Oracle Corp. (NYSE:ORCL)

Over the period from May 31, 2020, to May 31, 2025, the financial data reveals several notable trends in profitability, cost of capital, invested capital, and economic profit.

Net Operating Profit After Taxes (NOPAT)

NOPAT experienced a significant increase from 10,144 million US dollars in 2020 to a peak of 14,348 million in 2021. However, there was a sharp decline to 7,492 million in 2022, followed by a recovery to 10,160 million in 2023. Subsequently, NOPAT showed a consistent upward trend, reaching 11,940 million in 2024 and 14,158 million in 2025. Overall, despite fluctuations, the later years indicate a recovery and growth in operating profitability.

Cost of Capital

The cost of capital steadily increased over the entire period, starting at 11.67% in 2020 and rising to 14.28% by 2025. The increase was gradual but persistent, with costs moving upward every year. This indicates a rising expense associated with financing and capital usage, which can exert pressure on profitability and investment returns.

Invested Capital

Invested capital showed a declining trend from 87,978 million US dollars in 2020 to 77,262 million in 2022. This was followed by a marked increase beginning in 2023, with the amount rising to 98,251 million, then continuing upward to 101,930 million in 2024 and 115,423 million in 2025. This pattern suggests initial capital downsizing or divestment followed by increased investment or asset accumulation in later years.

Economic Profit

Economic profit experienced significant volatility throughout the period. It was slightly negative at -120 million in 2020, surging to a strong positive 4,479 million in 2021. After this peak, economic profit turned sharply negative, recording -2,023 million in 2022 and further declines to -3,042 million in 2023. Although there was some improvement in 2024 to -2,142 million, it slightly worsened again to -2,322 million in 2025. This trend highlights challenges in generating returns above the cost of capital, as the rising cost of capital and fluctuating NOPAT affected value creation negatively in the latter years.

In summary, the data reflects an initially robust operating profit and economic profit position, followed by volatility and challenges in maintaining economic profitability, likely linked to rising cost of capital and fluctuating invested capital. The recovery in NOPAT after 2022 is a positive sign, though economic profit remains negative, indicating ongoing pressure to generate returns that exceed the increasing capital cost.

Net Income Trend

The net income showed a rising trend from 2020 to 2021, increasing from 10,135 million USD to 13,746 million USD. However, there was a significant decline in 2022, with net income dropping to 6,717 million USD. Following this decline, the net income gradually increased over the next three years, reaching 8,503 million USD in 2023, 10,467 million USD in 2024, and 12,443 million USD in 2025. Overall, despite the dip in 2022, the net income demonstrates recovery and growth toward the latter years.

Net Operating Profit After Taxes (NOPAT) Trend

NNOPAT also increased from 10,144 million USD in 2020 to a peak of 14,348 million USD in 2021. It similarly experienced a large decrease in 2022 to 7,492 million USD. From 2023 onward, NOPAT consistently rose, reaching 10,160 million USD in 2023, 11,940 million USD in 2024, and culminating at 14,158 million USD in 2025. This suggests a strong rebound in operational profitability and effective tax management.

Comparative Insights

The patterns for both net income and NOPAT are aligned, with a peak in 2021, a notable downturn in 2022, and a steady recovery through the following years. NOPAT values are consistently close to net income values, indicating relatively stable operating efficiency and tax impact. The data imply that the company managed to improve operating results over time despite the intermediate disturbance in 2022.

Provision for (benefit from) income taxes

The provision for income taxes displays a fluctuating trend over the periods observed. It started at a positive amount of 1928 million USD in May 31, 2020, then dropped sharply to a negative value of -747 million USD in May 31, 2021, suggesting a tax benefit for that year. This was followed by a return to positive values with 932 million USD in 2022 and steady increases in subsequent years, reaching 1717 million USD in May 31, 2025. The data indicates variability but an overall upward trend after the negative dip.

Cash operating taxes

Cash operating taxes present a generally increasing trajectory from May 31, 2020, through May 31, 2025. Starting at 3101 million USD in 2020, the amount decreased in 2021 to 2197 million USD, but then steadily increased each year thereafter, reaching a peak of 4137 million USD in 2024, with a slight decrease to 4134 million USD in 2025. This suggests progressively higher cash tax outflows during the later years, indicative of either higher taxable income or changes in tax payments.

