Oracle Reports Q1 GAAP EPS Up 14% to 47 Cents; Q1 Non-GAAP EPS Up 12% to 59 Cents

Q1 Operating Cash Flow Increases to $6.3 Billion, TTM Operating Cash Flow Increases to $14.8 Billion

Marketwired

REDWOOD SHORES, CA--(Marketwired - Sep 18, 2013) - Oracle Corporation (NYSE: ORCL) today announced that both fiscal 2014 Q1 GAAP and non-GAAP total revenues were up 2% to $8.4 billion. GAAP new software licenses and cloud software subscriptions revenues were up 5% to $1.7 billion while non-GAAP new software licenses and cloud software subscriptions revenues were up 4% to $1.7 billion. Both GAAP and non-GAAP software license updates and product support revenues were up 7% to $4.4 billion. Hardware systems products revenues were $669 million. GAAP operating income was flat at $2.9 billion, and GAAP operating margin was 34%. Non-GAAP operating income was up 4% to $3.7 billion, and non-GAAP operating margin was 45%. GAAP net income was up 8% to $2.2 billion, while non-GAAP net income was up 6% to $2.8 billion. GAAP earnings per share were up 14% to $0.47, while non-GAAP earnings per share were up 12% to $0.59. GAAP operating cash flow on a trailing twelve-month basis was $14.8 billion. 

Without the impact of the US dollar strengthening compared to foreign currencies, Oracle's reported Q1 GAAP earnings per share would have been up 17% and non-GAAP earnings per share would have been up 14%. GAAP and non-GAAP total revenues also would have been up 4%; GAAP new software licenses and cloud software subscriptions revenues would have been up 7% while non-GAAP new software licenses and cloud software subscriptions revenues would have been up 6%.

"Non-GAAP earnings per share increased 12% to $0.59, the best ever result for the first quarter of our fiscal year," said Oracle President and CFO, Safra Catz. "Those record level earnings were enabled by an operating margin of 45% for the quarter. We also set a free cash flow record of over $6 billion in Q1, and then we returned half of that to our stockholders by repurchasing $3 billion of our shares in the quarter."

"Engineered systems had its best ever Q1 in terms of unit sales, growing over 60% compared with the same quarter last year," said Oracle President Mark Hurd. "New software license results were especially strong in the Americas, which saw 15% growth in constant currency."

"Next week at Oracle OpenWorld, we will announce the In-Memory Option for the Oracle database," said Oracle CEO, Larry Ellison. "Virtually every existing application that runs on top of the Oracle database will run dramatically faster by simply turning on the new In-Memory feature. Our customers don't have to make any changes to their applications whatsoever; they simply flip on the in-memory switch, and the Oracle database immediately starts scanning data at a rate of billions or tens of billions of rows per second."

The Board of Directors 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, 2013, with a payment date of October 29, 2013.

Q1 Fiscal 2014 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 (913) 312-6699, Passcode: 790817. 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 2014 financial tables are available on the Oracle Investor Relations website.

A replay of the conference call will also be available by dialing (719) 457-0820 or (888) 203-1112, Passcode: 7920718.

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 the In-Memory Option for the Oracle database to be announced at Oracle OpenWorld, 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, political and market conditions, including the current European economic crisis and slowing economic conditions in 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 hardware systems revenues and profitability could decline further, and we may fail to achieve our financial forecasts with respect to this business. (4) 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. (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) Our periodic workforce restructurings, including reorganizations of our sales force, can be disruptive. (7) 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. 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, 2013. Oracle undertakes no duty to update any statement in light of new information or future events.

                         
ORACLE CORPORATION  
Q1 FISCAL 2014 FINANCIAL RESULTS  
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  
($ in millions, except per share data)  
                         
