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

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

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.

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 ~~March 5,~~September 6, 2021 was: ~~2,883,535,000.~~2,738,179,000.

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 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:

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 in documents we file from time to time with the U.S. Securities and Exchange Commission (the SEC), including our Annual Report on Form 10-K for our fiscal year ended May 31, ~~2020~~2021 and our other Quarterly Reports on Form 10-Q to be filed by us in our fiscal ~~2021,~~2022, which runs from June 1, ~~2020~~2021 to May 31, ~~2021.~~2022.

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.

(in millions, except per share data)	February 28, 2021			May 31, 2020			August 31, 2021			May 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	22,321		$	37,239		$	23,059		$	30,098
Marketable securities		13,543			5,818			16,251			16,456
Trade receivables, net of allowances for doubtful accounts of $485 and $409 as of February 28, 2021 and May 31, 2020, respectively		4,637			5,551
Trade receivables, net of allowances for doubtful accounts of $402 and $373 as of August 31, 2021 and May 31, 2021, respectively								4,482			5,409
Prepaid expenses and other current assets		3,243			3,532			3,325			3,604
Total current assets		43,744			52,140			47,117			55,567
Non-current assets:
Property, plant and equipment, net		6,816			6,244			7,610			7,049
Intangible assets, net		2,754			3,738			2,181			2,430
Goodwill, net		43,954			43,769			43,862			43,935
Deferred tax assets		13,725			3,252			13,391			13,636
Other non-current assets		7,116			6,295			8,763			8,490
Total non-current assets		74,365			63,298			75,807			75,540
Total assets	$	118,109		$	115,438		$	122,924		$	131,107
LIABILITIES AND EQUITY
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
Current liabilities:
Notes payable, current	$	5,758		$	2,371		$	6,748		$	8,250
Accounts payable		812			637			749			745
Accrued compensation and related benefits		1,684			1,453			1,470			2,017
Deferred revenues		8,088			8,002			10,011			8,775
Other current liabilities		3,908			4,737			4,093			4,377
Total current liabilities		20,250			17,200			23,071			24,164
Non-current liabilities:
Notes payable and other borrowings, non-current		63,541			69,226			75,970			75,995
Income taxes payable		12,316			12,463			12,315			12,345
Deferred tax liabilities		7,892			41			7,648			7,864
Other non-current liabilities		4,473			3,791			5,050			4,787
Total non-current liabilities		88,222			85,521			100,983			100,991
Commitments and contingencies
Oracle Corporation stockholders’ equity:
Oracle Corporation stockholders’ (deficit) equity:
Preferred stock, $0.01 par value—authorized: 1.0 shares; outstanding: NaN		0			0			0			0
Common stock, $0.01 par value and additional paid in capital—authorized: 11,000 shares; outstanding: 2,895 shares and 3,067 shares as of February 28, 2021 and May 31, 2020, respectively		26,261			26,486
Common stock, $0.01 par value and additional paid in capital—authorized: 11,000 shares; outstanding: 2,743 shares and 2,814 shares as of August 31, 2021 and May 31, 2021, respectively								25,534			26,533
Accumulated deficit		(16,206	)		(12,696	)		(25,679	)		(20,120	)
Accumulated other comprehensive loss		(1,155	)		(1,716	)		(1,396	)		(1,175	)
Total Oracle Corporation stockholders’ equity		8,900			12,074
Total Oracle Corporation stockholders’ (deficit) equity								(1,541	)		5,238
Noncontrolling interests		737			643			411			714
Total equity		9,637			12,717
Total liabilities and equity	$	118,109		$	115,438
Total stockholders’ (deficit) equity								(1,130	)		5,952
Total liabilities and stockholders’ (deficit) equity							$	122,924		$	131,107

For the Three ~~and Nine~~ Months Ended ~~February 28,~~August 31, 2021 and ~~February 29,~~ 2020

	Three Months Ended						Nine Months Ended						Three Months Ended August 31,
(in millions, except per share data)	February 28, 2021			February 29, 2020			February 28, 2021			February 29, 2020			2021			2020
Revenues:
Cloud services and license support	$	7,252		$	6,930		$	21,311		$	20,546		$	7,371		$	6,947
Cloud license and on-premise license		1,276			1,231			3,254			3,169			813			886
Hardware		820			857			2,478			2,542			763			814
Services		737			778			2,209			2,372			781			720
Total revenues		10,085			9,796			29,252			28,629			9,728			9,367
Operating expenses:
Cloud services and license support⁽¹⁾		1,064			991			3,139			2,994			1,214			1,011
Hardware⁽¹⁾		230			271			719			828			245			246
Services		621			702			1,875			2,147			644			623
Sales and marketing⁽¹⁾		1,915			2,049			5,605			6,135			1,854			1,854
Research and development		1,621			1,500			4,812			4,588			1,684			1,589
General and administrative		330			288			949			903			298			295
Amortization of intangible assets		347			400			1,037			1,221			303			345
Acquisition related and other		13			7			107			44			21			19
Restructuring		66			60			337			181			38			174
Total operating expenses		6,207			6,268			18,580			19,041			6,301			6,156
Operating income		3,878			3,528			10,672			9,588			3,427			3,211
Interest expense		(585	)		(456	)		(1,799	)		(1,416	)		(705	)		(614	)
Non-operating (expenses) income, net		(17	)		4			(30	)		195
Income before benefit from (provision for) income taxes		3,276			3,076			8,843			8,367
Benefit from (provision for) income taxes		1,745			(505	)		871			(1,348	)
Non-operating expenses, net														(41	)		(2	)
Income before provision for income taxes														2,681			2,595
Provision for income taxes														224			344
Net income	$	5,021		$	2,571		$	9,714		$	7,019		$	2,457		$	2,251
Earnings per share:
Basic	$	1.72		$	0.81		$	3.26		$	2.16		$	0.89		$	0.74
Diluted	$	1.68		$	0.79		$	3.19		$	2.10		$	0.86		$	0.72
Weighted average common shares outstanding:
Basic		2,913			3,190			2,977			3,251			2,769			3,041
Diluted		2,994			3,271			3,049			3,337			2,861			3,107

For the Three ~~and Nine~~ Months Ended ~~February 28,~~August 31, 2021 and ~~February 29,~~ 2020

Three Months Ended

Nine Months Ended

(in millions)

February 28, 2021

February 29, 2020

February 28, 2021

February 29, 2020

Net income

$
5,021

$
2,571

$
9,714

$
7,019

Other comprehensive income (loss), net of tax:

