SOURCE: Oracle Corporation

Oracle Corporation

September 18, 2014 16:01 ET

SaaS and PaaS Cloud Revenue Up 32%, Software and Cloud Revenue Up 6% to $6.6 Billion

Record Quarterly Operating Cash Flow Up 7% to $6.7 Billion

REDWOOD SHORES, CA--(Marketwired - Sep 18, 2014) - Oracle Corporation (NYSE: ORCL) today announced that fiscal 2015 Q1 total revenues were up 3% to $8.6 billion. Total Software plus Cloud revenue was up 6% to $6.6 billion. Software-as-a-service (SaaS) and Platform-as-a-service (PaaS) cloud revenue was up 32% to $337 million. Infrastructure-as-a-service (IaaS) cloud revenue was up 26% to $138 million. Hardware systems revenue was down 8% to $1.2 billion. GAAP operating income was up 3% to $3.0 billion, and the GAAP operating margin was 34%. Non-GAAP operating income was up 2% to $3.8 billion, and the non-GAAP operating margin was 44%. GAAP net income was unchanged at $2.2 billion while non-GAAP net income was up 2% at $2.8 billion. GAAP earnings per share were $0.48, up 2% compared to last year while non-GAAP earnings per share were $0.62, up 4%. GAAP operating cash flow on a trailing twelve-month basis was $15.4 billion.      

"We are increasing our cloud services growth rate while simultaneously delivering record levels of cash flow," said Oracle CEO, Safra Catz. "In Q1, our overall cloud services business grew more than 30% to $475 million in revenue. At the same time, we delivered an all-time record operating cash flow up 7% to $6.7 billion. We are laser focused on two goals: growing our cloud business and growing our cash flow. We're off to a good start in FY15."

"Our internally developed Fusion cloud applications business grew at a rate of nearly 200% in the quarter," said Oracle CEO, Mark Hurd. "As our hyper-growth Fusion applications become a larger and larger portion of our total SaaS sales, that will drive up our overall cloud services growth rate. Our cloud business is already three times the size of Workday, but we won't be satisfied until we're number one in the cloud."

"Next week at Oracle Open World, we will be rolling out our database cloud service," said Oracle Executive Chairman and Chief Technology Officer, Larry Ellison. "Database is our largest software business, and database will be our largest cloud service. With our new multitenant Database as a Service offering, our customers and ISV's can move any of their existing Oracle databases and applications to the Oracle Cloud with the push of a button."

The Board of Directors also declared a quarterly cash dividend of $0.12 per share of outstanding common stock. This dividend will be paid to stockholders of record as of the close of business on October 8, 2014, with a payment date of October 29, 2014.

Oracle also announced that its Board of Directors authorized the repurchase of up to an additional $13.0 billion of common stock under its existing share repurchase program in future quarters.

Q1 Fiscal 2015 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 Q1 results and Fiscal 2015 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, Passcode: 99926438.

About Oracle

Oracle engineers hardware and software to work together in the cloud and in your data center. 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 cloud services growth rate, growing our cash flow, our plans to be number one in the cloud, our Database as a Service offering and that database will be our largest cloud service, 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) 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. (2) 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, unanticipated fluctuations in currency exchange rates, delays in delivery of new products or releases or a decline in our renewal rates for support contracts. (3) Our cloud computing strategy, including our Oracle Cloud Software-as-a-Service, Platform-as-a-Service, Infrastructure-as-a-Service and our new Database as a Service offerings, may not be successful. (4) 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. (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) 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. (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 September 18, 2014. Oracle undertakes no duty to update any statement in light of new information or future events.

