UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
or
For the transition period from ____________ to ____________
Commission File Number:
(Exact name of registrant as specified in its charter)
|
||
(State or other jurisdiction of incorporation or organization) |
|
(I.R.S. Employer Identification No.) |
|
|
|
|
||
(Address of principal executive offices) |
|
(Zip Code) |
(
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
|
Accelerated filer ☐ |
|
Non-accelerated filer ☐ |
|
Smaller reporting company |
|
|
Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
The number of shares of registrant’s common stock outstanding as of September 6, 2024 was:
ORACLE CORPORATION
FORM 10-Q QUARTERLY REPORT
TABLE OF CONTENTS
|
|
|
|
Page |
|
|
|
|
|
PART I. |
|
|
3 |
|
|
|
|
|
|
Item 1. |
|
|
3 |
|
|
|
|
|
|
|
|
Condensed Consolidated Balance Sheets as of August 31, 2024 and May 31, 2024 |
|
3 |
|
|
|
|
|
|
|
Condensed Consolidated Statements of Operations for the Three Months Ended August 31, 2024 and 2023 |
|
4 |
|
|
|
|
|
|
|
|
5 |
|
|
|
|
|
|
|
|
|
6 |
|
|
|
|
|
|
|
|
Condensed Consolidated Statements of Cash Flows for the Three Months Ended August 31, 2024 and 2023 |
|
7 |
|
|
|
|
|
|
|
|
8 |
|
|
|
|
|
|
Item 2. |
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
|
22 |
|
|
|
|
|
Item 3. |
|
|
37 |
|
|
|
|
|
|
Item 4. |
|
|
37 |
|
|
|
|
|
|
PART II. |
|
|
38 |
|
|
|
|
|
|
Item 1. |
|
|
38 |
|
|
|
|
|
|
Item 1A. |
|
|
38 |
|
|
|
|
|
|
Item 2. |
|
|
38 |
|
|
|
|
|
|
Item 6. |
|
|
39 |
|
|
|
|
|
|
|
|
|
40 |
Cautionary Note on Forward-Looking Statements
For purposes of this Quarterly Report on Form 10-Q (this Quarterly Report), the terms “Oracle,” “we,” “us” and “our” refer to Oracle Corporation and its consolidated subsidiaries. This Quarterly Report contains statements that are not historical in nature, are predictive in nature, or that depend upon or refer to future events or conditions or otherwise contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), and Section 27A of the Securities Act of 1933, as amended (the Securities Act). These include, among other things, statements regarding:
1
as well as other statements regarding our future operations, financial condition and prospects, and business strategies. Forward-looking statements may be preceded by, followed by or include the words “anticipates,” “believes,” “commits,” “continues,” “could,” “endeavors,” “estimates,” “expects,” “goal,” “intends,” “is designed to,” “likely,” “maintains,” “may,” “plans,” “potential,” “seeks,” “shall,” “should,” “strives,” “will” and similar expressions. We claim the protection of the safe harbor for forward-looking statements contained in the Exchange Act and the Securities Act for all forward-looking statements. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to risks, uncertainties and assumptions about our business that could affect our future results and could cause those results or other outcomes to differ materially from those expressed or implied in the forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in “Risk Factors” included in documents we file from time to time with the U.S. Securities and Exchange Commission, including our Annual Report on Form 10-K for the fiscal year ended May 31, 2024 and our other Quarterly Reports on Form 10-Q to be filed by us in our fiscal year 2025, which runs from June 1, 2024 to May 31, 2025.
We have no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or risks, except to the extent required by applicable securities laws. If we do update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements. New information, future events or risks could cause the forward-looking events we discuss in this Quarterly Report not to occur. You should not place undue reliance on these forward-looking statements, which reflect our expectations only as of the date of this Quarterly Report.