  Three Months Ended August 31,          
                      % Increase   
  2013   % of Revenues   2012   % of Revenues   % Increase (Decrease)
in US $
  (Decrease) in Constant Currency (1)  
REVENUES                            
  New software licenses and cloud software subscriptions $ 1,653   20%   $ 1,574   19%   5%   7%  
  Software license updates and product support   4,431   53%     4,140   51%   7%   8%  
    Software Revenues   6,084   73%     5,714   70%   6%   8%  
  Hardware systems products   669   8%     779   9%   (14%)   (13%)  
  Hardware systems support   592   7%     574   7%   3%   5%  
    Hardware Systems Revenues   1,261   15%     1,353   16%   (7%)   (6%)  
    Services Revenues   1,027   12%     1,114   14%   (8%)   (6%)  
      Total Revenues   8,372   100%     8,181   100%   2%   4%  
OPERATING EXPENSES                            
  Sales and marketing   1,708   20%     1,545   19%   11%   12%  
  Software license updates and product support   288   3%     283   3%   2%   3%  
  Hardware systems products   330   4%     384   5%   (14%)   (13%)  
  Hardware systems support   209   3%     224   3%   (7%)   (6%)  
  Services   806   10%     884   11%   (9%)   (7%)  
  Research and development   1,237   15%     1,201   15%   3%   4%  
  General and administrative   260   3%     275   3%   (5%)   (4%)  
  Amortization of intangible assets   595   7%     619   7%   (4%)   (4%)  
  Acquisition related and other (2)   10   0%     (258 ) (3%)   104%   104%  
  Restructuring   56   1%     145   2%   (61%)   (62%)  
      Total Operating Expenses   5,499   66%     5,302   65%   4%   5%  
OPERATING INCOME   2,873   34%     2,879   35%   0%   2%  
  Interest expense   (217 ) (2%)     (188 ) (2%)   15%   15%  
  Non-operating income, net   7   0%     11   0%   (40%)   36%  
INCOME BEFORE PROVISION FOR INCOME TAXES   2,663   32%     2,702   33%   (1%)   1%  
  Provision for income taxes   472   6%     668   8%   (29%)   (28%)  
NET INCOME $ 2,191   26%   $ 2,034   25%   8%   10%  
                             
EARNINGS PER SHARE:                            
  Basic $ 0.48       $ 0.42              
  Diluted $ 0.47       $ 0.41              
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:                            
  Basic   4,608         4,867              
  Diluted   4,674         4,939              
                             
   
(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, 2013, 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, 2013 compared with the corresponding prior year period decreased our revenues by 2 percentage points, operating expenses by 1 percentage point and operating income by 2 percentage points.
   
(2) Acquisition related and other expenses for the three months ended August 31, 2012 included a benefit of $306 million related to certain litigation.
   
   
   
ORACLE CORPORATION
Q1 FISCAL 2014 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)
    2013 GAAP   Adj.     2013 Non-GAAP   2012 GAAP     Adj.     2012 Non-GAAP   GAAP   Non-GAAP   GAAP   Non-GAAP
                                                           
TOTAL REVENUES (3) (4)   $ 8,372   $ 9     $ 8,381   $ 8,181     $ 28     $ 8,209   2%   2%   4%   4%
                                                           
TOTAL SOFTWARE REVENUES (3)   $ 6,084   $ 4     $ 6,088   $ 5,714     $ 24     $ 5,738   6%   6%   8%   8%
  New software licenses and cloud software subscriptions (3)     1,653     3       1,656     1,574       19       1,593   5%   4%   7%   6%
  Software license updates and product support     4,431     1       4,432     4,140       5       4,145   7%   7%   8%   8%
                                                           
TOTAL HARDWARE SYSTEMS REVENUES (4)   $ 1,261   $ 5     $ 1,266   $ 1,353     $ 4     $ 1,357   (7%)   (7%)   (6%)   (5%)
  Hardware systems products     669     -       669     779       -       779   (14%)   (14%)   (13%)   (13%)
  Hardware systems support (4)     592     5       597     574       4       578   3%   3%   5%   5%
                                                           
TOTAL OPERATING EXPENSES   $ 5,499   $ (859 )   $ 4,640   $ 5,302     $ (682 )   $ 4,620   4%   0%   5%   2%
  Stock-based compensation (5)     198     (198 )     -     176       (176 )     -   12%   *   12%   *
  Amortization of intangible assets (6)     595     (595 )     -     619       (619 )     -   (4%)   *   (4%)   *
  Acquisition related and other     10     (10 )     -     (258 )     258       -   104%   *   104%   *
  Restructuring     56     (56 )     -     145       (145 )     -   (61%)   *   (62%)   *
                                                             
OPERATING INCOME   $ 2,873   $ 868     $ 3,741   $ 2,879     $ 710     $ 3,589   0%   4%   2%   6%
                                                           
OPERATING MARGIN %     34%             45%     35%               44%   (87) bp.   91 bp.   (66) bp.   99 bp.
                                                           
INCOME TAX EFFECTS (7)   $ 472   $ 298     $ 770   $ 668     $ 130     $ 798   (29%)   (4%)   (28%)   (2%)
                                                           
NET INCOME   $ 2,191   $ 570     $ 2,761   $ 2,034     $ 580     $ 2,614   8%   6%   10%   8%
                                                           
DILUTED EARNINGS PER SHARE   $ 0.47           $ 0.59   $ 0.41             $ 0.53   14%   12%   17%   14%
                                                           
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING     4,674     -       4,674     4,939       -       4,939   (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, 2013, 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 2013, approximately $3 million in estimated revenues related to assumed cloud software subscriptions contracts will not be recognized for remainder of fiscal 2014 due to business combination accounting rules.
   
