UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended November 30, 2022

or

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission File Number: 001-35992

Oracle Corporation

(Exact name of registrant as specified in its charter)

Delaware	54-2185193
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
2300 Oracle Way Austin, Texas	78741
(Address of principal executive offices)	(Zip Code)

(737) 867-1000

(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
Common Stock, par value $0.01 per share  3.125% senior notes due July 2025	ORCL —	New York Stock Exchange  New York Stock Exchange

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.  Yes    ☒    No  ☐

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).  Yes    ☒  No  ☐

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.

Large accelerated filer   ☒	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 December 7, 2022 was: 2,696,253,000.

ORACLE CORPORATION 

FORM 10-Q QUARTERLY REPORT

TABLE OF CONTENTS

		Page
PART I.	FINANCIAL INFORMATION	3
Item 1.	Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets as of November 30, 2022 and May 31, 2022	3
	Condensed Consolidated Statements of Operations for the Three and Six Months Ended November 30, 2022 and 2021	4
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended November 30, 2022 and 2021	5
	Condensed Consolidated Statements of Stockholders’ Deficit for the Three and Six Months Ended November 30, 2022 and 2021	6
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended November 30, 2022 and 2021	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	45
Item 4.	Controls and Procedures	45
PART II.	OTHER INFORMATION	47
Item 1.	Legal Proceedings	47
Item 1A.	Risk Factors	47
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	47
Item 6.	Exhibits	48
	Signatures	49

Cautionary Note on Forward-Looking Statements

For purposes of this Quarterly Report, the terms “Oracle,” “we,” “us” and “our” refer to Oracle Corporation and its consolidated subsidiaries. This Quarterly Report on Form 10-Q 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 (Exchange Act), and Section 27A of the Securities Act of 1933, as amended (Securities Act). These include, among other things, statements regarding:

• our expectations regarding the impacts on our business as a result of the global COVID-19 pandemic;

• our expectation that we may acquire, and realize the anticipated benefits of acquiring, companies, products, services and technologies to further our corporate strategy as compelling opportunities become available;

• our expectation that, on a constant currency basis, our total cloud and license revenues generally will continue to increase due to expected growth in our cloud services and license support offerings, and continued demand for our cloud license and on-premise license offerings;

• our expectation that substantially all of our customers will renew their license support contracts annually;

• our expectation that our hardware business will have lower operating margins as a percentage of revenues than our cloud and license business;

• our expectation that we will continue to make significant investments in research and development, and our belief that research and development efforts are essential to maintaining our competitive position;

• our expectation that our international operations will continue to provide a significant portion of our total revenues and expenses;

• our expectation that variable expenditures that were curtailed primarily in response to COVID-19 may normalize in future periods provided global economic and health conditions improve;

• our expectation that the proportion of our cloud services revenues relative to our total revenues will continue to increase;

• the sufficiency of our sources of funding for working capital, capital expenditures, contractual obligations, acquisitions, dividends, stock repurchases, debt repayments and other matters;

• our belief that we have adequately provided under U.S. generally accepted accounting principles for outcomes related to our tax audits and that the final outcome of our tax-related examinations, agreements or judicial proceedings will not have a material effect on our results of operations, and our belief that our net deferred tax assets will likely be realized in the foreseeable future;

• our belief that the outcome of certain legal proceedings and claims to which we are a party will not, individually or in the aggregate, result in losses that are materially in excess of amounts already recognized, if any;

• our expectation that certain litigation related charges and other expenses will not recur;

• the possibility that certain legal proceedings to which we are a party could have a material impact on our financial position or results of operations;

• the timing and amount of expenses we expect to incur;

• the cost savings we expect to realize pursuant to our Fiscal 2022 Oracle Restructuring Plan;

1

• declarations of future cash dividend payments and the timing and amount of future stock repurchases, including our expectation that the levels of our future stock repurchase activity may be modified in comparison to past periods in order to use available cash for other purposes;

• our expectations regarding the impact of recent accounting pronouncements on our consolidated financial statements;

• our ability to predict revenues, particularly certain cloud license and on-premise license revenues and hardware revenues;

• the percentages of remaining performance obligations that we expect to recognize as revenues over respective future periods;

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 “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “strives,” “endeavors,” “estimates,” “will,” “should,” “is designed to” 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 our fiscal year ended May 31, 2022 and our other Quarterly Reports on Form 10-Q to be filed by us in our fiscal 2023, which runs from June 1, 2022 to May 31, 2023.