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
ORACLE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
As of August 31, 2024 and May 31, 2024
(Unaudited)
(in millions, except per share data) |
|
August 31, |
|
|
May 31, |
|
||
ASSETS |
|
|
|
|
|
|
||
Current assets: |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
||
Marketable securities |
|
|
|
|
|
|
||
Trade receivables, net of allowances for credit losses of $ |
|
|
|
|
|
|
||
Prepaid expenses and other current assets |
|
|
|
|
|
|
||
Total current assets |
|
|
|
|
|
|
||
Non-current assets: |
|
|
|
|
|
|
||
Property, plant and equipment, net |
|
|
|
|
|
|
||
Intangible assets, net |
|
|
|
|
|
|
||
Goodwill, net |
|
|
|
|
|
|
||
Deferred tax assets |
|
|
|
|
|
|
||
Other non-current assets |
|
|
|
|
|
|
||
Total non-current assets |
|
|
|
|
|
|
||
Total assets |
|
$ |
|
|
$ |
|
||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
||
Current liabilities: |
|
|
|
|
|
|
||
Notes payable and other borrowings, current |
|
$ |
|
|
$ |
|
||
Accounts payable |
|
|
|
|
|
|
||
Accrued compensation and related benefits |
|
|
|
|
|
|
||
Deferred revenues |
|
|
|
|
|
|
||
Other current liabilities |
|
|
|
|
|
|
||
Total current liabilities |
|
|
|
|
|
|
||
Non-current liabilities: |
|
|
|
|
|
|
||
Notes payable and other borrowings, non-current |
|
|
|
|
|
|
||
Income taxes payable |
|
|
|
|
|
|
||
Deferred tax liabilities |
|
|
|
|
|
|
||
Other non-current liabilities |
|
|
|
|
|
|
||
Total non-current liabilities |
|
|
|
|
|
|
||
|
|
|
|
|
|
|||
Oracle Corporation stockholders’ equity: |
|
|
|
|
|
|
||
Preferred stock, $ |
|
|
|
|
|
|
||
Common stock, $ |
|
|
|
|
|
|
||
Accumulated deficit |
|
|
( |
) |
|
|
( |
) |
Accumulated other comprehensive loss |
|
|
( |
) |
|
|
( |
) |
Total Oracle Corporation stockholders’ equity |
|
|
|
|
|
|
||
Noncontrolling interests |
|
|
|
|
|
|
||
Total stockholders’ equity |
|
|
|
|
|
|
||
Total liabilities and stockholders’ equity |
|
$ |
|
|
$ |
|
See notes to condensed consolidated financial statements.
3
ORACLE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended August 31, 2024 and 2023
(Unaudited)
|
|
Three Months Ended |
|
|||||
(in millions, except per share data) |
|
2024 |
|
|
2023 |
|
||
Revenues: |
|
|
|
|
|
|
||
Cloud services and license support |
|
$ |
|
|
$ |
|
||
Cloud license and on-premise license |
|
|
|
|
|
|
||
Hardware |
|
|
|
|
|
|
||
Services |
|
|
|
|
|
|
||
Total revenues |
|
|
|
|
|
|
||
Operating expenses: |
|
|
|
|
|
|
||
Cloud services and license support(1) |
|
|
|
|
|
|
||
Hardware(1) |
|
|
|
|
|
|
||
Services(1) |
|
|
|
|
|
|
||
Sales and marketing(1) |
|
|
|
|
|
|
||
Research and development |
|
|
|
|
|
|
||
General and administrative |
|
|
|
|
|
|
||
Amortization of intangible assets |
|
|
|
|
|
|
||
Acquisition related and other |
|
|
|
|
|
|
||
Restructuring |
|
|
|
|
|
|
||
Total operating expenses |
|
|
|
|
|
|
||
Operating income |
|
|
|
|
|
|
||
Interest expense |
|
|
( |
) |
|
|
( |
) |
Non-operating income (expenses), net |
|
|
|
|
|
( |
) |
|
Income before income taxes |
|
|
|
|
|
|
||
(Provision for) benefit from income taxes |
|
|
( |
) |
|
|
|
|
Net income |
|
$ |
|
|
$ |
|
||
Earnings per share: |
|
|
|
|
|
|
||
Basic |
|
$ |
|
|
$ |
|
||
Diluted |
|
$ |
|
|
$ |
|
||
Weighted average common shares outstanding: |
|
|
|
|
|
|
||
Basic |
|
|
|
|
|
|
||
Diluted |
|
|
|
|
|
|
See notes to condensed consolidated financial statements.
4
ORACLE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Three Months Ended August 31, 2024 and 2023
(Unaudited)
|
|
Three Months Ended |
|
|||||
(in millions) |
|
2024 |
|
|
2023 |
|
||
Net income |
|
$ |
|
|
$ |
|
||
Other comprehensive income, net of tax: |
|
|
|
|
|
|
||
Net foreign currency translation gains (losses) |
|
|
|
|
|
( |
) |
|
Net unrealized (losses) gains on cash flow hedges |
|
|
( |
) |
|
|
|
|
Other, net |
|
|
|
|
|
( |
) |
|
Total other comprehensive income, net |
|
|
|
|
|
|
||
Comprehensive income |
|
$ |
|
|
$ |
|
See notes to condensed consolidated financial statements.
