EX-99.1 2 d412785dex991.htm PRESS RELEASE PRESS RELEASE

Exhibit 99.1

 

LOGO

For Immediate Release

 

Contact:    Ken Bond    Deborah Hellinger
   Oracle Investor Relations    Oracle Corporate Communications
   1.650.607.0349    1.212.508.7935
   ken.bond@oracle.com    deborah.hellinger@oracle.com

ORACLE REPORTS Q1 GAAP EPS UP 15% TO 41 CENTS; Q1 NON-GAAP EPS UP 11% TO 53 CENTS

Trailing Twelve Month Operating Cash Flow Up 9% to $14.0 billion

REDWOOD SHORES, Calif., September 20, 2012 Oracle Corporation (NASDAQ: ORCL) today announced that both fiscal 2013 Q1 GAAP and non-GAAP total revenues were down 2% to $8.2 billion. GAAP new software licenses and cloud software subscriptions revenues were up 5% to $1.6 billion, while non-GAAP new software licenses and cloud software subscriptions revenues were up 6% to $1.6 billion. Both GAAP and non-GAAP software license updates and product support revenues were up 3% to $4.1 billion. Both GAAP and non-GAAP hardware systems products revenues were down 24% to $779 million. GAAP operating income was up 7% to $2.9 billion, and GAAP operating margin was 35%. Non-GAAP operating income was up 1% to $3.6 billion, and non-GAAP operating margin was 44%. GAAP net income was up 11% to $2.0 billion, while non-GAAP net income was up 6% to $2.6 billion. GAAP earnings per share were $0.41, up 15% compared to last year while non-GAAP earnings per share were up 11% to $0.53. GAAP operating cash flow on a trailing twelve-month basis was $14.0 billion, up 9% compared to last year.

Without the impact of the US dollar strengthening compared to foreign currencies, Oracle’s reported Q1 GAAP earnings per share would have been $0.03 higher at $0.44, up 24%, and Q1 non-GAAP earnings per share would have been $0.03 higher at $0.56, up 17%. Both GAAP and non-GAAP total revenues also would have been up 3%, GAAP new software licenses and cloud software subscriptions revenues would have been up 10%, non-GAAP new software licenses and cloud software subscriptions revenues would have been up 11% and both GAAP and non-GAAP hardware systems products revenues would have been down 21%.

“On a non-GAAP basis, new software licenses and cloud software subscriptions sales grew 11% in constant currency and operating margin increased to 44% in Q1,” said Oracle President and CFO, Safra Catz. “Q1 operating cash flow increased to a record high of $5.7 billion. We’re off to a good start in the new year.”


“Exadata, Exalogic, Exalytics and our other engineered systems grew more than 100% in the quarter,” said Oracle President, Mark Hurd. “For the full year, we expect to double engineered systems sales to well over $1 billion. Oracle’s new cloud business is also approaching a $1 billion annual run rate. These two businesses will drive Oracle’s growth for years to come.”

“A little more than a week from now we will announce lots of enhancements to the Oracle Cloud,” said Oracle CEO, Larry Ellison. “There are more CRM, ERP and HCM applications as a service, and more Oracle database, Java and social network platform services. Our new infrastructure as a service is available in the Oracle Cloud and as a private cloud in our customers’ data center, with the unique ability to move applications and services back and forth between the two. Join us at Oracle OpenWorld for all the details.”

The Board of Directors also declared a quarterly cash dividend of $0.06 per share of outstanding common stock. This dividend will be paid to stockholders of record as of the close of business on October 12, 2012, with a payment date of November 2, 2012.

Q1 Fiscal 2013 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: 861602. 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 2013 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: 6071749.


About Oracle

Oracle engineers hardware and software to work together in the cloud and in your data center. For more information about Oracle (NASDAQ: 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 engineered systems sales doubling for the full year, Oracle’s cloud business annual run rate, the cloud business and engineered systems business driving Oracle’s growth in years to come, and announcements to be made at Oracle Open World, 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 debt crisis, 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 software license updates and product support. (3) Our hardware systems business may not be successful, 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 and risks relating to compliance with international and U.S. laws that apply to our international operations. (6) Intense competitive forces demand rapid technological advances and frequent new product introductions and could require us to reduce prices or cause us to lose customers. (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 20, 2012. Oracle undertakes no duty to update any statement in light of new information or future events.