 
 
ORACLE CORPORATION
 
Q1 FISCAL 2015 FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($ in millions, except per share data)
 
             
    Three Months Ended August 31,        
                    % Increase   % Increase (Decrease) in Constant
    2014   % of Revenues   2013   % of Revenues   (Decrease) in US $   Currency (1)
REVENUES                            
  New software licenses   $ 1,370   16%   $ 1,399   17%   (2%)   (2%)
  Cloud software-as-a-service and platform-as-a-service     337   4%     254   3%   32%   32%
  Cloud infrastructure-as-a-service     138   1%     109   1%   26%   25%
  Software license updates and product support     4,731   55%     4,431   53%   7%   6%
    Software and Cloud Revenues     6,576   76%     6,193   74%   6%   6%
  Hardware systems products     578   7%     669   8%   (14%)   (14%)
  Hardware systems support     587   7%     592   7%   (1%)   (2%)
    Hardware Systems Revenues     1,165   14%     1,261   15%   (8%)   (8%)
    Services Revenues     855   10%     918   11%   (7%)   (8%)
      Total Revenues     8,596   100%     8,372   100%   3%   2%
                             
OPERATING EXPENSES                            
  Sales and marketing     1,706   20%     1,620   19%   5%   5%
  Cloud software-as-a-service and platform-as-a-service     149   2%     102   1%   47%   45%
  Cloud infrastructure-as-a-service     79   1%     72   1%   10%   9%
  Software license updates and product support     272   3%     288   3%   (5%)   (6%)
  Hardware systems products     298   4%     330   4%   (10%)   (10%)
  Hardware systems support     192   2%     209   3%   (8%)   (9%)
  Services     691   8%     720   9%   (4%)   (5%)
  Research and development     1,329   16%     1,237   15%   7%   7%
  General and administrative     276   3%     260   3%   6%   5%
  Amortization of intangible assets     547   6%     595   7%   (8%)   (8%)
  Acquisition related and other     25   0%     10   0%   138%   134%
  Restructuring     69   1%     56   1%   23%   21%
      Total Operating Expenses     5,633   66%     5,499   66%   2%   2%
                             
OPERATING INCOME     2,963   34%     2,873   34%   3%   2%
  Interest expense     (261 ) (3%)     (217 ) (2%)   21%   21%
  Non-operating income, net     16   0%     7   0%   144%   80%
                             
INCOME BEFORE PROVISION FOR INCOME TAXES     2,718   31%     2,663   32%   2%   1%
  Provision for income taxes     534   6%     472   6%   13%   12%
                             
NET INCOME   $ 2,184   25%   $ 2,191   26%   0%   (1%)
                             
EARNINGS PER SHARE:                            
  Basic   $ 0.49       $ 0.48            
  Diluted   $ 0.48       $ 0.47            
                             
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:                            
  Basic     4,451         4,608            
  Diluted     4,548         4,674            
                             
(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, 2014, 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 August 31, 2014 compared with the corresponding prior year period increased our revenues by 1 percentage point and operating income by 1 percentage point.
   
   
   
ORACLE CORPORATION
 
Q1 FISCAL 2015 FINANCIAL RESULTS
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)
 
($ in millions, except per share data)
 
  Three Months Ended August 31,     % Increase (Decrease) in US $   % Increase (Decrease) in Constant Currency (2)
  2014 GAAP     Adj.     2014 Non-GAAP     2013 GAAP     Adj.     2013 Non-GAAP     GAAP   Non-GAAP   GAAP   Non-GAAP
                                                               
TOTAL REVENUES (3) (4) $ 8,596     $ 3     $ 8,599     $ 8,372     $ 9     $ 8,381     3%   3%   2%   2%
                                                               
TOTAL SOFTWARE AND CLOUD REVENUES (3) $ 6,576     $ 2     $ 6,578     $ 6,193     $ 4     $ 6,197     6%   6%   6%   6%
  New software licenses   1,370       -       1,370       1,399       -       1,399     (2%)   (2%)   (2%)   (2%)
  Cloud software-as-a-service and platform-as-a-service (3)   337       2       339       254       3       257     32%   32%   32%   31%
  Cloud infrastructure-as-a-service   138       -       138       109       -       109     26%   26%   25%   25%
  Software license updates and product support   4,731       -       4,731       4,431       1       4,432     7%   7%   6%   6%
                                                               
