SOURCE: Oracle Corporation

Oracle Corporation

June 16, 2016 16:00 ET

Q4 FY16 SaaS and PaaS Revenues Were Up 66%, and Up 68% in Constant Currency

Q1 FY17 SaaS and PaaS Revenues Expected to Be Up 75% to 80%

REDWOOD SHORES, CA--(Marketwired - Jun 16, 2016) - Oracle Corporation (NYSE: ORCL) today announced fiscal 2016 Q4 results. Total Q4 Revenues were $10.6 billion, down 1% in U.S. dollars and flat in constant currency. Cloud plus On-Premise Software Revenues were $8.4 billion, flat in U.S. dollars and up 2% in constant currency. Cloud software as a service (SaaS) and platform as a service (PaaS) revenues were $690 million, up 66% in U.S. dollars and up 68% in constant currency. Total Cloud revenues, including infrastructure as a service (IaaS), were $859 million, up 49% in U.S. dollars and up 51% in constant currency. Operating Income was $4.0 billion, and Operating Margin was 37%. Non-GAAP Operating Income was $4.8 billion, and the non-GAAP Operating Margin was 45%. Net Income was $2.8 billion while non-GAAP Net Income was $3.4 billion. Earnings Per Share was $0.66, while non-GAAP Earnings Per Share was $0.81. Without the impact of the U.S. dollar strengthening compared to foreign currencies, Oracle's reported GAAP Earnings Per Share would have been 2 cents higher and non-GAAP Earnings Per Share would have been 1 cent higher.

Short-term deferred revenues were $7.7 billion, up 6% in U.S. dollars and up 7% in constant currency compared with a year ago. Operating cash flow on a trailing twelve-month basis was $13.6 billion.

For fiscal 2016, Total Revenues were $37.0 billion, down 3% in U.S. dollars and up 2% in constant currency. Cloud plus On-Premise Software Revenues were $29.0 billion, down 2% in U.S. dollars and up 3% in constant currency. Cloud SaaS and PaaS revenues were $2.2 billion, up 49% in U.S. dollars and up 52% in constant currency. Total Cloud revenues, including IaaS, were $2.9 billion, up 36% in U.S. dollars and up 40% in constant currency. Operating Income was $12.6 billion, and Operating Margin was 34%. Non-GAAP Operating Income was $15.8 billion and non-GAAP Operating Margin was 43%. Net Income was $8.9 billion while non-GAAP Net Income was $11.2 billion. Earnings Per Share was $2.07, while Non-GAAP Earnings Per Share was $2.61. Without the impact of the U.S. dollar strengthening compared to foreign currencies, Oracle's reported GAAP and non-GAAP Earnings Per Share would have been 17 cents higher.

"Fourth quarter SaaS and PaaS revenue growth accelerated to 68% in constant currency, significantly higher than my guidance," said Oracle CEO, Safra Catz. "SaaS and PaaS gross margins continued to improve throughout the year, exiting FY16 at 56%. Bookings in Q4 were also very strong enabling us to raise our guidance for Q1 SaaS and PaaS revenue growth, which we now expect to be between 75% and 80%."

"We added more than 1,600 new SaaS customers and more than 2,000 new PaaS customers in Q4," said Oracle CEO, Mark Hurd. "In Fusion ERP alone, we added more than 800 new cloud customers. Today, Oracle has nearly 2,600 Fusion ERP customers in the Oracle Public Cloud -- that's ten-times more cloud ERP customers than Workday."

"We expect that the SaaS and PaaS hyper-growth we experienced in FY16 will continue on for the next few years," said Oracle Executive Chairman and CTO, Larry Ellison. "That gives us a fighting chance to be the first cloud company to reach $10 billion in SaaS and PaaS revenue. We're also very excited about the availability of version 2 of Oracle's Infrastructure as a Service (IaaS) -- which will enable us to speed up the growth of our IaaS business, which customers want to buy in conjunction with our SaaS and PaaS."

The Board of Directors also declared a quarterly cash dividend of $0.15 per share of outstanding common stock. This dividend will be paid to stockholders of record as of the close of business on July 6, 2016, with a payment date of July 27, 2016.

Q4 Fiscal 2016 Earnings Conference Call and Webcast

Oracle will hold a conference call and webcast today to discuss these results at 2:00 p.m. Pacific. You may listen to the call by dialing (816) 287-5563, Passcode: 425392. To access the live webcast of this event, please visit the Oracle Investor Relations website at http://www.oracle.com/investor. In addition, Oracle's Q4 results and fiscal 2016 financial tables are available on the Oracle Investor Relations website.

A replay of the conference call will also be available by dialing (855) 859-2056 or (404) 537-3406, Pass Code: 28515799.

About Oracle

Oracle offers a comprehensive and fully integrated stack of cloud applications and platform services. For more information about Oracle (NYSE: ORCL), visit www.oracle.com or contact Investor Relations at investor_us@oracle.com or (650) 506-4073.

Trademarks

Oracle and Java are registered trademarks of Oracle and/or its affiliates. Other names may be trademarks of their respective owners.