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 November 30, 2022 and May 31, 2022

(Unaudited)

(in millions, except per share data)	November 30, 2022			May 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	6,813		$	21,383
Marketable securities		537			519
Trade receivables, net of allowances for credit losses of $403 and $362 as of November 30, 2022 and May 31, 2022, respectively		6,197			5,953
Prepaid expenses and other current assets		4,014			3,778
Total current assets		17,561			31,633
Non-current assets:
Property, plant and equipment, net		14,351			9,716
Intangible assets, net		11,593			1,440
Goodwill, net		61,513			43,811
Deferred tax assets		12,091			12,782
Other non-current assets		11,360			9,915
Total non-current assets		110,908			77,664
Total assets	$	128,469		$	109,297
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Notes payable and other borrowings, current	$	9,746		$	3,749
Accounts payable		1,647			1,317
Accrued compensation and related benefits		1,780			1,944
Deferred revenues		8,705			8,357
Other current liabilities		5,228			4,144
Total current liabilities		27,106			19,511
Non-current liabilities:
Notes payable and other borrowings, non-current		81,173			72,110
Income taxes payable		11,128			12,210
Deferred tax liabilities		7,165			6,031
Other non-current liabilities		5,673			5,203
Total non-current liabilities		105,139			95,554
Commitments and contingencies
Oracle Corporation stockholders' deficit:
Preferred stock, $0.01 par value—authorized: 1.0 shares; outstanding: none		—			—
Common stock, $0.01 par value and additional paid in capital—authorized: 11,000 shares; outstanding: 2,695 shares and 2,665 shares as of November 30, 2022 and May 31, 2022, respectively		28,148			26,808
Accumulated deficit		(30,617	)		(31,336	)
Accumulated other comprehensive loss		(1,777	)		(1,692	)
Total Oracle Corporation stockholders' deficit		(4,246	)		(6,220	)
Noncontrolling interests		470			452
Total stockholders' deficit		(3,776	)		(5,768	)
Total liabilities and stockholders' deficit	$	128,469		$	109,297

See notes to condensed consolidated financial statements.

3

ORACLE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three and Six Months Ended November 30, 2022 and 2021

(Unaudited)

	Three Months Ended November 30,						Six Months Ended November 30,
(in millions, except per share data)	2022			2021			2022			2021
Revenues:
Cloud services and license support	$	8,598		$	7,554		$	17,015		$	14,925
Cloud license and on-premise license		1,435			1,237			2,339			2,049
Hardware		850			767			1,613			1,530
Services		1,392			802			2,753			1,583
Total revenues		12,275			10,360			23,720			20,087
Operating expenses:
Cloud services and license support(1)		1,891			1,259			3,626			2,472
Hardware(1)		286			229			536			474
Services(1)		1,181			671			2,233			1,315
Sales and marketing(1)		2,216			1,954			4,393			3,808
Research and development		2,158			1,754			4,251			3,438
General and administrative		366			319			777			618
Amortization of intangible assets		907			299			1,826			603
Acquisition related and other		62			4,667			103			4,687
Restructuring		137			32			281			70
Total operating expenses		9,204			11,184			18,026			17,485
Operating income (loss)		3,071			(824	)		5,694			2,602
Interest expense		(856	)		(679	)		(1,643	)		(1,384	)
Non-operating (expenses) income, net		(71	)		7			(251	)		(34	)
Income (loss) before income taxes		2,144			(1,496	)		3,800			1,184
(Provision for) benefit from income taxes		(403	)		249			(511	)		25
Net income (loss)	$	1,741		$	(1,247	)	$	3,289		$	1,209
Earnings (loss) per share:
Basic	$	0.65		$	(0.46	)	$	1.22		$	0.44
Diluted	$	0.63		$	(0.46	)	$	1.20		$	0.43
Weighted average common shares outstanding:
Basic		2,695			2,694			2,690			2,731
Diluted		2,746			2,694			2,747			2,823

⁽¹⁾ Exclusive of amortization of intangible assets, which is shown separately.

See notes to condensed consolidated financial statements.