ORACLE CORPORATION

Q1 FISCAL 2013 FINANCIAL RESULTS

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

($ in millions, except per share data)

 

     Three Months Ended August 31,    

% Increase

   

% Increase

(Decrease)

 
        
      2012     % of
Revenues
    2011     % of
Revenues
    (Decrease)
in US $
    in Constant
Currency (1)
 

REVENUES

            

New software licenses and cloud software subscriptions

   $     1,574        19%      $   1,498        18%        5%        10%   

Software license updates and product support

     4,140        51%        4,022        48%        3%        8%   
  

 

 

     

Software Revenues

     5,714        70%        5,520        66%        4%        9%   
  

 

 

     

Hardware systems products

     779        9%        1,029        12%        (24%     (21%

Hardware systems support

     574        7%        645        8%        (11%     (6%
  

 

 

     

Hardware Systems Revenues

     1,353        16%        1,674        20%        (19%     (15%
  

 

 

     

Services Revenues

     1,114        14%        1,180        14%        (6%     0%   
  

 

 

     

Total Revenues

     8,181        100%        8,374        100%        (2%     3%   
  

 

 

     

OPERATING EXPENSES

            

Sales and marketing

     1,545        19%        1,630        19%        (5%     (1%

Software license updates and product support

     283        3%        297        4%        (5%     0%   

Hardware systems products

     384        5%        472        6%        (19%     (15%

Hardware systems support

     224        3%        283        3%        (21%     (16%

Services

     884        11%        936        11%        (6%     0%   

Research and development

     1,201        15%        1,050        13%        14%        17%   

General and administrative

     275        3%        311        4%        (12%     (8%

Amortization of intangible assets

     619        7%        592        7%        5%        5%   

Acquisition related and other (2)

     (258     (3%     19        0%        (1,435%     (1,587%

Restructuring

     145        2%        101        1%        43%        57%   
  

 

 

     

Total Operating Expenses

     5,302        65%        5,691        68%        (7%     (3%
  

 

 

     

OPERATING INCOME

     2,879        35%        2,683        32%        7%        15%   

Interest expense

     (188     (2%     (192     (2%     (2%     (2%

Non-operating income (expense), net

     11        0%        (20     0%        155%        148%   
  

 

 

     

INCOME BEFORE PROVISION FOR INCOME TAXES

     2,702        33%        2,471        30%        9%        18%   
  

 

 

     

Provision for income taxes

     668        8%        631        8%        6%        14%   
  

 

 

     

NET INCOME

   $ 2,034        25%      $ 1,840        22%        11%        19%   
  

 

 

     

EARNINGS PER SHARE:

            

Basic

   $ 0.42        $ 0.36         

Diluted

   $ 0.41        $ 0.36         

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:

            

Basic

     4,867          5,062         

Diluted

 

     4,939                5,150                           
(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, 2012, 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, 2012 compared with the corresponding prior year period decreased our revenues by 5 percentage points, operating expenses by 4 percentage points and operating income by 8 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.

 

1


ORACLE CORPORATION

Q1 FISCAL 2013 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)
 
     2012           2012      2011            2011      GAAP     Non-GAAP     GAAP     Non-GAAP  
     GAAP     Adj.     Non-GAAP      GAAP      Adj.     Non-GAAP           

 

TOTAL REVENUES (3) (4) (5)

   $

 

  8,181

 

  

 

  $

 

28

 

  

 

  $

 

  8,209

 

  

 

   $

 

8,374

 

  

 

   $

 

24

 

  

 

  $

 

8,398

 

  

 

    

 

(2%

 

 

   

 

(2%

 

 

   

 

3%

 

  

 

   

 

3%

 

  

 

TOTAL SOFTWARE REVENUES (3) (4)

   $ 5,714      $ 24      $ 5,738       $ 5,520       $ 13      $ 5,533         4%        4%        9%        9%   

New software licenses and cloud software subscriptions (3)

     1,574        19        1,593         1,498                1,498         5%        6%        10%        11%   

Software license updates and product support (4)

     4,140        5        4,145         4,022         13        4,035         3%        3%        8%        8%   

TOTAL HARDWARE SYSTEMS REVENUES (5)

   $ 1,353      $ 4      $ 1,357       $ 1,674       $ 11      $ 1,685         (19%     (19%     (15%     (15%

Hardware systems products

     779               779         1,029                1,029         (24%     (24%     (21%     (21%

Hardware systems support (5)

     574        4        578         645         11        656         (11%     (12%     (6%     (7%

 

TOTAL OPERATING EXPENSES

   $ 5,302      $   (682   $ 4,620       $ 5,691       $   (859   $   4,832         (7%     (4%     (3%     0%   

Stock-based compensation (6)

     176        (176             147         (147             20%        *          20%        *     

Amortization of intangible assets (7)

     619        (619             592         (592             5%        *          5%        *     

Acquisition related and other

     (258     258                19         (19             (1,435%     *          (1,587%     *     

Restructuring

     145        (145             101         (101             43%        *          57%        *     

 

OPERATING INCOME

   $ 2,879      $ 710      $ 3,589       $   2,683       $ 883      $ 3,566         7%        1%        15%        6%   

OPERATING MARGIN %

     35%          44%         32%           42%         315 bp.        125 bp.        375 bp.        145 bp.   

