REDWOOD SHORES, Calif., March 19,
2018 /PRNewswire/ -- Oracle Corporation (NYSE: ORCL) today
announced fiscal 2018 Q3 results. Total Revenues were up 6% to
$9.8 billion, compared to Q3 last
year. Cloud and On-Premise Software Revenues were up 8% to
$8.0 billion. Cloud Software as a
Service (SaaS) revenues were up 33% to $1.2
billion. Cloud Platform as a Service (PaaS) plus
Infrastructure as a Service (IaaS) revenues were up 28% to
$415 million. Total Cloud Revenues
were up 32% to $1.6 billion.
GAAP Operating Income was up 15% to $3.4
billion and GAAP Operating Margin was 35%. Non-GAAP
Operating Income was up 9% to $4.3
billion and non-GAAP Operating Margin was 44%. GAAP Net Loss
was $4.0 billion and GAAP Loss Per
Share was $0.98 due to a one-time net
charge totaling $6.9 billion related
to the 2017 Tax Cuts and Jobs Act. Non-GAAP Net Income was up 21%
to $3.5 billion and non-GAAP Earnings
Per Share was up 20% to $0.83.
Short-term deferred revenues were up 8% to $8.0 billion. Operating cash flow on a trailing
twelve-month basis was up 13% to $15.2
billion.
"During FY17, I forecast double-digit non-GAAP earnings per
share growth for FY18," said Oracle CEO, Safra Catz. "With non-GAAP earnings per share up
20% in Q3, our year-to-date earnings per share growth is now up to
16%. At this point, I feel quite confident that we will comfortably
deliver on my original forecast of double-digit non-GAAP earnings
per share growth for FY18."
"Our Fusion ERP and HCM SaaS applications suite revenues grew
65% in the quarter," said Oracle CEO, Mark
Hurd. "Our Cloud SaaS applications business is rapidly
approaching $5 billion…and it's still
early days. Less than 15% of our on-premise applications
customers have begun to migrate their applications to the
cloud. As the other 85% of our applications customers start
to move their applications to the Cloud, we have a huge opportunity
in front of us. We expect to more than double the size of our
SaaS business very quickly."
"The Oracle autonomous database is now fully available in the
Oracle Cloud," said Oracle CTO, Larry
Ellison. "And there are more autonomous cloud services to
come. During this calendar year we expect to deliver Autonomous
Analytics, Autonomous Mobility, Autonomous Application Development
and Autonomous Integration services. Oracle's new suite of
Autonomous PaaS services delivers an unprecedented level of
automation and cost savings to our customers."
The Board of Directors also declared a quarterly cash dividend
of $0.19 per share of outstanding
common stock. This dividend will be paid to stockholders of record
as of the close of business on April 17,
2018, with a payment date of May 1,
2018.
Q3 Fiscal 2018 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, please visit the Oracle
Investor Relations website at http://www.oracle.com/investor. In
addition, Oracle's Q3 results and Fiscal 2018 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: 1182679.
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/investor 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 growth
of our non-GAAP EPS, the potential to significantly increase the
size of our SaaS business, and roll out of our new autonomous
database, are all "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 products and services are compromised or
if our products and services contain significant coding,
manufacturing or configuration errors, we may experience
reputational harm, legal claims and reduced sales. (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
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 U.S. Securities and Exchange
Commission (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
March 19, 2018. Oracle undertakes no
duty to update any statement in light of new information or future
events.
ORACLE
CORPORATION
Q3 FISCAL 2018 FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($ in millions, except per share data)
|
|
|
Three Months Ended
February 28,
|
|
%
Increase
|
|
|
|
%
Increase
|
(Decrease)
|
|
|
|
|
%
of
|
|
%
of
|
(Decrease)
|
in
Constant
|
|
|
|
2018
|
Revenues
|
2017
|
Revenues
|
in US
$
|
Currency
(1)
|
|
REVENUES
|
|
|
|
|
|
|
|
|
Cloud software as a
service
|
$
1,151
|
12%
|
$
865
|
9%
|
33%
|
31%
|
|
|
Cloud platform as a
service and infrastructure as a service
|
415
|
4%
|
324
|
4%
|
28%
|
24%
|
|
|
Total cloud
revenues
|
1,566
|
16%
|
1,189
|
13%
|
32%
|
29%
|
|
|
New software
licenses
|
1,388
|
14%
|
1,414
|
15%
|
(2%)
|
(6%)
|
|
|
Software license
updates and product support
|
5,027
|
52%
|
4,762
|
52%
|
6%
|
1%
|
|
|
Total on-premise
software revenues
|
6,415
|
66%
|
6,176
|
67%
|
4%
|
0%
|
|
|
Total cloud and
on-premise software revenues
|
7,981
|
82%
|
7,365
|
80%
|
8%
|
4%
|
|
|
Hardware
revenues
|
994
|
10%
|
1,028
|
11%
|
(3%)
|
(7%)
|
|
|
Services
revenues
|
796
|
8%
|
812
|
9%
|
(2%)
|
(6%)
|
|
|
Total
revenues
|
9,771
|
100%
|
9,205
|
100%
|
6%
|
2%
|
|
OPERATING
EXPENSES
|
|
|
|
|
|
|
|
|
Cloud software as a
service
|
398
|
4%
|
330
|
3%
|
20%
|
17%
|
|
|
Cloud platform as a
service and infrastructure as a service
|
275
|
3%
|
175
|
2%
|
57%
|
54%
|
|
|
Software license
updates and product support
|
223
|
2%
|
270
|
3%
|
(17%)
|
(20%)
|
|
|
Hardware
|
394
|
4%
|
437
|
5%
|
(10%)
|
(14%)
|
|
|
Services
|
712
|
7%
|
680
|
7%
|
5%
|
0%
|
|
|
Sales and
marketing
|
2,033
|
21%
|
2,004
|
22%
|
1%
|
(2%)
|
|
|
Research and
development
|
1,498
|
15%
|
1,521
|
17%
|
(2%)
|
(3%)
|
|
|
General and
administrative
|
340
|
4%
|
241
|
3%
|
41%
|
37%
|
|
|
Amortization of
intangible assets
|
394
|
4%
|
397
|
4%
|
(1%)
|
(1%)
|
|
|
Acquisition related
and other
|
3
|
0%
|
30
|
0%
|
(89%)
|
(90%)
|
|
|
Restructuring
|
91
|
1%
|
161
|
2%
|
(43%)
|
(46%)
|
|
|
Total operating
expenses
|
6,361
|
65%
|
6,246
|
68%
|
2%
|
(1%)
|
|
OPERATING
INCOME
|
3,410
|
35%
|
2,959
|
32%
|
15%
|
9%
|
|
|
Interest
expense
|
(533)
|
(5%)
|
(450)
|
(5%)
|
19%
|
18%
|
|
|
Non-operating income,
net
|
423
|
4%
|
189
|
2%
|
123%
|
126%
|
|
INCOME BEFORE
PROVISION FOR INCOME TAXES
|
3,300
|
34%
|
2,698
|
29%
|
22%
|
15%
|
|
|
Provision for income
taxes (2)
|
7,324
|
75%
|
459
|
5%
|
1,495%
|
1,490%
|
|
NET INCOME
(LOSS)
|
$
(4,024)
|
(41%)
|
$
2,239
|
24%
|
(280%)
|
(280%)
|
|
|
|
|
|
|
|
|
|
|
EARNINGS (LOSS)
PER SHARE:
|
|
|
|
|
|
|
|
|
Basic
|
$
(0.98)
|
|
$
0.55
|
|
|
|
|
|
Diluted
|
$
(0.98)
|
|
$
0.53
|
|
|
|
|
WEIGHTED AVERAGE
COMMON SHARES OUTSTANDING:
|
|
|
|
|
|
|
|
|
Basic
|
4,122
|
|
4,107
|
|
|
|
|
|
Diluted
|
4,122
|
|
4,204
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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, 2017, 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 February 28, 2018 compared with the corresponding
prior year period increased our revenues by 4 percentage points,
operating expenses by 3 percentage points and operating income by 6
percentage points.
