INVESTMENT AND

FINANCING DECISIONS

SOFTWARE
INDUSTRY
Maksim IKONNIKOV; Evgenii IURCHENKO;
Mariia KONIUKHOVA; Chiajen LEE;
Sitong LIN; Vadim MAKASEEV;
Hyun wook PARK; Ekaterina SHICHKOVA
 OVERVIEW
01 02 03
Introduction Fortinet Oracle

WHO Sitong Lin Shichkova Ekaterina

04 05 06 07
Dropbox Microsoft Adobe Conclusion

Chiajen Lee Maksim Ikonnikov Mariia KONIUKHOVA Makaseev & Iurchenko

 Among the fastest-growing sectors globally driven
by innovations in cloud computing, cybersecurity and AI EBITDA margin(%) Revenue Growth(%)

Valued at over $500 billion (2023)

Microsoft

Key growth drivers:

Digital transformation across industries
Rising demand for cybersecurity Crowdstrike
Shift to subscription-based business models

Leading companies:
Oracle
Microsoft: High profitability, 52% EBITDA margin.
CrowdStrike: 30% YoY revenue growth.

Challenges: Synopsys
High valuations and regulatory scrutiny
Increasing focus on sustainability and governance (ESG) 0 10 20 30 40 50 60
->Must focus on innovation, strategic reinvestment
and governance
 ROC Cost of capital Variance

Performance Analysis：
Operational efficiency & profitability are both 40.26% -5.20% 45.46%
considerable relative to its investment
Current stock
D/E Debt to capital
price
Debt/equity mix：
Heavy reliance on debt=debt leverage ➡️
Boosting returns but increased financial risk 373.42% 187.62% $90.26

Future Stock
Cost of capital and future stock price： P/E Avg. P/E
price
P/E under average ➡️ Weak investor confidence
in company’s future
57.72 287.32 90.74$
Future stock price close to current ➡️ limited
upside potential
Dividend and valuation expectations：
Not pay a dividend ➡️ a focus on reinvesting
profits in growth and innovation rather than
returning capital

ESG:
Similar in the whole industry:
S: information security & work
pressure
E: don’t have physical products
G: industry regulation and legal
changes
BALANCE SHEET & DEBT/EQUITY MIX ORACLE(ORCL)
Debt-to-Equity Ratio Net Tangible Assets Cash Position
9.40 (high leverage) $59.88B $10.91B

reflecting significant reliance on indicating a heavy reliance on providing liquidity but not enough
debt financing for growth and intangible assets and raising to offset high liabilities​
acquisitions​ potential financial risk​

PERFORMANCE ANALYSIS

EBITDA Margin Return on Capital (ROC)

40.51% 9.53%

(above industry average of narrowly exceeding the Weighted

28.95%), showcasing Oracle’s Average Cost of Capital (WACC)
strong cost efficiency​ of 11.47%, suggesting limited
(Individual+assignement+…) efficiency in capital deployment​
 Overperforming or Valuation & Future Stock Cost of Capital
Underperforming Pricing

Sales Growth: 6.9% YoY, Current Price: $167.47;

Cost of Debt: 3.99%; Cost
below the industry Projected Price: $210.69,
of Equity: 12.84%; Beta: 1.40
average of 12.75%, highlighting modest upside
(higher market risk)
indicating slower potential​
expansion relative to peers​ EV/EBITDA: 25.46, higher
Dividend Yield: ~1.2%, than the industry median,
reflecting Oracle's stable suggesting Oracle might
but conservative approach be overvalued​
to returning value to
shareholders
ESG Overview

Environmental: Social: Governance:

Minimal impact due Focus on data Challenges in

to software-based privacy and compliance with
operations workforce well-being global regulations​
 ROC Cost of capital Variance
Performance Analysis：
Steady operational efficiency
Healthy return spread: 6.88% 19.95% -0.19% 20.14%
Suggest it is more of a stable performer
Current stock
Debt/equity mix： D/E Debt to capital
price
Balanced financial management: avoid
excessive leverage
96.16% 100% 29.33
Low COD: efficient debt servicing
Cost of capital and future stock price： Future Stock
P/E Avg. P/E
P/E lower than average: potential price
undervaluation
Future stock price is close to current stock 42.47 287.32 30.57
price
Modest revenue growth
Dividend and valuation expectations：
Not pay a dividend ➡️ a focus on reinvesting
profits in growth initiatives.
With long-term strategy
May deter income-focused investors

ESG:
E (3.9) S (8.5) G (6.4)
Aligns well with priorities
Actions like reducing paper
dependency, enabling remote work

Conclusion :
Offers solid operational performance
and a favorable valuation
Slower growth and less aggressive
innovation compared to industry.
Stable, low-risk choice.
 ADOBE
Adobe does not pay dividends,
maintaining a dividend yield of
0%, which aligns with its growth
strategy of reinvesting profits
into innovation and market
expansion.
P/E ratio: 42.74

D/E ratio: 41.79% Moderate leverage

Total debt: $6.08 billion
Capacity to manage its obligations
Cash reserves: $7.51 billion

ROC: 20.14% Excellent operational efficiency

WACC: 8.04%

Total assets: $31.20 billion

Total liabilities: $12.50 billion Strong financial position with a healthy asset-
to-liability ratio
Shareholder equity: $18.70 billion
 ADOBE
Environment (E): 1.9 Social (S): 6.0 Governance (G): 5.2

The company has Independence: Adobe's

achieved carbon neutrality Adobe has a strong board of directors is made
in its operations and is on focus on DEI through its up of a mix of inside and
track to power its global Adobe for All program. outside directors, most of
operations with 100% This program aims to whom are independent, as
renewable energy by2025 create a diverse is the chairman of the
Adobe’s offices are LEED workforce with gender board
certified and have set and racial equity in Separation of the CEO and
science-based targets to leadership positions. chairman roles (→ positive
reduce their carbon for corporate governance)
footprint
Total Score: 13.1 → Low risk category
Price-to-Earnings (P/E) ratio: 4.94. High earnings in
relation to share price.
Debt-to-Equity (D/E) ratio: 36.45%. Moderate
leverage.

Total debt: $96.84B USD

Cash reserves: $78.43B USD. Not enough reserves
to manage obligations

Return on Capital (ROC): 33.20%

Cost of Capital (WACC): 8.04% - Very efficient
operations

Total Assets: $512.16 billion USD

Total Liabilities: $243.69 billion USD
Shareholders' Equity: $268.48 billion USD
Strong finacial foundation

Microsoft pays a dividend yield of 0.78% -

Balanced strategy with growth-oriented
investors
 Focus on sustainability, including carbon
Environment: 1.5 neutrality and renewable energy
initiatives

Strong commitments to diversity, equity

and inclusion
Social: 7.5
Transparent corporate governance
Governance: 6.1 practices
 CONCLUSION
1 FINANCIAL HEALTH

2 PROFITABILITY

3 GROWTH

4 INNOVATION

5 ESG COMMITMENT