5
ORACLE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
For the Three Months Ended August 31, 2024 and 2023
(Unaudited)
|
|
Three Months Ended |
|
|||||
(in millions, except per share data) |
|
2024 |
|
|
2023 |
|
||
Common stock and additional paid in capital |
|
|
|
|
|
|
||
Balance, beginning of period |
|
$ |
|
|
$ |
|
||
Common stock issued |
|
|
|
|
|
|
||
Stock-based compensation |
|
|
|
|
|
|
||
Repurchases of common stock |
|
|
( |
) |
|
|
( |
) |
Shares repurchased for tax withholdings upon vesting of restricted stock-based awards |
|
|
( |
) |
|
|
( |
) |
Other, net |
|
|
( |
) |
|
|
( |
) |
Balance, end of period |
|
$ |
|
|
$ |
|
||
Accumulated deficit |
|
|
|
|
|
|
||
Balance, beginning of period |
|
$ |
( |
) |
|
$ |
( |
) |
Repurchases of common stock |
|
|
( |
) |
|
|
( |
) |
Cash dividends declared |
|
|
( |
) |
|
|
( |
) |
Net income |
|
|
|
|
|
|
||
Balance, end of period |
|
$ |
( |
) |
|
$ |
( |
) |
Other stockholders’ equity, net |
|
|
|
|
|
|
||
Balance, beginning of period |
|
$ |
( |
) |
|
$ |
( |
) |
Other comprehensive income, net |
|
|
|
|
|
|
||
Other, net |
|
|
( |
) |
|
|
( |
) |
Balance, end of period |
|
$ |
( |
) |
|
$ |
( |
) |
Total stockholders’ equity |
|
$ |
|
|
$ |
|
||
Cash dividends declared per common share |
|
$ |
|
|
$ |
|
See notes to condensed consolidated financial statements.
6
ORACLE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended August 31, 2024 and 2023
(Unaudited)
|
|
Three Months Ended |
|
|||||
(in millions) |
|
2024 |
|
|
2023 |
|
||
Cash flows from operating activities: |
|
|
|
|
|
|
||
Net income |
|
$ |
|
|
$ |
|
||
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
||
Depreciation |
|
|
|
|
|
|
||
Amortization of intangible assets |
|
|
|
|
|
|
||
Deferred income taxes |
|
|
( |
) |
|
|
( |
) |
Stock-based compensation |
|
|
|
|
|
|
||
Other, net |
|
|
|
|
|
|
||
Changes in operating assets and liabilities: |
|
|
|
|
|
|
||
(Increase) decrease in trade receivables, net |
|
|
( |
) |
|
|
|
|
Decrease in prepaid expenses and other assets |
|
|
|
|
|
|
||
Decrease in accounts payable and other liabilities |
|
|
( |
) |
|
|
( |
) |
Increase in income taxes payable |
|
|
|
|
|
|
||
Increase in deferred revenues |
|
|
|
|
|
|
||
Net cash provided by operating activities |
|
|
|
|
|
|
||
Cash flows from investing activities: |
|
|
|
|
|
|
||
Purchases of marketable securities and other investments |
|
|
( |
) |
|
|
( |
) |
Proceeds from sales and maturities of marketable securities and other investments |
|
|
|
|
|
|
||
Capital expenditures |
|
|
( |
) |
|
|
( |
) |
Net cash used for investing activities |
|
|
( |
) |
|
|
( |
) |
Cash flows from financing activities: |
|
|
|
|
|
|
||
Payments for repurchases of common stock |
|
|
( |
) |
|
|
( |
) |
Proceeds from issuances of common stock |
|
|
|
|
|
|
||
Shares repurchased for tax withholdings upon vesting of restricted stock-based awards |
|
|
( |
) |
|
|
( |
) |
Payments of dividends to stockholders |
|
|
( |
) |
|
|
( |
) |
Repayments of commercial paper, net |
|
|
( |
) |
|
|
( |
) |
Proceeds from issuances of term loan credit agreements |
|
|
|
|
|
|
||
Repayments of senior notes and term loan credit agreements |
|
|
( |
) |
|
|
( |
) |
Other, net |
|
|
( |
) |
|
|
|
|
Net cash used for financing activities |
|
|
( |
) |
|
|
( |
) |
Effect of exchange rate changes on cash and cash equivalents |
|
|
|
|
|
( |
) |
|
Net increase in cash and cash equivalents |
|
|
|
|
|
|
||
Cash and cash equivalents at beginning of period |
|
|
|
|
|
|
||
Cash and cash equivalents at end of period |
|
$ |
|
|
$ |
|
||
Non-cash investing activities: |
|
|
|
|
|
|
||
Unpaid capital expenditures |
|
$ |
|
|
$ |
|
See notes to condensed consolidated financial statements.