(4) As of August 31, 2013, approximately $7 million in estimated revenues related to hardware systems support contracts will not be recognized for the remainder of fiscal 2014 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, 2013   August 31, 2012
      GAAP   Adj.     Non-GAAP   GAAP   Adj.     Non-GAAP
  Sales and marketing   $ 41   $ (41 )   $ -   $ 37   $ (37 )   $ -
  Software license updates and product support     6     (6 )     -     5     (5 )     -
  Hardware systems products     2     (2 )     -     -     -       -
  Hardware systems support     3     (3 )     -     1     (1 )     -
  Services     7     (7 )     -     9     (9 )     -
  Research and development     97     (97 )     -     83     (83 )     -
  General and administrative     42     (42 )     -     41     (41 )     -
    Subtotal     198     (198 )     -     176     (176 )     -
  Acquisition related and other     2     (2 )     -     17     (17 )     -
    Total stock-based compensation   $ 200   $ (200 )   $ -   $ 193   $ (193 )   $ -
   
(6) Estimated future annual amortization expense related to intangible assets as of August 31, 2013 was as follows:
   
  Remainder of Fiscal 2014   $ 1,637
  Fiscal 2015     1,763
  Fiscal 2016     1,193
  Fiscal 2017     622
  Fiscal 2018     496
  Fiscal 2019     411
  Thereafter     675
    Total intangible assets subject to amortization     6,797
  In-process research and development     117
    Total intangible assets, net   $ 6,914
   
(7) Income tax effects were calculated reflecting an effective GAAP tax rate of 17.7% and 24.7% in the first quarter of fiscal 2014 and 2013, respectively, and an effective non-GAAP tax rate of 21.8% and 23.4% in the first quarter of fiscal 2014 and 2013, respectively. The difference between our GAAP and non-GAAP tax rates in the first quarter of fiscal 2014 was primarily due to the net tax effects of acquisition related items, including the tax effect of amortization of intangible assets. The difference between our GAAP and non-GAAP tax rates in the first quarter of fiscal 2013 was primarily due to the disproportionate tax rate impact of discrete items for the quarter, the tax effect of amortization of intangible assets, and differences in jurisdictional tax rates and related tax benefits attributable to our restructuring expenses.
   
* Not meaningful
   
   
   
ORACLE CORPORATION
Q1 FISCAL 2014 FINANCIAL RESULTS
CONDENSED CONSOLIDATED BALANCE SHEETS
($ in millions)
         
    August 31,   May 31,
    2013   2013
ASSETS            
             
  Current Assets:            
    Cash and cash equivalents   $ 19,664   $ 14,613
    Marketable securities     19,440     17,603
    Trade receivables, net     3,450     6,049
    Inventories     243     240
    Deferred tax assets     937     974
    Prepaid expenses and other current assets     1,723     2,213
      Total Current Assets     45,457     41,692
             
  Non-Current Assets:            
    Property, plant and equipment, net     3,052     3,053
    Intangible assets, net     6,914     6,640
    Goodwill     27,965     27,343
    Deferred tax assets     722     766
    Other assets     2,296     2,318
      Total Non-Current Assets     40,949     40,120
             
TOTAL ASSETS   $ 86,406   $ 81,812
             
LIABILITIES AND EQUITY            
             
  Current Liabilities:            
    Notes payable, current and other current borrowings   $ 1,533   $ -
    Accounts payable     367     419
    Accrued compensation and related benefits     1,425     1,851
    Income taxes payable     571     911
    Deferred revenues     8,524     7,118
    Other current liabilities     2,106     2,573
                 
      Total Current Liabilities     14,526     12,872
               
  Non-Current Liabilities:            
    Notes payable and other non-current borrowings     22,575     18,494
    Income taxes payable     3,860     3,899
    Other non-current liabilities     1,459     1,402
                 
