UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 18, 2014
Oracle Corporation
(Exact name of registrant as specified in its charter)
Delaware | 001-35992 | 54-2185193 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) |
(IRS Employer Identification No.) |
500 Oracle Parkway, Redwood City, California 94065
(Address of principal executive offices) (Zip Code)
(650) 506-7000
(Registrants telephone number, including area code)
N/A
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 Results of Operations and Financial Condition
Item 9.01 Financial Statements and Exhibits
Section 2Financial Information
Item 2.02 Results of Operations and Financial Condition
On September 18, 2014, Oracle Corporation issued a press release announcing financial results for its fiscal first quarter ended August 31, 2014. A copy of this press release is furnished as Exhibit 99.1 to this report.
Section 8Other Events
Oracle Corporation announced that its Board of Directors has declared a cash dividend of $0.12 per share of outstanding common stock payable on October 29, 2014, to stockholders of record as of the close of business on October 8, 2014. Oracle also announced that its Board of Directors authorized the repurchase of up to an additional $13.0 billion of common stock under its existing share repurchase program in future quarters.
Section 9Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
Exhibit No. |
Description of Exhibit | |
99.1 | Press Release dated September 18, 2014 |
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
ORACLE CORPORATION | ||||||
Dated: September 18, 2014 | By: | /s/ WILLIAM COREY WEST | ||||
William Corey West Senior Vice President, Corporate Controller and Chief Accounting Officer |
Exhibit No. |
Description of Exhibit | |
99.1 | Press Release dated September 18, 2014 |
Exhibit 99.1
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 |
SAAS AND PAAS CLOUD REVENUE UP 32%, SOFTWARE AND CLOUD REVENUE UP 6% TO $6.6 BILLION
Record Quarterly Operating Cash Flow Up 7% to $6.7 Billion
REDWOOD SHORES, Calif., September 18, 2014 Oracle Corporation (NYSE: ORCL) today announced that fiscal 2015 Q1 total revenues were up 3% to $8.6 billion. Total Software plus Cloud revenue was up 6% to $6.6 billion. Software-as-a-service (SaaS) and Platform-as-a-service (PaaS) cloud revenue was up 32% to $337 million. Infrastructure-as-a-service (IaaS) cloud revenue was up 26% to $138 million. Hardware systems revenue was down 8% to $1.2 billion. GAAP operating income was up 3% to $3.0 billion, and the GAAP operating margin was 34%. Non-GAAP operating income was up 2% to $3.8 billion, and the non-GAAP operating margin was 44%. GAAP net income was unchanged at $2.2 billion while non-GAAP net income was up 2% at $2.8 billion. GAAP earnings per share were $0.48, up 2% compared to last year while non-GAAP earnings per share were $0.62, up 4%. GAAP operating cash flow on a trailing twelve-month basis was $15.4 billion.
We are increasing our cloud services growth rate while simultaneously delivering record levels of cash flow, said Oracle CEO, Safra Catz. In Q1, our overall cloud services business grew more than 30% to $475 million in revenue. At the same time, we delivered an all-time record operating cash flow up 7% to $6.7 billion. We are laser focused on two goals: growing our cloud business and growing our cash flow. Were off to a good start in FY15.
Our internally developed Fusion cloud applications business grew at a rate of nearly 200% in the quarter, said Oracle CEO, Mark Hurd. As our hyper-growth Fusion applications become a larger and larger portion of our total SaaS sales, that will drive up our overall cloud services growth rate. Our cloud business is already three times the size of Workday, but we wont be satisfied until were number one in the cloud.
Next week at Oracle Open World, we will be rolling out our database cloud service, said Oracle Executive Chairman and Chief Technology Officer, Larry Ellison. Database is our largest software business, and database will be our largest cloud service. With our new multitenant Database as a Service offering, our customers and ISVs can move any of their existing Oracle databases and applications to the Oracle Cloud with the push of a button.
The Board of Directors also declared a quarterly cash dividend of $0.12 per share of outstanding common stock. This dividend will be paid to stockholders of record as of the close of business on October 8, 2014, with a payment date of October 29, 2014.
Oracle also announced that its Board of Directors authorized the repurchase of up to an additional $13.0 billion of common stock under its existing share repurchase program in future quarters.
Q1 Fiscal 2015 Earnings Conference Call and Webcast
Oracle will hold a conference call and webcast today to discuss these results at 2:00 p.m. Pacific. You may listen to the call by dialing (816) 287-5563, Passcode: 425392. To access the live webcast of this event, please visit the Oracle Investor Relations website at http://www.oracle.com/investor. In addition, Oracles Q1 results and Fiscal 2015 financial tables are available on the Oracle Investor Relations website.
A replay of the conference call will also be available by dialing (855) 859-2056 or (404) 537-3406, Passcode: 99926438.
About Oracle
Oracle engineers hardware and software to work together in the cloud and in your data center. For more information about Oracle (NYSE: ORCL), visit www.oracle.com or contact Investor Relations at investor_us@oracle.com or (650) 506-4073.
# # #
Trademarks
Oracle and Java are registered trademarks of Oracle and/or its affiliates. Other names may be trademarks of their respective owners.
