VALUATION HIGHLIGHTS

1. Cloud services and license support constitutes 81% of the Trefis price estimate for Oracle's stock.
2. Cloud & On-Premise License constitutes 12% of the Trefis price estimate for Oracle's stock.

WHAT HAS CHANGED?

Latest Earnings

For Q3 FY 2024 (ended February 2024), Total Revenues were $13.3 billion, up 7% y-o-y. Cloud Services and License Support revenues were $9.96 billion, up 12% y-o-y. Cloud License and On-Premise License decreased by 3% y-o-y. GAAP Operating Income was $3.8 billion, as compared to $3.3 billion in the year-ago period. GAAP Net Income was $2.4 billion - up from $1.9 billion.

Note: Oracle's FY'23 ended on May 31, 2023. Q3 FY'24 refers to the quarter that ended on February 29, 2024.

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 $42.4 billion in FY2022 - up 5% 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 (2022 revenue of $30.2 billion, c.71% 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 (2022 revenue of $5.9 billion, c.14% of total revenue)

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

Hardware (2022 revenue of $3.2 billion, c.7.5% of total revenue)

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

Services (2022 revenue of $3.2 billion, c.7.5% of total revenue)

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