REDWOOD SHORES, Calif., Dec. 12,
2019 /PRNewswire/ -- Oracle Corporation (NYSE: ORCL)
today announced fiscal 2020 Q2 results. Total Revenues were
$9.6 billion, up 1% in USD and in
constant currency compared to Q2 last year. Cloud Services and
License Support revenues were $6.8
billion, while Cloud License and On-Premise License revenues
were $1.1 billion.
GAAP Operating Income was up 3% to $3.2
billion, and GAAP Operating Margin was 33%. Non-GAAP
Operating Income was $4.0 billion,
and non-GAAP Operating Margin was 42%. GAAP Net Income was
$2.3 billion, and non-GAAP Net Income
was $3.0 billion. GAAP Earnings Per
Share was up 14% to $0.69, while
non-GAAP Earnings Per Share was up 12% to $0.90.
Short-term deferred revenues were $8.1
billion. Operating Cash Flow was $13.8 billion during the trailing twelve
months.
"We had another strong quarter in our Fusion and NetSuite cloud
applications businesses with Fusion ERP revenues growing 37% and
NetSuite ERP revenues growing 29%," said Oracle CEO, Safra Catz. "This consistent rapid growth in the
now multibillion dollar ERP segment of our cloud applications
business has enabled Oracle to deliver a double-digit EPS growth
rate year-after-year. I fully expect we will do that again this
year."
"It's still early days, but the Oracle Autonomous Database
already has thousands of customers running in our Gen2 Public
Cloud," said Oracle CTO, Larry
Ellison. "Currently, our Autonomous Database running in our
Public Cloud business is growing at a rate of over 100%. We expect
that growth rate to increase dramatically as we release our
Autonomous Database running on our Gen2 Cloud@Customer into our
huge on-premise installed base over the next several months."
The Board of Directors also declared a quarterly cash dividend
of $0.24 per share of outstanding
common stock. This dividend will be paid to stockholders of record
as of the close of business on January 9,
2020, with a payment date of January
23, 2020.
Q2 Fiscal 2020 Earnings Conference Call and Webcast
Oracle will hold a conference call and webcast today to discuss
these results at 2:00 p.m. Pacific.
You may listen to the call by dialing (816) 287-5563, Passcode:
425392. To access the live webcast, please visit the Oracle
Investor Relations website at http://www.oracle.com/investor. In
addition, Oracle's Q2 results and fiscal 2020 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: 4597628.
About Oracle
The Oracle Cloud offers a complete suite of integrated
applications for Sales, Service, Marketing, Human Resources,
Finance, Supply Chain and Manufacturing, plus Highly-Automated and
Secure Generation 2 Infrastructure featuring the Oracle Autonomous
Database. For more information about Oracle (NYSE:ORCL), visit us
at www.oracle.com or contact Investor Relations at
investor_us@oracle.com or (650) 506-4073.
Trademarks
Oracle and Java are registered trademarks of Oracle and/or its
affiliates. Other names may be trademarks of their respective
owners.
"Safe Harbor" Statement: Statements in this press
release relating to Oracle's future plans, expectations, beliefs,
intentions and prospects, including statements regarding the growth
of our earnings per share and our Autonomous Database business, 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) Our success depends upon our
ability to develop new products and services, integrate acquired
products and services and enhance our existing products and
services. (2) Our cloud strategy, including our Oracle
Software-as-a-Service and Infrastructure-as-a-Service offerings,
may adversely affect our revenues and profitability. (3) We might
experience significant coding, manufacturing or configuration
errors in our cloud, license and hardware offerings. (4) If the
security measures for our products and services are compromised and
as a result, our customers' data or our IT systems are accessed
improperly, made unavailable, or improperly modified, our products
and services may be perceived as vulnerable, our brand and
reputation could be damaged, the IT services we provide to our
customers could be disrupted, and customers may stop using our
products and services, all of which could reduce our revenue and
earnings, increase our expenses and expose us to legal claims and
regulatory actions. (5) Our business practices with respect to data
could give rise to operational interruption, liabilities or
reputational harm as a result of governmental regulation, legal
requirements or industry standards relating to consumer privacy and
data protection. (6) Economic, political and market conditions can
adversely affect our business, results of operations and financial
condition, including our revenue growth and profitability, which in
turn could adversely affect our stock price. (7) Our international
sales and operations subject us to additional risks that can
adversely affect our operating results. (8) Acquisitions present
many risks and we may not achieve the financial and strategic goals
that were contemplated at the time of a transaction. 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 December 12,
2019. Oracle undertakes no duty to update any statement in
light of new information or future events.