Safe Harbor Statement: Statements in this press release relating to Oracles future plans, expectations, beliefs, intentions and prospects, including statements regarding our cloud services growth rate, growing our cash flow, our plans to be number one in the cloud, our Database as a Service offering and that database will be our largest cloud service, are forward-looking statements and are subject to material risks and uncertainties. Many factors could affect our current expectations and our actual results, and could cause actual results to differ materially. We presently consider the following to be among the important factors that could cause actual results to differ materially from expectations: (1) Economic, geopolitical and market conditions, including the continued slow economic recovery in the U.S. and other parts of the world, can adversely affect our business, results of operations and financial condition, including our revenue growth and profitability, which in turn could adversely affect our stock price. (2) We may fail to achieve our financial forecasts due to such factors as delays or size reductions in transactions, fewer large transactions in a particular quarter, unanticipated fluctuations in currency exchange rates, delays in delivery of new products or releases or a decline in our renewal rates for support contracts. (3) Our cloud computing strategy, including our Oracle Cloud Software-as-a-Service, Platform-as-a-Service, Infrastructure-as-a-Service and our new Database as a Service offerings, may not be successful. (4) If we are unable to develop new or sufficiently differentiated products and services, or to enhance and improve our products and support services in a timely manner or to position and/or price our products and services to meet market demand, customers may not buy new software licenses, cloud software subscriptions or hardware systems products or purchase or renew support contracts. (5) Our international sales and operations subject us to additional risks that can adversely affect our operating results, including risks relating to foreign currency gains and losses. (6) If the security measures for our software, hardware, services or Oracle Cloud offerings are compromised or if such offerings contain significant coding, manufacturing or configuration errors, we may experience reputational harm, legal claims and financial exposure. (7) We have an active acquisition program and our acquisitions may not be successful, may involve unanticipated costs or other integration issues or may disrupt our existing operations. A detailed discussion of these factors and other risks that affect our business is contained in our SEC filings, including our most recent reports on Form 10-K and Form 10-Q, particularly under the heading Risk Factors. Copies of these filings are available online from the SEC or by contacting Oracle Corporations Investor Relations Department at (650) 506-4073 or by clicking on SEC Filings on Oracles Investor Relations website at http://www.oracle.com/investor. All information set forth in this press release is current as of September 18, 2014. Oracle undertakes no duty to update any statement in light of new information or future events.
ORACLE CORPORATION
Q1 FISCAL 2015 FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($ in millions, except per share data)
Three Months Ended August 31, |
% Increase (Decrease) in US $ |
% Increase (Decrease) in Constant Currency (1) |
||||||||||||||||||||||
2014 | % of Revenues |
2013 | % of Revenues |
|||||||||||||||||||||
REVENUES |
||||||||||||||||||||||||
New software licenses |
$ | 1,370 | 16% | $ | 1,399 | 17% | (2% | ) | (2% | ) | ||||||||||||||
Cloud software-as-a-service and platform-as-a-service |
337 | 4% | 254 | 3% | 32% | 32% | ||||||||||||||||||
Cloud infrastructure-as-a-service |
138 | 1% | 109 | 1% | 26% | 25% | ||||||||||||||||||
Software license updates and product support |
4,731 | 55% | 4,431 | 53% | 7% | 6% | ||||||||||||||||||
|
|
|||||||||||||||||||||||
Software and Cloud Revenues |
6,576 | 76% | 6,193 | 74% | 6% | 6% | ||||||||||||||||||
|
|
|||||||||||||||||||||||
Hardware systems products |
578 | 7% | 669 | 8% | (14% | ) | (14% | ) | ||||||||||||||||
Hardware systems support |
587 | 7% | 592 | 7% | (1% | ) | (2% | ) | ||||||||||||||||
|
|
|||||||||||||||||||||||
Hardware Systems Revenues |
1,165 | 14% | 1,261 | 15% | (8% | ) | (8% | ) | ||||||||||||||||
|
|
|||||||||||||||||||||||
Services Revenues |
855 | 10% | 918 | 11% | (7% | ) | (8% | ) | ||||||||||||||||
|
|
|||||||||||||||||||||||
Total Revenues |
8,596 | 100% | 8,372 | 100% | 3% | 2% | ||||||||||||||||||
|
|
|||||||||||||||||||||||
OPERATING EXPENSES |
||||||||||||||||||||||||
Sales and marketing |
1,706 | 20% | 1,620 | 19% | 5% | 5% | ||||||||||||||||||
Cloud software-as-a-service and platform-as-a-service |
149 | 2% | 102 | 1% | 47% | 45% | ||||||||||||||||||
Cloud infrastructure-as-a-service |
79 | 1% | 72 | 1% | 10% | 9% | ||||||||||||||||||
Software license updates and product support |
272 | 3% | 288 | 3% | (5% | ) | (6% | ) | ||||||||||||||||
Hardware systems products |