Net foreign currency translation gains (losses)

132

(86
)

504

(178
)
Net unrealized gains on defined benefit plans

10

34

66

45

Net unrealized (losses) gains on marketable securities

(4
)

3

(1
)

91

Net unrealized (losses) gains on cash flow hedges

(7
)

7

(8
)

(9
)
Total other comprehensive income (loss), net

131

(42
)

561

(51
)
Comprehensive income

$
5,152

$
2,529

$
10,275

$
6,968

	Three Months Ended August 31,
(in millions)	2021			2020
Net income	$	2,457		$	2,251
Other comprehensive (loss) income, net of tax:
Net foreign currency translation (losses) gains		(223	)		325
Net unrealized gains on defined benefit plans		2			46
Net unrealized gains on marketable securities		0			3
Net unrealized gains on cash flow hedges		0			5
Total other comprehensive (loss) income, net		(221	)		379
Comprehensive income	$	2,236		$	2,630

For the Three ~~and Nine~~ Months Ended ~~February 28,~~August 31, 2021 and ~~February 29,~~ 2020

	Three Months Ended						Nine Months Ended						Three Months Ended August 31,
(in millions, except per share data)	February 28, 2021			February 29, 2020			February 28, 2021			February 29, 2020			2021			2020
Common stock and additional paid in capital
Balance, beginning of period	$	26,298		$	26,374		$	26,486		$	26,909		$	26,533		$	26,486
Common stock issued		143			615			915			1,232			148			567
Stock-based compensation		479			361			1,395			1,204			545			428
Repurchases of common stock		(567	)		(599	)		(1,922	)		(2,033	)		(872	)		(765	)
Other, net		(92	)		(66	)		(613	)		(627	)		(820	)		(478	)
Balance, end of period	$	26,261		$	26,685		$	26,261		$	26,685		$	25,534		$	26,238
Accumulated deficit
Balance, beginning of period	$	(17,095	)	$	(9,174	)	$	(12,696	)	$	(3,496	)	$	(20,120	)	$	(12,696	)
Repurchases of common stock		(3,433	)		(3,401	)		(11,078	)		(11,967	)		(7,128	)		(4,235	)
Cash dividends declared		(699	)		(768	)		(2,146	)		(2,330	)		(887	)		(730	)
Net income		5,021			2,571			9,714			7,019			2,457			2,251
Other, net		0			1			0			3			(1	)		0
Balance, end of period	$	(16,206	)	$	(10,771	)	$	(16,206	)	$	(10,771	)	$	(25,679	)	$	(15,410	)
Other equity, net
Other stockholders’ (deficit) equity, net
Balance, beginning of period	$	(587	)	$	(1,015	)	$	(1,073	)	$	(1,050	)	$	(461	)	$	(1,073	)
Other comprehensive income (loss), net		131			(42	)		561			(51	)
Other comprehensive (loss) income, net														(221	)		379
Other, net		38			24			94			68			(303	)		6
Balance, end of period	$	(418	)	$	(1,033	)	$	(418	)	$	(1,033	)	$	(985	)	$	(688	)
Total equity	$	9,637		$	14,881		$	9,637		$	14,881
Total stockholders’ (deficit) equity													$	(1,130	)	$	10,140
Cash dividends declared per common share	$	0.24		$	0.24		$	0.72		$	0.72		$	0.32		$	0.24

For the ~~Nine~~Three Months Ended ~~February 28,~~August 31, 2021 and ~~February 29,~~ 2020

	Nine Months Ended						Three Months Ended August 31,
(in millions)	February 28, 2021			February 29, 2020			2021			2020
Cash flows from operating activities:
Net income	$	9,714		$	7,019		$	2,457		$	2,251
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		1,127			1,025			454			356
Amortization of intangible assets		1,037			1,221			303			345
Deferred income taxes		(2,475	)		(398	)		(15	)		173
Stock-based compensation		1,395			1,204			545			428
Other, net		227			167			(27	)		78
Changes in operating assets and liabilities, net of effects from acquisitions:
Decrease in trade receivables, net		1,089			946			852			1,077
Decrease in prepaid expenses and other assets		609			718			270			380
Decrease in accounts payable and other liabilities		(247	)		(1,035	)		(713	)		(294	)
Decrease in income taxes payable		(1,181	)		(789	)		(221	)		(586	)
Decrease in deferred revenues		(250	)		(553	)
Increase in deferred revenues								1,486			1,745
Net cash provided by operating activities		11,045			9,525			5,391			5,953
Cash flows from investing activities:
Purchases of marketable securities and other investments		(26,775	)		(399	)		(7,671	)		(10,678	)
Proceeds from maturities of marketable securities and other investments		18,182			3,165
Proceeds from sales of marketable securities		853			12,575
Proceeds from sales and maturities of marketable securities and other investments								8,002			1,459
Acquisitions, net of cash acquired		(29	)		(111	)		(50	)		0
Capital expenditures		(1,418	)		(1,131	)		(1,062	)		(436	)
Net cash (used for) provided by investing activities		(9,187	)		14,099
Net cash used for investing activities								(781	)		(9,655	)
Cash flows from financing activities:
Payments for repurchases of common stock		(12,958	)		(13,935	)		(7,995	)		(4,945	)
Proceeds from issuances of common stock		915			1,232			148			567
Shares repurchased for tax withholdings upon vesting of restricted stock-based awards		(597	)		(624	)		(820	)		(478	)
Payments of dividends to stockholders		(2,146	)		(2,330	)		(887	)		(730	)
Repayments of borrowings		(2,631	)		(4,500	)		(1,500	)		(1,000	)
Other, net		241			(108	)		(414	)		93
Net cash used for financing activities		(17,176	)		(20,265	)		(11,468	)		(6,493	)
Effect of exchange rate changes on cash and cash equivalents		400			(44	)		(181	)		232
Net (decrease) increase in cash and cash equivalents		(14,918	)		3,315
Net decrease in cash and cash equivalents								(7,039	)		(9,963	)
Cash and cash equivalents at beginning of period		37,239			20,514			30,098			37,239
Cash and cash equivalents at end of period	$	22,321		$	23,829		$	23,059		$	27,276
Non-cash financing activities:
Change in unsettled repurchases of common stock	$	42		$	65		$	5		$	55

We have prepared the condensed consolidated financial statements included herein pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (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, ~~2020.~~2021.

