THE SECURITIES EXCHANGE ACT OF 1934

For the transition period fromto        

Commission file number:File Number: 001-35992

Oracle Corporation

(Exact name of registrant as specified in its charter)

(650) 506-7000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    YES  x☒    NO  ¨☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    YES ¨☐    NO  x☒

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  x☒    NO  ¨☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted 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 and post such files).    YES  x☒    NO  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ¨☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”filer,” “smaller reporting company” and “smaller reporting“emerging growth company” in Rule 12b-2 of the Exchange Act.

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  x☒

The aggregate market value of the voting stock held by non-affiliates of the registrant was $118,269,080,000$107,968,269,000 based on the number of shares held by non-affiliates of the registrant as of May 31, 2016,2019, and based on the closing sale price of common stock as reported by the New York Stock Exchange on November 30, 2015,2018, which is the last business day of the registrant’s most recently completed second fiscal quarter. This calculation does not reflect a determination that persons are affiliates for any other purposes.

Number of shares of common stock outstanding as of June 15, 2016: 4,122,730,000.17, 2019: 3,335,819,000.

Documents Incorporated by Reference:

Portions of the registrant’sregistrant's definitive proxy statement relating to its 20162019 annual stockholders’stockholders' meeting are incorporated by reference into Part III of this Annual Report on Form 10-K where indicated.indicated.

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ORACLE CORPORATION

FISCAL YEAR 20162019

FORM 10-K

ANNUAL REPORT

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Cautionary Note on Forward-Looking Statements

For purposes of this Annual Report, the terms “Oracle,” “we,” “us” and “our” refer to Oracle Corporation and its consolidated subsidiaries. This Annual Report on Form 10-K 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 21 of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. These include, among other things, statements regarding:

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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 Private Securities Litigation Reform Act of 1995 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 elsewhere in this Annual Report and as may be updated in filings we make from time to time with the U.S. Securities and Exchange Commission (the SEC), including theour Quarterly Reports on Form 10-Q to be filed by us in our fiscal year 2017,2020, which runs from June 1, 20162019 to May 31, 2017.2020.

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 Annual 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 Annual Report.

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PARTPART I

Oracle Corporation provides products and services that address all aspects of corporateenterprise information technology (IT) environments—application, platformenvironments. Our products and infrastructure.services include applications and infrastructure offerings that are delivered worldwide through a variety of flexible and interoperable IT deployment models. These models include on-premise deployments, cloud-based deployments, and hybrid deployments (an approach that combines both on-premise and cloud-based deployment) such as our Oracle Cloud at Customer offering (an instance of Oracle Cloud in a customer’s own data center). Accordingly, we offer choice and flexibility to our customers and facilitate the product, service and deployment combinations that best suit our customers’ needs. Our customers include businesses of many sizes, government agencies, educational institutions and resellers that we market and sell to directly through our worldwide sales force and indirectly through the Oracle Partner Network.

Oracle Cloud Software-as-a-Service and Infrastructure-as-a-Service (SaaS and IaaS, respectively, and collectively, Oracle Cloud Services) offerings provide a comprehensive and fully integrated stack of application, platform, computeapplications and storageinfrastructure services in all three primary layers of the cloud: Software asdelivered via a Service (SaaS), Platform as a Service (PaaS) and Infrastructure as a Service (IaaS). Our on-premise offerings includecloud-based deployment model. Oracle database and middleware software, application software, hardware (Oracle Engineered Systems, servers, storage, networking and industry-specific products), and related support and services. We provide our cloud and on-premise offerings to over 400,000 worldwide customers via deployment models that best suit their needs.

Our comprehensive and fully integrated stack of SaaS, PaaS and IaaS offeringsCloud Services integrate the software, hardware and services on the customers’a customer’s behalf in a cloud-based IT environmentsenvironment that we deploy, supportOracle deploys, upgrades, supports and managemanages for the customer. Our integrated Oracle Cloud offeringsServices are designed to be rapidly deployable to enable customers shorter time to innovation; intuitive for casual and experienced users; easily maintainable to reduce upgrade, integration and testing work; connectable among differing deployment models to enable interchangeability and extendibility between cloud and on-premise IT environments; compatible to easily move workloads between on-premise IT environments and the Oracle Cloud;Cloud and other IT environments; cost-effective by requiring lower upfront customer investment; and secure, standards-based and reliable. We are a leader in

Oracle cloud license and on-premise license deployment offerings include Oracle Applications, Oracle Database and Oracle Middleware software offerings, among others, which customers deploy using IT infrastructure from the core technologies of cloud IT environments, including database and middleware software as well as enterprise applications, virtualization, clustering, large-scale systems management and related infrastructure. Our products and services are the building blocks of our Oracle Cloud services, our partners’ cloud services and our customers’ cloud IT environments.

In addition to providing a broad spectrum of cloud offerings, we develop and sell our products and services to our customers worldwide for use inor their global data centers andown cloud-based or on-premise IT environments. AnSubstantially all customers, at their option, purchase license support contracts when they purchase an Oracle license.

Oracle hardware product offerings include Oracle Engineered Systems, servers, storage and industry-specific products, among others, and customers generally opt to purchase hardware support contracts when they purchase Oracle hardware.

Oracle also offers services to assist our customers and partners to maximize the performance of their Oracle purchases.

Providing choice and flexibility to Oracle customers as to when and how they deploy Oracle applications and infrastructure technologies is an important element of our corporate strategy. We believe that offering customers broad, comprehensive, flexible and interoperable deployment models for Oracle applications and infrastructure technologies is important to our growth strategy isand better addresses customer needs relative to continue our competitors, many of whom provide fewer offerings and more restrictive deployment models.