298 | 4% | 330 | 4% | (10% | ) | (10% | ) | ||||||||||||||||
Hardware systems support |
192 | 2% | 209 | 3% | (8% | ) | (9% | ) | ||||||||||||||||
Services |
691 | 8% | 720 | 9% | (4% | ) | (5% | ) | ||||||||||||||||
Research and development |
1,329 | 16% | 1,237 | 15% | 7% | 7% | ||||||||||||||||||
General and administrative |
276 | 3% | 260 | 3% | 6% | 5% | ||||||||||||||||||
Amortization of intangible assets |
547 | 6% | 595 | 7% | (8% | ) | (8% | ) | ||||||||||||||||
Acquisition related and other |
25 | 0% | 10 | 0% | 138% | 134% | ||||||||||||||||||
Restructuring |
69 | 1% | 56 | 1% | 23% | 21% | ||||||||||||||||||
|
|
|||||||||||||||||||||||
Total Operating Expenses |
5,633 | 66% | 5,499 | 66% | 2% | 2% | ||||||||||||||||||
|
|
|||||||||||||||||||||||
OPERATING INCOME |
2,963 | 34% | 2,873 | 34% | 3% | 2% | ||||||||||||||||||
Interest expense |
(261 | ) | (3% | ) | (217 | ) | (2% | ) | 21% | 21% | ||||||||||||||
Non-operating income, net |
16 | 0% | 7 | 0% | 144% | 80% | ||||||||||||||||||
|
|
|||||||||||||||||||||||
INCOME BEFORE PROVISION FOR INCOME TAXES |
2,718 | 31% | 2,663 | 32% | 2% | 1% | ||||||||||||||||||
|
|
|||||||||||||||||||||||
Provision for income taxes |
534 | 6% | 472 | 6% | 13% | 12% | ||||||||||||||||||
|
|
|||||||||||||||||||||||
NET INCOME |
$ | 2,184 | 25% | $ | 2,191 | 26% | 0% | (1% | ) | |||||||||||||||
|
|
|||||||||||||||||||||||
EARNINGS PER SHARE: |
||||||||||||||||||||||||
Basic |
$ | 0.49 | $ | 0.48 | ||||||||||||||||||||
Diluted |
$ | 0.48 | $ | 0.47 | ||||||||||||||||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: |
||||||||||||||||||||||||
Basic |
4,451 | 4,608 | ||||||||||||||||||||||
Diluted |
4,548 | 4,674 | ||||||||||||||||||||||
(1) | We compare the percent change in the results from one period to another period using constant currency disclosure. We present constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the exchange rates in effect on May 31, 2014, which was the last day of our prior fiscal year, rather than the actual exchange rates in effect during the respective periods. Movements in international currencies relative to the United States dollar during the three months ended August 31, 2014 compared with the corresponding prior year period increased our revenues by 1 percentage point and operating income by 1 percentage point. |
1
ORACLE CORPORATION
Q1 FISCAL 2015 FINANCIAL RESULTS
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)
($ in millions, except per share data)
Three Months Ended August 31, | % Increase
(Decrease) in US $ |
% Increase (Decrease) in Constant Currency (2) |
||||||||||||||||||||||||||||||||||||||
2014 GAAP |
Adj. | 2014 Non-GAAP |
2013 GAAP |
Adj. | 2013 Non-GAAP |
GAAP | Non-GAAP | GAAP | Non-GAAP | |||||||||||||||||||||||||||||||
TOTAL REVENUES (3) (4) |
$ | 8,596 | $ | 3 | $ | 8,599 | $ | 8,372 | $ | 9 | $ | 8,381 | 3% | 3% | 2% | 2% | ||||||||||||||||||||||||
TOTAL SOFTWARE AND CLOUD REVENUES (3) |
$ | 6,576 | $ | 2 | $ | 6,578 | $ | 6,193 | $ | 4 | $ | 6,197 | 6% | 6% | 6% | 6% | ||||||||||||||||||||||||
New software licenses |
1,370 | | 1,370 | 1,399 | | 1,399 | (2% | ) | (2% | ) | (2% | ) | (2% | ) | ||||||||||||||||||||||||||
Cloud software-as-a-service and platform-as-a-service (3) |
337 | 2 | 339 | 254 | 3 | 257 | 32% | 32% | 32% | 31% | ||||||||||||||||||||||||||||||
Cloud infrastructure-as-a-service |
138 | | 138 | 109 | | 109 | 26% | 26% | 25% | 25% | ||||||||||||||||||||||||||||||
Software license updates and product support |
4,731 | | 4,731 | 4,431 | 1 | 4,432 | 7% | 7% | 6% | 6% | ||||||||||||||||||||||||||||||
TOTAL HARDWARE SYSTEMS REVENUES (4) |
$ | 1,165 | $ | 1 | $ | 1,166 | $ | 1,261 | $ | 5 | $ | 1,266 | (8% | ) | (8% | ) | (8% | ) | (8% | ) | ||||||||||||||||||||
Hardware systems products |
578 | | 578 | 669 | | 669 | (14% | ) | (14% | ) | (14% | ) | (14% | ) | ||||||||||||||||||||||||||
Hardware systems support (4) |
587 | 1 | 588 | 592 | 5 | 597 | (1% | ) | (2% | ) | (2% | ) | (2% | ) | ||||||||||||||||||||||||||
TOTAL OPERATING EXPENSES |
$ | 5,633 | $ | (853 | ) | $ | 4,780 | $ | 5,499 | $ | (859 | ) | $ | 4,640 | 2% | 3% | 2% | 2% | ||||||||||||||||||||||
Stock-based compensation (5) |
212 | (212 | ) | | 198 | (198 | ) | | 7% | * | 7% | * | ||||||||||||||||||||||||||||
Amortization of intangible assets (6) |
547 | (547 | ) | | 595 | (595 | ) | | (8% | ) | * | (8% | ) | * | ||||||||||||||||||||||||||
Acquisition related and other |
25 | (25 | ) | | 10 | (10 | ) | | 138% | * | 134% | * | ||||||||||||||||||||||||||||
Restructuring |
69 | (69 | ) | | 56 | (56 | ) | | 23% | * | 21% | * | ||||||||||||||||||||||||||||
OPERATING INCOME |
$ | 2,963 | $ | 856 | $ | 3,819 | $ | 2,873 | $ | 868 | $ | 3,741 | 3% | 2% | 2% | 1% | ||||||||||||||||||||||||
OPERATING MARGIN % |
34% | 44% | 34% | 45% | 15 bp. | (22) bp. | 8 bp. | (25) bp. | ||||||||||||||||||||||||||||||||
INCOME TAX EFFECTS (7) |
$ | 534 | $ | 234 | $ | 768 | $ | 472 | $ | 298 | $ | 770 | 13% | 0% | 12% | (1% | ) | |||||||||||||||||||||||
NET INCOME |
$ | 2,184 | $ | 622 | $ | 2,806 | $ | 2,191 | $ | 570 | $ | 2,761 | 0% | 2% | (1% | ) | 1% | |||||||||||||||||||||||
