Is Oracle Corporation Stock Halal to Invest in? Facts you should know

Report Published as on 8th July 2024

Business Sector Screening:

We have conducted a comprehensive review on Oracle Corporation from a Shariah point of view and analyzed its sources of income to know whether they are complying with Shariah principles.

About Oracle Corporation: –

Oracle Corporation is a renowned global technology company that specializes in providing comprehensive and integrated software and hardware solutions. Founded in 1977 by Larry Ellison, Bob Miner, and Ed Oates, Oracle has grown to become one of the world’s leading providers of database software, cloud-engineered systems, and enterprise software products. With its headquarters in Austin, Texas, Oracle serves a vast array of industries, offering innovative solutions designed to enhance business performance and efficiency. Oracle’s robust portfolio includes cutting-edge cloud solutions, powerful database management systems, and a suite of enterprise software products that empower organizations to optimize operations, harness data-driven insights, and achieve unprecedented efficiency.

In recent years, Oracle has made bold strides in the cloud computing arena, challenging incumbents and reshaping the competitive landscape with its comprehensive cloud offerings. As the digital transformation wave accelerates, Oracle’s integrated approach to cloud and on-premises solutions positions it as a formidable player poised for sustained growth.

Let’s have a look at the operating segments from which the company derives its revenue and apply the Shariah screens to them.

Operating Revenue: (In millions of USD) For year ended 31^{st May} 2023

Understanding Segment Breakup: –

Oracle Corporation’s business operations are divided into several key segments, each contributing significantly to the company’s overall performance. Understanding these segments provides insight into Oracle’s diverse revenue streams and strategic focus areas.

1. Cloud and License Business:

• Cloud Services and License Support: This segment is the largest contributor to Oracle’s revenue. It includes cloud services, which provide software-as-a-service (SaaS), platform-as-a-service (PaaS), and infrastructure-as-a-service (IaaS) offerings. Additionally, it encompasses license support, where customers receive software updates, product support, and maintenance services

• Cloud License and On-Premises License: This sub-segment involves the licensing of Oracle’s database and middleware software, which can be deployed both in the cloud and on-premises. It includes initial software license fees and cloud services related to Oracle’s software products.

2. Hardware:

• This segment includes Oracle’s hardware products such as servers, storage solutions, and engineered systems. Oracle’s engineered systems, like Exadata and Exalogic, integrate hardware and software to deliver optimized performance for various enterprise applications.

3. Services:

• Consulting Services: This segment offers professional services to assist customers in implementing Oracle software solutions, optimizing their IT environments, and ensuring smooth transitions to Oracle Cloud.
• Advanced Customer Services: This segment provides personalized support and tailored services to ensure the highest performance and reliability of Oracle products in customer environments.

• Education Services: This segment delivers training and certification programs to help customers and partners maximize the value of their Oracle investments.

Shariah Adherence Overview:

Oracle Corporation operates across diverse revenue segments, including Cloud Services and License Support, Cloud License and On-Premises License, Hardware, and Services. These segments primarily focus on providing cutting-edge technology solutions such as cloud infrastructure, software licensing, engineered systems, and professional consulting and support services. Given the nature of its business activities, Oracle Corporation aligns well with Shariah

principles, focusing on ethical practices and value-driven services. The company’s operations do not raise any concerns from a Shariah compliance perspective, ensuring that its revenue generation methods adhere to the ethical and legal standards expected in Shariah-compliant investments.

Interest Revenue: (In millions of USD) For year ended 31^{st May} 2023

It is clear from the table above that the non-operating income of the company includes interest income which is Shariah not compliant. This amount is included for the calculation of the Sector Compliance and Dividend Purification.

Sector Compliance Calculation:

Dividend Purification Calculation:

Financial Ratio Screen:

Source: All the above information is based on the website of the company and the latest Quarterly Report for the period ended 29^th February 2024

Conclusion:

Given the above information, we at Ratings Intelligence believe that Oracle Corporation is a Shariah Compliant company as per the Shariah screening criteria.