"Safe Harbor" Statement: Statements in this press release relating to Oracle's future plans, expectations, beliefs, intentions and prospects, including statements regarding our future guidance, and expectations of future SaaS, PaaS and IaaS growth, are "forward-looking statements" and are subject to material risks and uncertainties. Many factors could affect our current expectations and our actual results, and could cause actual results to differ materially. We presently consider the following to be among the important factors that could cause actual results to differ materially from expectations: (1) Our cloud computing strategy, including our Oracle Cloud SaaS, PaaS, IaaS and data as a service offerings, may not be successful. (2) If we are unable to develop new or sufficiently differentiated products and services, or to enhance and improve our products and support services in a timely manner or to position and/or price our products and services to meet market demand, customers may not buy new software licenses, cloud software subscriptions or hardware systems products or purchase or renew support contracts. (3) If the security measures for our software, hardware, services or Oracle Cloud offerings are compromised or if such offerings contain significant coding, manufacturing or configuration errors, we may experience reputational harm, legal claims and financial exposure. (4) We may fail to achieve our financial forecasts due to such factors as delays or size reductions in transactions, fewer large transactions in a particular quarter, fluctuations in currency exchange rates, delays in delivery of new products or releases or a decline in our renewal rates for support contracts. (5) Our international sales and operations subject us to additional risks that can adversely affect our operating results, including risks relating to foreign currency gains and losses. (6) Economic, geopolitical and market conditions, including the continued slow economic recovery in the U.S. and other parts of the world, can adversely affect our business, results of operations and financial condition, including our revenue growth and profitability, which in turn could adversely affect our stock price. (7) We have an active acquisition program and our acquisitions may not be successful, may involve unanticipated costs or other integration issues or may disrupt our existing operations. A detailed discussion of these factors and other risks that affect our business is contained in our SEC filings, including our most recent reports on Form 10-K and Form 10-Q, particularly under the heading "Risk Factors." Copies of these filings are available online from the SEC or by contacting Oracle Corporation's Investor Relations Department at (650) 506-4073 or by clicking on SEC Filings on Oracle's Investor Relations website at http://www.oracle.com/investor. All information set forth in this press release is current as of June 16, 2016. Oracle undertakes no duty to update any statement in light of new information or future events.

 
ORACLE CORPORATION
 
Q4 FISCAL 2016 FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($in millions, except per share data)
 
  Three Months Ended May 31,          
  2016   % of Revenues   2015   % of Revenues   % Increase (Decrease) in US $   % Increase (Decrease) in Constant Currency (1)  
REVENUES                            
  Cloud software as a service and platform as a service $ 690   6 % $ 416   4 % 66 % 68 %
  Cloud infrastructure as a service   169   2 %   160   1 % 5 % 8 %
    Total cloud revenues   859   8 %   576   5 % 49 % 51 %
  New software licenses   2,766   26 %   3,138   29 % (12 %) (10 %)
  Software license updates and product support   4,814   46 %   4,686   44 % 3 % 4 %
    Total on-premise software revenues   7,580   72 %   7,824   73 % (3 %) (2 %)
      Total cloud and on-premise software revenues   8,439   80 %   8,400   78 % 0 % 2 %
  Hardware products   725   7 %   818   8 % (11 %) (10 %)
  Hardware support   558   5 %   589   6 % (5 %) (4 %)
      Total hardware revenues   1,283   12 %   1,407   14 % (9 %) (7 %)
      Total services revenues   872   8 %   899   8 % (3 %) (1 %)
        Total revenues   10,594   100 %   10,706   100 % (1 %) 0 %
                             
OPERATING EXPENSES                            
  Sales and marketing   2,306   22 %   2,212   21 % 4 % 6 %
  Cloud software as a service and platform as a service   304   3 %   256   2 % 19 % 20 %
  Cloud infrastructure as a service   99   1 %   90   1 % 9 % 11 %
  Software license updates and product support   268   2 %   331   3 % (19 %) (18 %)
  Hardware products   405   4 %   438   4 % (8 %) (6 %)
  Hardware support   168   2 %   188   2 % (11 %) (10 %)
  Services   692   7 %   750   7 % (8 %) (6 %)
  Research and development   1,534   14 %   1,435   13 % 7 % 8 %
  General and administrative   323   3 %   278   3 % 16 % 18 %
  Amortization of intangible assets   355   3 %   507   5 % (30 %) (30 %)
  Acquisition related and other   7   0 %   200   2 % (97 %) (96 %)
  Restructuring   165   2 %   39   0 % 320 % 314 %
                             
        Total operating expenses   6,626   63 %   6,724   63 % (1 %) 0 %
                             
OPERATING INCOME   3,968   37 %   3,982   37 % 0 % 1 %
  Interest expense   (362 ) (3 %)   (325 ) (3 %) 11 % 11 %
  Non-operating income, net   126   1 %   40   1 % 211 % 211 %
                             
INCOME BEFORE PROVISION FOR INCOME TAXES   3,732   35 %   3,697   35 % 1 % 3 %
  Provision for income taxes   918   8 %   939   9 % (2 %) 0 %
                             
NET INCOME $ 2,814   27 % $ 2,758   26 % 2 % 4 %
                             
EARNINGS PER SHARE:                            
  Basic $ 0.68       $ 0.63              
  Diluted $ 0.66       $ 0.62              
                             
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:                            
  Basic   4,147         4,359              
  Diluted   4,238         4,463              
                             
(1) We compare the percent change in the results from one period to another period using constant currency disclosure. We present constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the exchange rates in effect on May 31, 2015, which was the last day of our prior fiscal year, rather than the actual exchange rates in effect during the respective periods. Movements in international currencies relative to the United States dollar during the three months ended May 31, 2016 compared with the corresponding prior year period decreased our revenues by 1 percentage point, operating expenses by 1 percentage point and operating income by 1 percentage point.
   