|
|
(2)
|
Provision for income
taxes for the three months ended February 28, 2018 includes the
impact of the U.S. 2017 Tax Cuts and Jobs Act, which was signed
into law during our third quarter of fiscal 2018.
|
|
|
|
|
ORACLE
CORPORATION
Q3 FISCAL 2018 FINANCIAL RESULTS
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES
(1)
($ in millions, except per share data)
|
|
|
Three Months Ended
Februay 28,
|
|
% Increase
(Decrease)
in US $
|
% Increase
(Decrease) in
Constant Currency (2)
|
|
|
2018
|
|
|
|
2018
|
|
|
2017
|
|
|
|
2017
|
|
GAAP
|
Non-GAAP
|
GAAP
|
Non-GAAP
|
|
|
|
GAAP
|
|
Adj.
|
|
Non-GAAP
|
|
|
GAAP
|
|
Adj.
|
|
Non-GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
REVENUES
|
$
9,771
|
|
$
5
|
|
$
9,776
|
|
|
$
9,205
|
|
$
69
|
|
$
9,274
|
|
6%
|
5%
|
2%
|
1%
|
|
TOTAL CLOUD AND
ON-PREMISE SOFTWARE REVENUES
|
7,981
|
|
5
|
|
7,986
|
|
|
7,365
|
|
69
|
|
7,434
|
|
8%
|
7%
|
4%
|
3%
|
|
TOTAL CLOUD
REVENUES
|
1,566
|
|
5
|
|
1,571
|
|
|
1,189
|
|
69
|
|
1,258
|
|
32%
|
25%
|
29%
|
22%
|
|
|
Cloud software as a
service
|
1,151
|
|
4
|
|
1,155
|
|
|
865
|
|
69
|
|
934
|
|
33%
|
24%
|
31%
|
21%
|
|
|
Cloud platform as a
service and infrastructure as a service
|
415
|
|
1
|
|
416
|
|
|
324
|
|
-
|
|
324
|
|
28%
|
28%
|
24%
|
24%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL OPERATING
EXPENSES
|
$
6,361
|
|
$
(874)
|
|
$
5,487
|
|
|
$
6,246
|
|
$
(916)
|
|
$
5,330
|
|
2%
|
3%
|
(1%)
|
0%
|
|
|
Cloud software as a
service (4)
|
398
|
|
(11)
|
|
387
|
|
|
330
|
|
(6)
|
|
324
|
|
20%
|
19%
|
17%
|
16%
|
|
|
Cloud platform as a
service and infrastructure as a service (4)
|
275
|
|
(3)
|
|
272
|
|
|
175
|
|
(1)
|
|
174
|
|
57%
|
57%
|
54%
|
53%
|
|
|
Sales and marketing
(3)
|
2,033
|
|
(84)
|
|
1,949
|
|
|
2,004
|
|
(75)
|
|
1,929
|
|
1%
|
1%
|
(2%)
|
(3%)
|
|
|
Stock-based
compensation (4)
|
288
|
|
(288)
|
|
-
|
|
|
246
|
|
(246)
|
|
-
|
|
17%
|
*
|
17%
|
*
|
|
|
Amortization of
intangible assets (5)
|
394
|
|
(394)
|
|
-
|
|
|
397
|
|
(397)
|
|
-
|
|
(1%)
|
*
|
(1%)
|
*
|
|
|
Acquisition related
and other
|
3
|
|
(3)
|
|
-
|
|
|
30
|
|
(30)
|
|
-
|
|
(89%)
|
*
|
(90%)
|
*
|
|
|
Restructuring
|
91
|
|
(91)
|
|
-
|
|
|
161
|
|
(161)
|
|
-
|
|
(43%)
|
*
|
(46%)
|
*
|
|
CLOUD SOFTWARE AS
A SERVICE MARGIN %
|
65%
|
|
|
|
67%
|
|
|
62%
|
|
|
|
65%
|
|
365 bp.
|
128 bp.
|
389 bp.
|
154 bp.
|
|
CLOUD PLATFORM AS
A SERVICE AND INFRASTRUCTURE AS A SERVICE MARGIN %
|
34%
|
|
|
|
35%
|
|
|
46%
|
|
|
|
46%
|
|
(1,220)
bp.
|
(1,174)
bp.
|
(1,300)
bp.
|
(1,252)
bp.
|
|
OPERATING
INCOME
|
$
3,410
|
|
$
879
|
|
$
4,289
|
|
|
$
2,959
|
|
$
985
|
|
$
3,944
|
|
15%
|
9%
|
9%
|
4%
|
|
OPERATING MARGIN
%
|
35%
|
|
|
|
44%
|
|
|
32%
|
|
|
|
43%
|
|
275 bp.
|
133 bp.
|
214 bp.
|
102 bp.
|
|
INCOME TAX EFFECTS
(6)
|
$
7,324
|
|
$
(6,651)
|
|
$
673
|
|
|
$
459
|
|
$
336
|
|
$
795
|
|
1,495%
|
(15%)
|
1,490%
|
(19%)
|
|
NET INCOME
(LOSS)
|
$
(4,024)
|
|
$
7,530
|
|
$
3,506
|
|
|
$
2,239
|
|
$
649
|
|
$
2,888
|
|
(280%)
|
21%
|
(280%)
|
16%
|
|
DILUTED EARNINGS
(LOSS) PER SHARE (7)
|
$
(0.98)
|
|
|
|
$
0.83
|
|
|
$
0.53
|
|
|
|
$
0.69
|
|
(283%)
|
20%
|
(283%)
|
15%
|
|
DILUTED WEIGHTED
AVERAGE COMMON SHARES OUTSTANDING (7)
|
4,122
|
|
114
|
|
4,236
|
|
|
4,204
|
|
-
|
|
4,204
|
|
(2%)
|
1%
|
(2%)
|
1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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, 2017, which was the last
day of our prior fiscal year, rather than the actual exchange rates
in effect during
the respective periods.
|
|
|
(3)
|
Non-GAAP adjustments
to sales and marketing expenses were as follows:
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
February
28,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation
(4)
|
$
(87)
|
|
$
(96)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquired deferred sales
commissions amortization
|
3
|
|
21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-GAAP sales and marketing adjustments
|
$
(84)
|
|
$
(75)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4)
|
Stock-based
compensation was included in the following GAAP operating expense
categories:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
Three Months
Ended
|
|
|
|
|
|
|
|
|
February 28,
2018
|
|
|
February 28,
2017
|
|
|
|
|
|
|
|
|
GAAP
|
|
Adj.
|
|
Non-GAAP
|
|
|
GAAP
|
|
Adj.