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 our fiscal year ending May 31, ~~2021.~~

The comparability of our operating results during the third quarter and first nine months of fiscal 2021 compared to the corresponding prior year periods, and of our condensed consolidated balance sheets as of February 28, 2021 relative to May 31, 2020, was impacted by the income tax related effects of a partial realignment of our legal entity structure that resulted in the intra-group transfer of certain intellectual property rights. During the third quarter and first nine months of fiscal 2021, we recognized a benefit from income taxes primarily due to the result of a net discrete tax benefit of $2.3 billion that was recorded as a deferred tax asset of $11.3 billion and a non-current deferred tax liability of $9.1 billion. The deferred tax asset was recognized as a result of the book and tax basis difference on the intra-group transfer of certain intellectual property and the realignment of certain legal entities, partially offset by a Global Intangible Low-Taxed Income (GILTI) non-current deferred tax liability. The tax amortization related to the intellectual property deferred tax asset will be recognized in future periods and any unused amortization in a particular year will carry forward indefinitely. The $11.3 billion deferred tax asset was measured based on the tax rate at which it is expected to reverse in the future. We expect to realize the net deferred tax asset recorded as a result of the intangible property transfer and will periodically assess the realizability of the net deferred tax asset. Refer to Note 9 below for additional information.2022.

During the first ~~nine months~~quarter of fiscal ~~2021,~~2022, we adopted Accounting Standards Update (ASU) ~~2016-13,~~2019-12, ~~Financial Instruments—Credit Losses~~Income Taxes (Topic ~~326)~~740): ~~Measurement of Credit Losses on Financial Instrumentsand subsequent amendments to~~Simplifying the ~~initial guidance~~Accounting for Income Taxes (ASU 2019-12)~~; and~~, ~~ASU 2020-01,~~ ~~Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815), neither of~~ which ~~had~~did not have a material impact to our current or historical condensed consolidated financial statements. 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, ~~2020~~2021 that had a significant impact on our condensed consolidated financial statements or notes thereto as of and for the ~~nine~~three months ended ~~February 28,~~August 31, 2021.

Restricted cash that was included within cash and cash equivalents as presented within our condensed consolidated balance sheets as of ~~February 28,~~August 31, 2021 and May 31, ~~2020~~2021 and our condensed consolidated statements of cash flows for the ~~nine~~three months ended ~~February 28,~~August 31, 2021 and ~~February 29,~~ 2020 was nominal.

Trade receivables, net of allowance for doubtful accounts, and deferred revenues are reported net of related uncollected deferred revenues in our condensed consolidated balance sheets as of ~~February 28,~~August 31, 2021 and May 31, ~~2020.~~2021. The revenues recognized during the ~~nine~~three months ended ~~February 28,~~August 31, 2021 and ~~February 29,~~ 2020, respectively, that were included in the opening deferred revenues balances as of May 31, ~~2020~~2021 and ~~2019,~~2020, respectively, were approximately ~~$7.4~~$3.7 billion and ~~$7.7~~$3.4 billion, respectively. Revenues recognized from performance obligations satisfied in prior periods and impairment losses recognized on our receivables were immaterial in each of the three ~~and nine~~ months ended ~~February 28,~~August 31, 2021 and ~~February 29,~~ 2020.

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, ~~2020,~~2021, were ~~$35.3~~$38.7 billion as of ~~February 28,~~August 31, 2021, approximately ~~61%~~60% of which we expect to recognize as revenues over the next twelve months, 29% over the subsequent month 13 to month 36, and the remainder thereafter.

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 ~~$338~~$656 million and ~~$1.3 billion~~$677 million for the three ~~and nine~~ months ended ~~February 28,~~August 31, 2021 ~~respectively,~~ and ~~$284 million and $1.2 billion for the three and nine months ended February 29,~~ 2020, respectively.

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				Nine Months Ended				Three Months Ended August 31,
(in millions)	February 28, 2021		February 29, 2020		February 28, 2021		February 29, 2020		2021		2020
Transitional and other employee related costs	$	1	$	2	$	4	$	9	$	2	$	2
Business combination adjustments, net		2		2		3		4		3		1
Other, net		10		3		100		31		16		16
Total acquisition related and other expenses	$	13	$	7	$	107	$	44	$	21	$	19

Non-operating ~~(expenses) 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) and net other income and expenses, including net realized gains and losses related to all of our investments, net unrealized gains and losses related to the small portion of our investment portfolio related to our deferred compensation plan, net unrealized gains and losses related to equity securities and non-service net periodic pension income and losses.

Financial Instruments: In March 2020, the Financial Accounting Standards Board (FASB) issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (ASU 2020-04) and also issued subsequent amendments to the initial guidance (collectively, Topic 848). Topic 848 provides optional guidance for contract modifications and certain hedging relationships associated with the transition from reference rates that are expected to be discontinued. We will adopt Topic 848 when our relevant contracts are modified upon transition to alternative reference rates. We do not expect our adoption of Topic 848 to have a material impact on our consolidated financial statements.

~~Income Taxes~~: ~~In December 2019, the FASB issued ASU 2019-12,~~ ~~Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes~~ (ASU 2019-12), which is intended to simplify various areas related to the accounting for income taxes and improve consistent application of Topic 740. ASU 2019-12 is effective for us beginning in fiscal 2022, and earlier adoption is permitted. We are currently evaluating the impact of our pending adoption of ASU 2019-12 on our consolidated financial statements.

During the first ~~nine months~~quarter of fiscal ~~2021~~2022 and full year of fiscal ~~2020,~~2021, we acquired certain companies and purchased certain technology and development assets primarily to expand our products and services offerings. These acquisitions were not significant individually or in the aggregate to our condensed consolidated financial statements.

