Oracle Corporation reported an exceptional fourth quarter for fiscal year 2024, showcasing a substantial shift towards cloud service dominance. The company achieved revenues of $14.3 billion, marking a year-over-year increase of 5%. Notably, cloud revenue, excluding Cerner, grew by 23%, underscoring the strong demand for Oracle’s cloud infrastructure and services. Management emphasizes that this quarter was driven by the largest sales contract in company history, largely attributed to AI and cloud offerings. With record RPO of $98 billion—a 44% year-over-year increase—Oracle is strategically positioning itself for robust future growth, signaling confidence to investors about ongoing market penetration and business scalability.
Key Performance Indicators
Revenue
14.29B
QoQ: 7.58% | YoY:3.26%
Gross Profit
9.62B
67.34% margin
QoQ: 2.23% | YoY:-4.80%
Operating Income
4.88B
QoQ: 30.11% | YoY:13.57%
Net Income
3.14B
QoQ: 30.95% | YoY:-5.27%
EPS
1.14
QoQ: 31.03% | YoY:-7.32%
Revenue Trend
Margin Analysis
Key Insights
Revenue growth exceeded expectations at 5% YoY and demonstrated healthy sequential growth.
The decline in net income is noted to be primarily due to elevated tax rates, which decreased the effective tax rate from 20.1% this quarter compared to last year's 9.2%.
Operating margin improved to 47%, reflecting operational efficiencies coupled with increased cloud service profitability.
### Year-over-Year and Quarter-over-Quarter Trends
- Revenue growth exceeded expectations at 5% YoY and demonstrated healthy sequential growth.
- The decline in net income is noted to be primarily due to elevated tax rates, which decreased the effective tax rate from 20.1% this quarter compared to last year's 9.2%.
- Operating margin improved to 47%, reflecting operational efficiencies coupled with increased cloud service profitability.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
14.29B
3.26%
7.58%
Gross Profit
9.62B
-4.80%
2.23%
Operating Income
4.88B
13.57%
30.11%
Net Income
3.14B
-5.27%
30.95%
EPS
1.14
-7.32%
31.03%
Key Financial Ratios
currentRatio
0.72
grossProfitMargin
67.3%
operatingProfitMargin
34.1%
netProfitMargin
22%
returnOnAssets
2.23%
returnOnEquity
36.1%
debtEquityRatio
10.85
operatingCashFlowPerShare
$2.21
freeCashFlowPerShare
$1.19
dividendPayoutRatio
35.1%
priceToBookRatio
37.07
priceEarningsRatio
25.65
Net Income vs. Revenue
Expense Breakdown
Management Commentary
- Management Insight: Safra Catz expressed confidence: "Clearly, we had an absolutely incredible quarter... this Q4 was powered by the enormous demand for our cloud services."
- Sales Achievement: Larry Ellison noted, "In Q4, Oracle's company-wide RPO increased 44% to $98 billion... the largest sales contract in our history..."
- Cloud Adoption: Catz emphasized the strategic shift, stating, "We are trading one-time non-recurring license revenue in return for much bigger strategic customer commitments for multi-year cloud revenues."
- Market Demand Drivers: Detailed strong AI and OCI demand, with over 30 AI contracts totaling $12 billion signed in the quarter.
"In Q4, Oracle signed the largest sales contract in our history ... this marks the full emergence of our high growth cloud businesses."
— Safra Catz
"Our current momentum will continue as our pipeline is growing even faster than bookings and our win rates are going higher."
— Larry Ellison
Forward Guidance
Moving into fiscal year 2025, Oracle anticipates continued strong cloud demand, projecting double-digit revenue growth. Management's outlook expects that this quarter will set a precedent, with every successive quarter trending toward accelerated growth. They outlined ambitious capital expenditure plans, expecting them to double from 2024 levels to support cloud capacity expansion. Notably, approximately 39% of RPO is expected to convert into revenue within the next 12 months, supported by a robust pipeline of contracts and high customer interest in cloud solutions.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
ORCL Focus
67.34%
34.10%
36.10%
25.65%
PANW
73.80%
10.90%
6.92%
80.32%
CRWD
75.20%
3.68%
2.33%
327.99%
MSFT
69.60%
43.10%
8.21%
38.52%
SQ
35.10%
-2.26%
0.95%
66.79%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Oracle’s robust focus on cloud services amid significant demand dynamics demonstrates its commitment to future growth. The projections for continued double-digit growth in 2025, combined with excellent operational efficiencies and cash flow generation, positions Oracle as a potentially strong investment opportunity. However, investors should remain cognizant of market competition and its implications for profitability. Monitoring how Oracle balances revenue shifts while maintaining customer satisfaction will be key to understanding future performance.
Key Investment Factors
Growth Potential
Oracle's growing cloud services are expected to sustain double-digit growth, with an undeniable shift in enterprise IT toward cloud-based solutions solidified by strategic contracts in AI and multi-cloud partnerships.
Profitability Risk
Oracle faces potential risks from competitive pressures within the cloud infrastructure sector, particularly from major players like AWS and Azure, which may influence pricing strategies and customer retention.
Financial Position
While Oracle's net income experienced a slight decline YoY, improvements in operating income and solid free cash flow generation highlight a strong underlying financial stance.
SWOT Analysis
Strengths
Leading cloud infrastructure capabilities with significant investment in AI advancements.
Strong brand reputation anchored by a solid client base spanning various industries.
Robust financial performance with increasing cash flow and significant revenue growth in cloud segments.
Weaknesses
Declining software license revenue indicates a possible shift away from traditional business models.
Net income experienced a year-over-year decline due to elevated tax impacts, which could deter investor confidence.
Opportunities
Expanding cloud infrastructure and AI markets present vast growth potential, especially in sectors showing increased cloud adoption.
Strategic alliances with tech giants like Google and Microsoft foster multi-cloud expansion and boost service offerings.
Threats
Intense competition from established cloud service providers like Amazon AWS and Microsoft Azure could pressure profit margins and growth rates.
Technological advancements by competitors may outpace Oracle’s innovations, threatening its market share in critical segments.