|
|
Non-GAAP
|
|
|
|
|
|
|
|
Software license updates and
product support
|
$
7
|
|
$
(7)
|
|
$
-
|
|
|
$
6
|
|
$
(6)
|
|
$
-
|
|
|
|
|
|
|
|
Hardware
|
2
|
|
(2)
|
|
-
|
|
|
3
|
|
(3)
|
|
-
|
|
|
|
|
|
|
|
Services
|
13
|
|
(13)
|
|
-
|
|
|
14
|
|
(14)
|
|
-
|
|
|
|
|
|
|
|
Research and
development
|
221
|
|
(221)
|
|
-
|
|
|
191
|
|
(191)
|
|
-
|
|
|
|
|
|
|
|
General and
administrative
|
45
|
|
(45)
|
|
-
|
|
|
32
|
|
(32)
|
|
-
|
|
|
|
|
|
|
|
Subtotal
|
288
|
|
(288)
|
|
-
|
|
|
246
|
|
(246)
|
|
-
|
|
|
|
|
|
|
|
Cloud software as a
service
|
11
|
|
(11)
|
|
-
|
|
|
6
|
|
(6)
|
|
-
|
|
|
|
|
|
|
|
Cloud platform as a service
and infrastructure as a service
|
3
|
|
(3)
|
|
-
|
|
|
1
|
|
(1)
|
|
-
|
|
|
|
|
|
|
|
Sales and
marketing
|
87
|
|
(87)
|
|
-
|
|
|
96
|
|
(96)
|
|
-
|
|
|
|
|
|
|
|
Acquisition related and
other
|
-
|
|
-
|
|
-
|
|
|
22
|
|
(22)
|
|
-
|
|
|
|
|
|
|
|
Total stock-based compensation
|
$
389
|
|
$
(389)
|
|
$
-
|
|
|
$
371
|
|
$
(371)
|
|
$
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5)
|
Estimated future
annual amortization expense related to intangible assets as of
February 28, 2018 was as follows:
|
|
Remainder of fiscal
2018
|
$
387
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
2019
|
1,411
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
2020
|
1,210
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
2021
|
1,023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
2022
|
918
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
2023
|
567
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thereafter
|
884
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total intangible
assets, net
|
$
6,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6)
|
Income tax effects
were calculated reflecting an effective GAAP tax rate of 222.0% and
17.0% in the third quarter of fiscal 2018 and 2017, respectively,
and an effective non-GAAP tax rate of 16.1% and 21.6%
in the third quarter of fiscal 2018 and 2017, respectively. The
difference between our GAAP and non-GAAP tax rates in the third
quarter of fiscal 2018 was primarily due to the impact of the U.S.
2017 Tax Cuts
and Jobs Act (refer to Appendix A for additional
information). The difference between our GAAP and non-GAAP
tax rates in the third quarter of fiscal 2017 was primarily due to
the net tax effects on stock-based
compensation expense and acquisition related items, including the
tax effects of amortization of intangible assets.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7)
|
In the third quarter
of fiscal 2018, GAAP diluted loss per share was calculated
excluding the dilutive effects of 114 million shares related to
employee stock plans as the effect would be
anti-dilutive.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
Not
meaningful
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ORACLE CORPORATION
Q3 FISCAL 2018 YEAR TO DATE FINANCIAL RESULTS
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
($ in millions,
except per share data)
|
|
|
Nine Months Ended
February 28,
|
%
Increase
|
%
Increase
(Decrease)
|
|
|
|
|
|
|
%
of
|
|
%
of
|
(Decrease)
|
in
Constant
|
|
|
|
2018
|
Revenues
|
2017
|
Revenues
|
in US
$
|
Currency
(1)
|
|
REVENUES
|
|
|
|
|
|
|
|
|
Cloud software as a
service
|
$
3,340
|
12%
|
$
2,247
|
8%
|
49%
|
47%
|
|
|
Cloud platform as a
service and infrastructure as a service
|
1,212
|
4%
|
964
|
4%
|
26%
|
23%
|
|
|
Total cloud
revenues
|
4,552
|
16%
|
3,211
|
12%
|
42%
|
40%
|
|
|
New software
licenses
|
3,706
|
13%
|
3,792
|
14%
|
(2%)
|
(5%)
|
|
|
Software license
updates and product support
|
14,932
|
52%
|
14,331
|
54%
|
4%
|
2%
|
|
|
Total on-premise
software revenues
|
18,638
|
65%
|
18,123
|
68%
|
3%
|
0%
|
|
|
Total cloud and
on-premise software revenues
|
23,190
|
81%
|
21,334
|
80%
|
9%
|
6%
|
|
|
Hardware
revenues
|
2,878
|
10%
|
3,037
|
11%
|
(5%)
|
(7%)
|
|
|
Services
revenues
|
2,511
|
9%
|
2,464
|
9%
|
2%
|
0%
|
|
|
Total
revenues
|
28,579
|
100%
|
26,835
|
100%
|
6%
|
4%
|
|
OPERATING
EXPENSES
|
|
|
|
|
|
|
|
|
Cloud software as a
service
|
1,168
|
4%
|
930
|
3%
|
26%
|
24%
|
|
|
Cloud platform as a
service and infrastructure as a service
|
743
|
3%
|
463
|
2%
|
60%
|
58%
|
|
|
Software license
updates and product support
|
738
|
3%
|
786
|
3%
|
(6%)
|
(8%)
|
|
|
Hardware
|
1,119
|
4%
|
1,214
|
5%
|
(8%)
|
(10%)
|
|
|
Services
|
2,134
|
8%
|
2,073
|
8%
|
3%
|
0%
|
|
|
Sales and
marketing
|
6,106
|
21%
|
5,883
|
22%
|
4%
|
2%
|
|
|
Research and
development
|
4,547
|
16%
|
4,551
|
17%
|
0%
|
(1%)
|
|
|
General and
administrative
|
982
|
3%
|
859
|
3%
|
14%
|
13%
|
|
|
Amortization of
intangible assets
|
1,205
|
4%
|
1,010
|
4%
|
19%
|
19%
|
|
|
Acquisition related
and other
|
32
|
0%
|
84
|
0%
|
(63%)
|
(63%)
|
|
|
Restructuring
|
506
|
2%
|
346
|
1%
|
47%
|
41%
|
|
|
Total operating
expenses
|
19,280
|
68%
|
18,199
|
68%
|
6%
|
4%
|
|
OPERATING
INCOME
|
9,299
|
32%
|
8,636
|
32%
|
8%
|
4%
|
|
|
Interest
expense
|
(1,477)
|
(5%)
|
(1,317)
|
(5%)
|
12%
|
12%
|
|
|
Non-operating income,
net
|
929
|
3%
|
437
|
2%
|
113%
|
114%
|
|
INCOME BEFORE
PROVISION FOR INCOME TAXES
|
8,751
|
30%
|
7,756
|
29%
|
13%
|
9%
|
|
|
Provision for income
taxes (2)
|
8,333
|
29%
|
1,653
|
6%
|
404%
|
403%
|
|
NET
INCOME
|
$
418
|
1%
|
$
6,103
|
23%
|
(93%)
|
(97%)
|
|
|
|
|
|
|
|
|
|
|
EARNINGS PER
SHARE:
|
|
|
|
|
|
|
|
|
Basic
|
$
0.10
|
|
$
1.49
|
|
|
|
|
|
Diluted
|
$
0.10
|
|
$
1.45
|
|
|
|
|
WEIGHTED AVERAGE
COMMON SHARES OUTSTANDING:
|
|
|
|
|
|
|
|
|
Basic
|
4,146
|
|
4,110
|
|
|
|
|
|
Diluted
|
4,268
|
|
4,207
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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, 2017, 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 nine
months ended February 28, 2018 compared with the corresponding
prior year period increased our revenues by 2 percentage points,
operating expenses by 2 percentage point and operating income by 4
percentage points.