ORACLE
CORPORATION
|
|
|
|
|
|
|
|
|
|
Q2 FISCAL 2020
FINANCIAL RESULTS
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
($ in millions,
except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
November 30,
|
%
Increase
|
%
Increase
(Decrease)
|
|
|
|
|
|
|
%
of
|
|
%
of
|
(Decrease)
|
in
Constant
|
|
|
|
2019
|
Revenues
|
2018
|
Revenues
|
in US
$
|
Currency
(1)
|
|
REVENUES
|
|
|
|
|
|
|
|
|
Cloud services and
license support
|
$ 6,811
|
71%
|
$
6,637
|
69%
|
3%
|
4%
|
|
|
Cloud license and
on-premise license
|
1,126
|
12%
|
1,217
|
13%
|
(7%)
|
(7%)
|
|
|
Hardware
|
871
|
9%
|
891
|
9%
|
(2%)
|
(1%)
|
|
|
Services
|
806
|
8%
|
817
|
9%
|
(1%)
|
0%
|
|
|
Total
revenues
|
9,614
|
100%
|
9,562
|
100%
|
1%
|
1%
|
|
OPERATING
EXPENSES
|
|
|
|
|
|
|
|
|
Cloud services and
license support
|
1,022
|
11%
|
956
|
10%
|
7%
|
8%
|
|
|
Hardware
|
285
|
3%
|
332
|
4%
|
(14%)
|
(13%)
|
|
|
Services
|
741
|
8%
|
713
|
8%
|
4%
|
5%
|
|
|
Sales and
marketing
|
2,068
|
22%
|
2,101
|
22%
|
(2%)
|
(1%)
|
|
|
Research and
development
|
1,531
|
16%
|
1,475
|
15%
|
4%
|
4%
|
|
|
General and
administrative
|
323
|
3%
|
299
|
3%
|
8%
|
9%
|
|
|
Amortization of
intangible assets
|
407
|
4%
|
424
|
5%
|
(4%)
|
(4%)
|
|
|
Acquisition related
and other
|
12
|
0%
|
18
|
0%
|
(33%)
|
(32%)
|
|
|
Restructuring
|
42
|
0%
|
143
|
1%
|
(71%)
|
(70%)
|
|
|
Total operating
expenses
|
6,431
|
67%
|
6,461
|
68%
|
0%
|
0%
|
|
OPERATING
INCOME
|
3,183
|
33%
|
3,101
|
32%
|
3%
|
4%
|
|
|
Interest
expense
|
(465)
|
(5%)
|
(519)
|
(5%)
|
(10%)
|
(10%)
|
|
|
Non-operating income,
net
|
92
|
1%
|
192
|
2%
|
(52%)
|
(52%)
|
|
INCOME BEFORE
PROVISION FOR INCOME TAXES
|
2,810
|
29%
|
2,774
|
29%
|
1%
|
3%
|
|
|
Provision for income
taxes
|
499
|
5%
|
441
|
5%
|
13%
|
13%
|
|
NET
INCOME
|
$ 2,311
|
24%
|
$
2,333
|
24%
|
(1%)
|
1%
|
|
|
|
|
|
|
|
|
|
|
EARNINGS PER
SHARE:
|
|
|
|
|
|
|
|
|
Basic
|
$
0.71
|
|
$
0.63
|
|
|
|
|
|
Diluted
|
$
0.69
|
|
$
0.61
|
|
|
|
|
WEIGHTED AVERAGE
COMMON SHARES OUTSTANDING:
|
|
|
|
|
|
|
|
|
Basic
|
3,245
|
|
3,720
|
|
|
|
|
|
Diluted
|
3,331
|
|
3,817
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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, 2019, 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 November 30, 2019 compared with the corresponding
prior year period decreased our operating income by 1 percentage
point.
|
|
|
|
|
|
|
|
|
|
|
ORACLE
CORPORATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q2 FISCAL 2020
FINANCIAL RESULTS
|
RECONCILIATION OF
SELECTED GAAP MEASURES TO NON-GAAP MEASURES
(1)
|
($ in millions,
except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
November 30,
|
|
% Increase
(Decrease)
in US $
|
% Increase
(Decrease)
in Constant
Currency (2)
|
|
|
|
2019
|
|
|
|
2019
|
|
|
2018
|
|
|
|
2018
|
|
GAAP
|
Non-GAAP
|
GAAP
|
Non-GAAP
|
|
|
|
|
GAAP
|
|
Adj.
|
|
Non-GAAP
|
|
|
GAAP
|
|
Adj.
|
|
Non-GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
REVENUES
|
|
$ 9,614
|
|
$
1
|
|
$
9,615
|
|
|
$ 9,562
|
|
$
5
|
|
$
9,567
|
|
1%
|
1%
|
1%
|
1%
|
|
|
Cloud services and license
support
|
|
6,811
|
|
1
|
|
6,812
|
|
|
6,637
|
|
5
|
|
6,642
|
|
3%
|
3%
|
4%
|
3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL OPERATING
EXPENSES
|
|
$ 6,431
|
|
$ (858)
|
|
$
5,573
|
|
|
$ 6,461
|
|
$ (981)
|
|
$
5,480
|
|
0%
|
2%
|
0%
|
2%
|
|
|
Stock-based compensation
(3)
|
|
397
|
|
(397)
|
|
-
|
|
|
396
|
|
(396)
|
|
-
|
|
0%
|
*
|
0%
|
*
|
|
|
Amortization of intangible
assets (4)
|
|
407
|
|
(407)
|
|
-
|
|
|
424
|
|
(424)
|
|
-
|
|
(4%)
|
*
|
(4%)
|
*
|
|
|
Acquisition related and
other
|
|
12
|
|
(12)
|
|
-
|
|
|
18
|
|
(18)
|
|
-
|
|
(33%)
|
*
|
(32%)
|
*
|
|
|
Restructuring
|
|
42
|
|
(42)
|
|
-
|
|
|
143
|
|
(143)
|
|
-
|
|
(71%)
|
*
|
(70%)
|
*
|
|
OPERATING
INCOME
|
|
$ 3,183
|
|
$
859
|
|
$
4,042
|
|
|
$ 3,101
|
|
$
986
|
|
$
4,087
|
|
3%
|
(1%)
|
4%
|
0%
|
|
OPERATING MARGIN
%
|
|
33%
|
|
|
|
42%
|
|
|
32%
|
|
|
|
43%
|
|
68 bp.
