hardware products. Its revenue model is heavily reliant on its cloud and license business, which includes software as a service (SaaS), platform as a service (PaaS), infrastructure as a service (IaaS), and software license updates and product support. A significant portion of Oracle's revenue also comes from its hardware business, which involves the sale of servers, storage, and network products. Additionally, Oracle generates income through consulting services and technical support. The company has established numerous strategic partnerships and alliances to bolster its cloud offerings, thereby enhancing its competitive position in the rapidly evolving technology landscape.
Oracle Financial Statement Overview
Summary
Oracle exhibits strong revenue growth and profitability with robust EBIT and EBITDA margins. However, high leverage is a concern, despite a strong ROE. Cash flow metrics show good cash earnings conversion, although there's a recent decline in free cash flow.Income Statement
Oracle has demonstrated strong revenue growth with a 10.6% increase in TTM compared to the previous annual period. The gross profit margin remains robust at 69.9% TTM. Net profit margin has improved to 21.2% TTM, reflecting operational efficiency. EBIT and EBITDA margins are healthy at 30.7% and 41.4% TTM, respectively, indicating solid profitability.88
Very Positive
Balance Sheet
The balance sheet shows a high debt-to-equity ratio of 6.45 TTM, highlighting significant leverage, which could pose a risk. However, the return on equity is impressive at 84.6% TTM, driven by strong profitability. The equity ratio is low at 9.3% TTM, indicating a leveraged capital structure.70
Positive
Cash Flow
Oracle's free cash flow has decreased by 19.2% TTM, but the operating cash flow to net income ratio is strong at 1.74, showing good cash conversion. The free cash flow to net income ratio is 0.82, suggesting robust cash generation relative to earnings, despite a drop in free cash flow.75
Positive
| Breakdown | |||||
| TTM | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 | Jun 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 54.93B | 52.96B | 49.95B | 42.44B | 40.48B | 39.07B | Gross Profit |
| 38.41B | 37.82B | 36.39B | 33.56B | 32.62B | 31.13B | EBIT |
| 16.84B | 15.35B | 13.67B | 15.84B | 15.65B | 14.15B | EBITDA |
| 22.74B | 21.58B | 18.90B | 18.96B | 18.57B | 17.12B | Net Income Common Stockholders |
| 11.63B | 10.47B | 8.50B | 6.72B | 13.75B | 10.13B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 10.66B | 10.66B | 10.19B | 21.90B | 46.55B | 43.06B | Total Assets |
| 140.98B | 140.98B | 134.38B | 109.30B | 131.11B | 115.44B | Total Debt |
| 94.47B | 94.47B | 90.48B | 75.86B | 84.25B | 71.60B | Net Debt |
| 84.02B | 84.02B | 80.72B | 54.48B | 54.15B | 34.36B | Total Liabilities |
| 131.74B | 131.74B | 132.83B | 115.06B | 125.16B | 102.72B | Stockholders Equity |
| 8.70B | 8.70B | 1.56B | -5.77B | 5.95B | 12.72B |
| Cash Flow | Free Cash Flow | ||||
| 9.54B | 11.81B | 8.47B | 5.03B | 13.75B | 11.57B | Operating Cash Flow |
| 20.29B | 18.67B | 17.16B | 9.54B | 15.89B | 13.14B | Investing Cash Flow |
| -11.10B | -7.36B | -36.48B | 11.22B | -13.10B | 9.84B | Financing Cash Flow |
| -6.38B | -10.55B | 7.91B | -29.13B | -10.38B | -6.13B |
Oracle Technical Analysis
Negative
157.47
Price Trends
168.58
Negative
174.14
Negative
157.32
Positive
Market Momentum
-2.02
Positive
37.81
Neutral
15.02
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ORCL, the sentiment is Negative. The current price of 157.47 is below the 20-day moving average (MA) of 171.46, below the 50-day MA of 168.58, and above the 200-day MA of 157.32, indicating a neutral trend. The MACD of -2.02 indicates Positive momentum. The RSI at 37.81 is Neutral, neither overbought nor oversold. The STOCH value of 15.02 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ORCL.