DILUTED EARNINGS PER SHARE |
$ | 0.48 | $ | 0.62 | $ | 0.47 | $ | 0.59 | 2% | 4% | 1% | 4% | ||||||||||||||||||||||||||||
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING |
4,548 | | 4,548 | 4,674 | | 4,674 | (3% | ) | (3% | ) | (3% | ) | (3% | ) | ||||||||||||||||||||||||||
(1) | This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. For a detailed explanation of the adjustments made to comparable GAAP measures, the reasons why management uses these measures, the usefulness of these measures and the material limitations on the usefulness of these measures, please see Appendix A. |
(2) | We compare the percent change in the results from one period to another period using constant currency disclosure. We present constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the exchange rates in effect on May 31, 2014, which was the last day of our prior fiscal year, rather than the actual exchange rates in effect during the respective periods. |
(3) | As of August 31, 2014, approximately $1 million in estimated revenues related to assumed cloud software-as-a-service and platform-as-a-service contracts will not be recognized for the remainder of fiscal 2015 due to business combination accounting rules. |
(4) | As of August 31, 2014, approximately $1 million in estimated revenues related to hardware systems support contracts will not be recognized for the remainder of fiscal 2015 due to business combination accounting rules. |
(5) | Stock-based compensation was included in the following GAAP operating expense categories: |
Three Months Ended August 31, 2014 |
Three Months Ended August 31, 2013 |
|||||||||||||||||||||||
GAAP | Adj. | Non-GAAP | GAAP | Adj. | Non-GAAP | |||||||||||||||||||
Sales and marketing |
$ | 43 | $ | (43 | ) | $ | | $ | 39 | $ | (39 | ) | $ | | ||||||||||
Cloud software-as-a-service and platform-as-a-service |
2 | (2 | ) | | 2 | (2 | ) | | ||||||||||||||||
Cloud infrastructure-as-a-service |
1 | (1 | ) | | 1 | (1 | ) | | ||||||||||||||||
Software license updates and product support |
5 | (5 | ) | | 6 | (6 | ) | | ||||||||||||||||
Hardware systems products |
1 | (1 | ) | | 2 | (2 | ) | | ||||||||||||||||
Hardware systems support |
1 | (1 | ) | | 3 | (3 | ) | | ||||||||||||||||
Services |
6 | (6 | ) | | 6 | (6 | ) | | ||||||||||||||||
Research and development |
108 | (108 | ) | | 97 | (97 | ) | | ||||||||||||||||
General and administrative |
45 | (45 | ) | | 42 | (42 | ) | | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Subtotal |
212 | (212 | ) | | 198 | (198 | ) | | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Acquisition related and other |
3 | (3 | ) | | 2 | (2 | ) | | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total stock-based compensation |
$ | 215 | $ | (215 | ) | $ | | $ | 200 | $ | (200 | ) | $ | | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
(6) | Estimated future annual amortization expense related to intangible assets as of August 31, 2014 was as follows: |
Remainder of Fiscal 2015 |
$ | 1,395 | ||
Fiscal 2016 |
1,345 | |||
Fiscal 2017 |
749 | |||
Fiscal 2018 |
611 | |||
Fiscal 2019 |
511 | |||
Fiscal 2020 |
387 | |||
Thereafter |
592 | |||
|
|
|||
Total intangible assets subject to amortization |
5,590 | |||
In-process research and development |
15 | |||
|
|
|||
Total intangible assets, net |
$ | 5,605 | ||
|
|
(7) | Income tax effects were calculated reflecting an effective GAAP tax rate of 19.7% and 17.7% in the first quarter of fiscal 2015 and 2014, respectively, and an effective non-GAAP tax rate of 21.5% and 21.8% in the first quarter of fiscal 2015 and 2014, respectively. The differences between our GAAP and non-GAAP tax rates in the first quarter of fiscal 2015 and 2014 were primarily due to the net tax effects of acquisition related items, including the tax effects of amortization of intangible assets. |
* | Not meaningful |
2
ORACLE CORPORATION
Q1 FISCAL 2015 FINANCIAL RESULTS
CONDENSED CONSOLIDATED BALANCE SHEETS
($ in millions)
August 31, |
May 31, 2014 |
|||||||
ASSETS |
||||||||
Current Assets: |
||||||||
Cash and cash equivalents |
$ | 24,179 | $ | 17,769 | ||||
Marketable securities |
27,437 | 21,050 | ||||||
Trade receivables, net |
3,551 | 6,087 | ||||||
Inventories |
179 | 189 | ||||||
Deferred tax assets |
833 | 914 | ||||||
Prepaid expenses and other current assets |
2,015 | 2,129 | ||||||
|
|
|||||||
Total Current Assets |
58,194 | 48,138 | ||||||
Non-Current Assets: |
||||||||
Property, plant and equipment, net |
3,086 | 3,061 | ||||||
Intangible assets, net |
5,605 | 6,137 | ||||||
Goodwill |
29,707 | 29,652 | ||||||
Deferred tax assets |
916 | 837 | ||||||
Other assets |
2,218 | 2,519 | ||||||
|
|
|||||||
Total Non-Current Assets |
41,532 | 42,206 | ||||||
|
|
|||||||
TOTAL ASSETS |
$ | 99,726 | $ | 90,344 | ||||
|
|
|||||||
LIABILITIES AND EQUITY |
||||||||
Current Liabilities: |
||||||||
Notes payable, current and other current borrowings |
$ | | $ | 1,508 | ||||
Accounts payable |
423 | 471 | ||||||
Accrued compensation and related benefits |
1,491 | 1,940 | ||||||
Income taxes payable |
425 | 416 | ||||||