Our investments in, and innovation with respect to, ourOracle products and services that we offer through our cloud and on-premise software,license, hardware and services businesses.businesses (described further below) are another important element of our corporate strategy. In fiscal 2016, 20152019, 2018 and 2014,2017, we invested $5.8$6.0 billion, $5.5$6.1 billion and $5.2$6.2 billion, respectively, in research and development to enhance our existing portfolio of offerings and products and to develop new technologies and services. We have a deep understanding as to how all components within IT environments—application, platformapplications and infrastructure—infrastructure technologies interact and function with one another. We focus our development efforts on improving the performance, security, operation and integration of these differingour technologies to make themimprove the computing performance of our products and services relative to our competitors’ offerings, to be more cost-effective, and to be easier for customers to deploy, manage and maintain for our customersmaintain. For example, we believe that Oracle applications and to improve their computingplatform technologies, such as the Oracle Database, when combined with other Oracle infrastructure technologies deliver improved performance at a lower cost relative to our competitors.competing infrastructure technologies and provide customers flexibility through a choice of cloud-based and on-premise deployment models. After the initial purchase of Oracle products and services, our customers can continue to take advantage ofbenefit from our research and development investmentsefforts and deep IT expertise by purchasingelecting to purchase and renewingrenew Oracle support offerings for their license and hardware deployments, which may include product enhancements that we periodically deliver to our Oracle E-Business Suite, Siebel, PeopleSoftproducts, and JD Edwards application software products, among others, or by renewing their SaaS, PaaS and IaaSOracle Cloud Services contracts with us.

As customers deploy with the Oracle Cloud, many are adopting a hybrid IT model whereby certain3

Table of their IT resources are deployed and managed through the Oracle Cloud, while other of their IT resources are deployed and managed on-premise, and both sets of resources can be managed as one. Our recently introduced Oracle Cloud at Customer provides an additional deployment model that customers may opt for and utilizes the Oracle Cloud MachineContents

Index to bring certain Oracle Cloud PaaS and IaaS offerings to a customer’s on-premise IT environment to meet data sovereignty, data residency, data protection and regulatory business policy requirements, among others. We focus the engineering of our products and services to best connect different deployment models to enable flexibility, ease, agility, compatibility, extensibility and seamlessness.Financial Statements

A

Our selective and active acquisition program is another important element of our corporate strategy. We believe that our acquisitions enhance the products and services that we can offer to customers, expand our customer base, provide greater scale to accelerate innovation, grow our revenues and earnings, and increase stockholder value. In recent years, we have collectively invested billions of dollars to acquire a number of companies, products, services and technologies that add to, are complementary to, or have otherwise enhanced our existing offerings. We expect to continue to acquire companies, products, services and technologies to further our corporate strategy.

We have three businesses that deliver our application, platform and infrastructure technologies: cloud and on-premise software, hardware and services. These businesses can be further divided into certain operating segments (Note 16 of Notes to Consolidated Financial Statements, included elsewhere in this Annual Report, provides additional information related to our operating segments):businesses:

Management’s Discussion and 10%Analysis of Financial Condition and Results of Operations and Note 15 of Notes to Consolidated Financial Statements, both included elsewhere in this Annual Report, provide additional information related to our total revenues in fiscal 2014.businesses and operating segments.

Oracle Corporation was incorporated in 2005 as a Delaware corporation and is the successor to operations originally begun in June 1977.

Application, PlatformApplications and Infrastructure Technologies

Oracle’s comprehensive portfolio of application, platformapplications and infrastructure technologies is designed to address an organization’s IT environment needs including business process, infrastructure and applications development IT requirements. Our applications, platform and infrastructurerequirements, among others. Oracle technologies are based upon industry standards and are designed to be enterprise-grade, reliable, scalable and secure. We offer theseOracle applications and infrastructure technologies including database and middleware software as well as enterprise applications, virtualization, clustering, large-scale systems management and related infrastructure products and services are the building blocks of Oracle Cloud Services, our partners’ cloud services, and our customers’ cloud IT environments. Oracle applications and infrastructure offerings are marketed and sold through our cloud and on-premise software,license, hardware, and services businesses and deliver themare delivered through flexible and interoperablethe Oracle Cloud, or through other IT deployment models thatincluding cloud-based, hybrid and on-premise. We believe Oracle applications and infrastructure offerings enable customerflexibility, interoperability and choice andto best meet customer IT needs.

ApplicationWe believe that our Oracle Cloud Services offerings are opportunities for us to expand our cloud and Platform Technologies

Our applicationlicense business. We believe that our customers increasingly recognize the value of access to cloud-based applications and platform technologies consist of comprehensive on-premiseinfrastructure capabilities via a lower cost, rapidly deployable, flexible and cloud software offerings includinginteroperable services model that Oracle manages and maintains on the customer’s behalf. We believe that we can market and sell our SaaS and PaaSIaaS offerings Oracle Applications, Oracle Database, Oracle Fusion Middleware and Java, among others, and related support.

Our application and platform technologies are substantially built on standards-based architectures that are designedtogether to help customers reducemigrate their extensive installed base of on-premise applications and infrastructure technologies to the Oracle Cloud while at the same time reaching a broader ecosystem of developers and partners. We also believe we can market our SaaS and IaaS services to small and medium-sized businesses and non-IT lines of business purchasers due to the highly available, intuitive design, low touch and low cost characteristics of the Oracle Cloud.

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In recent periods, customer demand for our applications and complexity of their IT infrastructure. Our commitment to industry standards results in software that works ininfrastructure technologies delivered through our Oracle Cloud Services deployment models has increased. To address customer environments with Oracle or non-Oracle hardware or software componentsdemand and that can be adapted to meet specific industry or business needs. This approach is designed to supportenable customer choice, we have introduced certain programs for customers to pivot their applications and reduce customer risk. Our softwareinfrastructure licenses and license support contracts to the Oracle Cloud for new deployments and to migrate to and expand with the Oracle Cloud for their existing workloads. We expect these trends to continue.