   
   
ORACLE CORPORATION
 
Q4 FISCAL 2016 FINANCIAL RESULTS
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)
($ in millions, except per share data)
 
  Three Months Ended May 31,     % Increase (Decrease)
in US $
    % Increase (Decrease) in Constant Currency (2)  
  2016 GAAP     Adj.     2016 Non-GAAP     2015 GAAP     Adj.     2015 Non-GAAP     GAAP     Non-GAAP     GAAP     Non-GAAP  
                                                                       
TOTAL REVENUES $ 10,594     $ 2     $ 10,596     $ 10,706     $ 6     $ 10,712     (1 %)   (1 %)   0 %   0 %
                                                                       
TOTAL CLOUD AND ON-PREMISE SOFTWARE REVENUES $ 8,439     $ 2     $ 8,441     $ 8,400     $ 5     $ 8,405     0 %   0 %   2 %   2 %
  Cloud software as a service and platform as a service   690       1       691       416       3       419     66 %   65 %   68 %   67 %
  Cloud infrastructure as a service   169       -       169       160       -       160     5 %   5 %   8 %   8 %
  New software licenses   2,766       -       2,766       3,138       -       3,138     (12 %)   (12 %)   (10 %)   (10 %)
  Software license updates and product support   4,814       1       4,815       4,686       2       4,688     3 %   3 %   4 %   4 %
                                                                       
TOTAL HARDWARE REVENUES $ 1,283     $ -     $ 1,283     $ 1,407     $ 1     $ 1,408     (9 %)   (9 %)   (7 %)   (7 %)
  Hardware products   725       -       725       818       -       818     (11 %)   (11 %)   (10 %)   (10 %)
  Hardware support   558       -       558       589       1       590     (5 %)   (5 %)   (4 %)   (4 %)
                                                                       
TOTAL OPERATING EXPENSES $ 6,626     $ (796 )   $ 5,830     $ 6,724     $ (990 )   $ 5,734     (1 %)   2 %   0 %   3 %
  Cloud software as a service and platform as a service (3)   304       (4 )     300       256       (3 )     253     19 %   18 %   20 %   20 %
  Stock-based compensation (3)   265       (265 )     -       241       (241 )     -     10 %   *     10 %   *  
  Amortization of intangible assets (4)   355       (355 )     -       507       (507 )     -     (30 %)   *     (30 %)   *  
  Acquisition related and other   7       (7 )     -       200       (200 )     -     (97 %)   *     (96 %)   *  
  Restructuring   165       (165 )     -       39       (39 )     -     320 %   *     314 %   *  
                                                                       
CLOUD SOFTWARE AS A SERVICE AND PLATFORM AS A SERVICE MARGIN %   56 %             57 %     38 %             40 %   1,748 bp.     1,707 bp.     1,749 bp.     1,707 bp.  
                                                                       
OPERATING INCOME $ 3,968     $ 798     $ 4,766     $ 3,982     $ 996     $ 4,978     0 %   (4 %)   1 %   (3 %)
OPERATING MARGIN %   37 %             45 %     37 %             46 %   26 bp.     (149) bp.     36 bp.     (153) bp.  
                                                                       
INCOME TAX EFFECTS (5) $ 918     $ 188     $ 1,106     $ 939     $ 258     $ 1,197     (2 %)   (8 %)   0 %   (6 %)
                                                                       
NET INCOME $ 2,814     $ 610     $ 3,424     $ 2,758     $ 738     $ 3,496     2 %   (2 %)   4 %   (1 %)
                                                                       
DILUTED EARNINGS PER SHARE $ 0.66             $ 0.81     $ 0.62             $ 0.78     7 %   3 %   9 %   5 %
                                                                       
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING   4,238       -       4,238       4,463       -       4,463     (5 %)   (5 %)   (5 %)   (5 %)
                               
(1) This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. For a detailed explanation of the adjustments made to comparable GAAP measures, the reasons why management uses these measures, the usefulness of these measures and the material limitations on the usefulness of these measures, please see Appendix A.
                               
(2) We compare the percent change in the results from one period to another period using constant currency disclosure. We present constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the exchange rates in effect on May 31, 2015, which was the last day of our prior fiscal year, rather than the actual exchange rates in effect during the respective periods.
                               
(3) Stock-based compensation was included in the following GAAP operating expense categories:
                               
      Three Months Ended   Three Months Ended
      May 31, 2016   May 31, 2015
      GAAP   Adj.     Non-GAAP   GAAP   Adj.     Non-GAAP
  Sales and marketing   $ 57   $ (57 )   $ -   $ 49   $ (49 )   $ -
  Cloud infrastructure as a service     1     (1 )     -     1     (1 )     -
  Software license updates and product support     6     (6 )     -     6     (6 )     -
  Hardware products     2     (2 )     -     2     (2 )     -
  Hardware support     1     (1 )     -     2     (2 )     -
  Services     7     (7 )     -     8     (8 )     -
  Research and development     157     (157 )     -     142     (142 )     -
  General and administrative     34     (34 )     -     31     (31 )     -
    Subtotal     265     (265 )     -     241     (241 )     -
  Cloud software as a service and platform as a service     4     (4 )     -     3     (3 )     -
  Acquisition related and other     -     -       -     -     -       -
    Total stock-based compensation   $ 269   $ (269 )   $ -   $ 244   $ (244 )   $ -
                         
(4) Estimated future annual amortization expense related to intangible assets as of May 31, 2016 was as follows:
                         
  Fiscal 2017 $ 1,026                    
  Fiscal 2018 878                    
  Fiscal 2019 770                    
  Fiscal 2020 621                    
  Fiscal 2021 476                    
  Thereafter 1,172                    
    Total intangible assets, net $ 4,943                    
                         
(5) Income tax effects were calculated reflecting an effective GAAP tax rate of 24.6% and 25.4% in the fourth quarter of fiscal 2016 and 2015, respectively, and an effective non-GAAP tax rate of 24.4% and 25.5% in the fourth quarter of fiscal 2016 and 2015, respectively. The differences between our GAAP and non-GAAP tax rates in the fourth quarter of fiscal 2016 and 2015 were primarily due to the net tax effects of acquisition related items, including the tax effects of amortization of intangible assets.
                         