|
(68) bp.
|
78 bp.
|
(63) bp.
|
|
INCOME TAX EFFECTS
(5)
|
|
$
499
|
|
$
189
|
|
$
688
|
|
|
$
441
|
|
$
258
|
|
$
699
|
|
13%
|
(2%)
|
13%
|
(1%)
|
|
NET
INCOME
|
|
$ 2,311
|
|
$
670
|
|
$
2,981
|
|
|
$ 2,333
|
|
$
728
|
|
$
3,061
|
|
(1%)
|
(3%)
|
1%
|
(2%)
|
|
DILUTED EARNINGS
PER SHARE
|
|
$
0.69
|
|
|
|
$
0.90
|
|
|
$
0.61
|
|
|
|
$
0.80
|
|
14%
|
12%
|
15%
|
13%
|
|
DILUTED WEIGHTED
AVERAGE COMMON SHARES OUTSTANDING
|
|
3,331
|
|
-
|
|
3,331
|
|
|
3,817
|
|
-
|
|
3,817
|
|
(13%)
|
(13%)
|
(13%)
|
(13%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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, 2019, 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
|
|
|
|
|
|
|
|
|
|
November 30,
2019
|
|
|
November 30,
2018
|
|
|
|
|
|
|
|
|
|
GAAP
|
|
Adj.
|
|
Non-GAAP
|
|
|
GAAP
|
|
Adj.
|
|
Non-GAAP
|
|
|
|
|
|
|
|
Cloud services and license
support
|
|
$
30
|
|
$
(30)
|
|
$
-
|
|
|
$
24
|
|
$
(24)
|
|
$
-
|
|
|
|
|
|
|
|
Hardware
|
|
3
|
|
(3)
|
|
-
|
|
|
2
|
|
(2)
|
|
-
|
|
|
|
|
|
|
|
Services
|
|
14
|
|
(14)
|
|
-
|
|
|
12
|
|
(12)
|
|
-
|
|
|
|
|
|
|
|
Sales and
marketing
|
|
37
|
|
(37)
|
|
-
|
|
|
93
|
|
(93)
|
|
-
|
|
|
|
|
|
|
|
Research and
development
|
|
272
|
|
(272)
|
|
-
|
|
|
222
|
|
(222)
|
|
-
|
|
|
|
|
|
|
|
General and
administrative
|
|
41
|
|
(41)
|
|
-
|
|
|
43
|
|
(43)
|
|
-
|
|
|
|
|
|
|
|
Total stock-based compensation
|
|
$
397
|
|
$ (397)
|
|
$
-
|
|
|
$
396
|
|
$ (396)
|
|
$
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4)
|
Estimated future
annual amortization expense related to intangible assets as of
November 30, 2019 was as follows:
|
|
|
Remainder of fiscal
2020
|
|
$
766
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2021
|
|
1,347
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2022
|
|
1,098
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2023
|
|
675
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2024
|
|
445
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2025
|
|
126
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thereafter
|
|
35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total intangible assets, net
|
|
$ 4,492
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5)
|
Income tax effects
were calculated reflecting an effective GAAP tax rate of 17.7% and
15.9% in the second quarter of fiscal 2020 and 2019, respectively,
and an effective non-GAAP tax rate of 18.8% and 18.6% in the second
quarter of fiscal 2020 and 2019, respectively.The difference in our
GAAP and non-GAAP tax rates in the second quarter of fiscal 2020
and 2019 was primarily due to the net tax effects on stock-based
compensation expense and acquisition related items, including the
tax effects of amortization of intangible assets.