We perform fair value measurements in accordance with FASB Accounting Standards Codification (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:

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):

	February 28, 2021						May 31, 2020						August 31, 2021						May 31, 2021
	Fair Value Measurements Using Input Types						Fair Value Measurements Using Input Types						Fair Value Measurements Using Input Types						Fair Value Measurements Using Input Types
(in millions)	Level 1		Level 2		Total		Level 1		Level 2		Total		Level 1		Level 2		Total		Level 1		Level 2		Total
Assets:
Money market funds	$	4,702	$	0	$	4,702	$	18,587	$	0	$	18,587	$	5,269	$	0	$	5,269	$	12,263	$	0	$	12,263
Corporate debt securities and other		2,836		7,933		10,769		4,036		2,589		6,625		2,204		9,450		11,654		1,250		8,220		9,470
Commercial paper debt securities		0		7,604		7,604		0		5,640		5,640		0		9,510		9,510		0		11,712		11,712
Derivative financial instruments		0		71		71		0		29		29		0		35		35		0		73		73
Total assets	$	7,538	$	15,608	$	23,146	$	22,623	$	8,258	$	30,881	$	7,473	$	18,995	$	26,468	$	13,513	$	20,005	$	33,518
Liabilities:
Derivative financial instruments	$	0	$	0	$	0	$	0	$	268	$	268

We classify our marketable securities as available-for-sale debt securities at the time of purchase and reevaluate such classification as of each balance sheet date. Our marketable securities investments consist of money market funds, Tier 1 commercial paper debt securities, corporate debt securities and certain other securities. Marketable securities as presented per our condensed consolidated balance sheets included securities with original maturities at the time of purchase greater than three months and the remainder of the securities were included in cash and cash equivalents. As of ~~February 28,~~August 31, 2021 and May 31, ~~2020,~~2021, substantially all of our marketable 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 ~~LIBOR-based~~reference rate yield curves, among others.

Based on the trading prices of the $82.7 billion and $84.2 billion of senior notes and the related fair value hedges that we had outstanding as of August 31, 2021 and May 31, 2021, respectively, the estimated fair values of the senior notes and the related fair value hedges using Level 2 inputs at August 31, 2021 and May 31, 2021 were $90.2 billion and $89.6 billion, respectively.

Based on the trading prices of the $69.3 billion and $71.6 billion of senior notes and the related fair value hedges that we had outstanding as of February 28, 2021 and May 31, 2020, respectively, the estimated fair values of the senior notes and the related fair value hedges using Level 2 inputs at February 28, 2021 and May 31, 2020 were $76.3 billion and $80.9 billion, respectively.

The changes in intangible assets for fiscal ~~2021~~2022 and the net book value of intangible assets as of ~~February 28,~~August 31, 2021 and May 31, ~~2020~~2021 were as follows:

	Intangible Assets, Gross						Accumulated Amortization									Intangible Assets, Net				Weighted Average Useful Life⁽²⁾		Intangible Assets, Gross							Accumulated Amortization									Intangible Assets, Net				Weighted Average Useful Life⁽²⁾
(Dollars in millions)	May 31, 2020		Additions & Adjustments, net⁽¹⁾		February 28, 2021		May 31, 2020			Expense			February 28, 2021			May 31, 2020		February 28, 2021		Weighted Average Useful Life⁽²⁾		May 31, 2021		Additions & Adjustments, net⁽¹⁾			August 31, 2021		May 31, 2021			Expense			August 31, 2021			May 31, 2021		August 31, 2021		Weighted Average Useful Life⁽²⁾
Developed technology	$	4,471	$	36	$	4,507	$	(3,290	)	$	(477	)	$	(3,767	)	$	1,181	$	740		3	$	4,237	$	59		$	4,296	$	(3,621	)	$	(127	)	$	(3,748	)	$	616	$	548		3
Cloud services and license support agreements and related relationships		5,589		16		5,605		(3,271	)		(493	)		(3,764	)		2,318		1,841		—		5,497		(5	)		5,492		(3,834	)		(155	)		(3,989	)		1,663		1,503	N.A.
Other		1,341		1		1,342		(1,102	)		(67	)		(1,169	)		239		173		—		1,269		0			1,269		(1,118	)		(21	)		(1,139	)		151		130	N.A.
Total intangible assets, net	$	11,401	$	53	$	11,454	$	(7,663	)	$	(1,037	)	$	(8,700	)	$	3,738	$	2,754			$	11,003	$	54		$	11,057	$	(8,573	)	$	(303	)	$	(8,876	)	$	2,430	$	2,181

As of ~~February 28,~~August 31, 2021, estimated future amortization expenses related to intangible assets were as follows (in millions):

Remainder of fiscal 2021	$	328
Fiscal 2022		1,120
Remainder of fiscal 2022			$	834
Fiscal 2023		696		716
Fiscal 2024		450		473
Fiscal 2025		126		124
Fiscal 2026		24		24
Fiscal 2027				6
Thereafter		10		4
Total intangible assets, net	$	2,754	$	2,181

The changes in the carrying amounts of goodwill, net, which is generally not deductible for tax purposes, for our operating segments for the ~~nine~~three months ended ~~February 28,~~August 31, 2021 were as follows:

(in millions)	Cloud and License		Hardware		Services		Total Goodwill, net		Cloud and License		Hardware		Services			Total Goodwill, net
Balances as of May 31, 2020	$	39,637	$	2,367	$	1,765	$	43,769
Balances as of May 31, 2021									$	39,786	$	2,367	$	1,782		$	43,935
Goodwill adjustments, net⁽¹⁾		168		0		17		185		186		0		(259	)		(73	)
Balances as of February 28, 2021	$	39,805	$	2,367	$	1,782	$	43,954
Balances as of August 31, 2021									$	39,972	$	2,367	$	1,523		$	43,862

During the first quarter of fiscal ~~2019,~~2022, 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 ~~(2019~~(2022 Restructuring Plan). ~~In the first nine months of fiscal 2021, our management supplemented the 2019 Restructuring Plan to reflect additional actions that we expected to take.~~ ~~Restructuring~~The total estimated restructuring costs associated with the ~~2019~~2022 Restructuring Plan ~~were~~are up to $353 million and will be recorded to the restructuring expense line item within our condensed consolidated statements of operations as they ~~were~~are incurred. We recorded ~~$335 million and $186~~$55 million of restructuring expenses in connection with the ~~2019~~2022 Restructuring Plan in the first ~~nine~~three months of fiscal ~~2021~~2022 and ~~2020, respectively.~~we expect to incur the majority of the estimated remaining $298 million through the end of fiscal 2023. Any changes to the estimates ~~or timing~~ of executing the ~~2019~~2022 Restructuring Plan will be reflected in our future results of operations.