Deferred revenues |
8,939 | 7,269 | ||||||
Other current liabilities |
2,099 | 2,785 | ||||||
|
|
|||||||
Total Current Liabilities |
13,377 | 14,389 | ||||||
Non-Current Liabilities: |
||||||||
Notes payable and other non-current borrowings |
32,567 | 22,667 | ||||||
Income taxes payable |
4,148 | 4,184 | ||||||
Other non-current liabilities |
1,703 | 1,657 | ||||||
|
|
|||||||
Total Non-Current Liabilities |
38,418 | 28,508 | ||||||
Equity |
47,931 | 47,447 | ||||||
|
|
|||||||
TOTAL LIABILITIES AND EQUITY |
$ | 99,726 | $ | 90,344 | ||||
|
|
|||||||
3
ORACLE CORPORATION
Q1 FISCAL 2015 FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in millions)
Three Months Ended August 31, | ||||||||
2014 | 2013 | |||||||
Cash Flows From Operating Activities: |
||||||||
Net income |
$ | 2,184 | $ | 2,191 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
Depreciation |
160 | 150 | ||||||
Amortization of intangible assets |
547 | 595 | ||||||
Deferred income taxes |
(68 | ) | (101 | ) | ||||
Stock-based compensation |
215 | 200 | ||||||
Tax benefits on the exercise of stock options and vesting of restricted stock-based awards |
96 | 67 | ||||||
Excess tax benefits on the exercise of stock options and vesting of restricted stock-based awards |
(51 | ) | (40 | ) | ||||
Other, net |
46 | 17 | ||||||
Changes in operating assets and liabilities, net of effects from acquisitions: |
||||||||
Decrease in trade receivables, net |
2,506 | 2,707 | ||||||
Decrease in inventories |
10 | 5 | ||||||
Decrease in prepaid expenses and other assets |
275 | 366 | ||||||
Decrease in accounts payable and other liabilities |
(1,088 | ) | (994 | ) | ||||
Increase (decrease) in income taxes payable |
80 | (313 | ) | |||||
Increase in deferred revenues |
1,816 | 1,442 | ||||||
|
|
|||||||
Net cash provided by operating activities |
6,728 | 6,292 | ||||||
|
|
|||||||
Cash Flows From Investing Activities: |
||||||||
Purchases of marketable securities and other investments |
(10,340 | ) | (8,549 | ) | ||||
Proceeds from maturities and sales of marketable securities and other investments |
3,878 | 6,515 | ||||||
Acquisitions, net of cash acquired |
(37 | ) | (1,314 | ) | ||||
Capital expenditures |
(201 | ) | (153 | ) | ||||
|
|
|||||||
Net cash used for investing activities |
(6,700 | ) | (3,501 | ) | ||||
|
|
|||||||
Cash Flows From Financing Activities: |
||||||||
Payments for repurchases of common stock |
(2,000 | ) | (2,968 | ) | ||||
Proceeds from issuances of common stock |
588 | 285 | ||||||
Payments of dividends to stockholders |
(537 | ) | (554 | ) | ||||
Proceeds from borrowings, net of issuance costs |
9,945 | 5,566 | ||||||
Repayments of borrowings |
(1,500 | ) | | |||||
Excess tax benefits on the exercise of stock options and vesting of restricted stock-based awards |
51 | 40 | ||||||
Distributions to noncontrolling interests |
(27 | ) | (28 | ) | ||||
|
|
|||||||
Net cash provided by financing activities |
6,520 | 2,341 | ||||||
|
|
|||||||
Effect of exchange rate changes on cash and cash equivalents |
(138 | ) | (81 | ) | ||||
|
|
|||||||
Net increase in cash and cash equivalents |
6,410 | 5,051 | ||||||
|
|
|||||||
Cash and cash equivalents at beginning of period |
17,769 | 14,613 | ||||||
|
|
|||||||
Cash and cash equivalents at end of period |
$ | 24,179 | $ | 19,664 | ||||
|
|
|||||||
4
ORACLE CORPORATION
Q1 FISCAL 2015 FINANCIAL RESULTS
FREE CASH FLOWTRAILING 4-QUARTERS (1)
($ in millions)
Fiscal 2014 | Fiscal 2015 | |||||||||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | |||||||||||||||||||
GAAP Operating Cash Flow |
$ | 14,845 | $ | 15,196 | $ | 15,029 | $ | 14,921 | $ | 15,357 | ||||||||||||||||
Capital Expenditures (2) |
(664 | ) | (578 | ) | (609 | ) | (580 | ) | (628 | ) | ||||||||||||||||
|
| |||||||||||||||||||||||||
Free Cash Flow |
$ | 14,181 | $ | 14,618 | $ | 14,420 | $ | 14,341 | $ | 14,729 | ||||||||||||||||
|
| |||||||||||||||||||||||||
% Growth over prior year |
6% | 14% | 11% | 6% | 4% | |||||||||||||||||||||
GAAP Net Income |
$ | 11,082 | $ | 11,054 | $ | 11,115 | $ | 10,955 | $ | 10,948 | ||||||||||||||||
Free Cash Flow as a % of Net Income |
128% | 132% | 130% | 131% | 135% | |||||||||||||||||||||
(1) | To supplement our statements of cash flows presented on a GAAP basis, we use non-GAAP measures of cash flows on a trailing 4-quarter basis to analyze cash flow generated from operations. We believe free cash flow is also useful as one of the bases for comparing our performance with our competitors. The presentation of non-GAAP free cash flow is not meant to be considered in isolation or as an alternative to net income as an indicator of our performance, or as an alternative to cash flows from operating activities as a measure of liquidity. |
(2) | Derived from capital expenditures as reported in cash flows from investing activities as per our consolidated statements of cash flows presented in accordance with GAAP. |
5
ORACLE CORPORATION
Q1 FISCAL 2015 FINANCIAL RESULTS
SUPPLEMENTAL ANALYSIS OF GAAP REVENUES AND HEADCOUNT (1)
($ in millions)
Fiscal 2014 | Fiscal 2015 | |||||||||||||||||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | TOTAL | Q1 | Q2 | Q3 | Q4 | TOTAL | |||||||||||||||||||||||||