|
|
*
|
Not
meaningful
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ORACLE
CORPORATION
|
|
|
|
|
|
|
|
|
|
Q2 FISCAL
2020 YEAR TO DATE FINANCIAL RESULTS
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
($ in millions,
except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
November 30,
|
%
Increase
|
%
Increase
(Decrease)
|
|
|
|
|
|
|
%
of
|
|
%
of
|
(Decrease)
|
in
Constant
|
|
|
|
2019
|
Revenues
|
2018
|
Revenues
|
in US
$
|
Currency
(1)
|
|
REVENUES
|
|
|
|
|
|
|
|
|
Cloud services and
license support
|
$ 13,616
|
73%
|
$ 13,246
|
71%
|
3%
|
4%
|
|
|
Cloud license and
on-premise license
|
1,937
|
10%
|
2,083
|
11%
|
(7%)
|
(6%)
|
|
|
Hardware
|
1,686
|
9%
|
1,796
|
9%
|
(6%)
|
(5%)
|
|
|
Services
|
1,593
|
8%
|
1,630
|
9%
|
(2%)
|
(1%)
|
|
|
Total
revenues
|
18,832
|
100%
|
18,755
|
100%
|
0%
|
1%
|
|
OPERATING
EXPENSES
|
|
|
|
|
|
|
|
|
Cloud services and
license support
|
2,003
|
11%
|
1,870
|
10%
|
7%
|
8%
|
|
|
Hardware
|
557
|
3%
|
658
|
4%
|
(15%)
|
(14%)
|
|
|
Services
|
1,445
|
8%
|
1,428
|
8%
|
1%
|
2%
|
|
|
Sales and
marketing
|
4,086
|
22%
|
4,140
|
22%
|
(1%)
|
0%
|
|
|
Research and
development
|
3,088
|
16%
|
3,039
|
16%
|
2%
|
2%
|
|
|
General and
administrative
|
615
|
3%
|
619
|
3%
|
(1%)
|
0%
|
|
|
Amortization of
intangible assets
|
821
|
4%
|
858
|
5%
|
(4%)
|
(4%)
|
|
|
Acquisition related
and other
|
37
|
0%
|
32
|
0%
|
16%
|
16%
|
|
|
Restructuring
|
120
|
1%
|
233
|
1%
|
(48%)
|
(47%)
|
|
|
Total operating
expenses
|
12,772
|
68%
|
12,877
|
69%
|
(1%)
|
0%
|
|
OPERATING
INCOME
|
6,060
|
32%
|
5,878
|
31%
|
3%
|
5%
|
|
|
Interest
expense
|
(959)
|
(5%)
|
(1,048)
|
(6%)
|
(8%)
|
(8%)
|
|
|
Non-operating income,
net
|
191
|
1%
|
484
|
3%
|
(60%)
|
(60%)
|
|
INCOME BEFORE
PROVISION FOR INCOME TAXES
|
5,292
|
28%
|
5,314
|
28%
|
0%
|
1%
|
|
|
Provision for income
taxes
|
844
|
4%
|
716
|
4%
|
18%
|
17%
|
|
NET
INCOME
|
$
4,448
|
24%
|
$
4,598
|
24%
|
(3%)
|
(1%)
|
|
|
|
|
|
|
|
|
|
|
EARNINGS PER
SHARE:
|
|
|
|
|
|
|
|
|
Basic
|
$
1.36
|
|
$
1.21
|
|
|
|
|
|
Diluted
|
$
1.32
|
|
$
1.18
|
|
|
|
|
WEIGHTED AVERAGE
COMMON SHARES OUTSTANDING:
|
|
|
|
|
|
|
|
|
Basic
|
3,281
|
|
3,812
|
|
|
|
|
|
Diluted
|
3,370
|
|
3,908
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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, 2019, 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 six
months ended November 30, 2019 compared with the corresponding
prior year period decreased our revenues by 1 percentage point,
operating expenses by 1 percentage point and operating income by 2
percentage points.
|
|
|
|
|
|
|
|
|
|
|
ORACLE
CORPORATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q2 FISCAL
2020 YEAR TO DATE FINANCIAL RESULTS
|
RECONCILIATION OF
SELECTED GAAP MEASURES TO NON-GAAP MEASURES
(1)
|
($ in millions,
except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
November 30,
|
|
% Increase
(Decrease)
in US $
|
% Increase
(Decrease) in
Constant Currency (2)
|
|
|
|
2019
|
|
|
|
2019
|
|
|
2018
|
|
|
|
2018
|
|
GAAP
|
Non-GAAP
|
GAAP
|
Non-GAAP
|
|
|
|
|
GAAP
|
|
Adj.
|
|
Non-GAAP
|
|
|
GAAP
|
|
Adj.
|
|
Non-GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
REVENUES
|
|
$ 18,832
|
|
$
3
|
|
$
18,835
|
|
|
$ 18,755
|
|
$
13
|
|
$
18,768
|
|
0%
|
0%
|
1%
|
1%
|
|
|
Cloud services and license
support
|
|
13,616
|
|
3
|
|
13,619
|
|
|
13,246
|
|
13
|
|
13,259
|
|
3%
|
3%
|
4%
|
4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL OPERATING
EXPENSES
|
|
$ 12,772
|
|
$
(1,821)
|
|
$
10,951
|
|
|
$ 12,877
|
|
$
(1,955)
|
|
$
10,922
|
|
(1%)
|
0%
|
0%
|
1%
|
|
|
Stock-based compensation
(3)
|
|
843
|
|
(843)
|
|
-
|
|
|
832
|
|
(832)
|
|
-
|
|
1%
|
*
|
1%
|
*
|
|
|
Amortization of intangible
assets (4)
|
|
821
|
|
(821)
|
|
-
|
|
|
858
|
|
(858)
|
|
-
|
|
(4%)
|
*
|
(4%)
|
*
|
|
|
Acquisition related and
other
|
|
37
|
|
(37)
|
|
-
|
|
|
32
|
|
(32)
|
|
-
|
|
16%
|
*
|
16%
|
*
|
|
|
Restructuring
|
|
120
|
|
(120)
|
|
-
|
|
|
233
|
|
(233)
|
|
-
|
|
(48%)
|
*
|
(47%)
|
*
|
|
OPERATING
INCOME
|
|
$
6,060
|
|
$
1,824
|
|
$
7,884
|
|
|
$
5,878
|
|
$
1,968
|
|
$
7,846
|
|
3%
|
0%
|
5%
|
2%
|
|
OPERATING MARGIN
%
|
|
32%
|
|
|
|
42%
|
|
|
31%
|
|
|
|
42%
|
|
83 bp.
|
5 bp.
|
98 bp.