TOTAL HARDWARE SYSTEMS REVENUES (4) $ 1,165     $ 1     $ 1,166     $ 1,261     $ 5     $ 1,266     (8%)   (8%)   (8%)   (8%)
  Hardware systems products   578       -       578       669       -       669     (14%)   (14%)   (14%)   (14%)
  Hardware systems support (4)   587       1       588       592       5       597     (1%)   (2%)   (2%)   (2%)
                                                               
TOTAL OPERATING EXPENSES $ 5,633     $ (853 )   $ 4,780     $ 5,499     $ (859 )   $ 4,640     2%   3%   2%   2%
  Stock-based compensation (5)   212       (212 )     -       198       (198 )     -     7%   *   7%   *
  Amortization of intangible assets (6)   547       (547 )     -       595       (595 )     -     (8%)   *   (8%)   *
  Acquisition related and other   25       (25 )     -       10       (10 )     -     138%   *   134%   *
  Restructuring   69       (69 )     -       56       (56 )     -     23%   *   21%   *
                                                               
OPERATING INCOME $ 2,963     $ 856     $ 3,819     $ 2,873     $ 868     $ 3,741     3%   2%   2%   1%
                                                               
OPERATING MARGIN%   34 %             44 %     34 %             45 %   15 bp.   (22) bp.   8 bp.    (25) bp. 
INCOME TAX EFFECTS (7) $ 534     $ 234     $ 768     $ 472     $ 298     $ 770     13%   0%   12%   (1%)
                                                               
NET INCOME $ 2,184     $ 622     $ 2,806     $ 2,191     $ 570     $ 2,761     0%   2%   (1%)   1%
                                                               
DILUTED EARNINGS PER SHARE $ 0.48             $ 0.62     $ 0.47             $ 0.59     2%   4%   1   4% 
                                                               
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING   4,548       -       4,548       4,674       -       4,674     (3%)   (3%)   (3%)   (3%)
                                                               
(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, 2014, which was the last day of our prior fiscal year, rather than the actual exchange rates in effect during the respective periods.
                                         
(3) As of August 31, 2014, approximately $1 million in estimated revenues related to assumed cloud software-as-a-service and platform-as-a-service contracts will not be recognized for the remainder of fiscal 2015 due to business combination accounting rules.
                                         
(4) As of August 31, 2014, approximately $1 million in estimated revenues related to hardware systems support contracts will not be recognized for the remainder of fiscal 2015 due to business combination accounting rules.
                                         
(5) Stock-based compensation was included in the following GAAP operating expense categories:
                                         
    Three Months Ended   Three Months Ended
    August 31, 2014   August 31, 2013
    GAAP   Adj.     Non-GAAP   GAAP   Adj.     Non-GAAP
  Sales and marketing $ 43   $ (43 )   $ -   $ 39   $ (39 )   $ -
  Cloud software-as-a-service and platform-as-a-service   2     (2 )     -     2     (2 )     -
  Cloud infrastructure-as-a-service   1     (1 )     -     1     (1 )     -
  Software license updates and product support   5     (5 )     -     6     (6 )     -
  Hardware systems products   1     (1 )     -     2     (2 )     -
  Hardware systems support   1     (1 )     -     3     (3 )     -
  Services   6     (6 )     -     6     (6 )     -
  Research and development   108     (108 )     -     97     (97 )     -
  General and administrative   45     (45 )     -     42     (42 )     -
    Subtotal   212     (212 )     -     198     (198 )     -
  Acquisition related and other   3     (3 )     -     2     (2 )     -
    Total stock-based compensation $ 215   $ (215 )   $ -   $ 200   $ (200 )   $ -
                                         
(6) Estimated future annual amortization expense related to intangible assets as of August 31, 2014 was as follows:
  Remainder of Fiscal 2015 $ 1,395                                  
  Fiscal 2016   1,345                                  
  Fiscal 2017   749                                  
  Fiscal 2018   611                                  
  Fiscal 2019   511                                  
  Fiscal 2020   387                                  
  Thereafter   592                                  
    Total intangible assets subject to amortization   5,590                                  
  In-process research and development   15                                  
    Total intangible assets, net $ 5,605                                  
                                         
