Exchange: SIX | Sector: Technology | Industry: Software Infrastructure
Q3 2025
Published: Mar 11, 2025
Earnings Highlights
Revenue of $14.13B up 6.4% year-over-year
EPS of $1.02 increased by 20.7% from previous year
Gross margin of 70.3%
Net income of 2.94B
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Oracle Corporation (ORCL.SW) QQ3 2025 Results: Cloud-Driven Margin Resilience and Persistent Cash Generation amid Capital Intensity
Executive Summary
Oracle reported solid QQ3 2025 results underscoring a cloud-enabled path to earnings resilience. Revenue reached USD 14.13 billion, up approximately 6.4% year over year, with gross margin at 70.31% and operating margin at 30.84%, reflecting a healthy mix of software license, subscription, and services revenue against ongoing product investment. Net income of USD 2.94 billion and diluted earnings per share of USD 1.02–1.05 (GAAP/likely) signal durable profitability even as Oracle continues heavy capital expenditure to accelerate Fusion Cloud, NetSuite, and Autonomous Database initiatives. Cash flow from operations stood at USD 5.93 billion, supported by a capex burden of roughly USD 5.86 billion, resulting in a modest free cash flow near the low tens of millions of dollars. The balance sheet remains liquidity rich with USD 17.4 billion in cash and equivalents and USD 17.8 billion in combined cash and short-term investments, yet total debt remains elevated at about USD 96.3 billion, yielding a net debt position around USD 78.9 billion. The quarter reinforces Oracle’s strength in margins and cash generation while highlighting the capital-intensive nature of its cloud transition. Investors should monitor cloud revenue growth, operating leverage over time, balance sheet evolution, and capital allocation signals as Oracle scales its Fusion Cloud, NetSuite, and database offerings.
Net Income: USD 2.936B; Net Margin 20.78%; YoY +22.28%; QoQ -6.82%
EPS (GAAP): USD 1.05; EPS Diluted: USD 1.02; YoY EPS +20.69%; QoQ -7.08%
Cash Flow and Capital Allocation
Financial Highlights
Revenue and Profitability
- Revenue: USD 14.13B; YoY +6.40%; QoQ +0.51%
- Gross Profit: USD 9.935B; Gross Margin 70.31%; YoY +5.57%; QoQ -0.39%
- Operating Income: USD 4.359B; Operating Margin 30.84%; YoY +16.21%; QoQ +3.27%
- Net Income: USD 2.936B; Net Margin 20.78%; YoY +22.28%; QoQ -6.82%
- EPS (GAAP): USD 1.05; EPS Diluted: USD 1.02; YoY EPS +20.69%; QoQ -7.08%
Cash Flow and Capital Allocation
- Net cash provided by operating activities: USD 5.933B
- Capital expenditures: USD -5.862B
- Free cash flow (estimated): USD ~0.071B (approx. USD 71M) given OCF less capex
- Net capex intensity reflects ongoing investment in cloud and data infrastructure
Balance Sheet and Liquidity
- Cash and cash equivalents: USD 17.406B; Total cash and short-term investments: USD 17.823B
- Total assets: USD 161.378B; Total liabilities: USD 144.117B
- Total debt: USD 96.276B; Net debt: USD 78.87B
- Shareholders’ equity: USD 16.73B
- Leverage metrics indicate high absolute leverage, with a debt-to-capitalization around 0.852 and debt-to-equity around 5.75
Operational and Efficiency Metrics
- Days sales outstanding (DSO): 51.28 days; Payables outstanding: 51.98 days; Cash conversion cycle: -0.703 days
- Asset turnover: 0.0876; Fixed asset turnover: 0.442; Cash flow to debt ratio: 0.0616
- Price-to-earnings: ~40.7x; Price-to-book: ~28.6x; Price-to-sales: ~33.8x (note: several ratios appear elevated given large intangible base and cloud investments)
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
14.13B
6.40%
0.51%
Gross Profit
9.94B
5.57%
-0.39%
Operating Income
4.36B
16.21%
3.27%
Net Income
2.94B
22.28%
-6.82%
EPS
1.05
20.69%
-7.08%
Key Financial Ratios
currentRatio
1.02
grossProfitMargin
70.3%
operatingProfitMargin
30.8%
netProfitMargin
20.8%
returnOnAssets
1.82%
returnOnEquity
17.5%
debtEquityRatio
5.75
operatingCashFlowPerShare
$2.06
freeCashFlowPerShare
$0.02
dividendPayoutRatio
38.1%
priceToBookRatio
28.57
priceEarningsRatio
40.7
Net Income vs. Revenue
Expense Breakdown
Management Commentary
No management transcript highlights were provided in the dataset for QQ3 2025. As a result, this section cannot be populated with verbatim quotes or thematic quotes from Oracle's earnings call. If available, please share the transcript to incorporate management themes on cloud trajectory, competition, product roadmap, and customer adoption rates.