|
11 bp.
|
|
INCOME TAX EFFECTS
(5)
|
|
$
844
|
|
$
528
|
|
$
1,372
|
|
|
$
716
|
|
$
656
|
|
$
1,372
|
|
18%
|
0%
|
17%
|
1%
|
|
NET
INCOME
|
|
$
4,448
|
|
$
1,296
|
|
$
5,744
|
|
|
$
4,598
|
|
$
1,312
|
|
$
5,910
|
|
(3%)
|
(3%)
|
(1%)
|
(2%)
|
|
DILUTED EARNINGS
PER SHARE
|
|
$
1.32
|
|
|
|
$
1.70
|
|
|
$
1.18
|
|
|
|
$
1.51
|
|
12%
|
13%
|
14%
|
14%
|
|
DILUTED WEIGHTED
AVERAGE COMMON
SHARES OUTSTANDING
|
|
3,370
|
|
-
|
|
3,370
|
|
|
3,908
|
|
-
|
|
3,908
|
|
(14%)
|
(14%)
|
(14%)
|
(14%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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, 2019, 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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended
|
|
|
Six Months
Ended
|
|
|
|
|
|
|
|
|
|
November
30, 2019
|
|
|
November 30,
2018
|
|
|
|
|
|
|
|
|
|
GAAP
|
|
Adj.
|
|
Non-GAAP
|
|
|
GAAP
|
|
Adj.
|
|
Non-GAAP
|
|
|
|
|
|
|
|
Cloud services and license
support
|
|
$
61
|
|
$
(61)
|
|
$
-
|
|
|
$
48
|
|
$
(48)
|
|
$
-
|
|
|
|
|
|
|
|
Hardware
|
|
6
|
|
(6)
|
|
-
|
|
|
5
|
|
(5)
|
|
-
|
|
|
|
|
|
|
|
Services
|
|
28
|
|
(28)
|
|
-
|
|
|
25
|
|
(25)
|
|
-
|
|
|
|
|
|
|
|
Sales and
marketing
|
|
125
|
|
(125)
|
|
-
|
|
|
188
|
|
(188)
|
|
-
|
|
|
|
|
|
|
|
Research and
development
|
|
543
|
|
(543)
|
|
-
|
|
|
479
|
|
(479)
|
|
-
|
|
|
|
|
|
|
|
General and
administrative
|
|
80
|
|
(80)
|
|
-
|
|
|
87
|
|
(87)
|
|
-
|
|
|
|
|
|
|
|
Total stock-based compensation
|
|
$
843
|
|
$
(843)
|
|
$
-
|
|
|
$
832
|
|
$
(832)
|
|
$
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4)
|
Estimated future
annual amortization expense related to intangible assets as of
November 30, 2019 was as follows:
|
|
|
Remainder of fiscal
2020
|
|
$
766
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2021
|
|
1,347
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2022
|
|
1,098
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2023
|
|
675
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2024
|
|
445
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2025
|
|
126
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thereafter
|
|
35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total intangible assets, net
|
|
$
4,492
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5)
|
Income tax effects
were calculated reflecting an effective GAAP tax rate of 16.0% and
13.5% in the first half of fiscal 2020 and 2019, respectively, and
an effective non-GAAP tax rate of 19.3% and 18.8% in the first half
of fiscal 2020 and 2019, respectively. The difference between our
GAAP and non-GAAP tax rates in the first half of fiscal 2020 was
primarily due to the net tax effects on stock-based compensation
expense and acquisition related items, including the tax effects of
amortization of intangible assets. The difference between our GAAP
and non-GAAP tax rates in the first half of fiscal 2019 was
primarily due to adjustments in our estimates for the one-time
effects of the U.S. Tax Cuts and Jobs Act of 2017 (refer to
Appendix A for additional information), the net tax effects on
stock-based compensation expense, and acquisition related items,
including the tax effects of amortization of intangible
assets.