7
ORACLE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
August 31, 2024
(Unaudited)
Basis of Presentation
We have prepared the condensed consolidated financial statements included herein pursuant to the rules and regulations of the United States (U.S.) Securities and Exchange Commission (the SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP) have been condensed or omitted pursuant to such rules and regulations. However, we believe that the disclosures herein are adequate to ensure the information presented is not misleading. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended May 31, 2024.
We believe that all necessary adjustments, which consisted only of normal recurring items, have been included in the accompanying financial statements to present fairly the results of the interim periods. The results of operations for the interim periods presented are not necessarily indicative of the operating results to be expected for any subsequent interim period or for the fiscal year ending May 31, 2025.
There have been no changes to our significant accounting policies as disclosed in our Annual Report on Form 10-K for the fiscal year ended May 31, 2024 that had a significant impact on our condensed consolidated financial statements or notes thereto as of and for the three months ended August 31, 2024.
Use of Estimates
Our condensed consolidated financial statements are prepared in accordance with GAAP as set forth in the Financial Accounting Standards Board’s (FASB) Accounting Standards Codification (ASC), and we consider various staff accounting bulletins and other applicable guidance issued by the SEC. These accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented. To the extent that there are differences between these estimates, judgments or assumptions and actual results, our consolidated financial statements will be affected. In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require management’s judgment in its application. There are also areas in which management’s judgment in selecting among available alternatives would not produce a materially different result.
During the first quarter of fiscal 2025, we completed an assessment of the useful lives of our servers and networking equipment and increased the estimate of the useful lives from
Cash, Cash Equivalents and Restricted Cash
Restricted cash that was included within cash and cash equivalents as presented within our condensed consolidated balance sheets as of August 31, 2024 and May 31, 2024 and our condensed consolidated statements of cash flows for the three months ended August 31, 2024 and 2023 was immaterial.
8
ORACLE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
August 31, 2024
(Unaudited)
Remaining Performance Obligations from Contracts with Customers
Trade receivables, net of allowance for credit losses, and deferred revenues are reported net of related uncollected deferred revenues in our condensed consolidated balance sheets as of August 31, 2024 and May 31, 2024. The revenues recognized during the three months ended August 31, 2024 and 2023 that were included in the opening deferred revenues balances as of May 31, 2024 and 2023 were approximately $
Remaining performance obligations, as defined in Note 1 of Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended May 31, 2024, were $
Sales of Financing Receivables
We offer certain of our customers the option to acquire certain of our cloud and license, hardware and services offerings through separate long-term payment contracts. We generally sell these contracts that we have financed for our customers on a non-recourse basis to financial institutions within 90 days of the contracts’ dates of execution. We record the transfers of amounts due from customers to financial institutions as sales of financing receivables because we are considered to have surrendered control of these financing receivables. Financing receivables sold to financial institutions were $
Non-Marketable Investments
Our non-marketable debt investments and equity securities and related instruments totaled $
9
ORACLE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
August 31, 2024
(Unaudited)
Acquisition Related and Other Expenses
Acquisition related and other expenses primarily consist of personnel related costs for transitional and certain other employees, certain business combination adjustments, including adjustments after the measurement period has ended, and certain other operating items, net.