INCOME TAX EFFECTS (8)

   $ 668      $ 130      $ 798       $ 631       $ 258      $ 889         6%        (10%     14%        (5%

NET INCOME

   $ 2,034      $ 580      $ 2,614       $ 1,840       $ 625      $ 2,465         11%        6%        19%        12%   

DILUTED EARNINGS PER SHARE

   $ 0.41        $ 0.53       $ 0.36         $ 0.48         15%        11%        24%        17%   

DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING

 

     4,939               4,939         5,150                5,150         (4%     (4%     (4%     (4%
(1) This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. For a detailed explanation of the adjustments made to comparable GAAP measures, the reasons why management uses these measures, the usefulness of these measures and the material limitations on the usefulness of these measures, please see Appendix A.

 

(2) We compare the percent change in the results from one period to another period using constant currency disclosure. We present constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the exchange rates in effect on May 31, 2012, 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, 2012, approximately $15 million in estimated revenues related to assumed cloud software subscriptions contracts will not be recognized for the remainder of fiscal 2013 due to business combination accounting rules.

 

(4) As of August 31, 2012, approximately $8 million and $2 million in estimated revenues related to assumed software support contracts will not be recognized for the remainder of fiscal 2013 and fiscal 2014, respectively, due to business combination accounting rules.

 

(5) As of August 31, 2012, approximately $7 million in estimated revenues related to hardware systems support contracts will not be recognized for the remainder of fiscal 2013 due to business combination accounting rules.

 

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

 

     Three Months Ended
August 31, 2012
     Three Months Ended
August 31, 2011
 
     GAAP      Adj.      Non-GAAP      GAAP      Adj.      Non-GAAP  
          

Sales and marketing

   $ 37       $ (37    $       $ 26       $ (26    $   

Software license updates and product support

     5         (5              4         (4        

Hardware systems products

                             1         (1        

Hardware systems support

     1         (1              1         (1        

Services

     9         (9              4         (4        

Research and development

     83         (83              71         (71        

General and administrative

     41         (41              40         (40        
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Subtotal

     176         (176              147         (147        
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Acquisition related and other

     17         (17              1         (1        
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total stock-based compensation

   $   193       $   (193    $       $ 148       $   (148    $   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(7) Estimated future annual amortization expense related to intangible assets as of August 31, 2012 was as follows:

 

Remainder of Fiscal 2013

   $ 1,712   

Fiscal 2014

     1,955   

Fiscal 2015

     1,505   

Fiscal 2016

     955   

Fiscal 2017

     398   

Fiscal 2018

     278   

Thereafter

     562   
  

 

 

 

Total intangible assets subject to amortization

     7,365   

In-process research and development

     11   
  

 

 

 

Total intangible assets, net

   $     7,376   
  

 

 

 

 

(8) Income tax effects were calculated reflecting an effective GAAP tax rate of 24.7% and 25.6% in the first quarter of fiscal 2013 and 2012, respectively, and an effective non-GAAP tax rate of 23.4% and 26.5% in the first quarter of fiscal 2013 and 2012, respectively. 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. The difference between our GAAP and non-GAAP tax rates in the first quarter of fiscal 2012 was primarily due to income tax effects related to our acquired tax exposures and the differences in jurisdictional tax rates and the related tax benefits attributable to our restructuring expenses.