|
|
*
|
Not
meaningful
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ORACLE
CORPORATION
|
|
|
|
|
|
|
|
Q2 FISCAL 2020
FINANCIAL RESULTS
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
($ in
millions)
|
|
|
|
|
|
|
|
|
|
|
November
30,
|
May
31,
|
|
|
|
2019
|
2019
|
ASSETS
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$ 24,540
|
|
$
20,514
|
|
|
Marketable
securities
|
2,904
|
|
17,313
|
|
|
Trade receivables,
net
|
4,050
|
|
5,134
|
|
|
Prepaid expenses and
other current assets
|
3,046
|
|
3,425
|
|
|
|
Total Current
Assets
|
34,540
|
|
46,386
|
|
Non-Current
Assets:
|
|
|
|
|
|
Property, plant and equipment, net
|
6,270
|
|
6,252
|
|
|
Intangible assets, net
|
4,492
|
|
5,279
|
|
|
Goodwill, net
|
43,810
|
|
43,779
|
|
|
Deferred
tax assets
|
2,751
|
|
2,696
|
|
|
Other
non-current assets
|
6,580
|
|
4,317
|
|
|
|
Total Non-Current
Assets
|
63,903
|
|
62,323
|
|
TOTAL
ASSETS
|
$ 98,443
|
|
$ 108,709
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
Notes payable,
current
|
$
999
|
|
$
4,494
|
|
|
Accounts
payable
|
534
|
|
580
|
|
|
Accrued compensation
and related benefits
|
1,312
|
|
1,628
|
|
|
Deferred
revenues
|
8,087
|
|
8,374
|
|
|
Other current
liabilities
|
3,660
|
|
3,554
|
|
|
|
Total Current
Liabilities
|
14,592
|
|
18,630
|
|
Non-Current
Liabilities:
|
|
|
|
|
|
Notes payable and
other borrowings, non-current
|
50,670
|
|
51,673
|
|
|
Income taxes
payable
|
13,042
|
|
13,295
|
|
|
Other non-current
liabilities
|
3,954
|
|
2,748
|
|
|
|
Total Non-Current
Liabilities
|
67,666
|
|
67,716
|
|
Equity
|
16,185
|
|
22,363
|
|
TOTAL LIABILITIES
AND EQUITY
|
$ 98,443
|
|
$ 108,709
|
|
|
|
|
|
|
|
|
ORACLE
CORPORATION
|
|
|
|
|
|
|
Q2 FISCAL 2020
FINANCIAL RESULTS
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
($ in
millions)
|
|
|
|
|
|
|
|
|
Six Months Ended
November 30,
|
|
|
2019
|
2018
|
Cash Flows From
Operating Activities:
|
|
|
|
|
Net
income
|
$
4,448
|
|
$
4,598
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
Depreciation
|
677
|
|
566
|
|
Amortization of
intangible assets
|
821
|
|
858
|
|
Deferred income
taxes
|
(263)
|
|
(228)
|
|
Stock-based
compensation
|
843
|
|
832
|
|
Other, net
|
117
|
|
118
|
|
Changes in operating
assets and liabilities, net of effects from
acquisitions:
|
|
|
|
|
Decrease in trade
receivables, net
|
1,079
|
|
1,116
|
|
Decrease in prepaid
expenses and other assets
|
638
|
|
327
|
|
Decrease in accounts
payable and other liabilities
|
(916)
|
|
(364)
|
|
Decrease in income
taxes payable
|
(613)
|
|
(679)
|
|
(Decrease) increase
in deferred revenues
|
(318)
|
|
124
|
|
Net cash provided
by operating activities
|
6,513
|
|
7,268
|
|
Cash Flows From
Investing Activities:
|
|
|
|
|
Purchases of
marketable securities and other investments
|
(314)
|
|
(1,278)
|
|
Proceeds from
maturities of marketable securities and other
investments
|
2,204
|
|
6,737
|
|
Proceeds from sales
of marketable securities
|
12,575
|
|
1,110
|
|
Acquisitions, net of
cash acquired
|
(111)
|
|
(313)
|
|
Capital
expenditures
|
(735)
|
|
(804)
|
|
Net cash provided
by investing activities
|
13,619
|
|
5,452
|
|
Cash Flows From
Financing Activities:
|
|
|
|
|
Payments for
repurchases of common stock
|
(9,996)
|
|
(19,924)
|
|
Proceeds from
issuances of common stock
|
617
|
|
1,018
|
|
Shares repurchased
for tax withholdings upon vesting of restricted stock-based
awards
|
(559)
|
|
(417)
|
|
Payments of dividends
to stockholders
|
(1,562)
|
|
(1,456)
|
|
Repayments of
borrowings
|
(4,500)
|
|
(2,500)
|
|
Other, net
|
(96)
|
|
(77)
|
|
Net cash used for
financing activities
|
(16,096)
|
|
(23,356)
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
(10)
|
|
(160)
|
|
Net increase
(decrease) in cash and cash equivalents
|
4,026
|
|
(10,796)
|
|
Cash and cash
equivalents at beginning of period
|
20,514
|
|
21,620
|
|
Cash and cash
equivalents at end of period
|
$
24,540
|
|
$ 10,824
|
|
|
|
|
|
|
|
ORACLE
CORPORATION
|
Q2 FISCAL
2020 FINANCIAL RESULTS
|
FREE CASH
FLOW - TRAILING 4-QUARTERS (1)
|
($ in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
2019
|
Fiscal
2020
|
|
|
|
Q1
|
Q2
|
Q3
|
Q4
|
Q1
|
Q2
|
Q3
|
Q4
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Operating
Cash Flow
|
$ 15,542
|
$ 15,238
|
$ 14,789
|
$ 14,551
|
$ 13,829
|
$ 13,796
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
Expenditures
|
(1,646)
|
(1,468)
|
(1,625)
|
(1,660)
|
(1,663)
|
(1,591)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash
Flow
|
$ 13,896
|
$ 13,770
|
$ 13,164
|
$ 12,891
|
$ 12,166
|
$ 12,205
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% Growth over
prior year
|
10%
|
10%
|
(1%)
|
(6%)
|
(12%)
|
(11%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Net
Income
|
$