|
|
(2)
|
Provision for income
taxes for the nine months ended February 28, 2018 includes the
impact of the U.S. 2017 Tax Cuts and Jobs Act, which was signed
into law during our third quarter of fiscal 2018.
|
|
|
|
|
ORACLE
CORPORATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q3 FISCAL 2018
YEAR TO DATE FINANCIAL RESULTS
|
RECONCILIATION OF
SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)
|
($ in millions,
except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
February 28,
|
|
% Increase
(Decrease)
in US $
|
% Increase
(Decrease) in
Constant Currency (2)
|
|
|
|
2018
|
|
|
|
2018
|
|
|
2017
|
|
|
|
2017
|
|
GAAP
|
Non-GAAP
|
GAAP
|
Non-GAAP
|
|
|
|
|
GAAP
|
|
Adj.
|
|
Non-GAAP
|
|
|
GAAP
|
|
Adj.
|
|
Non-GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
REVENUES
|
|
$
28,579
|
|
$
39
|
|
$
28,618
|
|
|
$
26,835
|
|
$
122
|
|
$
26,957
|
|
6%
|
6%
|
4%
|
4%
|
|
TOTAL CLOUD AND
ON-PREMISE SOFTWARE REVENUES
|
|
23,190
|
|
39
|
|
23,229
|
|
|
21,334
|
|
121
|
|
21,455
|
|
9%
|
8%
|
6%
|
6%
|
|
TOTAL CLOUD
REVENUES
|
|
4,552
|
|
39
|
|
4,591
|
|
|
3,211
|
|
120
|
|
3,331
|
|
42%
|
38%
|
40%
|
36%
|
|
|
Cloud software as a
service
|
|
3,340
|
|
33
|
|
3,373
|
|
|
2,247
|
|
120
|
|
2,367
|
|
49%
|
42%
|
47%
|
41%
|
|
|
Cloud platform as a
service and infrastructure as a service
|
|
1,212
|
|
6
|
|
1,218
|
|
|
964
|
|
-
|
|
964
|
|
26%
|
26%
|
23%
|
24%
|
|
|
Software license
updates and product support
|
|
14,932
|
|
-
|
|
14,932
|
|
|
14,331
|
|
1
|
|
14,332
|
|
4%
|
4%
|
2%
|
2%
|
|
TOTAL HARDWARE
REVENUES
|
|
2,878
|
|
-
|
|
2,878
|
|
|
3,037
|
|
1
|
|
3,038
|
|
(5%)
|
(5%)
|
(7%)
|
(7%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL OPERATING
EXPENSES
|
|
$
19,280
|
|
$
(2,933)
|
|
$
16,347
|
|
|
$
18,199
|
|
$
(2,395)
|
|
$
15,804
|
|
6%
|
3%
|
4%
|
1%
|
|
|
Cloud software as a
service (4)
|
|
1,168
|
|
(31)
|
|
1,137
|
|
|
930
|
|
(17)
|
|
913
|
|
26%
|
25%
|
24%
|
23%
|
|
|
Cloud platform as a
service and infrastructure as a service (4)
|
|
743
|
|
(7)
|
|
736
|
|
|
463
|
|
(3)
|
|
460
|
|
60%
|
60%
|
58%
|
57%
|
|
|
Sales and marketing
(3)
|
|
6,106
|
|
(255)
|
|
5,851
|
|
|
5,883
|
|
(199)
|
|
5,684
|
|
4%
|
3%
|
2%
|
1%
|
|
|
Stock-based
compensation (4)
|
|
897
|
|
(897)
|
|
-
|
|
|
736
|
|
(736)
|
|
-
|
|
22%
|
*
|
22%
|
*
|
|
|
Amortization of
intangible assets (5)
|
|
1,205
|
|
(1,205)
|
|
-
|
|
|
1,010
|
|
(1,010)
|
|
-
|
|
19%
|
*
|
19%
|
*
|
|
|
Acquisition related
and other
|
|
32
|
|
(32)
|
|
-
|
|
|
84
|
|
(84)
|
|
-
|
|
(63%)
|
*
|
(63%)
|
*
|
|
|
Restructuring
|
|
506
|
|
(506)
|
|
-
|
|
|
346
|
|
(346)
|
|
-
|
|
47%
|
*
|
41%
|
*
|
|
CLOUD SOFTWARE AS A
SERVICE MARGIN %
|
|
65%
|
|
|
|
66%
|
|
|
59%
|
|
|
|
61%
|
|
638 bp.
|
484 bp.
|
654 bp.
|
501 bp.
|
|
CLOUD PLATFORM AS A
SERVICE AND INFRASTRUCTURE AS A SERVICE MARGIN %
|
|
39%
|
|
|
|
40%
|
|
|
52%
|
|
|
|
52%
|
|
(1,317)
bp.
|
(1,263)
bp.
|
(1,344)
bp.
|
(1,288)
bp.
|
|
OPERATING
INCOME
|
|
$
9,299
|
|
$
2,972
|
|
$
12,271
|
|
|
$
8,636
|
|
$
2,517
|
|
$
11,153
|
|
8%
|
10%
|
4%
|
7%
|
|
OPERATING MARGIN
%
|
|
32%
|
|
|
|
43%
|
|
|
32%
|
|
|
|
41%
|
|
35 bp.
|
151 bp.
|
6 bp.
|
137 bp.
|
|
INCOME TAX EFFECTS
(6)
|
|
$
8,333
|
|
$
(5,766)
|
|
$
2,567
|
|
|
$
1,653
|
|
$
823
|
|
$
2,476
|
|
404%
|
4%
|
403%
|
1%
|
|
NET
INCOME
|
|
$
418
|
|
$
8,738
|
|
$
9,156
|
|
|
$
6,103
|
|
$
1,694
|
|
$
7,797
|
|
(93%)
|
17%
|
(97%)
|
14%
|
|
DILUTED EARNINGS
PER SHARE
|
|
$
0.10
|
|
|
|
$
2.15
|
|
|
$
1.45
|
|
|
|
$
1.85
|
|
(93%)
|
16%
|
(97%)
|
13%
|
|
DILUTED WEIGHTED
AVERAGE COMMON
SHARES OUTSTANDING
|
|
4,268
|
|
-
|
|
4,268
|
|
|
4,207
|
|
-
|
|
4,207
|
|
1%
|
1%
|
1%
|
1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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, 2017, which was the last
day of our prior fiscal year, rather than the actual exchange rates
in effect during the respective periods.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3)
|
Non-GAAP adjustments
to sales and marketing expenses were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months
Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
February
28,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation
(4)
|
|
$
(275)
|
|
$
(228)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquired deferred sales
commissions amortization
|
|
20
|
|
29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-GAAP sales and marketing adjustments
|
|
$
(255)
|
|
$
(199)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4)
|
Stock-based
compensation was included in the following GAAP operating expense
categories:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months
Ended
|
|
|
Nine Months
Ended
|
|
|
|
|
|
|
|
|
|
February 28,
2018
|
|
|
February 28,
2017
|
|
|
|
|
|
|
|
|
|
GAAP
|
|
Adj.
