VALUATION HIGHLIGHTS

1. Cloud services and license support constitutes 86% of the Trefis price estimate for Oracle's stock.
2. Cloud & On-Premise License constitutes 9% of the Trefis price estimate for Oracle's stock.

WHAT HAS CHANGED?

ORCL Stock Performance

ORCL stock has seen extremely strong gains of 210% from levels of $60 in early January 2021 to around $185 in early December 2024, vs. an increase of about 60% for the S&P 500 over this roughly four-year period.

Admirably, ORCL stock has outperformed the broader market in each of the last 4 years. Returns for the stock were 37% in 2021, -5% in 2022, and 31% in 2023. In comparison, returns for the S&P 500 have been 27% in 2021, -19% in 2022, and 24% in 2023.

Latest Earnings

For Q1 FY 2025 (fiscal ends in May), total revenues were $13.3 billion, up 7% y-o-y. Cloud Services and License Support revenues were $10.5 billion, up 10% y-o-y. Cloud License and On-Premise License increased by 8% y-o-y. The company reported adjusted earnings of $1.39 per share, up 17% y-o-y.

Impact of Coronavirus

IT software and services industries suffered from a fall in demand for software and web services at the start of the pandemic as consumers focused solely on essentials, not discretionary products. However, it recovered over the subsequent quarters, with companies having a portfolio of software and services aimed at remote collaboration benefitting the most.

Notably, the company posted total revenues of $53 billion in FY2024 — up 6% y-o-y.

BUSINESS SUMMARY

Oracle earns money through the sale of enterprise software and associated hardware. The company launched its Gen 2 cloud and Autonomous database to increase the 'as-a-service' component in its offerings.

Cloud services and license support (2024 revenue of $39.4 billion, 74% of total revenue)

Segment revenues are derived from the sale of subscriptions for Oracle Cloud Services and product upgrades.

Cloud license and on-premise license (2024 revenue of $5.0 billion, 10% of total revenue)

Segment revenues are derived from the sale of software licenses to be used on-premise or in the cloud.

Hardware (2024 revenue of $3.1 billion, 6% of total revenue)

Segment revenues are derived from the sale of hardware products and related software.

Services (2024 revenue of $5.4 billion, 10% of total revenue)

Segment revenues are derived from the sale of consulting and technical support services.