* Not meaningful
   
   
   
 
ORACLE CORPORATION
 
FISCAL 2016 YEAR TO DATE FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($ in millions, except per share data)
 
  Year Ended May 31,          
  2016   % of Revenues   2015   % of Revenues   % Increase (Decrease) in US $   % Increase (Decrease) in Constant Currency (1)  
REVENUES                            
  Cloud software as a service and platform as a service $ 2,207   6 % $ 1,485   4 % 49 % 52 %
  Cloud infrastructure as a service   646   2 %   608   2 % 6 % 11 %
    Total cloud revenues   2,853   8 %   2,093   6 % 36 % 40 %
  New software licenses   7,276   19 %   8,535   22 % (15 %) (11 %)
  Software license updates and product support   18,861   51 %   18,847   49 % 0 % 5 %
    Total on-premise software revenues   26,137   70 %   27,382   71 % (5 %) 0 %
      Total cloud and on-premise software revenues   28,990   78 %   29,475   77 % (2 %) 3 %
  Hardware products   2,471   7 %   2,825   8 % (13 %) (7 %)
  Hardware support   2,197   6 %   2,380   6 % (8 %) (3 %)
      Total hardware revenues   4,668   13 %   5,205   14 % (10 %) (5 %)
      Total services revenues   3,389   9 %   3,546   9 % (4 %) 2 %
                                   
        Total revenues   37,047   100 %   38,226   100 % (3 %) 2 %
                             
OPERATING EXPENSES                            
  Sales and marketing   7,884   21 %   7,655   20 % 3 % 8 %
  Cloud software as a service and platform as a service   1,152   3 %   773   2 % 49 % 53 %
  Cloud infrastructure as a service   366   1 %   344   1 % 6 % 10 %
  Software license updates and product support   1,146   3 %   1,199   3 % (4 %) 1 %
  Hardware products   1,371   4 %   1,471   4 % (7 %) (1 %)
  Hardware support   693   2 %   816   2 % (15 %) (10 %)
  Services   2,751   8 %   2,929   8 % (6 %) 0 %
  Research and development   5,787   16 %   5,524   14 % 5 % 7 %
  General and administrative   1,155   3 %   1,077   3 % 7 % 11 %
  Amortization of intangible assets   1,638   4 %   2,149   5 % (24 %) (24 %)
  Acquisition related and other   42   0 %   211   1 % (80 %) (80 %)
  Restructuring   458   1 %   207   1 % 121 % 145 %
                             
Total operating expenses   24,443   66 %   24,355   64 % 0 % 4 %
                             
OPERATING INCOME   12,604   34 %   13,871   36 % (9 %) (2 %)
  Interest expense   (1,467 ) (4 %)   (1,143 ) (3 %) 28 % 28 %
  Non-operating income, net   305   1 %   106   0 % 188 % 221 %
                             
INCOME BEFORE PROVISION FOR INCOME TAXES   11,442   31 %   12,834   33 % (11 %) (4 %)
  Provision for income taxes   2,541   7 %   2,896   7 % (12 %) (5 %)
                             
NET INCOME $ 8,901   24 % $ 9,938   26 % (10 %) (3 %)
                             
EARNINGS PER SHARE:                            
  Basic $ 2.11       $ 2.26              
  Diluted $ 2.07       $ 2.21              
                             
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:                            
  Basic   4,221         4,404              
  Diluted   4,305         4,503              
                             
(1) We compare the percent change in the results from one period to another period using constant currency disclosure. We present constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the exchange rates in effect on May 31, 2015, which was the last day of our prior fiscal year, rather than the actual exchange rates in effect during the respective periods. Movements in international currencies relative to the United States dollar during the year ended May 31, 2016 compared with the corresponding prior year period decreased our revenues by 5 percentage points, operating expenses by 4 percentage points and operating income by 7 percentage points.
   
   
   
ORACLE  CORPORATION
 
FISCAL 2016 YEAR TO DATE FINANCIAL RESULTS
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)
($ in millions, except per share data)
 
    Year Ended May 31,     % Increase (Decrease)
in US $
    % Increase (Decrease) in Constant Currency (2)  
    2016 GAAP     Adj.     2016 Non-GAAP     2015 GAAP     Adj.     2015 Non-GAAP     GAAP     Non-GAAP     GAAP     Non-GAAP  
                                                                         
TOTAL REVENUES   $ 37,047     $ 10     $ 37,057     $ 38,226     $ 27     $ 38,253     (3 %)   (3 %)   2 %   2 %
                                                                         
TOTAL CLOUD AND ON-PREMISE SOFTWARE REVENUES   $ 28,990     $ 9     $ 28,999     $ 29,475     $ 23     $ 29,498     (2 %)   (2 %)   3 %   3 %
  Cloud software as a service and platform as a service     2,207       7       2,214       1,485       12       1,497     49 %   48 %   52 %   52 %
  Cloud infrastructure as a service     646       -       646       608       -       608     6 %   6 %   11 %   11 %
  New software licenses     7,276       -       7,276       8,535       -       8,535     (15 %)   (15 %)   (11 %)   (11 %)
  Software license updates and product support     18,861       2       18,863       18,847       11       18,858     0 %   0 %   5 %   5 %
                                                                         