	Accrued May 31, 2020⁽²⁾		Nine Months Ended February 28, 2021											Accrued February 28, 2021⁽²⁾		Total Costs Accrued to Date		Total Expected Program Costs				Three Months Ended August 31, 2021											Accrued August 31, 2021⁽²⁾		Total Costs Accrued to Date		Total Expected Program Costs
(in millions)	Accrued May 31, 2020⁽²⁾		Initial Costs⁽³⁾		Adj. to Cost⁽⁴⁾			Cash Payments			Others⁽⁵⁾			Accrued February 28, 2021⁽²⁾		Total Costs Accrued to Date		Total Expected Program Costs		Accrued May 31, 2021⁽²⁾		Initial Costs⁽³⁾		Adj. to Cost⁽⁴⁾			Cash Payments			Others⁽⁵⁾			Accrued August 31, 2021⁽²⁾		Total Costs Accrued to Date		Total Expected Program Costs
2019 Restructuring Plan⁽¹⁾
2022 Restructuring Plan⁽¹⁾
Cloud and license	$	75	$	168	$	(18	)	$	(148	)	$	11		$	88	$	453	$	470	$	0	$	37	$	0		$	(13	)	$	0		$	24	$	37	$	247
Hardware		14		32		(2	)		(26	)		(1	)		17		110		115		0		3		0			(2	)		0			1		3		26
Services		27		45		(3	)		(45	)		3			27		133		156		0		4		0			(1	)		0			3		4		37
Other⁽⁶⁾		22		114		(1	)		(95	)		4			44		376		376		0		11		0			(2	)		0			9		11		43
Total 2019 Restructuring Plan	$	138	$	359	$	(24	)	$	(314	)	$	17		$	176	$	1,072	$	1,117
Total 2022 Restructuring Plan																				$	0	$	55	$	0		$	(18	)	$	0		$	37	$	55	$	353
Total other restructuring plans⁽⁷⁾	$	13	$	2	$	0		$	(4	)	$	(1	)	$	10					$	225	$	0	$	(17	)	$	(50	)	$	(6	)	$	152
Total restructuring plans	$	151	$	361	$	(24	)	$	(318	)	$	16		$	186					$	225	$	55	$	(17	)	$	(68	)	$	(6	)	$	189

(in millions)	February 28, 2021		May 31, 2020		August 31, 2021		May 31, 2021
Cloud services and license support	$	7,075	$	6,996	$	9,033	$	7,728
Hardware		556		613		599		618
Services		425		365		318		399
Cloud license and on-premise license		32		28		61		30
Deferred revenues, current		8,088		8,002		10,011		8,775
Deferred revenues, non-current (in other non-current liabilities)		670		597		773		679
Total deferred revenues	$	8,758	$	8,599	$	10,784	$	9,454

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 over the 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.

In connection with our acquisitions, we have estimated the fair values of the cloud services and license support performance obligations assumed from our acquired companies. Refer to Note 9 of Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended May 31, 2020 for further explanation of these estimates.

~~We held the following derivative instruments that were designated and accounted for as hedging instruments pursuant to ASC 815,~~ ~~Derivatives and Hedging~~ ~~(ASC 815):~~

We also held certain foreign currency contracts that were not designated as hedges pursuant to ASC 815. The notional amounts of such forward contracts we held to purchase U.S. Dollars in exchange for other major

international currencies was $4.2 billion as of both February 28, 2021 and May 31, 2020. The notional amounts of forward contracts we held to sell U.S. Dollars in exchange for other major international currencies were $4.4 billion and $3.9 billion as of February 28, 2021 and May 31, 2020, respectively. The fair values of our outstanding foreign currency forward contracts were nominal as of February 28, 2021 and May 31, 2020. Net gains or losses related to these forward contracts are included in non-operating income, net.

See Note 10 of Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended May 31, 2020 for additional information regarding the purpose, accounting and classification of our derivative instruments. None of our derivative instruments are used for trading purposes. The effects of derivative instruments designated as hedges on certain of our condensed consolidated financial statements were as follows as of or for each of the respective periods presented below (amounts presented exclude any income tax effects):

~~Fair Values of Derivative Instruments Designated as Hedges in Condensed Consolidated Balance Sheets~~

~~Effects of Fair Value Hedging Relationships on Hedged Items in Condensed Consolidated Balance Sheets~~

Three Months Ended

February 28, 2021

February 29, 2020

(in millions)

Non-operating (expenses)
income, net

Interest
expense

Non-operating (expenses)
income, net

Interest
expense

Condensed consolidated statements of operations line amounts in which the hedge effects were recorded

$
(17
)

$
(585
)

$
4

$
(456
)
Gain (loss) on hedges recognized in income:

Interest rate swap agreements designated as fair value hedges:

Derivative instruments

$
0

$
(7
)

$
0

$
10

Hedged items

0

7

0

(10
)
Cross-currency interest rate swap agreements designated as fair value hedges:

Derivative instruments

16

(8
)

0

6

Hedged items

(11
)

8

(1
)

(6
)
Cross-currency swap agreements designated as cash flow hedges:

Amount of gain (loss) reclassified from accumulated OCI

22

0

(18
)

0

Total gain (loss) on hedges recognized in income

$
27

$
0

$
(19
)

$
0

Nine Months Ended

February 28, 2021

February 29, 2020

(in millions)

Non-operating (expenses)
income, net

Interest
expense

Non-operating (expenses)
income, net

Interest
expense

Condensed consolidated statements of operations line amounts in which the hedge effects were recorded

$
(30
)

$
(1,799
)

$
195

$
(1,416
)
Gain (loss) on hedges recognized in income:

Interest rate swap agreements designated as fair value hedges:

Derivative instruments

$
0

$
(19
)

$
0

$
22

Hedged items

0

19

0

(22
)
Cross-currency interest rate swap agreements designated as fair value hedges:

Derivative instruments

86

(4
)

(13
)

13

Hedged items

(73
)

4

11

(13
)
Cross-currency swap agreements designated as cash flow hedges:

Amount of gain (loss) reclassified from accumulated OCI

137

0

(36
)

0

Total gain (loss) on hedges recognized in income

$
150

$
0

$
(38
)

$
0

~~Gain (Loss) on Derivative Instruments Designated as Hedges included in Other Comprehensive Income (OCI)~~

Our Board of Directors has approved a program for us to repurchase shares of our common stock. ~~On March 10, 2021, we announced that our Board of Directors approved an expansion of our stock repurchase program by an additional $20.0 billion.~~ As of ~~February 28,~~August 31, 2021, approximately ~~$3.6~~$7.6 billion remained available for stock repurchases pursuant to our stock repurchase program. We repurchased ~~222.2~~94.0 million shares for ~~$13.0~~$8.0 billion during the ~~nine~~three months ended ~~February 28,~~August 31, 2021 (including ~~0.6~~0.8 million shares for ~~$42~~$71 million that were repurchased but not settled) and ~~254.4~~89.8 million shares for ~~$14.0~~$5.0 billion during the ~~nine~~three months ended ~~February 29,~~August 31, 2020 under the stock repurchase program.