|
|
Three Months Ended |
|
|||||
(in millions) |
|
2024 |
|
|
2023 |
|
||
Transitional and other employee related costs |
|
$ |
|
|
$ |
|
||
Business combination adjustments, net |
|
|
( |
) |
|
|
|
|
Other, net |
|
|
|
|
|
|
||
Total acquisition related and other expenses |
|
$ |
|
|
$ |
|
Non-Operating Income (Expenses), net
Non-operating income (expenses), net consists primarily of interest income, net foreign currency exchange losses, the noncontrolling interests in the net profits of our majority-owned subsidiaries (primarily Oracle Financial Services Software Limited and Oracle Corporation Japan), net losses related to equity investments, including losses attributable to equity method investments (primarily Ampere) and net other income and expenses, including net unrealized gains and losses from our investment portfolio related to our deferred compensation plan and non-service net periodic pension income and losses.
|
|
Three Months Ended |
|
|||||
(in millions) |
|
2024 |
|
|
2023 |
|
||
Interest income |
|
$ |
|
|
$ |
|
||
Foreign currency losses, net |
|
|
( |
) |
|
|
( |
) |
Noncontrolling interests in income |
|
|
( |
) |
|
|
( |
) |
Losses from equity investments, net |
|
|
( |
) |
|
|
( |
) |
Other income, net |
|
|
|
|
|
|
||
Total non-operating income (expenses), net |
|
$ |
|
|
$ |
( |
) |
Recent Accounting Pronouncements
Segment Reporting: In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (ASU 2023-07), which enhances the disclosures required for operating segments in our annual and interim consolidated financial statements. ASU 2023-07 is effective for us for our annual reporting for fiscal 2025 and for interim period reporting beginning in fiscal 2026 on a retrospective basis. Early adoption is permitted. We are currently evaluating the impact of our pending adoption of ASU 2023-07 on our consolidated financial statements.
Income Taxes: In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09), which enhances the disclosures required for income taxes in our annual consolidated financial statements. ASU 2023-09 is effective for us for our annual reporting for fiscal 2026 on a prospective basis. Both early adoption and retrospective application are permitted. We are currently evaluating the impact of our pending adoption of ASU 2023-09 on our consolidated financial statements.
10
ORACLE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
August 31, 2024
(Unaudited)
We perform fair value measurements in accordance with FASB ASC 820, Fair Value Measurement. ASC 820 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at their fair values, we consider the principal or most advantageous market in which we would transact and consider assumptions that market participants would use when pricing the assets or liabilities, such as inherent risk, transfer restrictions and risk of nonperformance.
ASC 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. An asset’s or a liability’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 establishes three levels of inputs that may be used to measure fair value:
Assets and Liabilities Measured at Fair Value on a Recurring Basis
Our assets and liabilities measured at fair value on a recurring basis consisted of the following (Level 1 and Level 2 inputs are defined above):
|
|
August 31, 2024 |
|
|
May 31, 2024 |
|
||||||||||||||||||
|
|
Fair Value Measurements |
|
|
|
|
|
Fair Value Measurements |
|
|
|
|
||||||||||||
(in millions) |
|
Level 1 |
|
|
Level 2 |
|
|
Total |
|
|
Level 1 |
|
|
Level 2 |
|
|
Total |
|
||||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Money market funds |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Time deposits and other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Derivative financial instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Derivative financial instruments |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
11
ORACLE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
August 31, 2024
(Unaudited)
Our cash equivalents and marketable securities investments consist of money market funds, time deposits, marketable equity securities and certain other securities. Marketable securities as presented per our condensed consolidated balance sheets included debt securities with original maturities at the time of purchase greater than three months and the remainder of the debt securities were included in cash and cash equivalents. We classify our marketable debt securities as available-for-sale debt securities at the time of purchase and reevaluate such classification as of each balance sheet date. As of August 31, 2024 and May 31, 2024, all of our marketable debt securities investments mature within one year. Our valuation techniques used to measure the fair values of our instruments that were classified as Level 1 in the table above were derived from quoted market prices and active markets for these instruments that exist. Our valuation techniques used to measure the fair values of Level 2 instruments listed in the table above were derived from the following: non-binding market consensus prices that were corroborated by observable market data, quoted market prices for similar instruments, or pricing models, such as discounted cash flow techniques, with all significant inputs derived from or corroborated by observable market data including reference rate yield curves, among others.