Oracle License Support

Oracle license support offerings are substantially designedmarketed and sold as a part of our cloud and license business. Substantially all of our customers opt to operate on both single serverpurchase license support contracts when they purchase Oracle applications and clustered server configurations for cloudinfrastructure licenses to run within the Oracle Cloud or other cloud-based and on-premise IT environments,environments. We believe our license support offerings protect and toenhance our customers’ investments in Oracle applications and infrastructure technologies because they provide proactive and personalized support a choice of operating systemsservices including Oracle Solaris, Lifetime Support and unspecified license enhancements and upgrades during the term of the support period. Substantially all license support customers renew their support contracts with us upon expiration in order to continue to benefit from technical support services and the periodic issuance of unspecified updates and enhancements, which current license support customers are entitled to receive. Our license support contracts are generally priced as a percentage of the net fees paid by the customer to access the license and are typically one year in duration.

Applications Technologies

Oracle Linux, Microsoft Windows and third-party UNIX products, among others.

Our application and platformapplications technologies are marketed, sold and delivered through our cloud and on-premise softwarelicense business which includesand represented 35%, 34% and 33% of our cloud software and on-premise software segmentlicense business revenues during fiscal 2019, 2018 and software license updates and product support segment, among others. Cloud software and on-premise software revenues represented 25%, 26% and 28%2017, respectively. Oracle applications technologies consist of our total revenues in fiscal 2016, 2015 and 2014, respectively. Software license updates and product support revenues represented 51%, 49% and 47% of our total revenues in fiscal 2016, 2015 and 2014, respectively.

Application Technologies

Our application technologies are available through subscription tocomprehensive cloud-based offerings including our Oracle Cloud SaaS offerings, or bywhich are available for customers as a subscription, and Oracle Applications license offerings, which are available for customers to purchase for use in Oracle Cloud IaaS, other cloud-based, and on-premise IT environments with the option to purchase of an on-premise software license.related license support. Regardless of the deployment model selected, our applicationapplications technologies are designed to reduce the risk, cost and complexity of our customers’ IT infrastructures, while supporting customer choice with flexible deployment models that readily enable performance, agility, compatibility and extendibility.

Our applicationapplications technologies are generally designed using an industry standards-based architecturestandard architectures to manage and automate core business functions across the enterprise, as well as to help customers differentiate and innovate in those processes unique to their industries or organizations. In addition toWe offer applications that are deployable to meet a number of business automation requirements across a broad range of industries, weindustries. We also offer industry-specific applications through a focused strategy of investments in internal development and strategic acquisitions. Our industry-specific applicationsacquisitions, which provide solutions to customers in the communications, engineeringconstruction and construction,engineering, financial services, healthcare,health sciences, hospitality, and retail, manufacturing, public sector, retail and utilities, sectors, among others. Our ability to offer applications to address industry-specific complex processes provides us an opportunity to expand our customers’ knowledge of our broader product offerings and address customer-specific technology challenges.other industries.

Oracle Cloud Software as a Service (SaaS)

OurOracle’s broad spectrum of Oracle Cloud SaaS offerings provides customers a choice of software applications that are delivered via a cloud-based IT environment that we host, manage, upgrade and support.support, and that customers access by entering into a subscription agreement with us for a stated period. Our SaaS offerings are built upon open industry standards such as SQL, Java and HTML5 for easier application accessibility, integration and development. Our SaaS offerings include a broad suite of modular, next-generation cloud software applications that span core business functions including enterprise resource planning (ERP), human capital management (HCM), enterprise resource planning (ERP), customer experience (CX), and supply chain management (SCM), among others. We also offer a number of cloud-based industry solutions to address specific customer needs within certain industries.

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We believe that the comprehensiveness and breadth of our SaaS offerings provide greater benefit to our customers and differentiate us from many of our competitors that offer more limited or specialized cloud-based applications. Our SaaS offerings are designed to be interoperable with one another, thereby limitingsupport connected business processes in the integrationcloud and tuningare centered on a responsive and flexible business core and a common data model. We believe our cloud ERP offerings drive adoption of multiple cloud applications from multiple vendors.our other SaaS offerings as our customers realize benefits of a common data model utilized across our SaaS offerings. Our SaaS offerings are designed to deliver a secure data isolation architecture and flexible upgrades,upgrades; self-service access controls for users,users; a Service-Oriented Architecture (SOA) for integration with on-premise systems,; built-in social, mobile and business insight capabilities,capabilities; and a high performance, high availability infrastructure based on our infrastructure technologies, including Oracle Engineered Systems. These SaaS capabilities are designed to simplify IT environments, reduce time to implementation and risk, provide an intuitive user experience for casual and experienced users, and enable customers to focus resources on business growth opportunities.

Our SaaS offerings are also designed to incorporate emerging technologies such as Internet-of-Things (IoT), Artificial Intelligence (AI), Machine Learning (ML), blockchain, and advances in the “human interface” and how users interact with Oracle Human Capital Management Cloud SaaS offerings.

Our Oracle HCM cloud applications areCloud SaaS offerings include, among others:

Oracle Applications

WeCustomers have the ability to license Oracle Applications software for use in data centers and relatedwithin the Oracle Cloud or within their own cloud-based or on-premise IT environmentsenvironments. Oracle Applications are designed to manage and automate core business functions across the enterprise, including human capital and talent management; customer experience and customer relationship management;HCM; ERP; financial management and governance, risk and compliance; procurement; project portfolio management; supply chain management;SCM; business analytics and enterprise performance management; CX and customer relationship management; and industry-specific applications, among others. Our Oracle Applications software strategy is designed to

As described above, we provide customers with complete choicean option to purchase license support contracts in connection with the purchase of Oracle Applications licenses.

