Oracle Corporation Japan reported its Q3 25 results on March 21, 2025, with a 13.7% y/y net revenue growth to JPY67,597m, driven by increasing demand for Cloud services and licenses. Operating profit grew impressively by 15.1% y/y to JPY22,306m, with a margin of 33%, an expansion of 40 bps y/y. Net income rose by 14.8% y/y to JPY15,515m, with a margin of 23%. Following the release, Oracle Japan’s stock surged by 13%.
Founded in 1985 and headquartered in Minato-ku, Tokyo, Oracle Corporation Japan specializes in selling database software, particularly Oracle database, middleware, application, hardware including servers, storage, and network equipment, as well as cloud computing solutions. The company, which employs over 2,250 individuals, is listed on the Tokyo Stock Exchange.
Oracle Corporation Japan operates primarily in four segments: Cloud Services and License Support, which accounted for 66% of the total sales mix in FY 24; Cloud License and On-Premises License, contributing 18%; Services, making up 9%; and Hardware, comprising 7%.
Poised for growth
In the recovering Japanese information services industry, Oracle Japan is driving growth by supporting cloud migration and active data utilization. The company aims to help customers innovate and transform their businesses through new technologies like Autonomous Database, AI, and machine learning. In FY 24, Oracle Japan focused on Japan-specific cloud services and AI promotion.
For FY25, it plans to advance these strategies, offering secure, efficient AI solutions and expanding partnerships to meet growing data sovereignty needs, ultimately fostering business modernization and technological evolution.
As Oracle continues to innovate and support its customers’ cloud migration and data utilization, analysts project Oracle Corp.’s net revenue to grow at a CAGR of 8% over FY 24-27 to JPY308bn. EBIT is expected to grow at a CAGR of 10%, reaching JPY106bn, with margins expanding from 32.6% to 34.4%. Net profit is projected to increase at a CAGR of 12.9%, reaching JPY74bn.
In contrast, analysts estimate that NEC Corp., a peer of Oracle Japan, will experience a lower net revenue growth at a CAGR of 4.3%, reaching JPY3,736bn. However, EBIT and net income growth for NEC Corp. are expected to be in line with Oracle, with CAGRs of 12.7% and 13.2%, respectively, over the same period.
Steady long-term performance
Oracle Japan experienced steady net revenue growth over the last three years (FY21-24) with a CAGR of 5.4%, reaching JPY245bn in FY 24. This growth was driven by increasing demand for Cloud services and licenses service offerings. EBIT grew at a CAGR of 4% to JPY79.8bn, although margins slightly decreased from 33.9% in FY 21 to 32.6% in FY 24. Net profit grew at a lower CAGR of 4.2%, reaching JPY55.6bn, with margins slightly decreasing to 22.7% in FY 24 from 23.6% in FY 21.
Net profit growth led to consistent positive FCF, generating cumulative FCF of JPY179.3bn over the last three years. As a result, net cash jumped from JPY53.9bn to JPY91.9bn by the end of FY24.
In comparison, NEC Corp. experienced a similar net revenue CAGR of 5.1% over the last three years, reaching JPY3,477bn in FY 24. However, its net income remained flat, reaching JPY150bn in FY 24.
Stock outperformance
Over the past 12 months, Oracle Japan’s stock has delivered impressive returns of approximately 36%, driven by higher demand for cloud services and strong Q3 performance. In comparison, NEC Corp. delivered slightly lower returns of approximately 25% over the same period.
Strong returns have elevated Oracle Japan’s valuation compared to its historical averages and peers. It is currently trading at a P/E of 29.2x, based on the FY 26 estimated EPS of JPY515.8. This is higher than the NEC Corp.’s P/E of 17.9x and Oracle Japan’s three-year historical average P/E of 23.8x. In terms of EV/EBIT, the company is currently trading at 18.8x, based on the FY 26 estimated EBIT of JPY93.9bn, which is higher than its three-year historical average of 15.5x and NEC Corp.’s 12.3x.
Oracle Corporation Japan reported strong Q3 results, driven by increased demand for cloud services and licenses, resulting in significant net revenue and EBIT growth. Analysts project continued growth for Oracle, supported by its focus on AI and cloud services. Over the past year, Oracle’s stock has outperformed its peer NEC Corp., reflecting higher demand for cloud solutions and robust financial performance. However, the company remains exposed to several risks, including cybersecurity threats, operational challenges, and risks associated with cloud transitions.