REVENUES |
||||||||||||||||||||||||||||||||||
New software licenses |
$ | 1,399 | $ | 2,121 | $ | 2,128 | $ | 3,769 | $ | 9,416 | $ | 1,370 | $ | 1,370 | ||||||||||||||||||||
Cloud software-as-a-service and platform-as-a-service |
254 | 259 | 287 | 322 | 1,121 | 337 | 337 | |||||||||||||||||||||||||||
Cloud infrastructure-as-a-service |
109 | 97 | 121 | 128 | 456 | 138 | 138 | |||||||||||||||||||||||||||
Software license updates and product support |
4,431 | 4,516 | 4,564 | 4,695 | 18,206 | 4,731 | 4,731 | |||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||||||
Software and Cloud Revenues |
6,193 | 6,993 | 7,100 | 8,914 | 29,199 | 6,576 | 6,576 | |||||||||||||||||||||||||||
Hardware systems products |
669 | 714 | 725 | 870 | 2,976 | 578 | 578 | |||||||||||||||||||||||||||
Hardware systems support |
592 | 609 | 598 | 596 | 2,396 | 587 | 587 | |||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||||||
Hardware Systems Revenues |
1,261 | 1,323 | 1,323 | 1,466 | 5,372 | 1,165 | 1,165 | |||||||||||||||||||||||||||
Services Revenues |
918 | 959 | 884 | 940 | 3,704 | 855 | 855 | |||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||||||
Total Revenues |
$ | 8,372 | $ | 9,275 | $ | 9,307 | $ | 11,320 | $ | 38,275 | $ | 8,596 | $ | 8,596 | ||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||||||
AS REPORTED REVENUE GROWTH RATES |
||||||||||||||||||||||||||||||||||
New software licenses |
2% | (2% | ) | 1% | 0% | 0% | (2% | ) | (2% | ) | ||||||||||||||||||||||||
Cloud software-as-a-service and platform-as-a-service |
25% | 19% | 24% | 25% | 23% | 32% | 32% | |||||||||||||||||||||||||||
Cloud infrastructure-as-a-service |
(9% | ) | (15% | ) | 10% | 13% | 0% | 26% | 26% | |||||||||||||||||||||||||
Software license updates and product support |
7% | 6% | 5% | 7% | 6% | 7% | 7% | |||||||||||||||||||||||||||
Software and Cloud Revenues |
6% | 3% | 5% | 4% | 5% | 6% | 6% | |||||||||||||||||||||||||||
Hardware systems products |
(14% | ) | (3% | ) | 8% | 2% | (2% | ) | (14% | ) | (14% | ) | ||||||||||||||||||||||
Hardware systems support |
3% | 4% | 5% | 2% | 4% | (1% | ) | (1% | ) | |||||||||||||||||||||||||
Hardware Systems Revenues |
(7% | ) | 0% | 7% | 2% | 0% | (8% | ) | (8% | ) | ||||||||||||||||||||||||
Services Revenues |
(8% | ) | (5% | ) | (5% | ) | (4% | ) | (5% | ) | (7% | ) | (7% | ) | ||||||||||||||||||||
Total Revenues |
2% | 2% | 4% | 3% | 3% | 3% | 3% | |||||||||||||||||||||||||||
CONSTANT CURRENCY GROWTH RATES (2) |
||||||||||||||||||||||||||||||||||
New software licenses |
5% | 0% | 3% | (1% | ) | 1% | (2% | ) | (2% | ) | ||||||||||||||||||||||||
Cloud software-as-a-service and platform-as-a-service |
26% | 20% | 25% | 25% | 24% | 32% | 32% | |||||||||||||||||||||||||||
Cloud infrastructure-as-a-service |
(7% | ) | (14% | ) | 11% | 13% | 1% | 25% | 25% | |||||||||||||||||||||||||
Software license updates and product support |
8% | 7% | 7% | 6% | 7% | 6% | 6% | |||||||||||||||||||||||||||
Software and Cloud Revenues |
8% | 5% | 6% | 4% | 5% | 6% | 6% | |||||||||||||||||||||||||||
Hardware systems products |
(13% | ) | (2% | ) | 10% | 3% | (1% | ) | (14% | ) | (14% | ) | ||||||||||||||||||||||
Hardware systems support |
5% | 5% | 7% | 2% | 5% | (2% | ) | (2% | ) | |||||||||||||||||||||||||
Hardware Systems Revenues |
(6% | ) | 1% | 9% | 3% | 2% | (8% | ) | (8% | ) | ||||||||||||||||||||||||
Services Revenues |
(6% | ) | (3% | ) | (3% | ) | (3% | ) | (4% | ) | (8% | ) | (8% | ) | ||||||||||||||||||||
Total Revenues |
4% | 3% | 6% | 3% | 4% | 2% | 2% | |||||||||||||||||||||||||||
GEOGRAPHIC REVENUES |
||||||||||||||||||||||||||||||||||
REVENUES |
||||||||||||||||||||||||||||||||||
Americas |
$ | 4,517 | $ | 4,995 | $ | 4,953 | $ | 5,857 | $ | 20,323 | $ | 4,620 | $ | 4,620 | ||||||||||||||||||||
Europe, Middle East & Africa |
2,439 | 2,817 | 2,923 | 3,768 | 11,946 | 2,589 | 2,589 | |||||||||||||||||||||||||||
Asia Pacific |
1,416 | 1,463 | 1,431 | 1,695 | 6,006 | 1,387 | 1,387 | |||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||||||
Total Revenues |
$ | 8,372 | $ | 9,275 | $ | 9,307 | $ | 11,320 | $ | 38,275 | $ | 8,596 | $ | 8,596 | ||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||||||
HEADCOUNT |
||||||||||||||||||||||||||||||||||
GEOGRAPHIC AREA |
||||||||||||||||||||||||||||||||||
Americas |
53,465 | 53,073 | 53,799 | 53,827 | 54,073 | |||||||||||||||||||||||||||||
Europe, Middle East & Africa |
23,349 | 23,178 | 23,350 | 23,339 | 23,349 | |||||||||||||||||||||||||||||
Asia Pacific |
45,513 | 45,617 | 45,561 | 45,108 | 45,496 | |||||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||||||
Total Company |
122,327 | 121,868 | 122,710 | 122,274 | 122,918 | |||||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||||||
(1) | The sum of the quarterly financial information may vary from year-to-date financial information due to rounding. |