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 plan. Our stock repurchase program may be accelerated, suspended, delayed or discontinued at any time.

In ~~March~~September 2021, our Board of Directors declared a quarterly cash dividend of $0.32 per share of our outstanding common ~~stock, an increase of $0.08 per share over the dividend declared in December 2020.~~stock. The dividend is payable on ~~April 22,~~October 26, 2021 to stockholders of record as of the close of business on ~~April 8,~~October 12, 2021. Future declarations of dividends and the establishment of future record and payment dates are subject to the final determination of our Board of Directors.

During the first ~~nine months~~quarter of fiscal ~~2021,~~2022, we issued 5047 million restricted stock-based units (RSUs), substantially all of which were issued as a part of our annual stock-based award process and are subject to ~~service‑based~~service-based vesting restrictions. These fiscal ~~2021~~2022 stock-based ~~awards~~award issuances were partially offset by stock-based award forfeitures and cancellations of 262 million shares during the first ~~nine months~~quarter of fiscal ~~2021.~~2022.

The RSUs that were granted during the ~~nine~~three months ended ~~February 28,~~August 31, 2021 have vesting restrictions, valuations and contractual lives of a similar nature to those described in Note 13 of Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended May 31, ~~2020.~~

~~February 28,~~ ~~2021~~Further, during the first quarter of fiscal 2022, the Compensation Committee of our Board of Directors approved an amendment to the terms of the performance-based stock options (PSOs) granted on July 20, 2017 to our Chief Executive Officer and Chief Technology Officer. The amendment extends the term of the performance period for each of the 6 tranches of the PSOs that require the attainment of both a performance metric and a market capitalization metric by three additional fiscal years from May 31, 2022 to May 31, 2025. A 7th PSO tranche that was based upon a market-based metric was achieved and accordingly the tranche vested in the first quarter of fiscal 2022 without any amendment. If any of the remaining operational and market capitalization performance goals are achieved before May 31, 2025 additional tranches may vest. Upon amendment, we estimated the revised fair values of the six unvested tranches of the PSOs using a Monte Carlo simulation approach. We will recognize incremental stock-based compensation expense if any of the remaining unvested tranches becomes probable of achievement over the longer of the (a) estimated implicit service period for performance-metric achievement, or (b) derived service period for market-based metric achievement. We have preliminarily estimated service periods for those tranches that have been deemed probable of achievement to be approximately three to four years.

~~Stock‑based~~Stock-based compensation expense is included in the following operating expense line items in our condensed consolidated statements of operations:

	Three Months Ended				Nine Months Ended				Three Months Ended August 31,
(in millions)	February 28, 2021		February 29, 2020		February 28, 2021		February 29, 2020		2021		2020
Cloud services and license support	$	33	$	22	$	99	$	83	$	40	$	30
Hardware		2		3		8		8		3		3
Services		15		14		41		42		14		12
Sales and marketing		82		67		233		192		95		71
Research and development		307		238		897		781		344		276
General and administrative		40		17		117		98		49		36
Total stock-based compensation	$	479	$	361	$	1,395	$	1,204	$	545	$	428

Our effective ~~income~~ tax rates for each of the periods presented are the result of the mix of income earned in various tax jurisdictions that apply a broad range of income tax rates. ~~For the three and nine months ended February 28, 2021, our~~Our provision for income taxes varied from the tax computed at the U.S. federal statutory income tax rate ~~primarily due to a total net deferred tax benefit of $2.3 billion as a result of a partial realignment of our legal entity structure that resulted in~~for the intra-group transfer of certain intellectual property rights, 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 GILTI. For the three and nine months ended February 29, 2020, our provision for income taxes varied from the tax computed at the U.S. federal statutory income tax rateperiods 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 ~~GILTI.~~Global Intangible Low-Taxed Income. Our effective tax rates were ~~(53.3%)~~8.4% and ~~(9.8%)~~13.3% for the three ~~and nine~~ months ended ~~February 28,~~August 31, 2021 ~~respectively,~~ and ~~our effective tax rates were 16.4% and 16.1% for the three and nine months ended February 29,~~ 2020, respectively.

Our net deferred tax assets were ~~$5.8~~$5.7 billion ~~(refer to Note 1 under “Basis of Presentation” for additional information)~~ and ~~$3.2~~$5.8 billion as of ~~February 28,~~August 31, 2021 and May 31, ~~2020,~~2021, respectively. We believe that it is more likely than not that the net deferred tax assets will be realized in the foreseeable future. Realization of our net deferred tax assets is dependent upon our generation of sufficient taxable income in future years in appropriate tax jurisdictions to obtain benefit from the reversal of temporary differences, net operating loss carryforwards and tax credit carryforwards. The amount of net deferred tax assets considered realizable is subject to adjustment in future periods if estimates of future taxable income change.

Domestically, U.S. federal and state taxing authorities are currently examining income tax returns of Oracle and various acquired entities for years through fiscal ~~2019.~~2020. Our U.S. federal income tax returns have been examined for all years prior to fiscal 2010 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 2007, and we are no longer subject to audit for those periods.

Internationally, tax authorities for numerous non-U.S. jurisdictions are also examining returns affecting our unrecognized tax benefits. 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, India, Indonesia, Israel, Mexico, New Zealand, 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.

ASC 280, Segment Reporting, establishes standards for reporting information about operating segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. Our chief operating decision makers (CODMs) are our Chief Executive Officer and Chief Technology Officer. We are organized by line of business and geographically. While our CODMs evaluate results in a number of different ways, the line of business management structure is the primary basis for which the allocation of resources and financial results are assessed. The tabular information below presents the financial information provided to our CODMs for their review and assists our CODMs with evaluating the company’s performance and allocating company resources.

We have 3 businesses—cloud and license, hardware and services—each of which is comprised of a single operating segment. All 3 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 ~~such as~~

~~Oracle Solaris and certain other software,~~ and can also include product repairs, maintenance services and technical support services.

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.