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Infrastructure Technologies

Oracle infrastructure technologies are marketed, sold and a secure path to benefit from the latest technological advances.delivered through our cloud and license business and through our hardware business.

Our Oracle Applications Unlimited program is Oracle’s commitment to ongoing investmentcloud and innovation in our current application offerings including our Oracle E-Business Suite, Siebel, PeopleSoft and JD Edwards application software products, among others. Since announcinglicense business’ infrastructure technologies include the Oracle Applications Unlimited program in 2005, we have delivered major releases of all application product lines by combining business functionality with innovative technologies, providing customers with more adaptive industry processes, business intelligence and optimal end-user productivity.

Platform Technologies

Our comprehensive platform technologies include license and subscription-based database, middleware and development software offerings including Oracle Database, software,which is the world’s most popular enterprise database, anddatabase; Java, which is the computer industry’s most widely-used software development language,language; middleware; and development tools, among others. These technologies are available through subscription to our Oracle Cloud IaaS offerings or with the purchase of a license to run within the Oracle Cloud or other cloud-based and on-premise IT environments and related license support at the customer’s option. Our platforminfrastructure technologies are designed to provide a cost-effective, standards-based, high-performance platform for runningplatforms and managinginfrastructure to develop, run, integrate, manage and extend business applications for midsize businesses, as well as large, global enterprises.applications. Our cloud and license infrastructure technologies also provide cloud-based compute, storage and networking capabilities through our Oracle Cloud IaaS offerings. Our customers are increasingly focused on developing innovations and reducing the total cost of their IT infrastructure, and we believe that our platformOracle infrastructure technologies help them achieve this goal.

In addition to utilizing our cloud and license business’ infrastructure technologies to modernize approaches to their IT environments, customer interest is increasing for emerging technologies such as IoT, chatbots and AI/ML to automate business processes, reduce human error and provide a platform to build new and innovative applications. We deliver emerging technologies through certain of our applications and infrastructure technologies, including as a part of Oracle Autonomous Data Warehouse Cloud Service, which is described further below.

Our hardware business’ infrastructure technologies include hardware products and certain unique hardware-related software offerings, such as Oracle Engineered Systems, servers, storage, industry-specific hardware, virtualization software, operating systems, management software, and related hardware services including support at the customer’s option.

We design our infrastructure technologies to work in customer environments that may include other Oracle or non-Oracle hardware or software components. Our flexible and open approach provides Oracle customers a choice as to how they can utilize and deploy Oracle infrastructure technologies: through the use of Oracle Cloud offerings; in our customers’ data centers; or a hybrid combination of these two deployment models, such as in the Oracle Cloud at Customer deployment model. We focus on the operation and integration of Oracle infrastructure technologies to make them easier to deploy, extend, interconnect, manage and maintain for our customers and to improve computing performance relative to our competitors’ offerings. For example, we design Oracle Engineered Systems to integrate multiple Oracle technology components to work together to deliver improved performance, availability, security and operational efficiency relative to our competitors’ products.

Oracle Infrastructure Technologies – Cloud and License Business Offerings

Oracle infrastructure technologies are marketed, sold and delivered through our cloud and license business and represented 65%, 66% and 67% of our cloud and license business’ total revenues in fiscal 2019, 2018 and 2017, respectively.

Oracle Cloud Infrastructure as a Service (IaaS)

Oracle Cloud IaaS is based upon Oracle’s Generation 2 Cloud technology and is designed to deliver platform, compute, storage and networking services, among others, that Oracle runs, manages, upgrades and supports on behalf of the customer for a fee for a stated time period, or for certain of our IaaS services, on a “pay-as-you-go” basis for services at a specified rate. By utilizing Oracle Cloud IaaS, customers leverage the Oracle Cloud for enterprise-grade, scalable, cost-effective and secure infrastructure technologies that are designed to accommodate demanding, non-stop business environments using clustered middlewarebe rapidly deployable while reducing the amount of time and database servers and storage. These clusters are designed to scale incrementally as required to address our customers’resources normally consumed by IT capacity requirements, satisfy their planning and procurement needs, support their business applications with a standardized platform architecture, reduce their risk of data loss and ITprocesses within on-premise environments. Oracle Generation 2 Cloud infrastructure downtime and efficiently utilize available IT resources to meet quality of service expectations.

Oracle Cloud Platform as a Service (PaaS)

Oracle Cloud Platform as a Servicetechnology is designed to be differentiated from other cloud vendors to provide better security by separating control code from customer data on separate

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computers with a broad suitedifferent architecture. We continue to invest in Oracle Cloud IaaS to expand the catalog of tools and services we provide to rapidlysimplify the process of migrating workloads to the Oracle Cloud, as well as to provide customers with the ability to run workloads across on-premise IT environments and the Oracle Cloud in a hybrid deployment model. Customers use Oracle Cloud IaaS offerings to build and deploy applications—operate new cloud-native applications, to run new workloads and to move their existing Oracle or extendnon-Oracle workloads to the Oracle Cloud SaaS applications—using Oracle’s enterprise-grade platform technologies. Customersfrom their data centers or from other cloud-based IT environments, among other uses.

Oracle customers and partners can use ourutilize Oracle’s open, standards-based PaaSIaaS offerings for platform related services that are based on Java, Oracle Fusion Middleware, and ourupon the Oracle Database, Cloud service,Oracle Middleware including Java, open source, and other tools for a variety of use cases across data management, applicationapplications development, enterprise integration, content sharing and collaboration, visual analysis reporting andexperience, business analytics, IT operations management.management and security.