|
|
Non-GAAP
|
|
|
GAAP
|
|
Adj.
|
|
Non-GAAP
|
|
|
|
|
|
|
|
Software license updates and
product support
|
|
$
20
|
|
$
(20)
|
|
$
-
|
|
|
$
18
|
|
$
(18)
|
|
$
-
|
|
|
|
|
|
|
|
Hardware
|
|
8
|
|
(8)
|
|
-
|
|
|
9
|
|
(9)
|
|
-
|
|
|
|
|
|
|
|
Services
|
|
41
|
|
(41)
|
|
-
|
|
|
31
|
|
(31)
|
|
-
|
|
|
|
|
|
|
|
Research and
development
|
|
693
|
|
(693)
|
|
-
|
|
|
574
|
|
(574)
|
|
-
|
|
|
|
|
|
|
|
General and
administrative
|
|
135
|
|
(135)
|
|
-
|
|
|
104
|
|
(104)
|
|
-
|
|
|
|
|
|
|
|
Subtotal
|
|
897
|
|
(897)
|
|
-
|
|
|
736
|
|
(736)
|
|
-
|
|
|
|
|
|
|
|
Cloud software as a
service
|
|
31
|
|
(31)
|
|
-
|
|
|
17
|
|
(17)
|
|
-
|
|
|
|
|
|
|
|
Cloud platform as a service
and infrastructure as a service
|
|
7
|
|
(7)
|
|
-
|
|
|
3
|
|
(3)
|
|
-
|
|
|
|
|
|
|
|
Sales and
marketing
|
|
275
|
|
(275)
|
|
-
|
|
|
228
|
|
(228)
|
|
-
|
|
|
|
|
|
|
|
Acquisition related and
other
|
|
1
|
|
(1)
|
|
-
|
|
|
33
|
|
(33)
|
|
-
|
|
|
|
|
|
|
|
Total stock-based compensation
|
|
$
1,211
|
|
$
(1,211)
|
|
$
-
|
|
|
$
1,017
|
|
$
(1,017)
|
|
$
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5)
|
Estimated future
annual amortization expense related to intangible assets as of
February 28, 2018 was as follows:
|
|
|
Remainder of fiscal
2018
|
|
$
387
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2019
|
|
1,411
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2020
|
|
1,210
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2021
|
|
1,023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2022
|
|
918
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2023
|
|
567
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thereafter
|
|
884
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total intangible
assets, net
|
|
$
6,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6)
|
Income tax effects
were calculated reflecting an effective GAAP tax rate of 95.2% and
21.3% in the first nine months of fiscal 2018 and 2017,
respectively, and an effective non-GAAP tax rate of 21.9% and 24.1%
in the third quarter of fiscal 2018 and 2017, respectively. The
difference between our GAAP and non-GAAP tax rates in the first
nine months of fiscal 2018 was primarily due to the impact of the
U.S. 2017 Tax Cuts and Jobs Act (refer to Appendix A for additional
information). The difference between our GAAP and non-GAAP
tax rates in the first nine months of fiscal 2017 was primarily due
to the net tax effects on stock-based compensation expense and
acquisition related items, including the tax effects of
amortization of intangible assets.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
Not
meaningful
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ORACLE
CORPORATION
|
|
|
|
|
|
|
|
Q3 FISCAL 2018
FINANCIAL RESULTS
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
($ in
millions)
|
|
|
|
|
|
|
|
|
|
|
February
28,
|
May
31,
|
|
|
|
2018
|
2017
|
ASSETS
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
19,487
|
|
$
21,784
|
|
|
Marketable
securities
|
50,968
|
|
44,294
|
|
|
Trade receivables,
net
|
3,902
|
|
5,300
|
|
|
Inventories
|
496
|
|
300
|
|
|
Prepaid expenses and
other current assets
|
2,879
|
|
2,837
|
|
|
|
Total Current
Assets
|
77,732
|
|
74,515
|
|
Non-Current
Assets:
|
|
|
|
|
|
Property,
plant and equipment, net
|
5,904
|
|
5,315
|
|
|
Intangible assets, net
|
6,400
|
|
7,679
|
|
|
Goodwill,
net
|
42,965
|
|
43,045
|
|
|
Deferred
tax assets
|
1,815
|
|
1,143
|
|
|
Other
non-current assets
|
3,385
|
|
3,294
|
|
|
|
Total Non-Current
Assets
|
60,469
|
|
60,476
|
|
TOTAL
ASSETS
|
$
138,201
|
|
$
134,991
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
Notes payable and
other borrowings, current
|
$
4,491
|
|
$
9,797
|
|
|
Accounts
payable
|
603
|
|
599
|
|
|
Accrued compensation
and related benefits
|
1,498
|
|
1,966
|
|
|
Deferred
revenues
|
8,003
|
|
8,233
|
|
|
Other current
liabilities
|
3,373
|
|
3,583
|
|
|
|
Total Current
Liabilities
|
17,968
|
|
24,178
|
|
Non-Current
Liabilities:
|
|
|
|
|
|
Notes payable and
other borrowings, non-current
|
56,224
|
|
48,112
|
|
|
Income taxes
payable
|
13,296
|
|
5,681
|
|
|
Other non-current
liabilities
|
2,441
|
|
2,774
|
|
|
|
Total Non-Current
Liabilities
|
71,961
|
|
56,567
|
|
Equity
|
48,272
|
|
54,246
|
|
TOTAL LIABILITIES
AND EQUITY
|
$
138,201
|
|
$
134,991
|
|
|
|
|
|
|
|
|
ORACLE
CORPORATION
|
|
|
|
|
|
|
Q3 FISCAL 2018
FINANCIAL RESULTS
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
($ in
millions)
|
|
|
|
|
|
|
|
|
Nine Months Ended
Feburary 28,
|
|
|
2018
|
2017
|
Cash Flows From
Operating Activities:
|
|
|
|
|
Net income
|
$
418
|
|
$
6,103
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
Depreciation
|
878
|
|
722
|
|
Amortization of
intangible assets
|
1,205
|
|
1,010
|
|
Deferred income
taxes
|
(613)
|
|
111
|
|
Stock-based
compensation
|
1,211
|
|
1,017
|
|
Other, net
|
(63)
|
|
96
|
|
Changes in operating
assets and liabilities, net of effects from
acquisitions:
|
|
|
|
|
Decrease in trade
receivables, net
|
1,484
|
|
1,673
|
|
Increase in
inventories
|
(195)
|
|
(178)
|
|
Decrease in prepaid
expenses and other assets
|
76
|
|
308
|
|
Decrease in accounts
payable and other liabilities
|
(606)
|
|
(862)
|
|
Increase (decrease) in
income taxes payable
|
7,444
|
|
(10)
|
|
Decrease in deferred
revenues
|
(513)
|
|
(330)
|
|
Net cash provided
by operating activities
|
10,726
|
|
9,660
|
|
Cash Flows From
Investing Activities:
|
|
|
|
|
Purchases of
marketable securities and other investments
|
(24,496)
|
|
(15,571)
|
|
Proceeds from
maturities and sales of marketable securities and other
investments
|
17,069
|
|
11,825
|
|
