Oracle Corp. (NYSE:ORCL)

The financial data reveals several notable trends concerning profitability, cost of capital, invested capital, and economic profit over the analyzed periods.

Net Operating Profit After Taxes (NOPAT)

The NOPAT fluctuated substantially over time, beginning at a moderate level, rising significantly in the subsequent year, then experiencing a sharp decline, before gradually recovering in the latest years. This indicates some volatility in operating performance, with a strong rebound observed from the low point to the last reported year.

Cost of Capital

A gradual upward trend is evident in the cost of capital, increasing steadily each year. This implies rising expenses associated with funding the company's operations, which could impact investment and financing decisions going forward.

Invested Capital

After an initial decrease in the early years, the invested capital began to increase notably in the later periods. This pattern suggests that after a phase of capital reduction or optimization, the company started expanding its capital base again, potentially to support growth or operational needs.

Economic Profit

The economic profit shows a highly fluctuating and predominantly negative trend. Despite a positive spike early in the analyzed timeframe, the metric turned negative in subsequent years and remained below zero, indicating that the company has been generating returns below its cost of capital in most periods. This highlights challenges in value creation during these years, partly due to rising cost of capital and inconsistent operational profitability.

Overall, the data suggests a complex financial landscape where operating profit recovery is countered by increasing capital costs and mixed returns on invested capital, leading to persistent economic losses in recent years. Strategic focus on managing capital efficiency and sustaining NOPAT growth appears critical.

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 exhibited significant volatility over the analyzed periods. Initially, it was negative at -134 million USD in 2020, followed by a substantial positive increase to 4,466 million USD in 2021. However, from 2022 onwards, economic profit turned negative again and deepened substantially, reaching values of -2,036 million USD in 2022, declining further to -3,060 million USD in 2023. Although there was a slight improvement in 2024 to -2,161 million USD, the trend remained negative with a marginal deterioration to -2,344 million USD in 2025. This pattern suggests considerable fluctuations in the company's value creation during this timeframe, with a peak in 2021 but consistent economic losses afterward.

Invested Capital

Invested capital demonstrated a mixed but overall growing trend. It started at 87,978 million USD in 2020, then decreased gradually over two years to a low of 77,262 million USD in 2022. Subsequently, invested capital experienced notable growth, rising sharply to 98,251 million USD in 2023. This uptrend continued in 2024 and 2025 with values reaching 101,930 million and 115,423 million USD, respectively. The increase in invested capital after 2022 indicates elevated resource commitments, potentially in pursuit of strategic growth or operational expansion.

Economic Spread Ratio

The economic spread ratio mirrored the trend of economic profit, reflecting profitability relative to invested capital. It was slightly negative at -0.15% in 2020, sharply rising to a positive 5.46% in 2021, aligning with the year of significant economic profit gain. However, from 2022 onward, the ratio turned negative again, deteriorating to -2.64% in 2022 and reaching its lowest point at -3.11% in 2023. Thereafter, it showed slight improvement but remained negative at -2.12% in 2024 and -2.03% in 2025. This indicates that the returns on invested capital were below cost for several years following the peak in 2021, suggesting challenges in generating economic value relative to capital invested.

Summary of Trends

Overall, the data reveals a significant positive performance spike in 2021, followed by a decline in economic profitability and returns on invested capital in subsequent years. Despite the negative economic profit and economic spread ratios in recent years, invested capital increased notably after 2022. This divergence suggests that while the company has expanded its asset base, it has struggled to generate returns that exceed the cost of capital during the latter part of the period under review.

The financial data over the reviewed periods reflects notable fluctuations in economic profit despite a consistent growth trend in adjusted revenues.

Adjusted Revenues

The adjusted revenues show a continuous upward trajectory, increasing from approximately $38.6 billion in 2020 to nearly $57.6 billion by 2025. This steady revenue growth suggests effective sales or service expansion, likely supported by market or product development initiatives.

Economic Profit

Economic profit exhibits significant volatility. After a negative figure of about -$134 million in 2020, there was a sharp improvement to a positive $4.5 billion in 2021. However, the subsequent years reveal a reversal to negative economic profits, with losses increasing to approximately -$3.1 billion by 2023. Though there was some reduction in losses in 2024, the figure worsened again modestly in 2025 to around -$2.3 billion. This pattern indicates challenges in sustaining profitability at an economic profit level despite revenue growth.

Economic Profit Margin

The economic profit margin mirrors the economic profit trend, with a negative margin of -0.35% in 2020 turning sharply positive to 10.8% in 2021. This was followed by a return to negative margins for the remaining periods, stabilizing around -4% from 2022 onwards. The consistent negative margins after 2021 may point to rising costs, investments, or other factors affecting operating efficiency and value creation.

Overall, while revenue growth is strong and consistent, the company faces ongoing difficulties in translating this growth into sustained positive economic profit and margin figures. This disparity highlights potential areas for management focus, such as cost control, operational efficiency, or strategic realignment to improve value generation.