Oracle Corp. (NYSE:ORCL)

The financial data reveals several notable trends in key performance metrics over the period from May 31, 2020, to May 31, 2025.

Net Operating Profit After Taxes (NOPAT)

NOPAT exhibits considerable fluctuations during the period. It increased significantly from 10,144 million USD in 2020 to a peak of 14,348 million USD in 2021, then sharply declined to 7,492 million USD in 2022. Subsequently, it recovered, rising to 10,160 million USD in 2023, followed by a steady increase to 14,158 million USD projected for 2025. This pattern suggests volatility in operational profitability with a strong recovery phase in the latter years.

Cost of Capital

The cost of capital shows a consistent upward trend throughout the observed years, increasing from 11.34% in 2020 to an anticipated 13.87% in 2025. This rise indicates a steadily growing required return on invested capital, which could be due to market conditions or changes in perceived risk.

Invested Capital

Invested capital decreased from 87,978 million USD in 2020 to 77,262 million USD by 2022, indicating a reduction in the capital base during that period. However, from 2023 onwards, invested capital increased significantly, reaching 115,423 million USD by 2025. This upward trend in invested capital in the latter years reflects substantial reinvestment or asset growth.

Economic Profit

Economic profit, representing the value created beyond the cost of capital, shows a mixed trend. Positive economic profit was recorded in 2020 (164 million USD) and significantly increased in 2021 (4,756 million USD), indicating value creation. However, from 2022 onward, economic profit turned negative, ranging between -1,738 million USD and -2,665 million USD through 2025. This negative economic profit during the latter years suggests that the company’s return on invested capital was insufficient to cover its cost of capital despite the rising NOPAT and invested capital.

Overall, the data reflects a period of operational profit volatility coupled with an increasing cost of capital and significant capital reinvestment. Despite recovering profitability in recent years, the consistent negative economic profit from 2022 onwards raises concerns about the efficiency of capital utilization relative to its 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 a significant fluctuation over the analyzed years. It rose sharply from 164 million USD in 2020 to 4,756 million USD in 2021, indicating a peak in value generation during that period. However, from 2022 onward, the economic profit turned negative, declining to -1,756 million USD and further deteriorating to -2,665 million USD in 2023. Although there is a slight improvement in 2024 to -1,738 million USD, the figure remains negative, with a minor further decline to -1,846 million USD in 2025. This trend suggests challenges in generating returns above the cost of capital in recent years.

Invested Capital

The invested capital demonstrates an overall upward trend, despite some variability. It decreased from 87,978 million USD in 2020 to 81,745 million USD in 2021 and further to 77,262 million USD in 2022. From 2023, invested capital increased steadily, reaching 98,251 million USD and continuing to 101,930 million USD in 2024, and peaking at 115,423 million USD in 2025. This growth in invested capital might indicate expansion or increased asset base despite the negative economic profit in latter years.

Economic Spread Ratio

The economic spread ratio aligns with the trend observed in economic profit, displaying significant volatility. It was near zero at 0.19% in 2020, surged to 5.82% in 2021, then turned negative at -2.27% in 2022 and further dipped to -2.71% in 2023. A gradual improvement is noted in 2024 and 2025, with the ratio reaching -1.7% and -1.6% respectively, yet remaining negative. This pattern indicates decreased efficiency in generating returns over the cost of capital after 2021, with some recovery attempts in the most recent years.

Adjusted Revenues

The adjusted revenues show a consistent upward trend over the entire period from May 31, 2020, to May 31, 2025. Beginning at 38,624 million US dollars in 2020, revenues increased steadily each year, reaching 57,586 million US dollars by 2025. This represents a significant growth in sales or core business activities, indicating expanding market presence or enhanced pricing strategies.

Economic Profit

Economic profit displays considerable volatility across the years. In 2020, economic profit was positive at 164 million US dollars and then surged sharply to 4,756 million in 2021. However, starting from 2022, economic profit turned negative and declined further, reaching -1,756 million US dollars in 2022 and continuing a downward trajectory through 2023, 2024, and 2025, with values of -2,665 million, -1,738 million, and -1,846 million respectively. This shift from positive to sustained negative economic profit suggests increasing operational costs, inefficiencies, or declining returns relative to capital employed.

Economic Profit Margin

The economic profit margin mirrors the pattern observed in economic profit. It initially rises sharply from 0.42% in 2020 to 11.51% in 2021, indicating improved profitability relative to adjusted revenues. However, from 2022 onward, the margin turns negative and declines progressively, reaching -5.25% in 2023 before slightly recovering to -3.20% in 2025. This negative margin trend implies that the company is generating losses relative to its revenue base in terms of economic profit, suggesting challenges in sustaining efficient use of capital despite growing revenues.

Overall Insights

Despite a solid increase in adjusted revenues over the five-year period, the economic profit and economic profit margin exhibit a marked decline starting in 2022. The company successfully increased its top-line figures but experienced deteriorating profitability on an economic profit basis. The initial peak in economic profit and margin in 2021 appears to be an outlier relative to the surrounding years, possibly influenced by extraordinary factors or short-term efficiencies. The subsequent persistent negative economic profit and margin suggest that the company must address cost management, capital efficiency, or other operational factors to improve sustainable profitability.