      Total Non-Current Liabilities     27,894     23,795
               
  Equity     43,986     45,145
             
TOTAL LIABILITIES AND EQUITY   $ 86,406   $ 81,812
             
             
             
             
ORACLE CORPORATION  
Q1 FISCAL 2014 FINANCIAL RESULTS  
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  
($ in millions)  
             
    Three Months Ended
August 31,
 
    2013     2012  
Cash Flows From Operating Activities:                
  Net income   $ 2,191     $ 2,034  
  Adjustments to reconcile net income to net cash provided by operating activities:                
    Depreciation     150       127  
    Amortization of intangible assets     595       619  
    Deferred income taxes     (101 )     64  
    Stock-based compensation     200       193  
    Tax benefits on the exercise of stock options and vesting of restricted stock-based awards     67       120  
    Excess tax benefits on the exercise of stock options and vesting of restricted stock-based awards     (40 )     (62 )
    Other, net     17       37  
    Changes in operating assets and liabilities, net of effects from acquisitions:                
      Decrease in trade receivables, net     2,707       2,630  
      Decrease in inventories     5       10  
      Decrease (increase) in prepaid expenses and other assets     366       (72 )
      Decrease in accounts payable and other liabilities     (994 )     (943 )
      Decrease in income taxes payable     (313 )     (329 )
      Increase in deferred revenues     1,442       1,243  
                       
        Net cash provided by operating activities     6,292       5,671  
                 
Cash Flows From Investing Activities:                
  Purchases of marketable securities and other investments     (8,549 )     (6,804 )
  Proceeds from maturities and sales of marketable securities and other investments     6,515       6,794  
  Acquisitions, net of cash acquired     (1,314 )     (361 )
  Capital expenditures     (153 )     (139 )
                 
        Net cash used for investing activities     (3,501 )     (510 )
                 
Cash Flows From Financing Activities:                
  Payments for repurchases of common stock     (2,968 )     (3,076 )
  Proceeds from issuances of common stock     285       517  
  Payments of dividends to stockholders     (554 )     (292 )
  Proceeds from borrowings, net of issuance costs     5,566       -  
  Repayments of borrowings     -       (1,700 )
  Excess tax benefits on the exercise of stock options and vesting of restricted stock-based awards     40       62  
  Distributions to noncontrolling interests     (28 )     (31 )
                   
        Net cash provided by (used for) financing activities     2,341       (4,520 )
                 
Effect of exchange rate changes on cash and cash equivalents     (81 )     71  
                 
Net increase in cash and cash equivalents     5,051       712  
                 
Cash and cash equivalents at beginning of period     14,613       14,955  
                 
Cash and cash equivalents at end of period   $ 19,664     $ 15,667  
                 
                 
                 
ORACLE CORPORATION
Q1 FISCAL 2014 FINANCIAL RESULTS
FREE CASH FLOW - TRAILING 4-QUARTERS (1)
($ in millions)
                                           
    Fiscal 2013     Fiscal 2014
    Q1     Q2     Q3     Q4     Q1     Q2   Q3   Q4
                                                     
GAAP Operating Cash Flow   $ 13,993     $ 13,533     $ 13,717     $ 14,224     $ 14,845              
                                                     
Capital Expenditures (2)     (627 )     (710 )     (684 )     (650 )     (664 )            
                                                     
Free Cash Flow   $ 13,366     $ 12,823     $ 13,033     $ 13,574     $ 14,181              
                                                     
% Growth over prior year     8 %     2 %     1 %     4 %     6 %            
                                                     
                                                     
GAAP Net Income   $ 10,175     $ 10,564     $ 10,571     $ 10,925     $ 11,082              
                                                     
Free Cash Flow as a % of Net Income     131 %     121 %     123 %     124 %     128 %            
                                                     
(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 2014 FINANCIAL RESULTS
SUPPLEMENTAL ANALYSIS OF GAAP REVENUES AND HEADCOUNT (1)
($ in millions)
...
                                             
    Fiscal 2013     Fiscal 2014  
Q1   Q2   Q3   Q4   TOTAL     Q1   Q2   Q3   Q4   TOTAL  
REVENUES                                                          
  New software licenses and cloud software subscriptions   $ 1,574   $ 2,389   $ 2,332   $ 4,026   $ 10,321     $ 1,653               $ 1,653  
  Software license updates and product support     4,140     4,260     4,340     4,402     17,142       4,431                 4,431  
      Software Revenues     5,714     6,649    6,672     8,428     27,463       6,084                 6,084  
                                                             