Acquisitions, net of
cash acquired
|
—
|
|
(10,406)
|
|
Capital
expenditures
|
(1,358)
|
|
(1,496)
|
|
Net cash used for
investing activities
|
(8,785)
|
|
(15,648)
|
|
Cash Flows From
Financing Activities:
|
|
|
|
|
Payments for
repurchases of common stock
|
(6,421)
|
|
(3,067)
|
|
Proceeds from
issuances of common stock
|
2,116
|
|
1,309
|
|
Shares repurchased for
tax withholdings upon vesting of restricted stock-based
awards
|
(467)
|
|
(237)
|
|
Payments of dividends
to stockholders
|
(2,362)
|
|
(1,844)
|
|
Proceeds from
borrowings, net of issuance costs
|
9,945
|
|
13,932
|
|
Repayments of
borrowings
|
(7,300)
|
|
(4,094)
|
|
Distributions to
noncontrolling interests
|
(34)
|
|
(200)
|
|
Net cash (used for)
provided by financing activities
|
(4,523)
|
|
5,799
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
285
|
|
(215)
|
|
Net decrease in
cash and cash equivalents
|
(2,297)
|
|
(404)
|
|
Cash and cash
equivalents at beginning of period
|
21,784
|
|
20,152
|
|
Cash and cash
equivalents at end of period
|
$
19,487
|
|
$
19,748
|
|
|
|
|
|
|
|
ORACLE
CORPORATION
|
Q3 FISCAL
2018 FINANCIAL RESULTS
|
FREE CASH
FLOW - TRAILING 4-QUARTERS (1)
|
($ in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
2017
|
Fiscal
2018
|
|
|
|
Q1
|
Q2
|
Q3
|
Q4
|
Q1
|
Q2
|
Q3
|
Q4
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Operating
Cash Flow
|
$
13,679
|
$
14,249
|
$
13,453
|
$
14,126
|
$
14,817
|
$
14,581
|
$
15,192
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
Expenditures
|
(1,042)
|
(1,604)
|
(1,676)
|
(2,021)
|
(2,195)
|
(2,037)
|
(1,883)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash
Flow
|
$
12,637
|
$
12,645
|
$
11,777
|
$
12,105
|
$
12,622
|
$
12,544
|
$
13,309
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% Growth over
prior year
|
5%
|
10%
|
(7%)
|
(3%)
|
0%
|
(1%)
|
13%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Net
Income
|
$
8,986
|
$
8,820
|
$
8,917
|
$
9,335
|
$
9,713
|
$
9,914
|
$
3,650
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow as
a % of Net Income
|
141%
|
143%
|
132%
|
130%
|
130%
|
127%
|
365%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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
|
Q3 FISCAL
2018 FINANCIAL RESULTS
|
SUPPLEMENTAL
ANALYSIS OF GAAP REVENUES (1)
|
($ in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
2017
|
|
|
|
|
Fiscal
2018
|
|
|
|
Q1
|
Q2
|
Q3
|
Q4
|
TOTAL
|
Q1
|
Q2
|
Q3
|
Q4
|
TOTAL
|
|
|
REVENUES
|
|
|
|
|
|
|
|
|
|
|
|
|
Cloud software
as a service
|
$
657
|
$
725
|
$
865
|
$
964
|
$
3,211
|
$
1,067
|
$
1,123
|
$
1,151
|
|
$
3,340
|
|
|
Cloud platform
as a service and infrastructure as a service
|
312
|
328
|
324
|
397
|
1,360
|
400
|
396
|
415
|
|
1,212
|
|
|
|
Total cloud
revenues
|
969
|
1,053
|
1,189
|
1,361
|
4,571
|
1,467
|
1,519
|
1,566
|
|
4,552
|
|
|
New software
licenses
|
1,030
|
1,347
|
1,414
|
2,626
|
6,418
|
966
|
1,353
|
1,388
|
|
3,706
|
|
|
Software
license updates and product support
|
4,792
|
4,777
|
4,762
|
4,897
|
19,229
|
4,951
|
4,953
|
5,027
|
|
14,932
|
|
|
|
Total on-premise
software revenues
|
5,822
|
6,124
|
6,176
|
7,523
|
25,647
|
5,917
|
6,306
|
6,415
|
|
18,638
|
|
|
|
Total cloud and
on-premise software revenues
|
6,791
|
7,177
|
7,365
|
8,884
|
30,218
|
7,384
|
7,825
|
7,981
|
|
23,190
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total hardware
revenues
|
996
|
1,014
|
1,028
|
1,114
|
4,152
|
943
|
940
|
994
|
|
2,878
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total services
revenues
|
808
|
844
|
812
|
894
|
3,358
|
860
|
856
|
796
|
|
2,511
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
$
8,595
|
$
9,035
|
$
9,205
|
$10,892
|
$37,728
|
$
9,187
|
$
9,621
|
$
9,771
|
|
$
28,579
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AS REPORTED
REVENUE GROWTH RATES
|
|
|
|
|
|
|
|
|
|
|
|
|
Cloud software
as a service
|
50%
|
57%
|
64%
|
67%
|
61%
|
62%
|
55%
|
33%
|
|
49%
|
|
|
Cloud platform
as a service and infrastructure as a service
|
80%
|
75%
|
55%
|
40%
|
60%
|
28%
|
21%
|
28%
|
|
26%
|
|
|
|
Total cloud
revenues
|
59%
|
62%
|
62%
|
58%
|
60%
|
51%
|
44%
|
32%
|
|
42%
|
|
|
New software
licenses
|
(11%)
|
(20%)
|
(16%)
|
(5%)
|
(12%)
|
(6%)
|
0%
|
(2%)
|
|
(2%)
|
|
|
Software
license updates and product support
|
2%
|
2%
|
2%
|
2%
|
2%
|
3%
|
4%
|
6%
|
|
4%
|
|
|
|
Total on-premise
software revenues
|
0%
|
(4%)
|
(3%)
|
(1%)
|
(2%)
|
2%
|
3%
|
4%
|
|
3%
|
|
|
|
Total cloud and
on-premise software revenues
|
5%
|
2%
|
4%
|
5%
|
4%
|
9%
|
9%
|
8%
|
|
9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total hardware
revenues
|
(12%)
|
(10%)
|
(9%)
|
(13%)
|
(11%)
|
(5%)
|
(7%)
|
(3%)
|
|
(5%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total services
revenues
|
(6%)
|
(2%)
|
2%
|
3%
|
(1%)
|
6%
|
1%
|
(2%)
|
|
2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
2%
|
0%
|
2%
|
3%
|
2%
|
7%
|
6%
|
6%
|
|
6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSTANT CURRENCY
GROWTH RATES (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
Cloud software
as a service
|
52%
|
59%
|
65%
|
69%
|
62%
|
62%
|
53%
|
31%
|
|
47%
|
|
|
Cloud platform
as a service and infrastructure as a service
|
84%
|
78%
|
57%
|
42%
|
62%
|
27%
|
19%
|
24%
|
|
23%
|
|
|
|
Total cloud
revenues
|
61%
|
64%
|
63%
|
60%
|
62%
|
51%
|
43%
|
29%
|
|
40%
|
|
|
New software
licenses
|
(10%)
|
(19%)
|
(15%)
|
(4%)
|
(11%)
|
(7%)
|
(2%)
|
(6%)
|
|
(5%)
|
|
|
Software
license updates and product support
|
3%
|
3%
|
3%
|
3%
|
3%
|
2%
|
2%
|
1%
|
|
2%
|
|
|
|
Total on-premise
software revenues
|
1%
|
(3%)
|
(2%)
|
0%
|
(1%)
|
1%
|
1%
|
0%
|
|
0%
|
|
|
|
Total cloud and