(2) | We compare the percent change in the results from one period to another period using constant currency disclosure. We present constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the exchange rates in effect on May 31, 2014 and 2013 for the fiscal 2015 and fiscal 2014 constant currency growth rate calculations presented, respectively, rather than the actual exchange rates in effect during the respective periods. |
6
ORACLE CORPORATION
Q1 FISCAL 2015 FINANCIAL RESULTS
SUPPLEMENTAL GEOGRAPHIC REVENUES ANALYSIS (1)
($ in millions)
Fiscal 2014 | Fiscal 2015 | |||||||||||||||||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | TOTAL | Q1 | Q2 | Q3 | Q4 | TOTAL | |||||||||||||||||||||||||
AMERICAS |
||||||||||||||||||||||||||||||||||
Software and cloud revenues |
$ | 3,434 | $ | 3,808 | $ | 3,847 | $ | 4,649 | $ | 15,737 | $ | 3,614 | $ | 3,614 | ||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||||||
Hardware systems revenues |
$ | 640 | $ | 694 | $ | 655 | $ | 747 | $ | 2,736 | $ | 583 | $ | 583 | ||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||||||
AS REPORTED GROWTH RATES |
||||||||||||||||||||||||||||||||||
Software and cloud revenues |
9% | 5% | 5% | (1% | ) | 4% | 5% | 5% | ||||||||||||||||||||||||||
Hardware systems revenues |
(2% | ) | 7% | 14% | 3% | 5% | (9% | ) | (9% | ) | ||||||||||||||||||||||||
CONSTANT CURRENCY GROWTH RATES (2) |
||||||||||||||||||||||||||||||||||
Software and cloud revenues |
9% | 6% | 7% | 1% | 5% | 6% | 6% | |||||||||||||||||||||||||||
Hardware systems revenues |
(1% | ) | 8% | 16% | 5% | 6% | (8% | ) | (8% | ) | ||||||||||||||||||||||||
EUROPE / MIDDLE EAST / AFRICA |
||||||||||||||||||||||||||||||||||
Software and cloud revenues |
$ | 1,816 | $ | 2,155 | $ | 2,245 | $ | 3,032 | $ | 9,249 | $ | 1,992 | $ | 1,992 | ||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||||||
Hardware systems revenues |
$ | 358 | $ | 372 | $ | 403 | $ | 440 | $ | 1,572 | $ | 338 | $ | 338 | ||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||||||
AS REPORTED GROWTH RATES |
||||||||||||||||||||||||||||||||||
Software and cloud revenues |
7% | 8% | 8% | 15% | 10% | 10% | 10% | |||||||||||||||||||||||||||
Hardware systems revenues |
(11% | ) | (5% | ) | 3% | 7% | (1% | ) | (6% | ) | (6% | ) | ||||||||||||||||||||||
CONSTANT CURRENCY GROWTH RATES (2) |
||||||||||||||||||||||||||||||||||
Software and cloud revenues |
4% | 6% | 6% | 10% | 7% | 7% | 7% | |||||||||||||||||||||||||||
Hardware systems revenues |
(13% | ) | (6% | ) | 2% | 3% | (3% | ) | (7% | ) | (7% | ) | ||||||||||||||||||||||
ASIA PACIFIC |
||||||||||||||||||||||||||||||||||
Software and cloud revenues |
$ | 943 | $ | 1,030 | $ | 1,008 | $ | 1,233 | $ | 4,213 | $ | 970 | $ | 970 | ||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||||||
Hardware systems revenues |
$ | 263 | $ | 257 | $ | 265 | $ | 279 | $ | 1,064 | $ | 244 | $ | 244 | ||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||||||
AS REPORTED GROWTH RATES |
||||||||||||||||||||||||||||||||||
Software and cloud revenues |
(3% | ) | (9% | ) | (5% | ) | 0% | (4% | ) | 3% | 3% | |||||||||||||||||||||||
Hardware systems revenues |
(12% | ) | (9% | ) | (3% | ) | (4% | ) | (7% | ) | (8% | ) | (8% | ) | ||||||||||||||||||||
CONSTANT CURRENCY GROWTH RATES (2) |
||||||||||||||||||||||||||||||||||
Software and cloud revenues |
8% | 0% | 3% | 3% | 3% | 2% | 2% | |||||||||||||||||||||||||||
Hardware systems revenues |
(5% | ) | (3% | ) | 3% | (3% | ) | (2% | ) | (8% | ) | (8% | ) | |||||||||||||||||||||
TOTAL COMPANY |
||||||||||||||||||||||||||||||||||
Software and cloud revenues |
$ | 6,193 | $ | 6,993 | $ | 7,100 | $ | 8,914 | $ | 29,199 | $ | 6,576 | $ | 6,576 | ||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||||||
Hardware systems revenues |
$ | 1,261 | $ | 1,323 | $ | 1,323 | $ | 1,466 | $ | 5,372 | $ | 1,165 | $ | 1,165 | ||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||||||
AS REPORTED GROWTH RATES |
||||||||||||||||||||||||||||||||||
Software and cloud revenues |
6% | 3% | 5% | 4% | 5% | 6% | 6% | |||||||||||||||||||||||||||
Hardware systems revenues |
(7% | ) | 0% | 7% | 2% | 0% | (8% | ) | (8% | ) | ||||||||||||||||||||||||
CONSTANT CURRENCY GROWTH RATES (2) |
||||||||||||||||||||||||||||||||||
Software and cloud revenues |
8% | 5% | 6% | 4% | 5% | 6% | 6% | |||||||||||||||||||||||||||
Hardware systems revenues |
(6% | ) | 1% | 9% | 3% | 2% | (8% | ) | (8% | ) | ||||||||||||||||||||||||
(1) | The sum of the quarterly financial information may vary from year-to-date financial information due to rounding. |
(2) | We compare the percent change in the results from one period to another period using constant currency disclosure. We present constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the exchange rates in effect on May 31, 2014 and 2013 for the fiscal 2015 and fiscal 2014 constant currency growth rate calculations presented, respectively, rather than the actual exchange rates in effect during the respective periods. |
7
APPENDIX A
ORACLE CORPORATION
Q1 FISCAL 2015 FINANCIAL RESULTS
EXPLANATION OF NON-GAAP MEASURES