We believe our PaaS offerings are a large opportunityOracle customers and partners also utilize Oracle Cloud IaaS for usenterprise-grade compute, storage and networking services. Our Oracle Cloud IaaS offerings’ compute services range from virtual machines to expand our cloud and on-premise software business. We believe our customers increasingly recognize the value of access to Oracle Database, Oracle Fusion Middleware and Java via a low cost, rapidly deployable, flexible and interoperable services model that Oracle manages and maintains on their behalf. We believe that we can market and sell our PaaSGPU-based offerings to our extensive installed basebare metal servers and include options for dense I/O workloads and high performance computing. Oracle Cloud IaaS also includes a range of database, middleware,storage offerings including block, object and applications customers,archive storage services, as well as containers, networking and reach a broader ecosystem of developers and partners. We also believe we can expand the market of our PaaSedge services to small to medium-sized enterprises and non-IT lineshelp mitigate denial of business purchasers.service attacks on customer networks.

Oracle Data Management Cloud

Oracle Data Management Cloud is designed to provide a broad and integrated set of capabilities for building, deploying, and managing data-driven applications. Our Oracle Data Management Cloud offerings include the following, among others:

Oracle Application Development Cloud

Oracle Application Development Cloud offerings are based upon an end-to-end Java EE framework and are designed to simplify application development by providing out-of-the-box infrastructure services and visual and declarative development experiences. Our Oracle Application Development Cloud offerings include the following, among others:

Oracle Integration Cloud

Oracle Integration Cloud is designed to provide organizations with a unified and comprehensive solution to integrate disparate cloud and on-premise applications. Our Oracle Integration Cloud offerings include, among others:

Oracle Content and Process Cloud

Oracle Content and Process Cloud is designed to enable business users to easily collaborate, simplify business automation and communicate more effectively and includes the following offerings, among others:

Oracle Business Analytics Cloud

Oracle Business Analytics Cloud delivers business analytics across the entire enterprise and includes the following offerings, among others:

Oracle Management Cloud

Oracle Management Cloud is a suite of integrated monitoring, management, and analytics cloud services that is designed to provide real-time analysis and technical and business insights. Oracle Management Cloud includes the following offerings, among others:

Oracle Cloud at Customer

Oracle Cloud at Customer utilizes the Oracle Cloud Machine to bring certain Oracle Cloud PaaS and IaaS offerings to a customer’s on-premise IT environment on a subscription basis. As an on-premise implementation of the Oracle Cloud, Oracle Cloud at Customer offerings are designeda direct response to enablerestrictions imposed upon cloud-based IT environment adoption by businesses that operate within certain regulated industries or jurisdictions. Oracle Cloud at Customer enables customers to useaccess certain IaaS capabilities of the Oracle Cloud PaaSin their own data centers behind their firewalls while having the services managed by Oracle. Oracle Cloud at Customer offerings allow customers to take advantage of the agility, innovation and IaaS offeringssubscription-based pricing of Oracle Cloud Services while meeting data sovereignty, data residency, data protection and regulatory business policy requirements, among others.requirements.

Oracle Database

We licensealso offers Oracle Managed Cloud Services, which are designed to customersprovide comprehensive software and hardware management, maintenance and security services for customer cloud-based, hybrid or other infrastructure for a fee for a stated term. Oracle Managed Cloud Services may be hosted at our Oracle data center facilities, select partner data centers or physically at our customers’ facilities.

Oracle Database

The Oracle Database software, whichis the world’s most popular enterprise database and is designed to enable reliable and secure storage, retrieval and manipulation of all forms of data, including: transactional data, business information and analytics; semi-structured and unstructured data in the form of weblogs, text, social media feeds, XML files, office documents, images, video and spatial images; and other specialized forms of data, such as graph data. The Oracle Database software is usedlicensed throughout the world by businesses and organizations of different sizes for a varietymultitude of purposes, including, withamong others: for use within the Oracle Cloud to deliver our Cloud SaaS and Cloud IaaS offerings; for use by a number of cloud-based vendors in offering their cloud services; for packaged applications and custom applications for transaction processing,transactions processing; and for data warehousing and business intelligence and as a document repository or specialized data store. Security continues to be a critical characteristic of theintelligence. The Oracle Database may be deployed within different IT environments including Oracle Cloud and the latest version includesOracle Cloud at Customer environments, other cloud-based IT environments, and on-premise data centers, among others. Customers may elect to purchase license support for Oracle Database licenses that are purchased at their option.

Oracle Database Enterprise Edition is available with a number of security enhancements and new features including, among others, encryption of data in motion, conditional auditing, real application security, and transparent sensitive data protection. All security capabilities available are compatible with the Oracle Multitenant architecture option, which enables customers to quickly and efficiently address the unique security requirements of each of their database instances.

A number of optional add-on products are available with Oracle Database Enterprise Edition software to address specific customer requirements, including:

Oracle Database In-Memory option with virtually any existing Oracle Database compatible application requires no application changes as it is fully integrated with Oracle Database’s scale-up, scale-out, storage tiering, availability and security technologies, which makes any Oracle in-memory database enterprise-ready.

requirements. In addition to the Oracle Database, we also offer a portfolio of specialized database software products to address particular customer requirements including the following:

The occurrence of any of these risks could have a material adverse effect on our business, results of operations, financial condition or cash flows, particularly in the case of a larger acquisition or several concurrent acquisitions.