Based on the trading prices of the $
Fiscal 2024 Oracle Restructuring Plan
During fiscal 2024, our management approved, committed to and initiated plans to restructure and further improve efficiencies in our operations due to our acquisitions and certain other operational activities (2024 Restructuring Plan). The total estimated restructuring costs associated with the 2024 Restructuring Plan are up to $
Summary of All Plans
|
|
Accrued |
|
|
Three Months Ended August 31, 2024 |
|
|
Accrued |
|
|
Total |
|
|
Total |
|
|||||||||||||||||
(in millions) |
|
May 31, |
|
|
Initial |
|
|
Adj. to |
|
|
Cash |
|
|
Others(5) |
|
|
August 31, |
|
|
Accrued |
|
|
Program |
|
||||||||
2024 Restructuring Plan(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Cloud and license |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Hardware |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Services |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Other |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total 2024 Restructuring Plan |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Total other restructuring plans(6) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
|
|
|
|
|
||||||
Total restructuring plans |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
|
|
|
|
|
12
ORACLE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
August 31, 2024
(Unaudited)
Deferred revenues consisted of the following:
(in millions) |
|
August 31, |
|
|
May 31, |
|
||
Cloud services and license support |
|
$ |
|
|
$ |
|
||
Hardware |
|
|
|
|
|
|
||
Services |
|
|
|
|
|
|
||
Cloud license and on-premise license |
|
|
|
|
|
|
||
Deferred revenues, current |
|
|
|
|
|
|
||
Deferred revenues, non-current (in other non-current liabilities) |
|
|
|
|
|
|
||
Total deferred revenues |
|
$ |
|
|
$ |
|
Deferred cloud services and license support revenues and deferred hardware revenues substantially represent customer payments made in advance for cloud or support contracts that are typically billed in advance with corresponding revenues generally being recognized ratably or based upon customer usage over the respective contractual periods. Deferred services revenues include prepayments for our services business and revenues for these services are generally recognized as the services are performed. Deferred cloud license and on-premise license revenues typically resulted from customer payments that related to undelivered products and services or specified enhancements.
Common Stock Repurchases
Our Board of Directors has approved a program for us to repurchase shares of our common stock. As of August 31, 2024, approximately $
Our stock repurchase authorization does not have an expiration date and the pace of our repurchase activity will depend on factors such as our working capital needs, our cash requirements for acquisitions and dividend payments, our debt repayment obligations or repurchases of our debt, our stock price and economic and market conditions. Our stock repurchases may be effected from time to time through open market purchases or pursuant to a Rule 10b5-1 trading plan. Our stock repurchase program may be accelerated, suspended, delayed or discontinued at any time.
13
ORACLE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
August 31, 2024
(Unaudited)
Dividends on Common Stock
In September 2024, our Board of Directors declared a quarterly cash dividend of $
Fiscal 2025 Stock‑Based Awards Activity and Compensation Expense
During the first quarter of fiscal 2025, we issued
The RSUs that were granted during the three months ended August 31, 2024 have similar vesting restrictions and contractual lives and were valued using methodologies of a similar nature as those described in Note 12 of Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended May 31, 2024.
Stock-based compensation expense is included in the following operating expense line items in our condensed consolidated statements of operations:
|
|
Three Months Ended |
|
|||||
(in millions) |
|
2024 |
|
|
2023 |
|
||
Cloud services and license support |
|
$ |
|
|
$ |
|
||
Hardware |
|
|
|
|
|
|
||
Services |
|
|
|
|
|
|
||
Sales and marketing |
|
|
|
|
|
|
||
Research and development |
|
|
|
|
|
|
||
General and administrative |
|
|
|
|
|
|
||
Total stock-based compensation |
|
$ |
|
|
$ |
|
14
ORACLE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
August 31, 2024
(Unaudited)
Our effective tax rates for each of the periods presented are the result of the mix of income and losses earned in various tax jurisdictions that apply a broad range of income tax rates. Our (provision for) benefit from income taxes varied from the tax computed at the U.S. federal statutory income tax rate for the periods presented primarily due to earnings in foreign operations, state taxes, the U.S. research and development tax credit, settlements with tax authorities, the tax effects of stock-based compensation, the Foreign Derived Intangible Income deduction and the tax effect of Global Intangible Low-Taxed Income. Our effective tax rate was
Our net deferred tax assets were $
Domestically, U.S. federal and state taxing authorities are currently examining income tax returns of Oracle and various acquired entities for years through fiscal 2022. Our U.S. federal income tax returns have been examined for all years prior to fiscal 2013 and, with some exceptions, we are no longer subject to audit for those periods. Our U.S. state income tax returns, with some exceptions, have been examined for all years prior to fiscal 2010, and we are no longer subject to audit for those periods.