  Hardware systems products     779     734     671     849     3,033       669                 669  
  Hardware systems support     574     587     570     582     2,313       592                 592  
      Hardware Systems Revenues     1,353     1,321     1,241     1,431     5,346       1,261                 1,261  
                                                             
      Services Revenues     1,114     1,124     1,045     1,088     4,371       1,027                 1,027  
                                                             
        Total Revenues   $ 8,181   $ 9,094   $ 8,958   $ 10,947   $ 37,180     $ 8,372               $ 8,372  
                                                           
AS REPORTED REVENUE GROWTH RATES                                                          
  New software licenses and cloud software subscriptions     5 %   17 %   (2 %)   1 %   4 %     5 %               5 %
  Software license updates and product support     3 %   7 %   7 %   6 %   6 %     7 %               7 %
      Software Revenues     4 %   10 %   4 %   4 %   5 %     6 %               6 %
                                                             
  Hardware systems products     (24 %)   (23 %)   (23 %)   (13 %)   (21 %)     (14 %)               (14 %)
  Hardware systems support     (11 %)   (6 %)   (6 %)   (3 %)   (7 %)     3 %               3 %
      Hardware Systems Revenues     (19 %)   (16 %)   (16 %)   (9 %)   (15 %)     (7 %)               (7 %)
                                                             
      Services Revenues     (6 %)   (5 %)   (8 %)   (9 %)   (7 %)     (8 %)               (8 %)
                                                             
        Total Revenues     (2 %)   3 %   (1 %)   0 %   0 %     2 %               2 %
                                                           
CONSTANT CURRENCY GROWTH RATES (2)                                                          
  New software licenses and cloud software subscriptions     10 %   18 %   0 %   2 %   6 %     7 %               7 %
  Software license updates and product support     8 %   8 %   8 %   8 %   8 %     8 %               8 %
      Software Revenues     9 %   11 %   5 %   5 %   7 %     8 %               8 %
                                                             
  Hardware systems products     (21 %)   (23 %)   (22 %)   (12 %)   (19 %)     (13 %)               (13 %)
  Hardware systems support     (6 %)   (5 %)   (5 %)   (1 %)   (4 %)     5 %               5 %
      Hardware Systems Revenues     (15 %)   (16 %)   (15 %)   (8 %)   (13 %)     (6 %)               (6 %)
                                                               
      Services Revenues     0 %   (3 %)   (7 %)   (8 %)   (5 %)     (6 %)               (6 %)
                                                               
        Total Revenues     3 %   5 %   0 %   2 %   2 %     4 %               4 %
                                                           
                                                           
GEOGRAPHIC REVENUES                                                          
                                                           
  REVENUES                                                          
    Americas   $ 4,324   $ 4,787   $ 4,698   $ 5,911   $ 19,719     $ 4,517               $ 4,517  
    Europe, Middle East & Africa     2,383     2,701     2,745     3,328     11,158       2,439                 2,439  
    Asia Pacific     1,474     1,606     1,515     1,708     6,303       1,416                 1,416  
          Total Revenues   $ 8,181   $ 9,094   $ 8,958   $ 10,947   $ 37,180     $ 8,372               $ 8,372  
                                                           
                                                           
HEADCOUNT                                                          
                                                           
  GEOGRAPHIC AREA                                                          
    Americas     49,145     49,584     50,402     51,519             53,465                    
    Europe, Middle East & Africa     22,584     22,594     22,592     22,860             23,349                    
    Asia Pacific     44,170     45,051     45,663     45,855             45,513                    
          Total Company     115,899     117,229     118,657     120,234             122,327                    
                                                           
(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, 2013 and 2012 for the fiscal 2014 and fiscal 2013 constant currency growth rate calculations presented, respectively, rather than the actual exchange rates in effect during the respective periods.
   