Total reported debt & leases

The total reported debt and leases exhibited an overall increasing trend from 2020 through 2025. Starting at $73,695 million in 2020, the amount rose to $87,027 million in 2021, followed by a decline to $79,517 million in 2022. Thereafter, a consistent upward movement occurred, reaching $95,330 million in 2023, slightly declining to $94,414 million in 2024, and finally increasing substantially to $108,952 million in 2025. This pattern indicates fluctuating debt exposures with a notable increase in the last reported period.

Total Oracle Corporation stockholders’ equity (deficit)

Stockholders’ equity showed significant volatility and a considerable turnaround over the years. Initially, equity stood at $12,074 million in 2020, sharply declining to $5,238 million in 2021 and turning into a deficit of -$6,220 million by 2022. Subsequently, equity recovered to a positive $1,073 million in 2023, then improved substantially to $8,704 million in 2024, and reached $20,451 million in 2025. This indicates a transition from financial distress or negative equity toward a stronger equity position, reflecting improved capital structure and retained earnings or other comprehensive income gains.

Invested capital

Invested capital decreased from $87,978 million in 2020 to $77,262 million in 2022, indicating reductions or restructuring in capital allocation during this period. However, from 2022 onward, invested capital rose markedly to $98,251 million in 2023, continuing to $101,930 million in 2024, and further to $115,423 million in 2025. This evolution suggests renewed investment activities and potentially greater operational scale or asset acquisition in the latter years. The confluence of rising invested capital and improving equity alongside increasing debt points to an expansion phase with leveraged financing.

Economic Profit

The economic profit shows significant fluctuations over the periods analyzed. Starting with a negative value of -120 million USD in 2020, it sharply increased to 4,479 million USD in 2021, indicating a period of strong value creation. However, from 2022 onwards, the economic profit reverted to negative territory and continued to worsen, reaching -3,042 million USD in 2023, then improving slightly but remaining negative at -2,142 million USD in 2024 and -2,322 million USD in 2025. This pattern suggests challenges in generating economic profit consistently over the recent years.

Invested Capital

Invested capital shows an overall upward trend throughout the period. It decreased from 87,978 million USD in 2020 to 77,262 million USD in 2022, suggesting a period of disinvestment or asset reduction. However, from 2022 onwards, invested capital increased substantially, reaching 98,251 million USD in 2023, 101,930 million USD in 2024, and further to 115,423 million USD in 2025. This rise indicates renewed investment efforts or asset expansion during the later years.

Economic Spread Ratio

The economic spread ratio follows a trend similar to the economic profit. It was negative at -0.14% in 2020, then sharply improved to a positive 5.48% in 2021, demonstrating significant value creation above the cost of capital. However, from 2022 onwards, the ratio turned negative again, showing continuous decline from -2.62% in 2022 to -3.10% in 2023. It improved marginally but remained negative at -2.10% in 2024 and -2.01% in 2025, indicating persistent challenges in generating returns above the capital cost.

Revenues

The adjusted revenues exhibit a consistent upward trend over the period from May 31, 2020, to May 31, 2025. Revenues increased steadily from 38,624 million USD in 2020 to 57,586 million USD in 2025, indicating strong growth in the company's top-line performance.

Economic Profit

The economic profit demonstrates significant volatility throughout the analyzed years. Starting with a negative value of -120 million USD in 2020, it rose sharply to a positive peak of 4,479 million USD in 2021. However, from 2022 onwards, the economic profit declined substantially, registering negative figures again from 2022 to 2025. The losses reached their lowest points in 2023 and 2025, around -3,042 million USD and -2,322 million USD respectively, indicating challenges in generating economic profit despite revenue growth.

Economic Profit Margin

The economic profit margin mirrors the trend of economic profit, beginning with a slight negative margin of -0.31% in 2020, improving significantly to 10.84% in 2021. Subsequently, the margin deteriorated, becoming negative and fluctuating between approximately -4% and -6% from 2022 through 2025. This decline suggests increasing costs or other financial pressures impacting profitability relative to revenues.

Overall Insights

The data reflects a scenario where revenues are growing steadily but economic profit and its corresponding margin are not following the same pattern. The positive spike in 2021 in both economic profit and margin might indicate a one-time event or exceptional performance that was not sustained in subsequent years. The persistent negative economic profit and margin from 2022 onwards highlight the need for addressing cost structures, operational efficiency, or other factors to restore overall profitability.