Our hardware revenues and profitability have declined and could decline if we do not manage the risks associated with our hardware business.continue to decline.     Our hardware business may adversely affect our overall profitability if we do not effectively manage the associated risks.profitability. We may not achieve our estimated revenue, profit or other financial projections with respect to our hardware business in a timely manner or at all due to a number of factors, including:

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Our hardware offerings are complex products, and if we cannot successfully manage this complexity, the results of our hardware business will suffer.Designing, developing, manufacturing and introducing new hardware products are complicated processes. The development process for our hardware products is uncertain and requires a high level of innovation. After the development phase, we must be able to forecast customer demand and manufacture new hardware products in sufficient volumes to meet this demand and do so in a cost-effective manner. Our “build-to-order” manufacturing model, in which our hardware products generally are not built until after customers place orders, may from time to time experience delays in delivering our hardware products to customers in a timely manner. These delays could cause our customers to purchase hardware products and services from our competitors. We must also manage new hardware product introductions and transitions to minimize the impact of customer delayed purchases of existing hardware products in anticipation of new hardware product releases. It is also possible that we could experience design or manufacturing flaws, which could delay or prevent the production of the components for which we have previously committed to pay or need to fulfill orders from customers and could also prevent the production of our hardware products or cause our hardware products to be returned, recalled or rejected resulting in lost revenues, increases in warranty costs or costs related to remediation efforts, damage to our reputation, penalties and litigation.

We depend on suppliers to design, develop, manufacture and deliver on a timely basis the necessary technologies and components for our hardware products, and there are some technologies and components that can only be purchased from a single vendor due to price, quality, technology, availability or other business constraints. As a result, our supply chain operations could be disrupted or negatively impacted by industry consolidation and component constraints or shortages, natural disasters, political unrest, port stoppages or other transportation disruptions or slowdowns, or other factors affecting the countries or regions where these single source component vendors are located or where the products are being shipped. We may be unable to purchase these items from the respective single vendors on acceptable terms or may experience significant shortages, delays or quality issues in the delivery of necessary technologies, parts or components from a particular vendor. If we had to find a new supplier for these technologies, parts and components, hardware product shipments could be delayed, which would adversely affect our hardware revenues. We could also experience fluctuations in component prices which, if unanticipated, could negatively impact our hardware business cost structure. Additionally, we could experience changes in shipping and logistics of our hardware products, which could result in fluctuations in prices and negatively impact our hardware margins. These factors may make it difficult for us to plan and procure appropriate component inventory levels in a timely fashion to meet customer demand for our hardware products. Therefore, we may experience component inventory shortages which may result in production delays or customers choosing to purchase fewer hardware products from us or hardware products from our competitors. We negotiate supply commitments with vendors early in the manufacturing process to ensure we have sufficient technologies and components for our hardware products to meet anticipated customer demand. We must also manage our levels of older component inventories used in our hardware products to minimize inventory write-offs or write-downs. If we have excess inventory, it may be necessary to write-down the inventory, which would adversely affect our operating results. If one or more of the risks described above occurs, our hardware business and related operating results could be materially and adversely affected.

We are susceptible to third-party manufacturing and logistics delays, which could result in the loss of sales and customers.We outsource the design, manufacturing, assembly, delivery and deliverytechnology or component design of certain of our hardware products to a variety of companies, many of which are located outside the United States. Our reliance on these third parties reduces our control over the manufacturing and delivery process, exposing us to risks, including reduced control over quality assurance, product costs, product supply and delivery delays as well as the political and economic uncertainties and natural disasters of the international locations where certain of these third-party

manufacturers have facilities and operations. Some countries may raise national security concerns or impose market access restrictions based on location of manufacture or sourcing. Any manufacturing disruption or logistics delays by these third parties could impair our ability to fulfill orders for these hardware products for extended periods of time. If we are unable to manage our relationships with these third parties effectively, or if these third parties experience delays, disruptions, capacity constraints, regulatory issues or quality control problems in their operations, or fail to meet our future requirements for timely delivery, our ability to ship and deliver certain of our hardware products to our customers could be impaired and our hardware business could be harmed.

We have simplified our supply chain processes by reducing the number of third-party manufacturing partners and the number of locations where these third-party manufacturers build our hardware products. We therefore have become more dependent on a fewer number of these manufacturing partners and locations.U.S. If these partners experience production problems or delays or cannot meet our demand for products, we may not be able to find alternate manufacturing sources in a timely or cost-effective manner, if at all. IfTherefore, we are requiredcontinue to changeexplore additional third-party manufacturers, our abilitymanufacturing partners to meet our scheduled hardware products deliveries to our customers could be adversely affected, whichdrive supply chain continuity. This could cause the loss of sales and existing or potential customers, delayed revenue recognition or an increase in our hardware products expenses, all of which could adversely affect the margins of our hardware business.

These challenges and risks also exist when we acquire companies with hardware products and related supply chain operations. In some cases, we may be dependent, at least initially, on these acquired companies’ supply chain operations that we are less familiar with and thus we may be slower to adjust or react to these challenges and risks.

Our softwarecloud and license, and hardware indirect sales channel could affect our future operating results.     Our softwarecloud and license, and hardware indirect channel network is comprised primarily of resellers, system integrators/implementers, consultants, education providers, internet service providers, network integrators and independent software vendors. Our relationships with these channel participants are important elements of our cloud, software and hardware marketing and sales efforts. Our financial results could be adversely affected if our contracts with channel participants were terminated, if our relationships with channel participants were to deteriorate, if any of our competitors enter into strategic relationships with or acquire a significant channel participant, if the financial condition or operations of our channel participants were to weaken or if the level of demand for our channel participants’ products and services were to decrease. There can be no assurance that we will be successful in maintaining, expanding or developing our relationships with channel participants. If we are not successful, we may lose sales opportunities, customers and revenues.

We may not be able to protect our intellectual property rights.     We rely on copyright, trademark, patent and trade secret laws, confidentiality procedures, controls and contractual commitments to protect our intellectual property rights. Despite our efforts, these protections may be limited. Unauthorized third parties may try to copy or reverse engineer portions of our products or otherwise obtain and use our intellectual property. Any patents owned by us may be invalidated, circumvented or challenged. Any of our pending or future patent applications, whether or not being currently challenged, may not be issued with the scope of the claims we seek, if at all. In addition, the laws of some countries do not provide the same level of protection of our intellectual property rights as do the laws and courts of the United States.U.S. If we cannot protect our intellectual property rights against unauthorized copying or use, or other misappropriation, we may not remain competitive.