(7) Income tax effects were calculated reflecting an effective GAAP tax rate of 19.7% and 17.7% in the first quarter of fiscal 2015 and 2014, respectively, and an effective non-GAAP tax rate of 21.5% and 21.8% in the first quarter of fiscal 2015 and 2014, respectively. The differences between our GAAP and non-GAAP tax rates in the first quarter of fiscal 2015 and 2014 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
 
Q1 FISCAL 2015 FINANCIAL RESULTS
CONDENSED CONSOLIDATED BALANCE SHEETS
($ in millions)
 
    August 31,   May 31,
    2014   2014
ASSETS            
             
  Current Assets:            
    Cash and cash equivalents   $ 24,179   $ 17,769
    Marketable securities     27,437     21,050
    Trade receivables, net     3,551     6,087
    Inventories     179     189
    Deferred tax assets     833     914
    Prepaid expenses and other current assets     2,015     2,129
      Total Current Assets     58,194     48,138
  Non-Current Assets:            
    Property, plant and equipment, net     3,086     3,061
    Intangible assets, net     5,605     6,137
    Goodwill     29,707     29,652
    Deferred tax assets     916     837
    Other assets     2,218     2,519
      Total Non-Current Assets     41,532     42,206
               
TOTAL ASSETS   $ 99,726   $ 90,344
             
LIABILITIES AND EQUITY            
             
  Current Liabilities:            
    Notes payable, current and other current borrowings   $ -   $ 1,508
    Accounts payable     423     471
    Accrued compensation and related benefits     1,491     1,940
    Income taxes payable     425     416
    Deferred revenues     8,939     7,269
    Other current liabilities     2,099     2,785
      Total Current Liabilities     13,377     14,389
  Non-Current Liabilities:            
    Notes payable and other non-current borrowings     32,567     22,667
    Income taxes payable     4,148     4,184
    Other non-current liabilities     1,703     1,657
      Total Non-Current Liabilities     38,418     28,508
             
  Equity     47,931     47,447
             
TOTAL LIABILITIES AND EQUITY   $ 99,726   $ 90,344
             
             
             
ORACLE CORPORATION  
   
Q1 FISCAL 2015 FINANCIAL RESULTS  
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  
($ in millions)  
   
    Three Months Ended
August 31,
 
    2014     2013  
Cash Flows From Operating Activities:                
  Net income   $ 2,184     $ 2,191  
  Adjustments to reconcile net income to net cash provided by operating activities:                
    Depreciation     160       150  
    Amortization of intangible assets     547       595  
    Deferred income taxes     (68 )     (101 )
    Stock-based compensation     215       200  
    Tax benefits on the exercise of stock options and vesting of restricted stock-based awards     96       67  
    Excess tax benefits on the exercise of stock options and vesting of restricted stock-based awards     (51 )     (40 )
      Other, net     46       17  
      Changes in operating assets and liabilities, net of effects from acquisitions:                
      Decrease in trade receivables, net     2,506       2,707  
      Decrease in inventories     10       5  
      Decrease in prepaid expenses and other assets     275       366  
      Decrease in accounts payable and other liabilities     (1,088 )     (994 )
      Increase (decrease) in income taxes payable     80       (313 )
      Increase in deferred revenues     1,816       1,442  
                 
        Net cash provided by operating activities     6,728       6,292  
                 
Cash Flows From Investing Activities:                
  Purchases of marketable securities and other investments     (10,340 )     (8,549 )
  Proceeds from maturities and sales of marketable securities and other investments     3,878       6,515  
  Acquisitions, net of cash acquired     (37 )     (1,314 )
  Capital expenditures     (201 )     (153 )
                   
        Net cash used for investing activities     (6,700 )     (3,501 )
                 