To supplement our financial results presented on a GAAP basis, we use the non-GAAP measures indicated in the tables, which exclude certain business combination accounting entries and expenses related to acquisitions, as well as other significant expenses including stock-based compensation, that we believe are helpful in understanding our past financial performance and our future results. Our non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. Our management regularly uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our business and make operating decisions. These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. Compensation of our executives is based in part on the performance of our business based on these non-GAAP measures. Our non-GAAP financial measures reflect adjustments based on the following items, as well as the related income tax effects:
| Cloud software-as-a-service and platform-as-a-service, software license updates and product support and hardware systems support deferred revenues: Business combination accounting rules require us to account for the fair values of cloud software-as-a-service and platform-as-a-service contracts, software license updates and product support contracts and hardware systems support contracts assumed in connection with our acquisitions. Because these contracts are generally one year in duration, our GAAP revenues generally for the one year period subsequent to our acquisition of a business do not reflect the full amount of revenues on these assumed cloud and support contracts that would have otherwise been recorded by the acquired entity. The non-GAAP adjustment to our cloud software-as-a-service and platform-as-a-service revenues, software license updates and product support revenues and hardware systems support revenues is intended to include, and thus reflect, the full amount of such revenues. We believe the adjustment to these revenues is useful to investors as a measure of the ongoing performance of our business. We have historically experienced high renewal rates on our software license updates and product support contracts and our objective is to increase the renewal rates on acquired and new cloud software-as-a-service and platform-as-a-service and hardware systems support contracts; however, we cannot be certain that our customers will renew our cloud software-as-a-service and platform-as-a-service contracts, software license updates and product support contracts or our hardware systems support contracts. |
| Stock-based compensation expenses: We have excluded the effect of stock-based compensation expenses from our non-GAAP operating expenses and net income measures. Although stock-based compensation is a key incentive offered to our employees, and we believe such compensation contributed to the revenues earned during the periods presented and also believe it will contribute to the generation of future period revenues, we continue to evaluate our business performance excluding stock-based compensation expenses. Stock-based compensation expenses will recur in future periods. |
| Amortization of intangible assets: We have excluded the effect of amortization of intangible assets from our non-GAAP operating expenses and net income measures. Amortization of intangible assets is inconsistent in amount and frequency and is significantly affected by the timing and size of our acquisitions. Investors should note that the use of intangible assets contributed to our revenues earned during the periods presented and will contribute to our future period revenues as well. Amortization of intangible assets will recur in future periods. |
| Acquisition related and other expenses; and restructuring expenses: We have excluded the effect of acquisition related and other expenses and the effect of restructuring expenses from our non-GAAP operating expenses and net income measures. We incurred significant expenses in connection with our acquisitions and also incurred certain other operating expenses or income, which we generally would not have otherwise incurred in the periods presented as a part of our continuing operations. Acquisition related and other expenses consist of personnel related costs for transitional employees, other acquired employee related costs, stock-based compensation expenses (in addition to the stock-based compensation expenses described above), integration related professional services, certain business combination adjustments including adjustments after the measurement period has ended and certain other operating items, net. Substantially all of the stock-based compensation expenses included in acquisition related and other expenses resulted from unvested options assumed in acquisitions whose vesting was fully accelerated upon termination of the employees pursuant to the original terms of those options. Restructuring expenses consist of employee severance and other exit costs. We believe it is useful for investors to understand the effects of these items on our total operating expenses. Although acquisition related expenses and restructuring expenses generally diminish over time with respect to past acquisitions, we generally will incur these expenses in connection with any future acquisitions. |
8
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