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Third parties have claimed, and in the future may claim, infringement or misuse of intellectual property rights and/or breach of license agreement provisions.     We periodically receive notices from, or have lawsuits filed against us by, others claiming infringement or other misuse of their intellectual property rights and/or breach of our agreements with them. These third parties include entities that do not have the capabilities to design, manufacture, or distribute products or services or that acquire intellectual property like patents for the sole purpose of monetizing their acquired intellectual property through asserting claims of infringement and misuse. We expect to continue to receive such claims as:

Responding to any such claim, regardless of its validity, could:

Our periodic workforce restructurings, including reorganizations of our sales force, can be disruptive.    We have in the past restructured or made other adjustments to our workforce, including our direct sales force on which we rely heavily, in response to management changes, product changes, performance issues, change in strategies, acquisitions and other internal and external considerations. In the past, these types of sales force restructurings have resulted in increased restructuring costs, increased sales and marketing costs and temporary reduced productivity while the sales teams adjusted to their new roles and responsibilities. In addition, we may not achieve or sustain the expected growth or cost savings benefits of these restructurings, or do so within the expected timeframe. These effects could recur in connection with future acquisitions and other restructurings and our revenues and other results of operations could be negatively affected.

We may lose key employees or may be unable to hire enough qualified employees.    We rely on hiring qualified employees and the continued service of our senior management, including our Chairman of the Board of Directors, Chief Technology Officer and founder, our Chief Executive Officers, other members of our executive team and other key employees. In the technology industry, there is substantial and continuous competition for highly skilled business, product development, technical and other personnel. We may also experience increased compensation costs that are not offset by either improved productivity or higher sales. We may not be successful in recruiting new personnel and in retaining and motivating existing personnel. With rare exceptions, we do not have long-term employment or non-competition agreements with our employees. Members of our senior management team have left Oracle over the years for a variety of reasons, and we cannot assure you that there will not be additional departures, which may be disruptive to our operations.

We continually focus on improving our cost structure by hiring personnel in countries where advanced technical expertise and other expertise are available at lower costs. When we make adjustments to our workforce, we may incur expenses associated with workforce reductions that delay the benefit of a more efficient workforce structure. We may also experience increased competition for employees in these countries as the trend toward globalization continues, which may affect our employee retention efforts and increase our expenses in an effort to offer a competitive compensation program.

Our general compensation program includes restricted stock units, performance stock units and stock options, which are important tools in attracting and retaining employees in our industry. If our stock price performs poorly, it may adversely affect our ability to retain or attract employees. We continually evaluate our compensation practices and consider changes from time to time, such as reducing the number of employees granted equity awards or the number of equity awards granted per employee and granting alternative forms of stock-based compensation, which may have an impact on our ability to retain employees and the amount of stock-based compensation expense that we record. Any changes in our compensation practices or those of our competitors could affect our ability to retain and motivate existing personnel and recruit new personnel.

Our sales to government clients expose us to business volatility and risks, including government budgeting cycles and appropriations, early termination, audits, investigations, sanctions and penalties.    We derive revenues from contracts with the U.S. government, state and local governments, and foreign governments and their respective agencies, which may terminate most of these contracts at any time, without cause. There is increased pressure on governments and their agencies, both domestically and internationally, to reduce spending. Further, our U.S. federal government contracts are subject to the approval of appropriations made by the U.S. Congress to fund the expenditures under these contracts. Similarly, our contracts with U.S. state and local governments, foreign governments and their agencies are generally subject to government funding authorizations. Additionally, government contracts are generally subject to audits and investigations which could result in various civil and criminal penalties and administrative sanctions, including termination of contracts, refund of a portion of fees received, forfeiture of profits, suspension of payments, fines and suspensions or debarment from future government business.

We may not receive significant revenues from our current research and development efforts for several years, if at all.     Developing software, cloud and hardwareour various product offerings is expensive and the investment in the development of these offerings often involves a long return on investment cycle. An important element of our corporate strategy is to continue to makededicate a significant investments inamount of resources to research and development and related product and service opportunities both through internal investments and the acquisition of intellectual property from companies that we have acquired. Accelerated product and service introductions and short software and hardware life cycles require high levels of expenditures for research and development that could adversely affect our operating results if not offset by revenue increases. We believe that we must continue to dedicate a significant amount of resources to our research and development efforts to maintain our competitive position. However, we do not expect to receive significant revenues from these investments for several years, if at all.

Business disruptions could adversely affect our operating results.     A significant portion of our critical business operations are concentrated in a few geographic areas.areas, some of which include emerging market international locations that may be less stable relative to running such business operations solely within the U.S. We are a highly automated business and a disruption or failure of our systems and processes could cause delays in completing sales, and providing services, including some of our cloud offerings.offerings, and enabling a seamless customer experience with respect to our customer facing back office processes. A major earthquake or fire, political, social or other disruption to infrastructure that supports our operations or other catastrophic event or the effects of climate change (such as increased storm severity, drought and pandemics) that results in the destruction or disruption of any of our critical business or IT systems could severely affect our ability to conduct normal business operations and, as a result, our future operating results could be materially and adversely affected.

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Adverse litigation results could affect our business.     We are subject to various legal proceedings. Litigation can be lengthy, expensive and disruptive to our operations, and can divert our management’s attention away from running our core business. The results of our litigation also cannot be predicted with certainty. An adverse decision could result in monetary damages or injunctive relief that could affect our business, operating results or financial condition. Additional information regarding certain of the lawsuits we are involved in is discussed under Note 1817 of Notes to Consolidated Financial Statements included elsewhere in this Annual Report.