TOTAL HARDWARE REVENUES   $ 4,668     $ 1     $ 4,669     $ 5,205     $ 4     $ 5,209     (10 %)   (10 %)   (5 %)   (5 %)
  Hardware products     2,471       -       2,471       2,825       -       2,825     (13 %)   (13 %)   (7 %)   (7 %)
  Hardware support     2,197       1       2,198       2,380       4       2,384     (8 %)   (8 %)   (3 %)   (3 %)
                                                                         
TOTAL OPERATING EXPENSES   $ 24,443     $ (3,172 )   $ 21,271     $ 24,355     $ (3,495 )   $ 20,860     0 %   2 %   4 %   7 %
  Stock-based compensation (3)     1,034       (1,034 )     -       928       (928 )     -     11 %   *     11 %   *  
  Amortization of intangible assets (4)     1,638       (1,638 )     -       2,149       (2,149 )     -     (24 %)   *     (24 %)   *  
  Acquisition related and other     42       (42 )     -       211       (211 )     -     (80 %)   *     (80 %)   *  
  Restructuring     458       (458 )     -       207       (207 )     -     121 %   *     145 %   *  
                                                                         
OPERATING INCOME   $ 12,604     $ 3,182     $ 15,786     $ 13,871     $ 3,522     $ 17,393     (9 %)   (9 %)   (2 %)   (4 %)
                                                                         
OPERATING MARGIN %     34 %             43 %     36 %             45 %   (226) bp.     (287) bp.     (153) bp.     (254) bp.  
                                                                         
INCOME TAX EFFECTS (5)   $ 2,541     $ 846     $ 3,387     $ 2,896     $ 971     $ 3,867     (12 %)   (12 %)   (5 %)   (7 %)
                                                                         
NET INCOME   $ 8,901     $ 2,336     $ 11,237     $ 9,938     $ 2,551     $ 12,489     (10 %)   (10 %)   (3 %)   (4 %)
                                                                         
DILUTED EARNINGS PER SHARE   $ 2.07             $ 2.61     $ 2.21             $ 2.77     (6 %)   (6 %)   1 %   0 %
                                                                         
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING     4,305       -       4,305       4,503       -       4,503     (4 %)   (4 %)   (4 %)   (4 %)
                                                                         
(1) This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. For a detailed explanation of the adjustments made to comparable GAAP measures, the reasons why management uses these measures, the usefulness of these measures and the material limitations on the usefulness of these measures, please see Appendix A.
                               
(2) We compare the percent change in the results from one period to another period using constant currency disclosure. We present constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the exchange rates in effect on May 31, 2015, which was the last day of our prior fiscal year, rather than the actual exchange rates in effect during the respective periods.
                               
(3) Stock-based compensation was included in the following GAAP operating expense categories:
                               
      Year Ended   Year Ended
      May 31, 2016   May 31, 2015
      GAAP   Adj.     Non-GAAP   GAAP   Adj.     Non-GAAP
  Sales and marketing   $ 220   $ (220 )   $ -   $ 180   $ (180 )   $ -
  Cloud software as a service and platform as a service     17     (17 )     -     10     (10 )     -
  Cloud infrastructure as a service     4     (4 )     -     5     (5 )     -
  Software license updates and product support     23     (23 )     -     21     (21 )     -
  Hardware products     7     (7 )     -     6     (6 )     -
  Hardware support     5     (5 )     -     6     (6 )     -
  Services     29     (29 )     -     30     (30 )     -
  Research and development     609     (609 )     -     522     (522 )     -
  General and administrative     120     (120 )     -     148     (148 )     -
    Subtotal     1,034     (1,034 )     -     928     (928 )     -
  Acquisition related and other     3     (3 )     -     5     (5 )     -
    Total stock-based compensation   $ 1,037   $ (1,037 )   $ -   $ 933   $ (933 )   $ -
                           
(4) Estimated future annual amortization expense related to intangible assets as of May 31, 2016 was as follows:
                           
  Fiscal 2017   $ 1,026                    
  Fiscal 2018     878                    
  Fiscal 2019     770                    
  Fiscal 2020     621                    
  Fiscal 2021     476                    
  Thereafter     1,172                    
    Total intangible assets, net   $ 4,943                    
                             
(5) Income tax effects were calculated reflecting an effective GAAP tax rate of 22.2% and 22.6% in fiscal 2016 and 2015, respectively, and an effective non-GAAP tax rate of 23.2% and 23.6% in fiscal 2016 and 2015, respectively. The differences between our GAAP and non-GAAP tax rates in fiscal 2016 and 2015 were primarily due to the net tax effects of acquisition related items, including the tax effects of amortization of intangible assets.
                             