3,708
|
$
3,827
|
$ 10,619
|
$ 11,083
|
$ 10,955
|
$ 10,933
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow as
a % of Net Income
|
375%
|
360%
|
124%
|
116%
|
111%
|
112%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
To supplement our
statements of cash flows presented on a GAAP basis, we use non-GAAP
measures of cash flows on a trailing 4-quarter basis to analyze
cash flow generated from operations. We believe free cash flow is
also useful as one of the bases for comparing our performance with
our competitors. The presentation of non-GAAP free cash flow is not
meant to be considered in isolation or as an alternative to net
income as an indicator of our performance, or as an alternative to
cash flows from operating activities as a measure of
liquidity.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ORACLE
CORPORATION
|
|
Q2 FISCAL
2020 FINANCIAL RESULTS
|
|
SUPPLEMENTAL
ANALYSIS OF GAAP REVENUES (1)
|
|
($ in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1
|
Q2
|
Fiscal
2019
Q3
|
Q4
|
TOTAL
|
|
Q1
|
Q2
|
Fiscal
2020
Q3
|
Q4
|
TOTAL
|
|
|
REVENUES BY
OFFERINGS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cloud services
and license support
|
$ 6,609
|
$ 6,637
|
$
6,662
|
$
6,799
|
$ 26,707
|
|
$ 6,805
|
$ 6,811
|
|
|
$ 13,616
|
|
|
Cloud license
and on-premise license
|
867
|
1,217
|
1,251
|
2,520
|
5,855
|
|
812
|
1,126
|
|
|
1,937
|
|
|
Hardware
|
904
|
891
|
915
|
994
|
3,704
|
|
815
|
871
|
|
|
1,686
|
|
|
Services
|
813
|
817
|
786
|
823
|
3,240
|
|
786
|
806
|
|
|
1,593
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
$ 9,193
|
$ 9,562
|
$
9,614
|
$ 11,136
|
$ 39,506
|
|
$ 9,218
|
$ 9,614
|
|
|
$ 18,832
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AS REPORTED
REVENUE GROWTH RATES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cloud services
and license support
|
3%
|
3%
|
1%
|
0%
|
2%
|
|
3%
|
3%
|
|
|
3%
|
|
|
Cloud license
and on-premise license
|
(3%)
|
(9%)
|
(4%)
|
12%
|
1%
|
|
(6%)
|
(7%)
|
|
|
(7%)
|
|
|
Hardware
|
(4%)
|
(5%)
|
(8%)
|
(11%)
|
(7%)
|
|
(10%)
|
(2%)
|
|
|
(6%)
|
|
|
Services
|
(5%)
|
(5%)
|
(1%)
|
(7%)
|
(5%)
|
|
(3%)
|
(1%)
|
|
|
(2%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
1%
|
0%
|
(1%)
|
1%
|
0%
|
|
0%
|
1%
|
|
|
0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSTANT CURRENCY
GROWTH RATES (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cloud services
and license support
|
4%
|
5%
|
4%
|
3%
|
4%
|
|
4%
|
4%
|
|
|
4%
|
|
|
Cloud license
and on-premise license
|
0%
|
(6%)
|
0%
|
15%
|
4%
|
|
(6%)
|
(7%)
|
|
|
(6%)
|
|
|
Hardware
|
(3%)
|
(3%)
|
(4%)
|
(8%)
|
(5%)
|
|
(9%)
|
(1%)
|
|
|
(5%)
|
|
|
Services
|
(4%)
|
(2%)
|
3%
|
(4%)
|
(2%)
|
|
(2%)
|
0%
|
|
|
(1%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
2%
|
2%
|
3%
|
4%
|
3%
|
|
2%
|
1%
|
|
|
1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CLOUD AND LICENSE
REVENUES BY ECOSYSTEM (3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Applications
revenues
|
$ 2,761
|
$ 2,808
|
$
2,841
|
$
3,081
|
$ 11,491
|
|
$ 2,821
|
$ 2,909
|
|
|
$
5,730
|
|
|
Infrastructure
revenues
|
4,715
|
5,046
|
5,072
|
6,238
|
21,071
|
|
4,796
|
5,028
|
|
|
9,823
|
|
|
|
Total cloud and
license revenues
|
$ 7,476
|
$ 7,854
|
$
7,913
|
$
9,319
|
$ 32,562
|
|
$ 7,617
|
$ 7,937
|
|
|
$ 15,553
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AS REPORTED
REVENUE GROWTH RATES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Applications
revenues
|
6%
|
5%
|
5%
|
2%
|
4%
|
|
2%
|
4%
|
|
|
3%
|
|
|
Infrastructure
revenues
|
1%
|
(2%)
|
(2%)
|
4%
|
0%
|
|
2%
|
0%
|
|
|
1%
|
|
|
|
Total cloud and
license revenues
|
2%
|
1%
|
0%
|
3%
|
2%
|
|
2%
|
1%
|
|
|
1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSTANT CURRENCY
GROWTH RATES (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Applications
revenues
|
7%
|
7%
|
7%
|
4%
|
6%
|
|
3%
|
4%
|
|
|
4%
|
|
|
Infrastructure
revenues
|
2%
|
1%
|
2%
|
7%
|
3%
|
|
3%
|
1%
|
|
|
2%
|
|
|
|
Total cloud and
license revenues
|
4%
|
3%
|
3%
|
6%
|
4%
|
|
3%
|
2%
|
|
|
3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GEOGRAPHIC
REVENUES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas
|
|
$ 5,161
|
$ 5,243
|
$
5,266
|
$
6,184
|
$ 21,856
|
|
$ 5,150
|
$ 5,304
|
|
|
$ 10,454
|
|
|
Europe/Middle
East/Africa
|
|
2,576
|
2,782
|
2,781
|
3,132
|
11,270
|
|
2,553
|
2,695
|
|
|
5,248
|
|
|
Asia
Pacific
|
|
1,456
|
1,537
|
1,567
|
1,820
|
6,380
|
|
1,515
|
1,615
|
|
|
3,130
|
|
|
|
Total
revenues
|
$ 9,193
|
$ 9,562
|
$
9,614
|
$ 11,136
|
$ 39,506
|
|
$ 9,218
|
$ 9,614
|
|
|
$ 18,832
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The sum of the
quarterly information presented may vary from the year-to-date
information presented due to rounding.