Cash Flows From Financing Activities:                
  Payments for repurchases of common stock     (2,000 )     (2,968 )
  Proceeds from issuances of common stock     588       285  
  Payments of dividends to stockholders     (537 )     (554 )
  Proceeds from borrowings, net of issuance costs     9,945       5,566  
  Repayments of borrowings     (1,500 )     -  
  Excess tax benefits on the exercise of stock options and vesting of restricted stock-based awards     51       40  
  Distributions to noncontrolling interests     (27 )     (28 )
                   
        Net cash provided by financing activities     6,520       2,341  
                 
Effect of exchange rate changes on cash and cash equivalents     (138 )     (81 )
                 
Net increase in cash and cash equivalents     6,410       5,051  
                 
Cash and cash equivalents at beginning of period     17,769       14,613  
                 
Cash and cash equivalents at end of period   $ 24,179     $ 19,664  
                 
                 
                 
ORACLE CORPORATION
Q1 FISCAL 2015 FINANCIAL RESULTS
FREE CASH FLOW - TRAILING 4-QUARTERS (1)
($ in millions)
 
  Fiscal 2014     Fiscal 2015
  Q1     Q2     Q3     Q4     Q1   Q2   Q3   Q4
                                                 
GAAP Operating Cash Flow $ 14,845     $ 15,196     $ 15,029     $ 14,921     $ 15,357            
                                                 
Capital Expenditures (2)   (664 )     (578 )     (609 )     (580 )     (628 )          
                                                 
Free Cash Flow $ 14,181     $ 14,618     $ 14,420     $ 14,341     $ 14,729            
                                                 
% Growth over prior year   6 %     14 %     11 %     6 %     4 %          
                                                 
                                                 
GAAP Net Income $ 11,082     $ 11,054     $ 11,115     $ 10,955     $ 10,948            
                                                 
Free Cash Flow as a % of Net Income   128 %     132 %     130 %     131 %     135 %          
   
(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.
   
(2) Derived from capital expenditures as reported in cash flows from investing activities as per our consolidated statements of cash flows presented in accordance with GAAP.
   
   
   
ORACLE CORPORATION
Q1 FISCAL 2015 FINANCIAL RESULTS
SUPPLEMENTAL ANALYSIS OF GAAP REVENUES AND HEADCOUNT (1)
($in millions)
                                                     
  Fiscal 2014     Fiscal 2015  
Q1     Q2     Q3     Q4     TOTAL     Q1     Q2   Q3   Q4   TOTAL  
REVENUES                                                                  
  New software licenses $ 1,399     $ 2,121     $ 2,128     $ 3,769     $ 9,416     $ 1,370                 $ 1,370  
  Cloud software-as-a-service and platform-as-a-service   254       259       287       322       1,121       337                   337  
  Cloud infrastructure-as-a-service   109       97       121       128       456       138                   138  
  Software license updates and product support   4,431       4,516       4,564       4,695       18,206       4,731                   4,731  
    Software and Cloud Revenues   6,193       6,993       7,100       8,914       29,199       6,576                   6,576  
                                                                   
  Hardware systems products   669       714       725       870       2,976       578                   578  
  Hardware systems support   592       609       598       596       2,396       587                   587  
    Hardware Systems Revenues   1,261       1,323       1,323       1,466       5,372       1,165                   1,165  
                                                                       
    Services Revenues   918       959       884       940       3,704       855                   855  
                                                                         
      Total Revenues $ 8,372     $ 9,275     $ 9,307     $ 11,320     $ 38,275     $ 8,596                 $ 8,596  
                                                                   
AS REPORTED REVENUE GROWTH RATES                                                                  
  New software licenses   2 %     (2 %)     1 %     0 %     0 %     (2 %)                 (2 %)
  Cloud software-as-a-service and platform-as-a-service   25 %     19 %     24 %     25 %     23 %     32 %                 32 %
  Cloud infrastructure-as-a-service   (9 %)     (15 %)     10 %     13 %     0 %     26 %                 26 %
  Software license updates and product support   7 %     6 %     5 %     7 %     6 %     7 %                 7 %
    Software and Cloud Revenues   6 %     3 %     5 %     4 %     5 %     6 %                 6 %
                                                                     