 

* Not meaningful

 

2


ORACLE CORPORATION

Q1 FISCAL 2013 FINANCIAL RESULTS

CONDENSED CONSOLIDATED BALANCE SHEETS

($ in millions)

 

           August 31,     
2012
          May 31,     
2012
 

 

ASSETS

 

     

Current Assets:

     

Cash and cash equivalents

   $ 15,667       $ 14,955   

Marketable securities

     15,940         15,721   

Trade receivables, net

     3,775         6,377   

Inventories

     148         158   

Deferred tax assets

     913         877   

Prepaid expenses and other current assets

     1,729         1,935   
  

 

 

 

Total Current Assets

     38,172         40,023   

Non-Current Assets:

     

Property, plant and equipment, net

     3,037         3,021   

Intangible assets, net

     7,376         7,899   

Goodwill

     25,288         25,119   

Deferred tax assets

     547         595   

Other assets

     2,138         1,670   
  

 

 

 

Total Non-Current Assets

     38,386         38,304   
  

 

 

 

TOTAL ASSETS

   $ 76,558       $ 78,327   
  

 

 

 

LIABILITIES AND EQUITY

 

     

Current Liabilities:

     

Notes payable, current and other current borrowings

   $ 1,250       $ 2,950   

Accounts payable

     388         438   

Accrued compensation and related benefits

     1,472         2,002   

Deferred revenues

     8,316         7,035   

Other current liabilities

     2,529         2,963   
  

 

 

 

Total Current Liabilities

     13,955         15,388   

Non-Current Liabilities:

     

Notes payable and other non-current borrowings

     13,521         13,524   

Income taxes payable

     3,732         3,759   

Other non-current liabilities

     1,614         1,569   
  

 

 

 

Total Non-Current Liabilities

     18,867         18,852   

Equity

     43,736         44,087   
  

 

 

 

TOTAL LIABILITIES AND EQUITY

   $ 76,558       $ 78,327   
  

 

 

 
    

 

 

 

 

3


ORACLE CORPORATION

Q1 FISCAL 2013 FINANCIAL RESULTS

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

($ in millions)

 

     Three Months Ended August 31,  
     2012     2011  

 

 

Cash Flows From Operating Activities:

    

Net income

   $ 2,034      $ 1,840   

Adjustments to reconcile net income to net cash provided by operating activities:

    

Depreciation

     127        117   

Amortization of intangible assets

     619        592   

Deferred income taxes

     64        (116

Stock-based compensation

     193        148   

Tax benefits on the exercise of stock options and vesting of restricted stock-based awards

     120        39   

Excess tax benefits on the exercise of stock options and vesting of restricted stock-based awards

     (62     (24

Other, net

     37        27   

Changes in operating assets and liabilities, net of effects from acquisitions:

    

Decrease in trade receivables, net

     2,630        2,483   

Decrease in inventories

     10        57   

(Increase) decrease in prepaid expenses and other assets

     (72     469   

Decrease in accounts payable and other liabilities

     (943     (1,374

(Decrease) increase in income taxes payable

     (329     159   

Increase in deferred revenues

     1,243        1,004   
  

 

 

 

Net cash provided by operating activities

     5,671        5,421   
  

 

 

 
    

Cash Flows From Investing Activities:

    

Purchases of marketable securities and other investments

     (6,804     (12,588

Proceeds from maturities and sales of marketable securities and other investments

     6,794        6,768   

Acquisitions, net of cash acquired

     (361     (343

Capital expenditures

     (139     (160
  

 

 

 

Net cash used for investing activities

     (510     (6,323
  

 

 

 
    

Cash Flows From Financing Activities:

    

Payments for repurchases of common stock

     (3,076     (800

Proceeds from issuances of common stock

     517        182   

Payments of dividends to stockholders

     (292     (304

Repayments of borrowings

     (1,700     (1,150

Excess tax benefits on the exercise of stock options and vesting of restricted stock-based awards

     62        24   

Distributions to noncontrolling interests

     (31     (163
  

 

 

 

Net cash used for financing activities

     (4,520     (2,211
  

 

 

 

Effect of exchange rate changes on cash and cash equivalents

     71        112   
  

 

 

 

Net increase (decrease) in cash and cash equivalents

     712        (3,001
  

 

 

 

Cash and cash equivalents at beginning of period

     14,955        16,163   
  

 

 

 

Cash and cash equivalents at end of period

   $   15,667      $   13,162   
  

 

 

 
    

 

 

 

 

4


ORACLE CORPORATION

Q1 FISCAL 2013 FINANCIAL RESULTS

FREE CASH FLOW—TRAILING 4-QUARTERS (1)

($ in millions)

 

     Fiscal 2012     Fiscal 2013  
     Q1     Q2     Q3     Q4     Q1           Q2                Q3                Q4        

 

 

 

GAAP Operating Cash Flow

   $         12,818      $         13,129      $         13,463      $         13,743      $         13,993           

Capital Expenditures (2)

     (492     (500     (509     (648     (627        
  

 

 

 

 

Free Cash Flow

   $ 12,326      $ 12,629      $ 12,954      $ 13,095      $ 13,366           
  

 

 

 

% Growth over prior year

     46%        45%        36%        22%        8%                   

 

GAAP Net Income

   $ 9,035      $ 9,356      $ 9,738      $ 9,981      $ 10,175           

Free Cash Flow as a % of Net Income

 

     136%        135%        133%        131%        131%                   

 

(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) Represents capital expenditures as reported in cash flows from investing activities on our cash flow statements presented in accordance with GAAP.