	Three Months Ended				Nine Months Ended				Three Months Ended August 31,
(in millions)	February 28, 2021		February 29, 2020		February 28, 2021		February 29, 2020		2021		2020
Cloud and license:
Revenues⁽¹⁾	$	8,529	$	8,162	$	24,567	$	23,718
Revenues⁽¹⁾									$	8,184	$	7,834
Cloud services and license support expenses		1,011		943		2,977		2,844		1,153		958
Sales and marketing expenses		1,694		1,816		4,947		5,428		1,626		1,633
Margin⁽²⁾	$	5,824	$	5,403	$	16,643	$	15,446
Margin⁽²⁾									$	5,405	$	5,243
Hardware:
Revenues	$	820	$	857	$	2,478	$	2,542	$	763	$	814
Hardware products and support expenses		223		262		698		803		238		239
Sales and marketing expenses		95		107		287		338		89		98
Margin⁽²⁾	$	502	$	488	$	1,493	$	1,401
Margin⁽²⁾									$	436	$	477
Services:
Revenues	$	737	$	778	$	2,209	$	2,372	$	781	$	720
Services expenses		587		660		1,767		2,025		609		585
Margin⁽²⁾	$	150	$	118	$	442	$	347
Margin⁽²⁾									$	172	$	135
Totals:
Revenues⁽¹⁾	$	10,086	$	9,797	$	29,254	$	28,632
Revenues⁽¹⁾									$	9,728	$	9,368
Expenses		3,610		3,788		10,676		11,438		3,715		3,513
Margin⁽²⁾	$	6,476	$	6,009	$	18,578	$	17,194
Margin⁽²⁾									$	6,013	$	5,855

The following table reconciles total operating segment revenues to total revenues as well as total operating segment margin to income before provision for income taxes:

	Three Months Ended						Nine Months Ended						Three Months Ended August 31,
(in millions)	February 28, 2021			February 29, 2020			February 28, 2021			February 29, 2020			2021		2020
Total revenues for operating segments	$	10,086		$	9,797		$	29,254		$	28,632		$	9,728	$	9,368
Cloud and license revenues⁽¹⁾		(1	)		(1	)		(2	)		(3	)
Cloud and license revenues⁽¹⁾														0		(1	)
Total revenues	$	10,085		$	9,796		$	29,252		$	28,629		$	9,728	$	9,367

Total margin for operating segments	$	6,476		$	6,009		$	18,578		$	17,194		$	6,013		$	5,855
Cloud and license revenues⁽¹⁾		(1	)		(1	)		(2	)		(3	)
Cloud and license revenues⁽¹⁾														0			(1	)
Research and development		(1,621	)		(1,500	)		(4,812	)		(4,588	)		(1,684	)		(1,589	)
General and administrative		(330	)		(288	)		(949	)		(903	)		(298	)		(295	)
Amortization of intangible assets		(347	)		(400	)		(1,037	)		(1,221	)		(303	)		(345	)
Acquisition related and other		(13	)		(7	)		(107	)		(44	)		(21	)		(19	)
Restructuring		(66	)		(60	)		(337	)		(181	)		(38	)		(174	)
Stock-based compensation for operating segments		(132	)		(106	)		(381	)		(325	)		(152	)		(116	)
Expense allocations and other, net		(88	)		(119	)		(281	)		(341	)		(90	)		(105	)
Interest expense		(585	)		(456	)		(1,799	)		(1,416	)		(705	)		(614	)
Non-operating (expenses) income, net		(17	)		4			(30	)		195
Income before benefit from (provision for) income taxes	$	3,276		$	3,076		$	8,843		$	8,367
Non-operating expenses, net														(41	)		(2	)
Income before provision for income taxes													$	2,681		$	2,595

We have considered information that is regularly reviewed by our CODMs in evaluating financial performance, and disclosures presented outside of our financial statements in our earnings releases and used in investor presentations to disaggregate revenues to depict how the nature, amount, timing and uncertainty of revenues and cash flows are affected by economic factors. The principal category we use to disaggregate revenues is the nature of our products and services as presented in our condensed consolidated statements of operations, the total of which is reconciled to revenues from our reportable segments as per the preceding tables of this footnote.

The following table is a summary of our total revenues by geographic region. The relative proportion of our total revenues between each geographic region as presented in the table below was materially consistent across each of our operating segments’ revenues for the periods presented.

	Three Months Ended				Nine Months Ended				Three Months Ended August 31,
(in millions)	February 28, 2021		February 29, 2020		February 28, 2021		February 29, 2020		2021		2020
Americas	$	5,424	$	5,363	$	15,751	$	15,817	$	5,321	$	5,068
EMEA⁽¹⁾		2,981		2,835		8,571		8,083
EMEA⁽¹⁾										2,784		2,738
Asia Pacific		1,680		1,598		4,930		4,729		1,623		1,561
Total revenues	$	10,085	$	9,796	$	29,252	$	28,629	$	9,728	$	9,367

The following table presents our cloud services and license support revenues by applications and infrastructure ecosystems.

	Three Months Ended				Nine Months Ended				Three Months Ended August 31,
(in millions)	February 28, 2021		February 29, 2020		February 28, 2021		February 29, 2020		2021		2020
Applications cloud services and license support	$	2,952	$	2,809	$	8,669	$	8,265	$	3,041	$	2,816
Infrastructure cloud services and license support		4,300		4,121		12,642		12,281		4,330		4,131
Total cloud services and license support revenues	$	7,252	$	6,930	$	21,311	$	20,546	$	7,371	$	6,947

Basic earnings per share is computed by dividing net income for the period by the weighted-average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income for the period by the ~~weighted average~~weighted-average number of common shares outstanding during the period, plus the dilutive effect of outstanding restricted stock-based awards, stock options, and shares issuable under the employee stock purchase plan as applicable pursuant to the treasury stock method. The following table sets forth the computation of basic and diluted earnings per share:

	Three Months Ended				Nine Months Ended				Three Months Ended August 31,
(in millions, except per share data)	February 28, 2021		February 29, 2020		February 28, 2021		February 29, 2020		2021		2020
Net income	$	5,021	$	2,571	$	9,714	$	7,019	$	2,457	$	2,251
Weighted average common shares outstanding		2,913		3,190		2,977		3,251		2,769		3,041
Dilutive effect of employee stock plans		81		81		72		86		92		66
Dilutive weighted average common shares outstanding		2,994		3,271		3,049		3,337		2,861		3,107
Basic earnings per share	$	1.72	$	0.81	$	3.26	$	2.16	$	0.89	$	0.74
Diluted earnings per share	$	1.68	$	0.79	$	3.19	$	2.10	$	0.86	$	0.72
Shares subject to anti-dilutive restricted stock-based awards and stock options excluded from calculation⁽¹⁾		36		55		36		55		30		36

On June 15, 2011, Hewlett-Packard Company, now Hewlett Packard Enterprise Company (HP), filed a complaint in the California Superior Court, County of Santa Clara against Oracle Corporation alleging numerous causes of action including breach of contract, breach of the covenant of good faith and fair dealing, defamation, intentional interference with prospective economic advantage, and violation of the California Unfair Business Practices Act. The complaint alleged that when Oracle announced on March 22 and 23, 2011 that it would no longer develop future versions of its software to run on HP’s Itanium-based servers, it breached a settlement agreement signed on September 20, 2010 (the HP Settlement Agreement), resolving litigation between HP and one of Oracle’s former CEOs who had previously acted as HP’s chief executive officer and chairman of HP’s board of directors. HP sought a judicial declaration of the parties’ rights and obligations under the HP Settlement Agreement and other equitable and monetary relief. Oracle answered the complaint and filed cross-claims.