  Hardware systems products   (14 %)     (3 %)     8 %     2 %     (2 %)     (14 %)                 (14 %)
  Hardware systems support   3 %     4 %     5 %     2 %     4 %     (1 %)                 (1 %)
    Hardware Systems Revenues   (7 %)     0 %     7 %     2 %     0 %     (8 %)                 (8 %)
                                                                     
    Services Revenues   (8 %)     (5 %)     (5 %)     (4 %)     (5 %)     (7 %)                 (7 %)
                                                                     
      Total Revenues   2 %     2 %     4 %     3 %     3 %     3 %                 3 %
                                                                   
CONSTANT CURRENCY GROWTH RATES (2)                                                                  
  New software licenses   5 %     0 %     3 %     (1 %)     1 %     (2 %)                 (2 %)
  Cloud software-as-a-service and platform-as-a-service   26 %     20 %     25 %     25 %     24 %     32 %                 32 %
  Cloud infrastructure-as-a-service   (7 %)     (14 %)     11 %     13 %     1 %     25 %                 25 %
  Software license updates and product support   8 %     7 %     7 %     6 %     7 %     6 %                 6 %
    Software and Cloud Revenues   8 %     5 %     6 %     4 %     5 %     6 %                 6 %
                                                                     
  Hardware systems products   (13 %)     (2 %)     10 %     3 %     (1 %)     (14 %)                 (14 %)
  Hardware systems support   5 %     5 %     7 %     2 %     5 %     (2 %)                 (2 %)
    Hardware Systems Revenues   (6 %)     1 %     9 %     3 %     2 %     (8 %)                 (8 %)
                                                                     
    Services Revenues   (6 %)     (3 %)     (3 %)     (3 %)     (4 %)     (8 %)                 (8 %)
                                                                     
      Total Revenues   4 %     3 %     6 %     3 %     4 %     2 %                 2 %
                                                                   
                                                                   
GEOGRAPHIC REVENUES                                                                  
                                                                   
  REVENUES                                                                  
    Americas $ 4,517     $ 4,995     $ 4,953     $ 5,857     $ 20,323     $ 4,620                 $ 4,620  
    Europe, Middle East & Africa   2,439       2,817       2,923       3,768       11,946       2,589                   2,589  
    Asia Pacific   1,416       1,463       1,431       1,695       6,006       1,387                   1,387  
      Total Revenues $ 8,372     $ 9,275     $ 9,307     $ 11,320     $ 38,275     $ 8,596                 $ 8,596  
                                                                   
                                                                   
HEADCOUNT                                                                  
                                                                   
  GEOGRAPHIC AREA                                                                  
    Americas   53,465       53,073       53,799       53,827               54,073                      
    Europe, Middle East & Africa   23,349       23,178       23,350       23,339               23,349                      
    Asia Pacific   45,513       45,617       45,561       45,108               45,496                      
      Total Company   122,327       121,868       122,710       122,274               122,918                      
                                                                   
(1) The sum of the quarterly financial information may vary from year-to-date financial information 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, 2014 and 2013 for the fiscal 2015 and fiscal 2014 constant currency growth rate calculations presented, respectively, rather than the actual exchange rates in effect during the respective periods.
   