 

5


ORACLE CORPORATION

Q1 FISCAL 2013 FINANCIAL RESULTS

SUPPLEMENTAL ANALYSIS OF GAAP REVENUES AND HEADCOUNT (1)

($ in millions)

 

     Fiscal 2012     Fiscal 2013  
   Q1     Q2     Q3     Q4     TOTAL     Q1         Q2            Q3            Q4        TOTAL  

 

 

 

 

REVENUES

                       

New software licenses and cloud software subscriptions

   $ 1,498      $ 2,048      $ 2,374      $ 3,985      $ 9,906      $ 1,574               $     1,574   

Software license updates and product support

     4,022        3,986        4,051        4,152        16,210        4,140                 4,140   
  

 

 

 

Software Revenues

     5,520        6,034        6,425        8,137        26,116        5,714                 5,714   

 

Hardware systems products

     1,029        953        869        977        3,827        779                 779   

Hardware systems support

     645        625        604        600        2,475        574                 574   
  

 

 

 

Hardware Systems Revenues

     1,674        1,578        1,473        1,577        6,302        1,353                 1,353   

 

Services Revenues

     1,180        1,180        1,141        1,202        4,703        1,114                 1,114   
  

 

 

 

 

Total Revenues

   $ 8,374      $ 8,792      $ 9,039      $ 10,916      $     37,121      $ 8,181               $ 8,181   
  

 

 

 

AS REPORTED REVENUE GROWTH RATES

                       

New software licenses and cloud software subscriptions

     17%        2%        7%        7%        7%        5%                 5%   

Software license updates and product support

     17%        9%        8%        5%        10%        3%                 3%   

Software Revenues

     17%        7%        8%        6%        9%        4%                 4%   

 

Hardware systems products

     (5%     (14%     (16%     (16%     (13%     (24%              (24%

Hardware systems support

     4%        (2%     (4%     (11%     (3%     (11%              (11%

Hardware Systems Revenues

     (1%     (10%     (11%     (14%     (9%     (19%              (19%

 

Services Revenues

     10%        0%        0%        (4%     1%        (6%              (6%

 

Total Revenues

     12%        2%        3%        1%        4%        (2%              (2%
                       

CONSTANT CURRENCY GROWTH RATES (2)

                       

New software licenses and cloud software subscriptions

     11%        3%        8%        11%        8%        10%                 10%   

Software license updates and product support

     10%        9%        9%        8%        9%        8%                 8%   

Software Revenues

     11%        7%        9%        10%        9%        9%                 9%   

 

Hardware systems products

     (11%     (14%     (16%     (13%     (14%     (21%              (21%

Hardware systems support

     (3%     (3%     (3%     (7%     (4%     (6%              (6%

Hardware Systems Revenues

     (8%     (10%     (11%     (11%     (10%     (15%              (15%

 

Services Revenues

     5%        0%        1%        0%        1%        0%                 0%   

 

Total Revenues

     5%        2%        4%        5%        4%        3%                 3%   

 

 

 

GEOGRAPHIC REVENUES

                       

REVENUES

                       

Americas

   $ 4,226      $ 4,532      $ 4,707      $ 5,771      $ 19,236      $ 4,324               $ 4,324   

Europe, Middle East & Africa

     2,704        2,756        2,787        3,314        11,561        2,383                 2,383   

Asia Pacific

     1,444        1,504        1,545        1,831        6,324        1,474                 1,474   
  

 

 

 

 

Total Revenues

   $ 8,374      $ 8,792      $ 9,039      $ 10,916      $ 37,121      $ 8,181               $ 8,181   
  

 

 

 
                       

 

 

 

HEADCOUNT

                       

GEOGRAPHIC AREA

                       

Americas

     46,338        46,672        47,884        48,901          49,145              

Europe, Middle East & Africa

     22,210        22,725        22,852        22,957          22,584              

Asia Pacific

     40,840        41,901        42,908        43,308          44,170              
  

 

 

 

 

Total Company

     109,388        111,298        113,644        115,166          115,899              
  

 

 

 
                       

 

 
(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, 2012 and 2011 for the fiscal 2013 and fiscal 2012 constant currency growth rate calculations presented, respectively, rather than the actual exchange rates in effect during the respective periods.