* Not meaningful
   
   
   
ORACLE CORPORATION
         
FISCAL 2016 FINANCIAL RESULTS
CONDENSED CONSOLIDATED BALANCE SHEETS
($ in millions)
         
    May 31,   May 31,
    2016   2015
ASSETS            
             
  Current Assets:            
    Cash and cash equivalents   $ 20,152   $ 21,716
    Marketable securities     35,973     32,652
    Trade receivables, net     5,385     5,618
    Inventories     212     314
    Prepaid expenses and other current assets     2,591     2,220
      Total Current Assets     64,313     62,520
               
  Non-Current Assets:            
    Property, plant and equipment, net     4,000     3,686
    Intangible assets, net     4,943     6,406
    Goodwill, net     34,590     34,087
    Deferred tax assets     1,291     1,458
    Other assets     3,043     2,746
      Total Non-Current Assets     47,867     48,383
             
TOTAL ASSETS   $ 112,180   $ 110,903
             
LIABILITIES AND EQUITY            
             
  Current Liabilities:            
    Notes payable, current   $ 3,750   $ 1,999
    Accounts payable     504     806
    Accrued compensation and related benefits     1,966     1,839
    Deferred revenues     7,655     7,245
    Other current liabilities     3,333     3,317
      Total Current Liabilities     17,208     15,206
               
  Non-Current Liabilities:            
    Notes payable, non-current     40,105     39,959
    Income taxes payable     4,908     4,386
    Other non-current liabilities     2,169     2,254
      Total Non-Current Liabilities     47,182     46,599
               
  Equity     47,790     49,098
             
TOTAL LIABILITIES AND EQUITY   $ 112,180   $ 110,903
             
             
             
ORACLE CORPORATION  
   
FISCAL 2016 FINANCIAL RESULTS  
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  
($ in millions)  
             
    Year Ended May 31,  
    2016     2015  
Cash Flows From Operating Activities:            
  Net income   $ 8,901     $ 9,938  
  Adjustments to reconcile net income to net cash provided by operating activities:                
    Depreciation     871       712  
    Amortization of intangible assets     1,638       2,149  
    Deferred income taxes     (105 )     (548 )
    Stock-based compensation     1,037       933  
    Tax benefits on the exercise of stock options and vesting of restricted stock-based awards     311       396  
    Excess tax benefits on the exercise of stock options and vesting of restricted stock-based awards     (124 )     (244 )
    Other, net     143       327  
    Changes in operating assets and liabilities, net of effects from acquisitions:                
      Decrease in trade receivables, net     226       264  
      Decrease (increase) in inventories     88       (96 )
      Increase in prepaid expenses and other assets     (90 )     (387 )
      (Decrease) increase in accounts payable and other liabilities     (13 )     247  
      Increase (decrease) in income taxes payable     2       (10 )
      Increase in deferred revenues     676       655  
                       
        Net cash provided by operating activities     13,561       14,336  
                 
Cash Flows From Investing Activities:                
  Purchases of marketable securities and other investments     (24,562 )     (31,421 )
  Proceeds from maturities and sales of marketable securities and other investments     21,247       20,004  
  Acquisitions, net of cash acquired     (650 )     (6,239 )
  Capital expenditures     (1,189 )     (1,391 )
                   
        Net cash used for investing activities     (5,154 )     (19,047 )
                 
Cash Flows From Financing Activities:                
  Payments for repurchases of common stock     (10,440 )     (8,087 )
  Proceeds from issuances of common stock     1,425       1,816  
  Shares repurchased for tax withholdings upon vesting of restricted stock-based awards     (89 )     (14 )
  Payments of dividends to stockholders     (2,541 )     (2,255 )
  Proceeds from borrowings, net of issuance costs     3,750       19,842  
  Repayments of borrowings     (2,000 )     (1,500 )
  Excess tax benefits on the exercise of stock options and vesting of restricted stock-based awards     124       244  
  Distributions to noncontrolling interests     (85 )     (196 )
                   
        Net cash (used for) provided by financing activities     (9,856 )     9,850  
                 
Effect of exchange rate changes on cash and cash equivalents     (115 )     (1,192 )
                 
Net (decrease) increase in cash and cash equivalents     (1,564 )     3,947  
                 
Cash and cash equivalents at beginning of period     21,716       17,769  
                 
Cash and cash equivalents at end of period   $ 20,152     $ 21,716  
                 
                 
                 
ORACLE CORPORATION
FISCAL 2016 FINANCIAL RESULTS
FREE CASH FLOW - TRAILING 4-QUARTERS (1)
($ in millions)
 
  Fiscal 2015     Fiscal 2016  
  Q1     Q2     Q3     Q4     Q1     Q2     Q3     Q4  
                                               
GAAP Operating Cash Flow $ 15,357     $ 15,273     $ 14,509     $ 14,336     $ 13,464     $ 12,903     $ 14,114     $ 13,561  
                                                               
Capital Expenditures   (628 )     (727 )     (948 )     (1,391 )     (1,636 )     (1,606 )     (1,606 )     (1,189 )
                                                               
Free Cash Flow $ 14,729     $ 14,546     $ 13,561     $ 12,945     $ 11,828     $ 11,297     $ 12,508     $ 12,372  
                                                               
% Growth over prior year   4 %     0 %     (6 )%     (10 )%     (20 )%     (22 )%     (8 )%     (4 )%
                                                               
                                                               
GAAP Net Income $ 10,948     $ 10,896     $ 10,827     $ 9,938     $ 9,501     $ 9,198     $ 8,844     $ 8,901  
                                                               
Free Cash Flow as a % of Net Income   135 %     133 %     125 %     130 %     124 %     123 %     141 %     139 %
                                                               
   
(1) To supplement our statements of cash flows presented on a GAAP basis, we use non-GAAP measures of cash flows on a trailing 4-quarter basis to analyze cash flow generated from operations. We believe free cash flow is also useful as one of the bases for comparing our performance with our competitors. The presentation of non-GAAP free cash flow is not meant to be considered in isolation or as an alternative to net income as an indicator of our performance, or as an alternative to cash flows from operating activities as a measure of liquidity.
   