   
   
ORACLE CORPORATION
Q1 FISCAL 2015 FINANCIAL RESULTS
SUPPLEMENTAL GEOGRAPHIC REVENUES ANALYSIS (1)
($in millions)
                                                     
  Fiscal 2014     Fiscal 2015  
  Q1     Q2     Q3     Q4     TOTAL     Q1     Q2   Q3   Q4   TOTAL  
                                                                   
AMERICAS                                                                  
  Software and cloud revenues $ 3,434     $ 3,808     $ 3,847     $ 4,649     $ 15,737     $ 3,614                 $ 3,614  
  Hardware systems revenues $ 640     $ 694     $ 655     $ 747     $ 2,736     $ 583                 $ 583  
                                                                   
AS REPORTED GROWTH RATES                                                                  
  Software and cloud revenues   9 %     5 %     5 %     (1 %)     4 %     5 %                 5 %
  Hardware systems revenues   (2 %)     7 %     14 %     3 %     5 %     (9 %)                 (9 %)
                                                                   
CONSTANT CURRENCY GROWTH RATES (2)                                                                  
  Software and cloud revenues   9 %     6 %     7 %     1 %     5 %     6 %                 6 %
  Hardware systems revenues   (1 %)     8 %     16 %     5 %     6 %     (8 %)                 (8 %)
                                                                   
                                                                   
EUROPE / MIDDLE EAST / AFRICA                                                                  
  Software and cloud revenues $ 1,816     $ 2,155     $ 2,245     $ 3,032     $ 9,249     $ 1,992                 $ 1,992  
  Hardware systems revenues $ 358     $ 372     $ 403     $ 440     $ 1,572     $ 338                 $ 338  
                                                                   
AS REPORTED GROWTH RATES                                                                  
  Software and cloud revenues   7 %     8 %     8 %     15 %     10 %     10 %                 10 %
  Hardware systems revenues   (11 %)     (5 %)     3 %     7 %     (1 %)     (6 %)                 (6 %)
                                                                   
CONSTANT CURRENCY GROWTH RATES (2)                                                                  
  Software and cloud revenues   4 %     6 %     6 %     10 %     7 %     7 %                 7 %
  Hardware systems revenues   (13 %)     (6 %)     2 %     3 %     (3 %)     (7 %)                 (7 %)
                                                                   
                                                                   
ASIA PACIFIC                                                                  
  Software and cloud revenues $ 943     $ 1,030     $ 1,008     $ 1,233     $ 4,213     $ 970                 $ 970  
  Hardware systems revenues $ 263     $ 257     $ 265     $ 279     $ 1,064     $ 244                 $ 244  
                                                                   
AS REPORTED GROWTH RATES                                                                  
  Software and cloud revenues   (3 %)     (9 %)     (5 %)     0 %     (4 %)     3 %                 3 %
  Hardware systems revenues   (12 %)     (9 %)     (3 %)     (4 %)     (7 %)     (8 %)                 (8 %)
                                                                   
CONSTANT CURRENCY GROWTH RATES (2)                                                                  
  Software and cloud revenues   8 %     0 %     3 %     3 %     3 %     2 %                 2 %
  Hardware systems revenues   (5 %)     (3 %)     3 %     (3 %)     (2 %)     (8 %)                 (8 %)
                                                                   
                                                                   
TOTAL COMPANY                                                                  
  Software and cloud revenues $ 6,193     $ 6,993     $ 7,100     $ 8,914     $ 29,199     $ 6,576                 $ 6,576  
  Hardware systems revenues $ 1,261     $ 1,323     $ 1,323     $ 1,466     $ 5,372     $ 1,165                 $ 1,165  
                                                                   
AS REPORTED GROWTH RATES                                                                  
  Software and cloud revenues   6 %     3 %     5 %     4 %     5 %     6 %                 6 %
  Hardware systems revenues   (7 %)     0 %     7 %     2 %     0 %     (8 %)                 (8 %)
                                                                   
CONSTANT CURRENCY GROWTH RATES (2)                                                                  
  Software and cloud revenues   8 %     5 %     6 %     4 %     5 %     6 %                 6 %
  Hardware systems revenues   (6 %)     1 %     9 %     3 %     2 %     (8 %)                 (8 %)
                                                                   
(1) The sum of the quarterly financial information may vary from year-to-date financial information 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, 2014 and 2013 for the fiscal 2015 and fiscal 2014 constant currency growth rate calculations presented, respectively, rather than the actual exchange rates in effect during the respective periods.
   