|
|
|
|
|
|
|
(2)
|
We compare the
percent change in the results from one period to another period
using constant currency disclosure. We present constant currency
information to provide a framework for assessing how our underlying
businesses performed excluding the effect of foreign currency rate
fluctuations. To present this information, current and comparative
prior period results for entities reporting in currencies other
than United States dollars are converted into United States dollars
at the exchange rates in effect on May 31, 2019 and 2018 for the
fiscal 2020 and fiscal 2019 constant currency growth rate
calculations presented, respectively, rather than the actual
exchange rates in effect during the respective periods.
|
|
|
(3)
|
Applications
ecosystem revenues represent the sum of applications related cloud
services and license support revenues; and applications related
license revenues. Infrastructure ecosystem revenues represent the
sum of infrastructure related cloud services and license support
revenues; and infrastructure related license
revenues.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
APPENDIX A
ORACLE
CORPORATION
Q2 FISCAL 2020 FINANCIAL RESULTS
EXPLANATION OF NON-GAAP MEASURES
To supplement our financial results presented on a GAAP basis,
we use the non-GAAP measures indicated in the tables, which exclude
certain business combination accounting entries and expenses
related to acquisitions, as well as other significant expenses
including stock-based compensation, that we believe are helpful in
understanding our past financial performance and our future
results. Our non-GAAP financial measures are not meant to be
considered in isolation or as a substitute for comparable GAAP
measures and should be read only in conjunction with our
consolidated financial statements prepared in accordance with GAAP.
Our management regularly uses our supplemental non-GAAP financial
measures internally to understand, manage and evaluate our business
and make operating decisions. These non-GAAP measures are among the
primary factors management uses in planning for and forecasting
future periods. Compensation of our executives is based in part on
the performance of our business based on these non-GAAP measures.
Our non-GAAP financial measures reflect adjustments based on the
following items, as well as the related income tax effects related
to each of the below items except for the impact of the U.S. Tax
Cuts and Jobs Act of 2017:
- Cloud services and license support revenues: Business
combination accounting rules require us to account for the fair
values of cloud services and license support contracts assumed in
connection with our acquisitions. The non-GAAP adjustments to our
cloud services and license support revenues are intended to
include, and thus reflect, the full amount of such revenues. We
believe the adjustments to these revenues are useful to investors
as a measure of the ongoing performance of our business as we
generally expect to experience high renewal rates for these
contracts at their stated values during the post combination
periods.
- Stock-based compensation expenses: We have excluded the effect
of stock-based compensation expenses from our non-GAAP operating
expenses and net income measures. Although stock-based compensation
is a key incentive offered to our employees, and we believe such
compensation contributed to the revenues earned during the periods
presented and also believe it will contribute to the generation of
future period revenues, we continue to evaluate our business
performance excluding stock-based compensation expenses.
Stock-based compensation expenses will recur in future
periods.
- Amortization of intangible assets: We have excluded the effect
of amortization of intangible assets from our non-GAAP operating
expenses and net income measures. Amortization of intangible assets
is inconsistent in amount and frequency and is significantly
affected by the timing and size of our acquisitions. Investors
should note that the use of intangible assets contributed to our
revenues earned during the periods presented and will contribute to
our future period revenues as well. Amortization of intangible
assets will recur in future periods.
- Acquisition related and other expenses; and restructuring
expenses: We have excluded the effect of acquisition related and
other expenses and the effect of restructuring expenses from our
non-GAAP operating expenses and net income measures. We incurred
expenses in connection with our acquisitions and also incurred
certain other operating expenses or income, which we generally
would not have otherwise incurred in the periods presented as a
part of our continuing operations. Acquisition related and other
expenses primarily consist of personnel related costs for
transitional and certain other employees, integration related
professional services, certain business combination adjustments
including adjustments after the measurement period has ended and
certain other operating items, net. Restructuring expenses consist
of employee severance and other exit costs. We believe it is useful
for investors to understand the effects of these items on our total
operating expenses. Although acquisition related and other expenses
and restructuring expenses generally diminish over time with
respect to past acquisitions and/or strategic initiatives, we
generally will incur these expenses in connection with any future
acquisitions and/or strategic initiatives.
- Impact of the U.S. Tax Cuts and Jobs Act of 2017: The U.S. Tax
Cuts and Jobs Act of 2017 (the Tax Act) was signed into law on
December 22, 2017. For the first half
of fiscal 2019, we recorded a benefit of $153 million related to adjustments in our
estimates of the one-time effects of the Tax Act, including the
one-time transition tax on certain foreign subsidiary earnings and
the remeasurement of net deferred income tax balances affected by
the Tax Act. We have excluded the impacts of this benefit from our
non-GAAP income taxes and net income measures for the first half of
fiscal 2019. We believe making these adjustments provides insight
to our operating performance and comparability.
View original
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SOURCE Oracle