   
   
ORACLE CORPORATION
FISCAL 2016 FINANCIAL RESULTS
SUPPLEMENTAL ANALYSIS OF GAAP REVENUES AND HEADCOUNT (1)
($ in millions)
 
  Fiscal 2015     Fiscal 2016  
Q1     Q2     Q3     Q4     TOTAL     Q1     Q2     Q3     Q4     TOTAL  
REVENUES                                                                              
  Cloud software as a service and platform as a service $ 337     $ 361     $ 372     $ 416     $ 1,485     $ 451     $ 484     $ 583     $ 690     $ 2,207  
  Cloud infrastructure as a service   138       155       155       160       608       160       165       152       169       646  
    Total cloud revenues   475       516       527       576       2,093       611       649       735       859       2,853  
  New software licenses   1,370       2,045       1,982       3,138       8,535       1,151       1,677       1,680       2,766       7,276  
  Software license updates and product support   4,731       4,768       4,661       4,686       18,847       4,696       4,683       4,669       4,814       18,861  
    Total on-premise software revenues   6,101       6,813       6,643       7,824       27,382       5,847       6,360       6,349       7,580       26,137  
      Total cloud and on-premise software revenues   6,576       7,329       7,170       8,400       29,475       6,458       7,009       7,084       8,439       28,990  
                                                                                 
  Hardware products   578       717       712       818       2,825       570       573       604       725       2,471  
  Hardware support   587       617       587       589       2,380       558       550       531       558       2,197  
      Total hardware revenues   1,165       1,334       1,299       1,407       5,205       1,128       1,123       1,135       1,283       4,668  
                                                                                     
      Total services revenues   855       935       858       899       3,546       862       861       793       872       3,389  
                                                                                   
        Total revenues $ 8,596     $ 9,598     $ 9,327     $ 10,706     $ 38,226     $ 8,448     $ 8,993     $ 9,012     $ 10,594     $ 37,047  
                                                                               
AS REPORTED REVENUE GROWTH RATES                                                                              
  Cloud software as a service and platform as a service   32 %     39 %     30 %     29 %     32 %     34 %     34 %     57 %     66 %     49 %
  Cloud infrastructure as a service   26 %     60 %     28 %     25 %     33 %     16 %     7 %     (2 %)     5 %     6 %
    Total cloud revenues   31 %     45 %     29 %     28 %     33 %     29 %     26 %     40 %     49 %     36 %
  New software licenses   (2 %)     (4 %)     (7 %)     (17 %)     (9 %)     (16 %)     (18 %)     (15 %)     (12 %)     (15 %)
  Software license updates and product support   7 %     6 %     2 %     0 %     4 %     (1 %)     (2 %)     0 %     3 %     0 %
    Total on-premise software revenues   5 %     3 %     (1 %)     (8 %)     (1 %)     (4 %)     (7 %)     (4 %)     (3 %)     (5 %)
      Total cloud and on-premise software revenues   6 %     5 %     1 %     (6 %)     1 %     (2 %)     (4 %)     (1 %)     0 %     (2 %)
                                                                                 
  Hardware products   (14 %)     0 %     (2 %)     (6 %)     (5 %)     (1 %)     (20 %)     (15 %)     (11 %)     (13 %)
  Hardware support   (1 %)     1 %     (2 %)     (1 %)     (1 %)     (5 %)     (11 %)     (10 %)     (5 %)     (8 %)
      Total hardware revenues   (8 %)     1 %     (2 %)     (4 %)     (3 %)     (3 %)     (16 %)     (13 %)     (9 %)     (10 %)
                                                                                     
      Total services revenues   (7 %)     (3 %)     (3 %)     (4 %)     (4 %)     1 %     (8 %)     (7 %)     (3 %)     (4 %)
                                                                                   
        Total revenues   3 %     3 %     0 %     (5 %)     0 %     (2 %)     (6 %)     (3 %)     (1 %)     (3 %)
                                                                               
CONSTANT CURRENCY GROWTH RATES (2)                                                                              
  Cloud software as a service and platform as a service   32 %     41 %     34 %     35 %     35 %     38 %     39 %     61 %     68 %     52 %
  Cloud infrastructure as a service   25 %     62 %     32 %     31 %     36 %     23 %     11 %     2 %     8 %     11 %
    Total cloud revenues   30 %     47 %     33 %     34 %     36 %     34 %     31 %     44 %     51 %     40 %
  New software licenses   (2 %)     0 %     0 %     (10 %)     (4 %)     (9 %)     (12 %)     (11 %)     (10 %)     (11 %)
  Software license updates and product support   6 %     9 %     8 %     8 %     8 %     8 %     5 %     5 %     4 %     5 %
    Total on-premise software revenues   4 %     6 %     6 %     0 %     4 %     4 %     0 %     0 %     (2 %)     0 %
      Total cloud and on-premise software revenues   6 %     8 %     7 %     2 %     5 %     6 %     2 %     3 %     2 %     3 %
                                                                                 
  Hardware products   (14 %)     4 %     6 %     3 %     0 %     9 %     (14 %)     (10 %)     (10 %)     (7 %)
  Hardware support   (2 %)     5 %     4 %     7 %     4 %     4 %     (5 %)     (5 %)     (4 %)     (3 %)
      Total hardware revenues   (8 %)     4 %     5 %     5 %     2 %     6 %     (10 %)     (8 %)     (7 %)     (5 %)
                                                                                     
      Total services revenues   (8 %)     1 %     3 %     5 %     0 %     10 %     0 %     (2 %)     (1 %)     2 %
                                                                                     
        Total revenues   2 %     7 %     6 %     3 %     4 %     7 %     0 %     1 %     0 %     2 %
                                                                               