   
   
APPENDIX A
ORACLE CORPORATION
Q1 FISCAL 2015 FINANCIAL RESULTS
EXPLANATION OF NON-GAAP MEASURES
 

To supplement our financial results presented on a GAAP basis, we use the non-GAAP measures indicated in the tables, which exclude certain business combination accounting entries and expenses related to acquisitions, as well as other significant expenses including stock-based compensation, that we believe are helpful in understanding our past financial performance and our future results. Our non-GAAP financial 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. Our management regularly uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our business and make operating decisions. These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. Compensation of our executives is based in part on the performance of our business based on these non-GAAP measures. Our non-GAAP financial measures reflect adjustments based on the following items, as well as the related income tax effects:

  • Cloud software-as-a-service and platform-as-a-service, software license updates and product support and hardware systems support deferred revenues: Business combination accounting rules require us to account for the fair values of cloud software-as-a-service and platform-as-a-service contracts, software license updates and product support contracts and hardware systems support contracts assumed in connection with our acquisitions. Because these contracts are generally one year in duration, our GAAP revenues generally for the one year period subsequent to our acquisition of a business do not reflect the full amount of revenues on these assumed cloud and support contracts that would have otherwise been recorded by the acquired entity. The non-GAAP adjustment to our cloud software-as-a-service and platform-as-a-service revenues, software license updates and product support revenues and hardware systems support revenues is intended to include, and thus reflect, the full amount of such revenues. We believe the adjustment to these revenues is useful to investors as a measure of the ongoing performance of our business. We have historically experienced high renewal rates on our software license updates and product support contracts and our objective is to increase the renewal rates on acquired and new cloud software-as-a-service and platform-as-a-service and hardware systems support contracts; however, we cannot be certain that our customers will renew our cloud software-as-a-service and platform-as-a-service contracts, software license updates and product support contracts or our hardware systems support contracts.

  • Stock-based compensation expenses: We have excluded the effect of stock-based compensation expenses from our non-GAAP operating expenses and net income measures. Although stock-based compensation is a key incentive offered to our employees, and we believe such compensation contributed to the revenues earned during the periods presented and also believe it will contribute to the generation of future period revenues, we continue to evaluate our business performance excluding stock-based compensation expenses. Stock-based compensation expenses will recur in future periods.

  • Amortization of intangible assets: We have excluded the effect of amortization of intangible assets from our non-GAAP operating expenses and net income measures. Amortization of intangible assets is inconsistent in amount and frequency and is significantly affected by the timing and size of our acquisitions. Investors should note that the use of intangible assets contributed to our revenues earned during the periods presented and will contribute to our future period revenues as well. Amortization of intangible assets will recur in future periods.

  • Acquisition related and other expenses; and restructuring expenses: We have excluded the effect of acquisition related and other expenses and the effect of restructuring expenses from our non-GAAP operating expenses and net income measures. We incurred significant expenses in connection with our acquisitions and also incurred certain other operating expenses or income, which we generally would not have otherwise incurred in the periods presented as a part of our continuing operations. Acquisition related and other expenses consist of personnel related costs for transitional employees, other acquired employee related costs, stock-based compensation expenses (in addition to the stock-based compensation expenses described above), integration related professional services, certain business combination adjustments including adjustments after the measurement period has ended and certain other operating items, net. Substantially all of the stock-based compensation expenses included in acquisition related and other expenses resulted from unvested options assumed in acquisitions whose vesting was fully accelerated upon termination of the employees pursuant to the original terms of those options. Restructuring expenses consist of employee severance and other exit costs. We believe it is useful for investors to understand the effects of these items on our total operating expenses. Although acquisition related expenses and restructuring expenses generally diminish over time with respect to past acquisitions, we generally will incur these expenses in connection with any future acquisitions.

Contact Information

  • Contact:
    Ken Bond
    Oracle Investor Relations
    1.650.607.0349
    Email Contact

    Deborah Hellinger
    Oracle Corporate Communications
    1.212.508.7935
    Email Contact