Oracle Corp. (NYSE:ORCL)

The analysis of the "Cloud and license business" segment over the reported periods reveals several notable trends in revenue, margin, and segment profit margin.

Revenues

There is a consistent upward trajectory in revenues from May 31, 2020 through May 31, 2025. Starting at approximately 32.5 billion US dollars in 2020, revenues increased each year, reaching 49.2 billion US dollars by 2025. The growth was steady, with larger increments observed particularly from 2022 onwards, indicating accelerating sales performance in this segment.

Margin

Absolute margin figures also exhibit a steady increase across the examined time frame. Margins rose from 21.6 billion US dollars in 2020 to 30.9 billion US dollars in 2025, reflecting strong expansion in profitability alongside revenue growth. This suggests effective cost management or improved operational efficiency accompanying the increase in sales.

Segment Profit Margin Percentage

The segment profit margin percentage displays a more variable trend compared to absolute figures. Beginning at 66.29% in 2020, the margin improved slightly to nearly 67.94% in 2021, before experiencing a gradual decline over subsequent years to 62.83% in 2025. This indicates that although margins in absolute terms increased, the ratio of profit to revenues narrowed, possibly due to competitive pressures, increased costs, or strategic investments within the segment.

In summary, the "Cloud and license business" segment shows robust revenue and margin growth over the period analyzed, accompanied by a modest decline in segment profit margin percentage. This overall positive financial performance is tempered somewhat by the decreasing margin ratio, which may warrant further investigation into cost structures or pricing strategies to ensure sustainable profitability.

The segment data for the hardware business demonstrates several notable trends over the analyzed periods. Revenue figures exhibit a gradual decline from a peak of $3,443 million in 2020 to $2,936 million in 2025, indicating a consistent reduction in sales volumes or pricing power within this segment. Despite the decrease in revenues, the margin in absolute terms remains relatively stable, fluctuating slightly between $1,878 million and $2,026 million, eventually settling at $1,918 million in 2025. This suggests effective cost control or improvements in operational efficiency that offset the lower revenue base.

Further emphasizing operational performance, the segment profit margin percentage shows a consistent upward trajectory across the years. Starting at 55.27% in 2020, it rises progressively to reach 65.33% by 2025. This increase in profit margin percentage implies that the segment has been able to enhance profitability relative to its revenue, likely through expense management, pricing strategies, or a shift in product mix favoring higher-margin offerings.

Revenues

Decline over time from $3,443 million in 2020 to $2,936 million in 2025, suggesting challenges in market demand or competitive pressures.

Absolute Margin

Relatively stable margin values, slightly fluctuating but mostly maintaining close to $1,900 million, indicating effective cost management amidst declining revenues.

Segment Profit Margin (%)

Steady increase from 55.27% to 65.33%, reflecting improved profitability and possibly greater operational efficiency within the hardware segment.

Overall, the hardware segment displays a scenario where declining sales revenue is counterbalanced by improved profit margins, resulting in sustained profitability. Strategic focus on margin enhancement appears to have mitigated the adverse impact of lower revenues over the reported years.

The analysis of the annual data for the Services business segment reveals distinct trends in revenues, margins, and segment profit margins over the six-year period.

Revenues

Revenues demonstrate fluctuations throughout the period. Starting at 3,106 million US dollars in 2020, there was a slight decrease in 2021 to 3,021 million. This was followed by a moderate increase in 2022 to 3,205 million. A significant surge occurred in 2023, with revenues reaching 5,594 million, which is approximately a 74.7% increase from the previous year. After this peak, revenues marginally declined to 5,431 million in 2024 and further to 5,233 million in 2025. Overall, revenues showed strong growth, especially between 2022 and 2023, but with some softening thereafter.

Margin (US$ in millions)

The margin in absolute terms exhibited a generally positive trend with occasional variability. Beginning at 450 million in 2020, the margin increased to 628 million in 2021 and 666 million in 2022. A notable jump to 1,104 million was recorded in 2023, aligning with the revenue surge in that year. However, the margin decreased to 916 million in 2024 before rising again to 993 million in 2025. These changes indicate that margin growth is not strictly proportional to revenue changes, suggesting variations in cost structure or operational efficiency year over year.

Segment Profit Margin (%)

The segment profit margin as a percentage displayed a generally strong performance with some volatility. It started at 14.49% in 2020, increased significantly to approximately 20.79% in 2021 and remained stable in 2022. A slight decline occurred in 2023 to 19.74%, followed by a more pronounced drop to 16.87% in 2024. In 2025, the profit margin recovered somewhat to 18.98%. The decline in profit margins in 2023 and 2024, despite high revenues and margins, indicates there may have been increased costs or investments impacting profitability during those years.

In summary, the Services business segment experienced a significant increase in revenues and margins around 2023, followed by a moderate decline in revenues and margins subsequently. Profit margins have generally remained robust but have shown susceptibility to fluctuations, especially after 2022. This suggests changes in the underlying cost structure or strategic spending that influenced profitability, despite strong top-line performance in the latter years.