Invest Alpha

Oracle (ORCL)

The Company

Oracle Corporation builds and sells enterprise software (databases, business applications) and cloud infrastructure — combining SaaS applications (ERP, HCM, CX), its flagship Oracle Database and developer tools, and Oracle Cloud Infrastructure (OCI) for IaaS/PaaS. In recent years Oracle has pivoted aggressively toward cloud and AI-enabled services while continuing to sell on-premises licenses and related hardware/support.

Financials

  • Total revenue: $57.4 billion (up ~8% year over year).
  • Cloud services & license support: $44.0B.
  • Cloud license & on-premise license: $5.2B.
  • GAAP net income: $12.4B; Non-GAAP net income: $17.3B.
  • Operating cash flow (FY2025): $20.8B.
  • Remaining Performance Obligations (RPO) (Q4 FY25): reported up materially from prior year (company disclosed RPO growth in FY25 results).

TAM / CAGR

Oracle spans multiple markets — the two most relevant are enterprise software (SaaS/ERP/DB) and cloud computing (IaaS/PaaS):

  • Enterprise software market (global): ~USD 260–270 billion (base-year estimates vary by vendor); expected CAGR ≈ 12% into the late 2020s.
  • Global cloud computing / infrastructure market: larger and faster-growing — estimates place the market in the high hundreds of billions (e.g., mid-to-high $700B range in the mid-2020s) and projecting to exceed $1T+ by 2030, implying a mid-teens CAGR for infrastructure/cloud services. Oracle competes across both TAMs (applications + cloud infra).

Products

Offering (category)FY2025 revenue (approx)% of total revenue (approx)
Cloud services & license support (SaaS apps + license support)$44.0B~77%
Cloud license & on-premise license$5.2B~9%
Services (professional services, support not included in license support line)$~5.2B~9%
Hardware (engineered systems, servers, storage)~$2.9B~5%
Total$57.4B100%

Notes: “Cloud services & license support” bundles SaaS application subscription revenue together with support for installed licenses (the largest single bucket). Within the cloud bucket Oracle separately reports Applications (SaaS) vs Infrastructure (OCI/IaaS) growth — infrastructure traction (OCI consumption) has been especially strong in recent quarters. These numbers are Oracle’s FY2025 reported categories and approximate percentages calculated from the company’s FY2025 results.

Business Model

  • Software licensing + support: traditional high-margin on-premise licenses and annual support contracts (license support).
  • Cloud subscription & consumption: SaaS (Fusion ERP, NetSuite, HCM, CX) subscriptions plus IaaS/PaaS consumption on OCI (pay-as-you-go and committed contracts).
  • Services & hardware: professional services, implementation, and engineered hardware systems.
  • Enterprise go-to-market: large direct salesforce, cloud partnerships (including multi-cloud offerings), channel partners and system integrators, plus large multi-year enterprise contracts and data-center buildouts. Oracle aims to monetize migrations to cloud, platform services, and database multicloud offerings (Oracle Autonomous Database, Exadata Cloud@Customer, etc.).

Customers

Oracle’s customer base skews toward medium-to-large enterprises and public-sector organizations across industries (finance, retail, telecom, manufacturing, healthcare, and government). Notable customer types: very large enterprise ERP deployments (Fusion/NetSuite customers), cloud infrastructure customers consuming OCI for AI/compute workloads, and companies using Oracle Database (on-prem and multicloud). Oracle also signs large multi-billion-dollar cloud contracts and “cloud@customer” dedicated datacenter deals.

Competitors

  1. Microsoft (Azure, SQL Server, Dynamics 365) — competes with Oracle on cloud infrastructure (Azure vs OCI), databases and data platform services (Azure SQL, managed DB services) and enterprise apps (Dynamics 365 vs Oracle Fusion/NetSuite).
  2. Amazon Web Services (AWS) — primary competitor on cloud infrastructure, managed database services (RDS, Aurora), and data/AI infrastructure (EC2/GPU instances) that compete with OCI compute, storage, and managed DB offerings.
  3. SAP — direct competitor in enterprise applications (ERP/HCM/finance), where SAP S/4HANA and related cloud offerings compete with Oracle Fusion Cloud ERP and NetSuite for large enterprise ERP workloads.

(If you prefer a “cloud-first” competitor set, Google Cloud would replace SAP in the top-3 list for infrastructure/data/AI competition; for pure application competition, Salesforce and Workday are also relevant rivals in CRM/HCM niches.)

— Each of these companies competes with specific Oracle products: e.g., Dynamics/SAP vs Oracle Fusion/NetSuite (ERP), Azure/AWS/GCP vs OCI (IaaS/PaaS), and various managed DB offerings vs Oracle Database / Autonomous Database.

Founding History

Oracle was founded in 1977 by Larry Ellison, Bob Miner, and Ed Oates (initially as Software Development Laboratories, later Relational Software, Inc.). The company’s first major product was a commercial implementation of the relational database (the Oracle RDBMS). Over decades Oracle expanded by building enterprise applications, middleware and hardware, and by a long series of acquisitions (PeopleSoft, BEA, Sun/Java, NetSuite, Cerner, and others) — and, more recently, by pivoting aggressively into cloud infrastructure and cloud applications. Larry Ellison served as early CEO and CTO; today Oracle is run by a management team including CEO Safra Catz and continues to emphasize cloud, database, and enterprise applications

Management Comments

  • Cap Ex for 2026 expected to be 35 Bill $.
  • Expect to sign more multi Bill $ customers and RPO will exceed 500 Bill $
  • Cloud Infrastructure Revenue expected to grow 77% to 18 Bill $ in 2025, 32 Bill$ in 2026, 73, 114, 144 Bill $ already booked in the 455 Bill $ RPO.