on-premise software revenues
|
6%
|
3%
|
5%
|
6%
|
5%
|
8%
|
7%
|
4%
|
|
6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total hardware
revenues
|
(11%)
|
(9%)
|
(9%)
|
(12%)
|
(10%)
|
(6%)
|
(9%)
|
(7%)
|
|
(7%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total services
revenues
|
(5%)
|
0%
|
3%
|
4%
|
1%
|
5%
|
0%
|
(6%)
|
|
0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
3%
|
1%
|
3%
|
4%
|
3%
|
6%
|
5%
|
2%
|
|
4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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, 2017 and 2016 for the
fiscal 2018 and fiscal 2017 constant currency growth rate
calculations presented, respectively, rather than the actual
exchange rates in effect during the respective periods.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ORACLE
CORPORATION
|
|
|
|
Q3 FISCAL
2018 FINANCIAL RESULTS
|
|
|
|
SUPPLEMENTAL
GEOGRAPHIC GAAP REVENUES ANALYSIS (1)
|
|
|
|
($ in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
2017
|
|
|
|
|
Fiscal
2018
|
|
|
|
|
|
|
Q1
|
Q2
|
Q3
|
Q4
|
TOTAL
|
Q1
|
Q2
|
Q3
|
Q4
|
TOTAL
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AMERICAS
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cloud and
on-premise software revenues
|
$
3,876
|
$
4,000
|
$
4,280
|
$
5,076
|
$
17,231
|
$
4,256
|
$
4,414
|
$
4,482
|
|
$
13,152
|
|
|
Total hardware
revenues
|
$
526
|
$
510
|
$
511
|
$
542
|
$
2,089
|
$
485
|
$
482
|
$
472
|
|
$
1,440
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AS REPORTED GROWTH
RATES
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cloud and
on-premise software revenues
|
5%
|
2%
|
8%
|
6%
|
5%
|
10%
|
10%
|
5%
|
|
8%
|
|
|
Total hardware
revenues
|
(11%)
|
(14%)
|
(11%)
|
(17%)
|
(13%)
|
(8%)
|
(5%)
|
(8%)
|
|
(7%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSTANT CURRENCY
GROWTH RATES (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cloud and
on-premise software revenues
|
6%
|
2%
|
7%
|
6%
|
5%
|
9%
|
10%
|
4%
|
|
8%
|
|
|
Total hardware
revenues
|
(10%)
|
(14%)
|
(11%)
|
(17%)
|
(13%)
|
(8%)
|
(6%)
|
(8%)
|
|
(7%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EUROPE / MIDDLE
EAST / AFRICA
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cloud and
on-premise software revenues
|
$
1,903
|
$
2,008
|
$
2,019
|
$
2,489
|
$
8,419
|
$
2,019
|
$
2,259
|
$
2,312
|
|
$
6,590
|
|
|
Total hardware
revenues
|
$
275
|
$
294
|
$
300
|
$
352
|
$
1,221
|
$
271
|
$
272
|
$
324
|
|
$
867
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AS REPORTED GROWTH
RATES
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cloud and
on-premise software revenues
|
2%
|
(3%)
|
(2%)
|
1%
|
(1%)
|
6%
|
12%
|
15%
|
|
11%
|
|
|
Total hardware
revenues
|
(17%)
|
(7%)
|
(14%)
|
(8%)
|
(11%)
|
(1%)
|
(8%)
|
8%
|
|
0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSTANT CURRENCY
GROWTH RATES (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cloud and
on-premise software revenues
|
7%
|
2%
|
2%
|
5%
|
4%
|
3%
|
7%
|
4%
|
|
4%
|
|
|
Total hardware
revenues
|
(13%)
|
(2%)
|
(10%)
|
(4%)
|
(7%)
|
(4%)
|
(12%)
|
(1%)
|
|
(6%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASIA
PACIFIC
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cloud and
on-premise software revenues
|
$
1,012
|
$
1,169
|
$
1,066
|
$
1,319
|
$
4,568
|
$
1,109
|
$
1,152
|
$
1,187
|
|
$
3,448
|
|
|
Total hardware
revenues
|
$
195
|
$
210
|
$
217
|
$
220
|
$
842
|
$
187
|
$
186
|
$
198
|
|
$
571
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AS REPORTED GROWTH
RATES
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cloud and
on-premise software revenues
|
12%
|
15%
|
2%
|
9%
|
9%
|
10%
|
(1%)
|
11%
|
|
6%
|
|
|
Total hardware
revenues
|
(7%)
|
(1%)
|
1%
|
(12%)
|
(5%)
|
(4%)
|
(11%)
|
(9%)
|
|
(8%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSTANT CURRENCY
GROWTH RATES (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cloud and
on-premise software revenues
|
8%
|
11%
|
0%
|
9%
|
7%
|
10%
|
(2%)
|
6%
|
|
4%
|
|
|
Total hardware
revenues
|
(9%)
|
(3%)
|
0%
|
(12%)
|
(6%)
|
(4%)
|
(12%)
|
(14%)
|
|
(10%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
COMPANY
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cloud and
on-premise software revenues
|
$
6,791
|
$
7,177
|
$
7,365
|
$
8,884
|
$
30,218
|
$
7,384
|
$
7,825
|
$
7,981
|
|
$
23,190
|
|
|
Total hardware
revenues
|
$
996
|
$
1,014
|
$
1,028
|
$
1,114
|
$
4,152
|
$
943
|
$
940
|
$
994
|
|
$
2,878
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AS REPORTED GROWTH
RATES
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cloud and
on-premise software revenues
|
5%
|
2%
|
4%
|
5%
|
4%
|
9%
|
9%
|
8%
|
|
9%
|
|
|
Total hardware
revenues
|
(12%)
|
(10%)
|
(9%)
|
(13%)
|
(11%)
|
(5%)
|
(7%)
|
(3%)
|
|
(5%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSTANT CURRENCY
GROWTH RATES (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cloud and
on-premise software revenues
|
6%
|
3%
|
5%
|
6%
|
5%
|
8%
|
7%
|
4%
|
|
6%
|
|
|
Total hardware
revenues
|
(11%)
|
(9%)
|
(9%)
|
(12%)
|
(10%)
|
(6%)
|
(9%)
|
(7%)
|
|
(7%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The sum of the
quarterly information presented may vary from the year-to-date
information presented due to rounding.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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(2)
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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, 2017 and 2016 for the
fiscal 2018 and fiscal 2017 constant currency growth rate
calculations presented, respectively, rather than the actual
exchange rates in effect during the respective periods.
