Oracle Announces Fiscal 2024 First Quarter Financial Results

ORACLE CORPORATION

Q1 FISCAL 2024 FINANCIAL RESULTS

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

($ in millions, except per share data)

Three Months Ended August 31,

% Increase

% Increase

(Decrease)

% of

% of

(Decrease)

in Constant

Revenues

2022

Revenues

in US $

Currency (1)

REVENUES

Cloud services and license support

$           9,547

77 %

$           8,417

73 %

13 %

12 %

Cloud license and on-premise license

809

6 %

904

8 %

(10 %)

(11 %)

Hardware

714

6 %

763

7 %

(6 %)

(8 %)

Services

1,383

11 %

1,361

12 %

2 %

1 %

      Total revenues

12,453

100 %

11,445

100 %

9 %

8 %

OPERATING EXPENSES

Cloud services and license support

2,179

18 %

1,735

15 %

26 %

25 %

Hardware

219

2 %

249

2 %

(12 %)

(14 %)

Services

1,212

10 %

1,053

9 %

15 %

14 %

Sales and marketing

2,026

16 %

2,177

19 %

(7 %)

(8 %)

Research and development

2,216

18 %

2,093

19 %

6 %

6 %

General and administrative

393

3 %

411

4 %

(4 %)

(5 %)

Amortization of intangible assets

763

6 %

919

8 %

(17 %)

(17 %)

Acquisition related and other

11

0 %

41

0 %

(72 %)

(72 %)

Restructuring

138

1 %

144

1 %

(4 %)

(1 %)

      Total operating expenses

9,157

74 %

8,822

77 %

4 %

3 %

OPERATING INCOME

3,296

26 %

2,623

23 %

26 %

23 %

Interest expense

(872)

(7 %)

(787)

(7 %)

11 %

11 %

Non-operating expenses, net

(49)

0 %

(180)

(1 %)

(73 %)

(74 %)

INCOME BEFORE INCOME TAXES

2,375

1,656

15 %

43 %

39 %

Benefit from (provision for) income taxes

45

0 %

(108)

*

*

NET INCOME

$           2,420

19 %

$           1,548

14 %

56 %

52 %

EARNINGS PER SHARE:

Basic

$              0.89

$              0.58

Diluted

$              0.86

$              0.56

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:

Basic

2,728

2,685

Diluted

2,823

2,747

(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, 2023, 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, 2023 compared with the corresponding prior year period increased our total revenues by 1 percentage point, total operating expenses by 1 percentage point and operating income by 3 percentage points.

Not meaningful

ORACLE CORPORATION

Q1 FISCAL 2024 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)

2023

2023

2022

2022

GAAP

Non-GAAP

GAAP

Non-GAAP

GAAP

Adj.

Non-GAAP

GAAP

Adj.

Non-GAAP

TOTAL REVENUES

$  12,453

$           –

$  12,453

$  11,445

$           –

$  11,445

9 %

9 %

8 %

8 %

TOTAL OPERATING EXPENSES

$     9,157

$   (1,761)

$     7,396

$     8,822

$   (1,854)

$     6,968

4 %

6 %

3 %

5 %

     Stock-based compensation (3)

849

(849)

–

750

(750)

–

13 %

*

13 %

*

     Amortization of intangible assets (4)

763

(763)

–

919

(919)

–

(17 %)

*

(17 %)

*

     Acquisition related and other

11

(11)

–

41

(41)

–

(72 %)

*

(72 %)

*

     Restructuring

138

(138)

–

144

(144)

–

(4 %)

*

(1 %)

*

OPERATING INCOME

$     3,296

$     1,761

$     5,057

$     2,623

$     1,854

$     4,477

26 %

13 %

23 %

12 %

OPERATING MARGIN %

26 %

41 %

23 %

39 %

355 bp.

150 bp.

327 bp.

140 bp.

INCOME TAX EFFECTS (5)

$          45

$      (823)

$      (778)

$      (108)

$      (574)

$      (682)

*

14 %

*

13 %

NET INCOME

$     2,420

$        938

$     3,358

$     1,548

$     1,280

$     2,828

56 %

19 %

52 %

17 %

DILUTED EARNINGS PER SHARE

$       0.86

$       1.19

$       0.56

$       1.03

52 %

16 %

48 %

14 %

DILUTED WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING

2,823

–

2,823

2,747

–

2,747

3 %

3 %

3 %

3 %

(1)

This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. For a detailed explanation of the adjustments made to comparable GAAP measures, the reasons why management uses these measures, the usefulness of these measures and the material limitations on the usefulness of these measures, please see Appendix A.

(2)

We compare the percent change in the results from one period to another period using constant currency disclosure. We present constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the exchange rates in effect on May 31, 2023, which was the last day of our prior fiscal year, rather than the actual exchange rates in effect during the respective periods.

(3)

Stock-based compensation was included in the following GAAP operating expense categories:

Three Months Ended

Three Months Ended

August 31,
 2023

August 31,
 2022

GAAP

Adj.

Non-GAAP

GAAP

Adj.

Non-GAAP

     Cloud services and license support

$        111

$      (111)

$           –

$          91

$         (91)

$           –

     Hardware

5

(5)

–

4

(4)

–

     Services

34

(34)

–

25

(25)

–

     Sales and marketing

135

(135)

–

124

(124)

–

     Research and development

484

(484)

–

422

(422)

–

     General and administrative

80

(80)

–

84

(84)

–

           Total stock-based compensation

$        849

$      (849)

$           –

$        750

$      (750)

$           –

(4)

Estimated future annual amortization expense related to intangible assets as of August 31, 2023 was as follows:

     Remainder of fiscal 2024

$     2,231

     Fiscal 2025

2,283

     Fiscal 2026

1,620

     Fiscal 2027

664

     Fiscal 2028

635

     Fiscal 2029

561

     Thereafter

1,080

           Total intangible assets, net

$     9,074

(5)

Income tax effects were calculated reflecting an effective GAAP tax rate of (1.9%) and 6.5% in the first quarter of fiscal 2024 and 2023, respectively, and an effective non-GAAP tax rate of 18.8% and 19.4% in the first quarter of fiscal 2024 and 2023, respectively. The difference in our GAAP and non-GAAP tax rates in each of the first quarter of fiscal 2024 and 2023 was primarily due to the net tax effects related to stock-based compensation expense and acquisition related and other items, including the tax effects on amortization of intangible assets and restructuring expense, partially offset by the net deferred tax effects related to an income tax benefit that was previously recorded due to the partial realignment of our legal entity structure.

Not meaningful

ORACLE CORPORATION

Q1 FISCAL 2024 FINANCIAL RESULTS

CONDENSED CONSOLIDATED BALANCE SHEETS

($ in millions)

August 31,

May 31,

2023

2023

ASSETS

Current Assets:

Cash and cash equivalents

$               11,613

$                 9,765

Marketable securities

470

422

Trade receivables, net

6,519

6,915

Prepaid expenses and other current assets

3,564

3,902

     Total Current Assets

22,166

21,004

Non-Current Assets:

   Property, plant and equipment, net

17,644

17,069