Oracle Risk Analysis
Oracle disclosed 30 risk factors in its most recent earnings report. Oracle reported the most risks in the “Tech & Innovation” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Oracle Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
81 Outperform | $2.89T | 31.30 | 30.64% | 0.80% | 15.04% | 12.38% | |
78 Outperform | $193.98B | 35.94 | 39.42% | ― | 11.02% | 4.96% | |
77 Outperform | $324.73B | 94.89 | 6.88% | 0.62% | 9.55% | -2.28% | |
75 Outperform | $440.44B | 38.54 | 84.57% | 0.99% | 6.40% | 12.83% | |
74 Outperform | $2.09T | 21.17 | 30.80% | 0.35% | 13.89% | 38.99% | |
67 Neutral | $234.79B | 39.40 | 22.06% | 2.65% | 1.45% | -20.56% | |
59 Neutral | $22.39B | 11.53 | -18.05% | 2.31% | 5.00% | -25.89% |
* Technology Sector Average
Performance Comparison
ORCL
Oracle
157.47
47.72
43.48%
ADBE
Adobe
446.03
-98.81
-18.14%
GOOGL
Alphabet Class A
170.92
38.73
29.30%
IBM
International Business Machines
253.21
67.51
36.35%
MSFT
Microsoft
388.61
-10.99
-2.75%
SAP
SAP AG
279.05
93.27
50.20%
Oracle Earnings Call Summary
Earnings Call Date: Dec 9, 2024 | % Change Since: -17.11% | Next Earnings Date: Mar 10, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong growth in cloud revenue, particularly in AI demand and infrastructure, and a significant increase in remaining performance obligations, indicating robust future revenue. However, challenges such as negative free cash flow, currency impact, and investment losses were noted. Overall, the positive aspects of strong revenue growth and future potential outweighed the financial challenges.Highlights
Strong Cloud Revenue Growth
Total cloud revenue reached $5.9 billion, with a 24% increase. IaaS revenue surged by 52%, while SaaS revenue grew by 10%. Cloud services and license support represented 77% of total revenue.
Record-Level AI Demand
Oracle Cloud Infrastructure revenue increased by 52%, driven by extraordinary growth in AI demand, with GPU consumption up 336%.
Significant Increase in RPO
Remaining performance obligation (RPO) grew by 50% to $97.3 billion. Cloud RPO grew nearly 80%, indicating strong future revenue potential.
Impressive Operating Income and Margin
Operating income grew by 10%, with an operating margin of 43%, up 60 basis points from the previous year.
Positive Outlook and Guidance
Oracle expects total cloud revenue to surpass $25 billion this fiscal year. Guidance for Q3 includes a total revenue growth of 9% to 11% in constant currency.
Advancements in AI Infrastructure
Oracle delivered the world's largest and fastest AI supercomputer, scaling up to 65,000 NVIDIA H200 GPUs, enhancing its AI infrastructure capabilities.
Lowlights
Negative Free Cash Flow
The free cash flow was negative $2.7 billion, despite a positive operating cash flow of $1.3 billion.
Currency Impact on Financials
Significant strengthening of the U.S. dollar led to a negative impact on revenue and EPS in USD terms for the upcoming quarter.
Investment Loss Affecting EPS
EPS guidance for Q3 is negatively impacted by $0.05 due to an investment loss in another company.
Company Guidance
In the Oracle Corporation's Q2 2025 earnings call, Safra Catz provided detailed guidance highlighting the company's strong financial performance and optimistic outlook. Total revenue reached $14.1 billion, marking a 9% increase from the previous year, with cloud services and license support accounting for 77% of total revenue. Specifically, the cloud segment saw a 24% increase, with $5.9 billion in revenue, driven by SaaS and IaaS growth of 10% and 52%, respectively. Oracle's remaining performance obligation (RPO) surged by 50% to $97.3 billion, reflecting robust demand and extended contract durations. The company anticipates full-year cloud revenue to exceed $25 billion, with continued acceleration expected in upcoming quarters. Operating income grew by 10%, achieving a 43% margin, while non-GAAP EPS rose by 10% to $1.47. Looking ahead, Oracle projects Q3 total revenue growth of 9% to 11% in constant currency and cloud revenue growth of 25% to 27%, underscoring the ongoing momentum in its cloud offerings and strategic partnerships.Oracle Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
Oracle’s Edward Screven to Retire After 38 Years
Neutral
Jan 13, 2025
Oracle announced that Edward Screven, Executive Vice President and Chief Corporate Architect, will be retiring after 38 years with the company. He will support the transition of his responsibilities until February 2025 and continue representing Oracle on Ampere Computing Holdings LLC’s Board of Directors, impacting the company’s strategic continuity.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.