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ORACLE
CORPORATION
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Q3 FISCAL
2018 FINANCIAL RESULTS
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SUPPLEMENTAL
TOTAL CLOUD AND ON-PREMISE SOFTWARE GAAP REVENUES ANALYSIS
(1)
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|
($ in
millions)
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Fiscal
2017
|
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|
Fiscal
2018
|
|
|
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|
|
Q1
|
Q2
|
Q3
|
Q4
|
TOTAL
|
Q1
|
Q2
|
Q3
|
Q4
|
TOTAL
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|
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|
APPLICATIONS
REVENUES
|
|
|
|
|
|
|
|
|
|
|
|
|
Cloud software
as a service
|
$
657
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$
725
|
$
865
|
$
964
|
$
3,211
|
$
1,067
|
$
1,123
|
$
1,151
|
|
$
3,340
|
|
|
On-premise
software revenues
|
1,584
|
1,610
|
1,632
|
1,898
|
6,724
|
1,579
|
1,554
|
1,571
|
|
4,705
|
|
|
Total cloud and on-premise software revenues
|
$
2,241
|
$
2,335
|
$
2,497
|
$
2,862
|
$
9,935
|
$
2,646
|
$
2,677
|
$
2,722
|
|
$
8,045
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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AS REPORTED GROWTH
RATES
|
|
|
|
|
|
|
|
|
|
|
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|
Cloud software
as a service
|
50%
|
57%
|
64%
|
67%
|
61%
|
62%
|
55%
|
33%
|
|
49%
|
|
|
On-premise
software revenues
|
(5%)
|
(11%)
|
(8%)
|
(10%)
|
(8%)
|
0%
|
(3%)
|
(4%)
|
|
(2%)
|
|
|
Total cloud and on-premise software revenues
|
6%
|
3%
|
9%
|
7%
|
6%
|
18%
|
15%
|
9%
|
|
14%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSTANT CURRENCY
GROWTH RATES (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
Cloud software
as a service
|
52%
|
59%
|
65%
|
69%
|
62%
|
62%
|
53%
|
31%
|
|
47%
|
|
|
On-premise
software revenues
|
(4%)
|
(9%)
|
(7%)
|
(9%)
|
(7%)
|
(1%)
|
(5%)
|
(7%)
|
|
(4%)
|
|
|
Total cloud and on-premise software revenues
|
8%
|
5%
|
9%
|
8%
|
8%
|
17%
|
13%
|
6%
|
|
12%
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
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|
|
|
|
|
|
|
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PLATFORM AND
INFRASTRUCTURE REVENUES
|
|
|
|
|
|
|
|
|
|
|
|
|
Cloud platform
as a service and infrastructure as a service
|
$
312
|
$
328
|
$
324
|
$
397
|
$
1,360
|
$
400
|
$
396
|
$
415
|
|
$
1,212
|
|
|
On-premise
software revenues
|
4,238
|
4,514
|
4,544
|
5,625
|
18,923
|
4,338
|
4,752
|
4,844
|
|
13,933
|
|
|
Total cloud and on-premise software revenues
|
$
4,550
|
$
4,842
|
$
4,868
|
$
6,022
|
$
20,283
|
$
4,738
|
$
5,148
|
$
5,259
|
|
$
15,145
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AS REPORTED GROWTH
RATES
|
|
|
|
|
|
|
|
|
|
|
|
|
Cloud platform
as a service and infrastructure as a service
|
80%
|
75%
|
55%
|
40%
|
60%
|
28%
|
21%
|
28%
|
|
26%
|
|
|
On-premise
software revenues
|
1%
|
(1%)
|
(1%)
|
3%
|
1%
|
2%
|
5%
|
7%
|
|
5%
|
|
|
Total cloud and on-premise software revenues
|
5%
|
2%
|
2%
|
5%
|
3%
|
4%
|
6%
|
8%
|
|
6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSTANT CURRENCY
GROWTH RATES (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
Cloud platform
as a service and infrastructure as a service
|
84%
|
78%
|
57%
|
42%
|
62%
|
27%
|
19%
|
24%
|
|
23%
|
|
|
On-premise
software revenues
|
2%
|
(1%)
|
0%
|
4%
|
1%
|
1%
|
3%
|
2%
|
|
2%
|
|
|
Total cloud and on-premise software revenues
|
5%
|
2%
|
2%
|
6%
|
4%
|
3%
|
4%
|
3%
|
|
4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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, 2017 and 2016 for the
fiscal 2018 and fiscal 2017 constant currency growth rate
calculations presented, respectively, rather than the actual
exchange rates in effect during the respective periods.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
APPENDIX A
ORACLE CORPORATION
Q3 FISCAL 2018
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 related
to each of the below items except for the impact of the U.S. 2017
Tax Cuts and Jobs Act:
- Cloud software as a service, cloud platform as a service and
infrastructure as a service, software license updates and product
support and hardware support deferred revenues: Business
combination accounting rules require us to account for the fair
values of cloud-based service contracts, software license updates
and product support contracts and hardware support contracts
assumed in connection with our acquisitions. The non-GAAP
adjustments to our cloud software as a service revenues, cloud
platform as a service and infrastructure as a service revenues,
software license updates and product support revenues and hardware
support revenues are intended to include, and thus reflect, the
full amount of such revenues. We believe the adjustments to these
revenues are 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 and hardware support contracts and our objective is to
increase the renewal rates on acquired and new cloud-based service
contracts; however, we cannot be certain that our customers will
renew our cloud-based contracts or software license updates and
product support and hardware support contracts.
- Deferred sales commissions amortization: Certain acquired
companies capitalized sales commissions associated with
subscription agreements and amortized these amounts over the
related contractual terms. Business combination accounting
rules generally require us to eliminate these capitalized sales
commissions balances as of the acquisition date and our
post-combination GAAP sales and marketing expenses generally do not
reflect the amortization of these deferred sales commissions
balances. The non-GAAP adjustment to increase our sales and
marketing expenses is intended to include, and thus reflect, the
full amount of amortization related to such balances as though the
acquired companies operated independently in the periods presented.
We believe this adjustment to sales and marketing expenses is
useful to investors as a measure of the ongoing performance of our
business. The presentation of this non-GAAP adjustment
commenced in the second fiscal quarter of fiscal 2017 as a result
of our acquisition of NetSuite. Such adjustment was not
material in prior periods.
- 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 primarily consist of personnel related
costs and stock-based compensation expenses for transitional and
certain other employees, integration related professional services,
certain business combination adjustments including adjustments
after the measurement period has ended and certain other operating
items, net. 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 and other expenses and
restructuring expenses generally diminish over time with respect to
past acquisitions and/or strategic initiatives, we generally will
incur these expenses in connection with any future acquisitions
and/or strategic initiatives.
- Impact of the U.S. 2017 Tax Cuts and Jobs Act: The U.S.
2017 Tax Cuts and Jobs Act (the Act) was signed into law on
December 22, 2017. We recorded a net
charge of $6.9 billion during the
three and nine months ended February 28,
2018 related to our preliminary assessment of the one-time
effects of the Act, including the one-time transition tax on
certain foreign subsidiary earnings and the remeasurement of net
deferred income tax balances affected by the Act. We have excluded
the impact of this charge from our non-GAAP income taxes and net
income measures for the three and nine months ended February 28, 2018. We believe making these
adjustments provides insight to our operating performance and
comparability to past operating results.
View original
content:http://www.prnewswire.com/news-releases/q3-fy18-cloud-revenues-up-32-to-16-billion-and-total-revenues-up-6-to-98-billion-300616171.html
SOURCE Oracle Corporation