4

ORACLE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

For the Three and Six Months Ended November 30, 2022 and 2021

(Unaudited)

	Three Months Ended November 30,					Six Months Ended November 30,
(in millions)	2022		2021			2022			2021
Net income (loss)	$	1,741	$	(1,247	)	$	3,289		$	1,209
Other comprehensive income (loss), net of tax:
Net foreign currency translation gains (losses)		95		(222	)		(194	)		(445	)
Net unrealized gains (losses) on defined benefit plans		—		2			(1	)		4
Net unrealized gains on cash flow hedges		93		—			110			—
Total other comprehensive income (loss), net		188		(220	)		(85	)		(441	)
Comprehensive income (loss)	$	1,929	$	(1,467	)	$	3,204		$	768

See notes to condensed consolidated financial statements.

5

ORACLE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

For the Three and Six Months Ended November 30, 2022 and 2021

(Unaudited)

	Three Months Ended November 30,						Six Months Ended November 30,
(in millions, except per share data)	2022			2021			2022			2021
Common stock and additional paid in capital
Balance, beginning of period	$	27,224		$	25,534		$	26,808		$	26,533
Common stock issued		146			157			661			305
Stock-based compensation		909			681			1,659			1,226
Repurchases of common stock		(61	)		(711	)		(134	)		(1,583	)
Other, net		(70	)		(70	)		(846	)		(890	)
Balance, end of period	$	28,148		$	25,591		$	28,148		$	25,591
Accumulated deficit
Balance, beginning of period	$	(31,134	)	$	(25,679	)	$	(31,336	)	$	(20,120	)
Repurchases of common stock		(361	)		(6,289	)		(847	)		(13,417	)
Cash dividends declared		(863	)		(861	)		(1,723	)		(1,748	)
Net income (loss)		1,741			(1,247	)		3,289			1,209
Balance, end of period	$	(30,617	)	$	(34,076	)	$	(30,617	)	$	(34,076	)
Other stockholders' deficit, net
Balance, beginning of period	$	(1,539	)	$	(985	)	$	(1,240	)	$	(461	)
Other comprehensive income (loss), net		188			(220	)		(85	)		(441	)
Other, net		44			32			18			(271	)
Balance, end of period	$	(1,307	)	$	(1,173	)	$	(1,307	)	$	(1,173	)
Total stockholders' deficit	$	(3,776	)	$	(9,658	)	$	(3,776	)	$	(9,658	)
Cash dividends declared per common share	$	0.32		$	0.32		$	0.64		$	0.64

See notes to condensed consolidated financial statements.

6

ORACLE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Six Months Ended November 30, 2022 and 2021

(Unaudited)

	Six Months Ended November 30,
(in millions)	2022			2021
Cash flows from operating activities:
Net income	$	3,289		$	1,209
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		1,138			913
Amortization of intangible assets		1,826			603
Deferred income taxes		(852	)		(820	)
Stock-based compensation		1,659			1,226
Other, net		289			(176	)
Changes in operating assets and liabilities, net of effects from acquisitions:
Decrease in trade receivables, net		516			789
Decrease in prepaid expenses and other assets		121			263
Decrease in accounts payable and other liabilities		(785	)		(918	)
Decrease in income taxes payable		(327	)		(849	)
Increase (decrease) in deferred revenues		369			(531	)
Net cash provided by operating activities		7,243			1,709
Cash flows from investing activities:
Purchases of marketable securities and other investments		(603	)		(9,631	)
Proceeds from sales and maturities of marketable securities and other investments		462			21,617
Acquisitions, net of cash acquired		(27,799	)		(50	)
Capital expenditures		(4,154	)		(1,987	)
Net cash (used for) provided by investing activities		(32,094	)		9,949
Cash flows from financing activities:
Payments for repurchases of common stock		(1,000	)		(15,001	)
Proceeds from issuances of common stock		661			305
Shares repurchased for tax withholdings upon vesting of restricted stock-based awards		(895	)		(890	)
Payments of dividends to stockholders		(1,723	)		(1,748	)
Proceeds from issuances of commercial paper, net of repayments		1,880			—
Proceeds from issuances of senior notes and other borrowings, net of issuance costs		28,280			—
Repayments of senior notes and other borrowings		(16,692	)		(5,750	)
Other, net		(56	)		(437	)
Net cash provided by (used for) financing activities		10,455			(23,521	)
Effect of exchange rate changes on cash and cash equivalents		(174	)		(297	)
Net decrease in cash and cash equivalents		(14,570	)		(12,160	)
Cash and cash equivalents at beginning of period		21,383			30,098
Cash and cash equivalents at end of period	$	6,813		$	17,938
Non-cash financing activities:
Fair values of stock awards assumed in connection with acquisitions	$