Internationally, tax authorities for numerous non-U.S. jurisdictions are also examining or have examined returns of Oracle and various acquired entities for years through fiscal 2024. Many of the relevant tax years are at an advanced stage in examination or subsequent controversy resolution processes. With some exceptions, we are generally no longer subject to tax examinations in non-U.S. jurisdictions for years prior to fiscal 2001.
We are under audit by the IRS and various other domestic and foreign tax authorities with regards to income tax and indirect tax matters and are involved in various challenges and litigation in a number of countries, including, in particular, Australia, Brazil, Canada, Egypt, Germany, India, Indonesia, Israel, Italy, Pakistan, Saudi Arabia, South Korea and Spain, where the amounts under controversy are significant. In some, although not all, cases, we have reserved for potential adjustments to our provision for income taxes and accrual of indirect taxes that may result from examinations by, or any negotiated agreements with, these tax authorities or final outcomes in judicial proceedings and we believe that the final outcome of these examinations, agreements or judicial proceedings will not have a material effect on our results of operations. If events occur which indicate payment of these amounts is unnecessary, the reversal of the liabilities would result in the recognition of benefits in the period we determine the liabilities are no longer necessary. If our estimates of the federal, state and foreign income tax liabilities and indirect tax liabilities are less than the ultimate assessment, it could result in a further charge to expense.
We believe that we have adequately provided under GAAP for outcomes related to our tax audits. However, there can be no assurances as to the possible outcomes or any related financial statement effect thereof.
15
ORACLE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
August 31, 2024
(Unaudited)
We have three businesses—cloud and license, hardware and services—each of which is comprised of a single operating segment. All three of our businesses market and sell our offerings globally to businesses of many sizes, government agencies, educational institutions and resellers with a worldwide sales force positioned to offer the combinations that best meet customer needs.
Our cloud and license business engages in the sale, marketing and delivery of our enterprise applications and infrastructure technologies through cloud and on-premise deployment models including our cloud services and license support offerings; and our cloud license and on-premise license offerings. Cloud services and license support revenues are generated from offerings that are typically contracted with customers directly, billed to customers in advance, delivered to customers over time with our revenue recognition occurring over the contractual terms and renewed by customers upon completion of the contractual terms. Cloud services and license support contracts provide customers with access to the latest updates to the applications and infrastructure technologies as they become available and for which the customer contracted and also include related technical support services over the contractual term. Cloud license and on-premise license revenues represent fees earned from granting customers licenses, generally on a perpetual basis, to use our database and middleware and our applications software products within cloud and on-premise IT environments. We generally recognize revenues at the point in time the software is made available to the customer to download and use, which typically is immediate upon signature of the license contract. In each fiscal year, our cloud and license business’ contractual activities are typically highest in our fourth fiscal quarter and the related cash flows are typically highest in the following quarter (i.e., in the first fiscal quarter of the next fiscal year) as we receive payments from these contracts.
Our hardware business provides infrastructure technologies including Oracle Engineered Systems, servers, storage, industry-specific hardware, operating systems, virtualization, management and other hardware-related software to support diverse IT environments. Our hardware business also offers hardware support, which provides customers with software updates for the software components that are essential to the functionality of their hardware products and can also include product repairs, maintenance services and technical support services that are typically delivered and recognized ratably over the contractual term.
Our services business provides services to customers and partners to help maximize the performance of their investments in Oracle applications and infrastructure technologies.
We do not track our assets for each business. Consequently, it is not practical to show assets by operating segment.
16
ORACLE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
August 31, 2024
(Unaudited)
The following table presents summary results for each of our three businesses:
|
|
Three Months Ended |
|
|||||
(in millions) |
|
2024 |
|
|
2023 |
|
||
Cloud and license: |
|
|
|
|
|
|
||
Revenues |
|
$ |
|
|
$ |
|
||
Cloud services and license support expenses |
|
|
|
|
|
|
||
Sales and marketing expenses |
|
|
|
|
|
|
||
Margin(1) |
|
$ |
|
|
$ |
|
||
Hardware: |
|
|
|
|
|
|
||
Revenues |
|
$ |
|
|
$ |
|
||
Hardware products and support expenses |
|
|
|
|
|
|
||
Sales and marketing expenses |
|
|
|
|
|
|
||
Margin(1) |
|
$ |
|
|
$ |
|
||
Services: |
|
|
|
|
|
|
||