                                                                               
GEOGRAPHIC REVENUES                                                                              
                                                                               
REVENUES                                                                              
  Americas $ 4,620     $ 5,221     $ 5,134     $ 6,133     $ 21,107     $ 4,716     $ 4,960     $ 4,942     $ 5,847     $ 20,466  
  Europe, Middle East & Africa   2,589       2,911       2,813       3,067       11,380       2,456       2,645       2,661       3,120       10,881  
  Asia Pacific   1,387       1,466       1,380       1,506       5,739       1,276       1,388       1,409       1,627       5,700  
        Total revenues $ 8,596     $ 9,598     $ 9,327     $ 10,706     $ 38,226     $ 8,448     $ 8,993     $ 9,012     $ 10,594     $ 37,047  
                                                                               
                                                                               
HEADCOUNT                                                                              
                                                                               
GEOGRAPHIC AREA                                                                              
  Americas   54,073       57,243       58,117       58,415               59,901       59,999       60,437       60,329          
  Europe, Middle East & Africa   23,349       26,997       26,989       26,988               27,030       27,541       27,275       27,061          
  Asia Pacific   45,496       46,312       46,456       46,962               48,139       48,620       48,694       48,872          
        Total company   122,918       130,552       131,562       132,365               135,070       136,160       136,406       136,262          
                                                                                       
(1) The sum of the quarterly information presented may vary from the year-to-date information presented due to rounding.
   
(2) We compare the percent change in the results from one period to another period using constant currency disclosure. We present constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the exchange rates in effect on May 31, 2015 and 2014 for the fiscal 2016 and fiscal 2015 constant currency growth rate calculations presented, respectively, rather than the actual exchange rates in effect during the respective periods.
   
   
   
ORACLE CORPORATION
FISCAL 2016 FINANCIAL RESULTS
SUPPLEMENTAL GEOGRAPHIC REVENUES ANALYSIS (1)
($ in millions)
 
  Fiscal 2015     Fiscal 2016  
  Q1     Q2     Q3     Q4     TOTAL     Q1     Q2     Q3     Q4     TOTAL  
                                                                               
AMERICAS                                                                              
  Total cloud and on-premise software revenues $ 3,614     $ 4,044     $ 4,021     $ 4,926     $ 16,604     $ 3,684     $ 3,927     $ 3,964     $ 4,771     $ 16,346  
  Total hardware revenues $ 583     $ 716     $ 686     $ 751     $ 2,737     $ 589     $ 595     $ 571     $ 650     $ 2,404  
                                                                               
AS REPORTED GROWTH RATES                                                                              
  Total cloud and on-premise software revenues   5 %     6 %     5 %     6 %     6 %     2 %     (3 %)     (1 %)     (3 %)     (2 %)
Total hardware revenues   (9 %)     3 %     5 %     1 %     0 %     1 %     (17 %)     (17 %)     (14 %)     (12 %)
                                                                               
CONSTANT CURRENCY GROWTH RATES (2)                                                                              
  Total cloud and on-premise software revenues   6 %     8 %     7 %     9 %     7 %     6 %     0 %     1 %     (2 %)     1 %
  Total hardware revenues   (8 %)     5 %     7 %     4 %     2 %     6 %     (14 %)     (13 %)     (11 %)     (9 %)
                                                                               
                                                                               
EUROPE / MIDDLE EAST / AFRICA                                                                              
  Total cloud and on-premise software revenues $ 1,992     $ 2,234     $ 2,169     $ 2,369     $ 8,764     $ 1,873     $ 2,066     $ 2,069     $ 2,462     $ 8,471  
  Total hardware revenues $ 338     $ 380     $ 379     $ 423     $ 1,519     $ 330     $ 316     $ 349     $ 382     $ 1,377  
                                                                               
AS REPORTED GROWTH RATES                                                                              
  Total cloud and on-premise software revenues   10 %     4 %     (3 %)     (22 %)     (5 %)     (6 %)     (8 %)     (5 %)     4 %     (3 %)
  Total hardware revenues   (6 %)     2 %     (6 %)     (4 %)     (3 %)     (2 %)     (17 %)     (8 %)     (10 %)     (9 %)
                                                                               
CONSTANT CURRENCY GROWTH RATES (2)                                                                              
  Total cloud and on-premise software revenues   7 %     9 %     9 %     (8 %)     3 %     7 %     3 %     2 %     5 %     4 %
  Total hardware revenues   (7 %)     8 %     8 %     15 %     6 %     14 %     (6 %)     (1 %)     (8 %)     (1 %)
                                                                               
                                                                               
ASIA PACIFIC                                                                              
  Total cloud and on-premise software revenues $ 970     $ 1,051     $ 980     $ 1,105     $ 4,107     $ 901     $ 1,016     $ 1,051     $ 1,206     $ 4,173  
  Total hardware revenues $ 244     $ 238     $ 234     $ 233     $ 949     $ 209     $ 212     $ 215     $ 251     $ 887  
                                                                               
AS REPORTED GROWTH RATES                                                                              
  Total cloud and on-premise software revenues   3 %     2 %     (3 %)     (10 %)     (3 %)     (7 %)     (3 %)     7 %     9 %     2 %
  Total hardware revenues   (8 %)     (7 %)     (12 %)     (16 %)     (11 %)     (14 %)     (11 %)     (8 %)     8 %     (7 %)
                                                                               
CONSTANT CURRENCY GROWTH RATES (2)                                                                              
  Total cloud and on-premise software revenues   2 %     7 %     4 %