Enterprise Value to FCFF (EV/FCFF)
Free Cash Flow to The Firm (FCFF)
Oracle Corp., FCFF calculation
US$ in millions
Based on: 10-K (reporting date: 2026-05-31), 10-K (reporting date: 2025-05-31), 10-K (reporting date: 2024-05-31), 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31).
A significant divergence is observed between the net cash provided by operating activities and the free cash flow to the firm (FCFF) over the analyzed period, particularly in the final two years. While operating cash flows demonstrate a strong growth trajectory, FCFF shifts from positive territory to a substantial deficit, indicating a massive increase in capital outflows that outweighs operating gains.
- Net Cash Provided by Operating Activities
- The cash flow from operations experienced a temporary contraction in 2022, falling to 9,539 million USD from 15,887 million USD in 2021. However, a consistent recovery followed, with values increasing steadily to 18,673 million USD by 2024 and accelerating to 31,977 million USD by 2026. This represents a robust and expanding capacity to generate cash from core business operations.
- Free Cash Flow to the Firm (FCFF)
- FCFF followed a similar initial dip in 2022, reaching 7,429 million USD, before recovering to a peak of 15,064 million USD in 2024. Starting in 2025, a sharp reversal occurs, with FCFF dropping to 2,572 million USD and subsequently collapsing to -20,281 million USD in 2026. This transition from positive to deeply negative cash flow indicates that the firm's investments or capital expenditures have drastically exceeded its operating cash generation.
- Analysis of the OCF-FCFF Divergence
- The widening gap between increasing operating cash flow and plummeting FCFF suggests a strategic shift toward aggressive capital investment. In 2026, while operating cash flow reached its highest point at 31,977 million USD, FCFF reached its lowest point at -20,281 million USD. This disparity implies that capital expenditures or other firm-level investments have scaled exponentially, consuming the entirety of the cash produced by operations and requiring additional funding to sustain the investment cycle.
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Interest Paid, Net of Tax
Oracle Corp., interest paid, net of tax calculation
US$ in millions
Based on: 10-K (reporting date: 2026-05-31), 10-K (reporting date: 2025-05-31), 10-K (reporting date: 2024-05-31), 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31).
2 2026 Calculation
Cash paid for interest, tax = Cash paid for interest × EITR
= 3,896 × 12.60% = 491
The analysis of cash expenditures for interest and the accompanying effective income tax rates reveals a general upward trend in net interest costs over the observed period, characterized by significant volatility in tax rates during the initial years.
- Cash Outflow for Interest
- Cash paid for interest, net of tax, exhibits a consistent increase from 2021 to 2024, rising from US$ 1,902 million to US$ 3,257 million. Although a decrease to US$ 2,966 million is observed in 2025, the expenditure is projected to reach its highest point of US$ 3,405 million by 2026, indicating an overall expansion in the cost of debt servicing over the six-year window.
- Effective Income Tax Rate Fluctuations
- The effective income tax rate experienced a sharp decline from 21.00% in 2021 to a period low of 6.80% in 2023. Subsequently, a trend of gradual normalization is observed, with the rate climbing to 10.90% in 2024 and reaching 12.60% by 2026. This indicates a significant reduction in the effective tax burden during the 2022-2023 interval followed by a steady recovery.
- Correlation Between Tax Rates and Interest Costs
- The net cash paid for interest is influenced by the tax shield provided by interest expenses. The period of lowest tax rates between 2022 and 2023 coincides with a period of rapid growth in net interest payments. As the effective tax rate begins to stabilize and increase from 2024 onward, the net cash impact of interest remains elevated, suggesting that the increase in gross interest obligations outweighs the marginal increase in tax-shield benefits.
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Enterprise Value to FCFF Ratio, Current
Oracle Corp., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | 484,937) |
| Free cash flow to the firm (FCFF) | (20,281) |
| Valuation Ratio | |
| EV/FCFF | — |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| Accenture PLC | 8.76 |
| Adobe Inc. | 9.86 |
| AppLovin Corp. | 32.37 |
| Cadence Design Systems Inc. | 55.72 |
| CrowdStrike Holdings Inc. | 150.81 |
| Datadog Inc. | 100.46 |
| International Business Machines Corp. | 19.53 |
| Intuit Inc. | 13.93 |
| Microsoft Corp. | 51.04 |
| Palantir Technologies Inc. | 137.07 |
| Palo Alto Networks Inc. | 77.08 |
| Salesforce Inc. | 10.68 |
| ServiceNow Inc. | 24.22 |
| Synopsys Inc. | 50.31 |
| Workday Inc. | 13.02 |
| EV/FCFF, Sector | |
| Software & Services | 39.10 |
| EV/FCFF, Industry | |
| Information Technology | 54.42 |
Based on: 10-K (reporting date: 2026-05-31).