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Forward Guidance
Forward guidance is not included in the provided data. Given Oracle’s ongoing capital expenditure cycle to expand Fusion Cloud and NetSuite deployments, investors should focus on: (1) cloud revenue growth rate and mix shift toward SaaS/subscription models, (2) progression toward operating leverage as the revenue mix matures, and (3) liquidity and debt management as Oracle funds cloud-scale initiatives. In the absence of explicit numeric targets, qualitatively evaluate management commentary on ARR growth, customer retention, and product contribution margins when guidance is released. Key monitoring factors: cloud ARR growth, renewal rates, average contract value (ACV) trends, platform utilization of Autonomous Database, and the rate of free cash flow realization after capex.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
ORCL.SW Focus
70.31%
30.80%
17.50%
40.70%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Oracle’s QQ3 2025 results demonstrate earnings resilience and strong cash generation amid a capital-intensive cloud buildout. The company’s robust gross margin and substantial operating cash flow support its long-term cloud strategy, but the near-term free cash flow is modest due to heavy capex. The valuation remains elevated relative to many peers, signaling high expectations for continued cloud adoption and leverage optimization. For a sustained positive investment thesis, Oracle needs to translate capital expenditure into meaningful and durable cloud ARR growth, continued execution on Fusion Cloud and NetSuite cross-sell, and enhanced operating leverage as the mix shifts toward higher-margin SaaS offerings. Investors should monitor cloud revenue growth, ARR momentum, gross and operating margins over successive quarters, debt trajectory, and the pace of deleveraging or capital return enhancements.
Key Investment Factors
Growth Potential
Oracle’s long-term growth hinges on cloud transition success (Fusion Cloud, NetSuite, and Autonomous Database) and continued uptake of mission-critical database and Java offerings. The company’s gross margin has remained robust around 70%, suggesting pricing power and mix optimization; its installed base, combined with large enterprise contracts, provides cross-sell opportunities across cloud, license, and services.
Profitability Risk
High leverage and large absolute debt levels create sensitivity to macro shifts and refinancing costs. Capital intensity of cloud infrastructure investments may depress near-term free cash flow despite strong operating cash flow. Competition from hyperscalers and enterprise software peers could pressure pricing and market share. Also, currency movements and global regulatory considerations pose ongoing risk for a USD-denominated revenue footprint sourced globally.
Financial Position
Strong liquidity position with USD 17.4B in cash and equivalents and substantial short-term investments, but total debt (~USD 96.3B) leaves a high net-debt balance (~USD 78.9B). The firm’s leverage ratios remain elevated, though operating profitability remains solid with operating margin ~30.8% and net margin ~20.8%, supporting ongoing investment in cloud platforms and potential accretive capital allocation.
SWOT Analysis
Strengths
Scale and breadth of Oracle’s software infrastructure portfolio (Fusion Cloud, ERP, HCM, Oracle Database, Java, Oracle Cloud Infrastructure, NetSuite).
High gross margin and durable enterprise value drivers with long-term contracts and a broad installed base.
Robust operating cash flow generation supports ongoing cloud investment and capital allocation flexibility.
Weaknesses
Substantial delegated debt burden contributing to a high net debt load.