 

6


ORACLE CORPORATION

Q1 FISCAL 2013 FINANCIAL RESULTS

SUPPLEMENTAL GEOGRAPHIC REVENUES ANALYSIS (1)

($ in millions)

 

    Fiscal 2012     Fiscal 2013  
    Q1     Q2     Q3     Q4     TOTAL     Q1         Q2           Q3           Q4       TOTAL  

 

AMERICAS

                                                                   

New software licenses and cloud software subscriptions

  $ 727      $ 1,027      $ 1,228      $ 2,126      $ 5,107      $ 814            $ 814   
 

 

 

 

Hardware systems products

  $ 475      $ 496      $ 410      $ 498      $ 1,880      $ 380            $ 380   
 

 

 

 

AS REPORTED GROWTH RATES

                   

New software licenses and cloud software subscriptions

    10%        0%        11%        14%        10%        12%              12%   

Hardware systems products

    (12%     (17%     (19%     (17%     (16%     (20%           (20%

CONSTANT CURRENCY GROWTH RATES (2)

                   

New software licenses and cloud software subscriptions

    9%        1%        11%        16%        11%        14%              14%   

Hardware systems products

    (13%     (17%     (18%     (16%     (16%     (19%           (19%
                                                                     

 

EUROPE / MIDDLE EAST / AFRICA

                                                                   

New software licenses and cloud software subscriptions

  $ 440      $ 584      $ 693      $ 1,166      $ 2,884      $ 403            $ 403   
 

 

 

 

Hardware systems products

  $ 344      $ 272      $ 265      $ 260      $ 1,140      $ 214            $ 214   
 

 

 

 

AS REPORTED GROWTH RATES

                   

New software licenses and cloud software subscriptions

    25%        2%        (1%     (5%     1%        (8%           (8%

Hardware systems products

    2%        (17%     (20%     (24%     (15%     (38%           (38%

CONSTANT CURRENCY GROWTH RATES (2)

                   

New software licenses and cloud software subscriptions

    15%        3%        1%        2%        4%        1%              1%   

Hardware systems products

    (11%     (17%     (18%     (18%     (16%     (30%           (30%
                   
                                                                     

 

ASIA PACIFIC

                                                                   

New software licenses and cloud software subscriptions

  $ 331      $ 437      $ 453      $ 693      $ 1,915      $ 357            $ 357   
 

 

 

 

Hardware systems products

  $ 210      $ 185      $ 194      $ 219      $ 807      $ 185            $ 185   
 

 

 

 

AS REPORTED GROWTH RATES

                   

New software licenses and cloud software subscriptions

    20%        11%        13%        8%        12%        8%              8%   

Hardware systems products

    6%        2%        (3%     1%        1%        (12%           (12%

CONSTANT CURRENCY GROWTH RATES (2)

                   

New software licenses and cloud software subscriptions

    9%        8%        11%        13%        11%        12%              12%   

Hardware systems products

    (5%     (1%     (6%     1%        (3%     (10%           (10%
                   
                                                                     

 

TOTAL COMPANY

                                                                   

New software licenses and cloud software subscriptions

  $     1,498      $     2,048      $     2,374      $     3,985      $     9,906      $     1,574            $     1,574   
 

 

 

 

Hardware systems products

  $ 1,029      $ 953      $ 869      $ 977      $ 3,827      $ 779            $ 779   
 

 

 

 

AS REPORTED GROWTH RATES

                   

New software licenses and cloud software subscriptions

    17%        2%        7%        7%        7%        5%              5%   

Hardware systems products

    (5%     (14%     (16%     (16%     (13%     (24%           (24%

CONSTANT CURRENCY GROWTH RATES (2)

                   

New software licenses and cloud software subscriptions

    11%        3%        8%        11%        8%        10%              10%   

Hardware systems products

    (11%     (14%     (16%     (13%     (14%     (21%           (21%
                   

 

(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, 2012 and 2011 for the fiscal 2013 and fiscal 2012 constant currency growth rate calculations presented, respectively, rather than the actual exchange rates in effect during the respective periods.

 

7


APPENDIX A

ORACLE CORPORATION

Q1 FISCAL 2013 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 license 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 changes in fair value of contingent consideration payable, and certain other operating expenses, 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.

 

8