1 Click competitor name to see calculations.
If the company EV/FCFF is lower then the EV/FCFF of benchmark then company is relatively undervalued.
Otherwise, if the company EV/FCFF is higher then the EV/FCFF of benchmark then company is relatively overvalued.
Enterprise Value to FCFF Ratio, Historical
Oracle Corp., historical EV/FCFF calculation, comparison to benchmarks
| May 31, 2026 | May 31, 2025 | May 31, 2024 | May 31, 2023 | May 31, 2022 | May 31, 2021 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Enterprise value (EV)1 | 615,134) | 677,116) | 470,583) | 412,025) | 234,771) | 256,153) | |
| Free cash flow to the firm (FCFF)2 | (20,281) | 2,572) | 15,064) | 11,499) | 7,429) | 15,654) | |
| Valuation Ratio | |||||||
| EV/FCFF3 | — | 263.29 | 31.24 | 35.83 | 31.60 | 16.36 | |
| Benchmarks | |||||||
| EV/FCFF, Competitors4 | |||||||
| Accenture PLC | — | 13.12 | 25.76 | 20.26 | 16.99 | 24.76 | |
| Adobe Inc. | — | 12.38 | 21.98 | 37.75 | 20.82 | 33.61 | |
| AppLovin Corp. | — | 33.81 | 49.47 | 20.62 | — | — | |
| Cadence Design Systems Inc. | — | 48.06 | 61.26 | 63.83 | 44.54 | 35.05 | |
| CrowdStrike Holdings Inc. | 82.30 | 67.26 | 81.46 | 38.65 | 96.36 | 141.43 | |
| Datadog Inc. | — | 43.12 | 52.45 | 68.76 | 66.00 | 198.40 | |
| International Business Machines Corp. | — | 19.86 | 20.11 | 15.27 | 16.47 | 13.10 | |
| Intuit Inc. | — | 29.77 | 36.79 | 31.28 | 32.85 | 48.64 | |
| Microsoft Corp. | 42.96 | 52.24 | 41.70 | 39.61 | 30.26 | 36.19 | |
| Palantir Technologies Inc. | — | 148.08 | 251.61 | 69.13 | 82.97 | 66.45 | |
| Palo Alto Networks Inc. | — | 35.88 | 34.69 | 28.15 | 29.30 | 32.74 | |
| Salesforce Inc. | 12.55 | 21.83 | 29.95 | 28.41 | 35.97 | 44.91 | |
| ServiceNow Inc. | — | 25.78 | 60.21 | 56.56 | 40.87 | 60.12 | |
| Synopsys Inc. | — | 60.75 | 56.95 | 55.87 | 30.82 | 38.59 | |
| Workday Inc. | 12.75 | 26.14 | 32.57 | 33.40 | 45.74 | 57.52 | |
| EV/FCFF, Sector | |||||||
| Software & Services | — | 43.37 | 38.24 | 34.90 | 29.15 | 32.35 | |
| EV/FCFF, Industry | |||||||
| Information Technology | — | 43.77 | 39.11 | 34.01 | 26.44 | 27.44 | |
Based on: 10-K (reporting date: 2026-05-31), 10-K (reporting date: 2025-05-31), 10-K (reporting date: 2024-05-31), 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31).
3 2026 Calculation
EV/FCFF = EV ÷ FCFF
= 615,134 ÷ -20,281 = —
4 Click competitor name to see calculations.
An analysis of the valuation metrics reveals a significant divergence between the enterprise value and the free cash flow to the firm over the observed period. While the enterprise value generally trended upward, the cash flow generation capability deteriorated sharply in the latter years, leading to an exponential increase in the valuation multiple.
- Enterprise Value Trends
- The enterprise value exhibited a general growth trajectory, increasing from 256,153 million in 2021 to a peak of 677,116 million in 2025. This represents a substantial expansion in the total market value of the entity's operations, despite a moderate contraction to 615,134 million by 2026.
- Free Cash Flow to the Firm (FCFF) Performance
- Cash flow generation demonstrated volatility followed by a severe decline. Following an initial dip in 2022 and a period of recovery that peaked in 2024 at 15,064 million, FCFF collapsed to 2,572 million in 2025. This downward trend culminated in a negative cash flow position of -20,281 million by 2026, indicating a transition from cash generation to a significant cash deficit.
- EV/FCFF Ratio Analysis
- The EV/FCFF ratio expanded drastically from 16.36 in 2021 to 263.29 in 2025. This escalation is the result of a compounding effect where the enterprise value increased while the denominator, FCFF, diminished rapidly. The ratio becomes inapplicable in 2026 due to the negative free cash flow, reflecting a disconnect between the company's market valuation and its immediate cash-generating capacity.
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