We may have exposure to additional tax liabilities.     As a multinational corporation, we are subject to income taxes as well as non-income based taxes, in both the United StatesU.S. and various foreign jurisdictions. Significant judgment isuncertainties exist with respect to the amount of our tax liabilities, including those arising from potential changes in laws in the countries in which we do business and the possibility of adverse determinations with respect to the application of existing laws. Many judgments are required in determining our worldwide provision for income taxes and other tax liabilities. Weliabilities, and we are regularly under audit by tax authorities, and those authoritieswhich often do not agree with positions taken by us on our tax returns.

Changes in tax laws or tax rulings Any unfavorable resolution of these uncertainties may have a significantlysignificant adverse impact on our effective tax rate. For example,

Increasingly, countries around the United States, many countries in the EU, and other countries where we do business,world are actively considering or have enacted changes in relevant tax, accounting and other laws, regulations and interpretations, includinginterpretations. In particular, the U.S. Tax Cuts and Jobs Act of 2017 (the Tax Act) significantly changed how corporations are taxed in the U.S., which has had and we expect will continue to have a meaningful impact on our provision for income taxes. Due to the complexity involved in applying the provisions of the Tax Act, we made reasonable estimates of the effects and recorded provisional amounts in our financial statements for the year ended May 31, 2018. The U.S. Treasury Department and the Internal Revenue Service (IRS), and other standards-setting bodies may issue guidance on how the provisions of the Tax Act will be applied that is different from our interpretation. The Tax Act requires complex computations not previously required or produced, and significant judgments and assumptions in the interpretation of the law were made in producing our provisional estimates. We have adjusted the provisional amounts and reflected the adjustments in our financial statements for the year ended May 31, 2019 based on the regulatory and other guidance issued to date by the Treasury Department and IRS, but also on judgments and assumptions where uncertainty continues to exist. Such uncertainty in the application of the Tax Act to our ongoing operations as well as possible adverse future law changes attributable to tax laws applicable to corporate multinationals, whichchanges in the U.S. political environment could have a significantan adverse impact on our effectivefuture tax rate. Further,

Other countries also continue to consider enacting changes to their tax laws that could adversely affect us by increasing taxes imposed on our foreign subsidiaries, including changes in withholding tax regimes and the ordinary courseimposition of taxes targeted at certain technology businesses. More fundamentally, longstanding international tax principles that determine each country’s right to tax cross-border transactions are being reconsidered, creating significant uncertainty as to the future level of corporate income tax on our international operations. This re-examination is driven by a global business,perceived need to provide greater taxing rights to market jurisdictions where customers or users are located. Various measures are being discussed, including adjustments to transfer pricing rules, limitations on deductions, and imposition of additional withholding taxes.

As a part of our income tax structure, there are many intercompany transactions and calculations made in the ordinary course of business where the ultimate tax determination is uncertain. Our intercompany transfer pricing has been and is currently being reviewed by the U.S. Internal Revenue Service (IRS)IRS and by foreign tax jurisdictions and will likely be subject to additional audits in the future. Although we have negotiated a number of agreements with certain unilateral Advance Pricing Agreements with the IRS and certain selected bilateral Advance Pricing Agreements that cover some of our intercompany transfer pricing issues and preclude the relevant tax authorities from making a transfer pricing adjustment within the scope of these agreements,taxing jurisdictions, these agreements do not cover

substantial elements of our transfer pricing. In recent periods, transfer pricing audits in many foreign jurisdictions have become increasingly contentious. Similarly, certain jurisdictions are increasingly raising concerns about certain withholding tax matters.matters under current law. In addition, our provision for income taxes could be adversely affected by shifts of earnings being lower than anticipated infrom jurisdictions which we consider to be indefinitely reinvested outside the United Statesor regimes that have relatively lower statutory tax rates and earnings being higher than anticipatedto those in jurisdictions that have higher statutory tax rates.which the rates are relatively higher.

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We are also subject to non-income based taxes, such as payroll, sales, use, value-added, net worth, property and goods and services taxes, in both the United StatesU.S. and various foreign jurisdictions. We are regularly under audit by tax authorities with respectjurisdictions that have uncertain applicability to these non-income based taxes and may have exposure to additional non-income based tax liabilities. Our acquisition activities have increased our non-income based tax exposures, particularly with our entry into the hardware business,businesses in which increased the volume and complexity of laws and regulations that we are subject to and with which we must comply.

engaged. Although we believe that our income and non-income based tax estimates are reasonable, there is no assurance that the final determination of tax audits or tax disputes will not be different from what is reflected in our historical income tax provisions and accruals.

Charges to earnings resulting from acquisitions may adversely affect our operating results.     Under business combination accounting standards pursuant to ASCAccounting Standards Codification (ASC) 805,Business Combinations, we recognize the identifiable assets acquired, the liabilities assumed and any non-controlling interests in acquired companies generally at their acquisition date fair values and, in each case, separately from goodwill. Goodwill as of the acquisition date is measured as the excess amount of consideration transferred, which is also generally measured at fair value, and the net of the acquisition date amounts of the identifiable assets acquired and the liabilities assumed. Our estimates of fair value are based upon assumptions believed to be reasonable but which are inherently uncertain. After we complete an acquisition, the following factors could result in material charges and adversely affect our operating results and may adversely affect our cash flows:

Substantially all of these costs will be accounted for as expenses that will decreaseadversely impact our net income and earnings per shareoperating results for the periods in which those costs are incurred. For example, we recognized a goodwill impairment loss in the fourth quarter of fiscal 2015 relating to our hardware reporting unit. Charges to our operating results in any given period could differ substantially from other periods based on the timing and size of our future acquisitions and the extent of integration activities. A more detailed discussion of our accounting for business combinations and other items is presented in the “Critical Accounting Policies and Estimates” section of Management’s Discussion and Analysis of Financial Condition and Results of Operations (Item 7).