   
   
ORACLE CORPORATION
Q1 FISCAL 2014 FINANCIAL RESULTS
SUPPLEMENTAL GEOGRAPHIC REVENUES ANALYSIS (1)
($ in millions)
                                             
    Fiscal 2013     Fiscal 2014  
    Q1   Q2   Q3   Q4   TOTAL     Q1   Q2   Q3   Q4   TOTAL  
                                                           
AMERICAS                                                          
                                                           
  New software licenses and cloud software subscriptions   $ 814   $ 1,253   $ 1,205   $ 2,194   $ 5,465     $ 926               $ 926  
  Hardware systems products   $ 380   $ 370   $ 307   $ 439   $ 1,495     $ 335               $ 335  
                                                           
AS REPORTED GROWTH RATES                                                          
  New software licenses and cloud software subscriptions     12 %   22 %   (2 %)   3 %   7 %     14 %               14 %
  Hardware systems products     (20 %)   (25 %)   (25 %)   (12 %)   (20 %)     (12 %)               (12 %)
                                                           
CONSTANT CURRENCY GROWTH RATES (2)                                                          
  New software licenses and cloud software subscriptions     14 %   22 %   (1 %)   4 %   8 %     15 %               15 %
  Hardware systems products     (19 %)   (25 %)   (25 %)   (12 %)   (20 %)     (11 %)               (11 %)
                                                           
                                                           
EUROPE / MIDDLE EAST / AFRICA                                                          
                                                           
  New software licenses and cloud software subscriptions   $ 403   $ 641   $ 690   $ 1,224   $ 2,959     $ 388               $ 388  
  Hardware systems products   $ 214   $ 198   $ 201   $ 228   $ 842     $ 177               $ 177  
                                                           
AS REPORTED GROWTH RATES                                                          
  New software licenses and cloud software subscriptions     (8 %)   10 %   0 %   5 %   3 %     (4 %)               (4 %)
  Hardware systems products     (38 %)   (27 %)   (24 %)   (12 %)   (26 %)     (18 %)               (18 %)
                                                           
CONSTANT CURRENCY GROWTH RATES (2)                                                          
  New software licenses and cloud software subscriptions     1 %   12 %   1 %   5 %   5 %     (5 %)               (5 %)
  Hardware systems products     (30 %)   (25 %)   (24 %)   (11 %)   (23 %)     (20 %)               (20 %)
                                                           
                                                           
ASIA PACIFIC                                                          
                                                           
  New software licenses and cloud software subscriptions   $ 357   $ 495   $ 437   $ 608   $ 1,897     $ 339               $ 339  
  Hardware systems products   $ 185   $ 166   $ 163   $ 182   $ 696     $ 157               $ 157  
                                                           
AS REPORTED GROWTH RATES                                                          
  New software licenses and cloud software subscriptions     8 %   13 %   (3 %)   (12 %)   (1 %)     (5 %)               (5 %)
  Hardware systems products     (12 %)   (10 %)   (16 %)   (17 %)   (14 %)     (15 %)               (15 %)
                                                           
CONSTANT CURRENCY GROWTH RATES (2)                                                          
  New software licenses and cloud software subscriptions     12 %   13 %   1 %   (7 %)   3 %     5 %               5 %
  Hardware systems products     (10 %)   (12 %)   (14 %)   (14 %)   (12 %)     (10 %)               (10 %)
                                                           
                                                           
TOTAL COMPANY                                                          
                                                           
  New software licenses and cloud software subscriptions   $ 1,574   $ 2,389   $ 2,332   $ 4,026   $ 10,321     $ 1,653               $ 1,653  
  Hardware systems products   $ 779   $ 734   $ 671   $ 849   $ 3,033     $ 669               $ 669  
                                                           
AS REPORTED GROWTH RATES                                                          
  New software licenses and cloud software subscriptions     5 %   17 %   (2 %)   1 %   4 %     5 %               5 %
  Hardware systems products     (24 %)   (23 %)   (23 %)   (13 %)   (21 %)     (14 %)               (14 %)
                                                           
CONSTANT CURRENCY GROWTH RATES (2)                                                          
  New software licenses and cloud software subscriptions     10 %   18 %   0 %   2 %   6 %     7 %               7 %
  Hardware systems products     (21 %)   (23 %)   (22 %)   (12 %)   (19 %)     (13 %)               (13 %)
                                                           
(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, 2013 and 2012 for the fiscal 2014 and fiscal 2013 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 2014 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:

  • New software licenses and cloud software subscriptions, 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 subscriptions 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 software subscriptions contracts and support contracts that would have otherwise been recorded by the acquired entity. The non-GAAP adjustment to our new software licenses and cloud software subscriptions 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 subscriptions and hardware systems support contracts; however, we cannot be certain that our customers will renew our cloud software subscriptions 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:

Ken Bond
Oracle Investor Relations
1.650.607.0349
Email Contact

Deborah Hellinger
Oracle Corporate Communications
1.212.508.7935
Email Contact

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