After a bench trial on the meaning of the HP Settlement Agreement, the court found that the HP Settlement Agreement required Oracle to continue to develop certain of its software products for use on HP’s Itanium-based servers at no cost to HP. The case proceeded to a jury trial in May 2016. On June 30, 2016, the jury returned a verdict in favor of HP on its claims for breach of contract and breach of the implied covenant of good faith and fair dealing and against Oracle on its cross-claims. The jury awarded HP $3.0 billion in damages. Under the court’s rulings, HP is entitled to post-judgment interest, but not pre-judgment interest, on this award.

After the trial court denied Oracle’s motion for a new trial, Oracle filed a notice of appeal on January 17, 2017. On February 2, 2017, HP filed a notice of appeal of the trial court’s denial of pre-judgment interest.

Oral argument was held on May 27, 2021. On June 14, 2021, the Court of Appeal affirmed both the judgment against Oracle noted above, and the denial of pre-judgment interest. Oracle has posted a mandated surety bond with the trial court for the amounts owing. On June 29, 2021, Oracle filed a Petition for Rehearing with the Court of Appeal, which was denied on July 8, 2021. On July 26, 2021, Oracle filed a Petition for Review with the California Supreme Court, and briefing on that Petition is now complete. NaN amounts have been paid or recorded to our results of operations. If the Court of Appeal’s judgment is ultimately affirmed, we would be liable for the amount of the jury award that is described above plus post-judgment interest.

We continue to believe that we have meritorious defenses against HP’s claims and we intend to present these defenses to the appellate court. Oracle filed its opening brief on March 7, 2019. Briefing on the appeal was completed November 1, 2019, and the appellate court has not scheduled a date for oral argument. vigorously defend against them.

We cannot currently estimate a reasonably possible range of loss for this action due to the complexities and uncertainty surrounding ~~the appeal~~this process and the nature of the claims. Litigation is inherently unpredictable, and the outcome of the ~~appeal~~ process related to this action is uncertain. It is possible that the resolution of this action could have a material impact on our future cash flows and results of operations.

On May 3 and July 18, 2017, two alleged stockholders filed separate derivative lawsuits in the Court of Chancery of the State of Delaware, purportedly on Oracle’s behalf. Thereafter, the court consolidated the two derivative cases and designated the July 18, 2017 complaint as the operative complaint. The consolidated lawsuit was brought against all the then-current members and one former member of our Board of Directors, and Oracle as a nominal defendant. Plaintiff alleged that the defendants breached their fiduciary duties by causing Oracle to agree to purchase NetSuite Inc. (NetSuite) at an excessive price. The complaint sought (and the operative complaint continues to seek) declaratory relief, unspecified monetary damages (including interest), and attorneys’ fees and costs. The defendants filed a motion to dismiss, which the court denied on March 19, 2018.

On May 4, 2018, our Board of Directors established a Special Litigation Committee (the SLC) to investigate the allegations in this derivative action. Three non-employee directors served on the SLC. On August 15, 2019, the SLC filed a letter with the court, stating that the SLC believed that plaintiff should be allowed to proceed with the derivative litigation on behalf of Oracle. After the SLC advised the Board that it had fulfilled its duties and obligations, the Board withdrew the SLC’s authority, except that the SLC maintained certain authority to respond to discovery requests in the litigation.

After plaintiff filed the July 18, 2017 complaint, an additional plaintiff joined the case. Plaintiffs filed several amended complaints, and filed their most recent amended complaint on December 11, 2020. The operative complaint asserts claims for breach of fiduciary duty against our Chief Executive Officer, our Chief Technology Officer, the estate of Mark Hurd (our former Chief Executive Officer who passed away on October 18, 2019), and two other members of our Board of Directors. Oracle is named as a nominal defendant. On December 11, 2020, the estate of Mark Hurd and the two other members of our Board of Directors moved to dismiss this complaint, and a hearing on this motion was held on February 16, 2021. ~~The~~On June 21, 2021, the court ~~has not yet ruled~~granted this motion as to the estate of Mark Hurd and one Board member and denied the motion as to the other Board member, who filed an answer to the complaint on ~~this motion.~~August 9, 2021. On December 28, 2020, our Chief Executive Officer, our Chief Technology Officer, and Oracle as a nominal defendant filed answers to the operative complaint.

The parties are conducting discovery. Trial is scheduled to commence on July 18, 2022.

While Oracle continues to evaluate these claims, we do not believe this litigation will have a material impact on our financial position or results of operations.

Securities Class Action and Derivative Litigation Concerning Oracle’s Cloud Business

On August 10, 2018, a putative class action, brought by an alleged stockholder of Oracle, was filed in the U.S. District Court for the Northern District of California against us, our Chief Technology Officer, our then-two Chief Executive Officers, two other Oracle executives, and one former Oracle executive. As noted above, Mr. Hurd, one of our then-two Chief Executive Officers, passed away on October 18, 2019. On March 8, 2019, plaintiff filed an amended complaint. Plaintiff alleges that the defendants made or are responsible for false and misleading statements regarding Oracle’s cloud business. Plaintiff further alleges that the former Oracle executive engaged in insider trading. Plaintiff seeks a ruling that this case may proceed as a class action, and seeks damages, attorneys’ fees and costs, and unspecified declaratory/injunctive relief. On April 19, 2019, defendants moved to dismiss plaintiff’s amended complaint. On December 17, 2019, the court granted this motion, giving plaintiffs an opportunity to file an amended complaint, which plaintiff filed on February 17, 2020. On April 23, 2020, defendants filed a motion to dismiss, and the court held a hearing on this motion on September 24, 2020. On March 22, 2021, the court granted in part and denied in part this motion. The court ~~has not yet ruled~~dismissed the action as to one Oracle executive and the former Oracle executive. The court permitted plaintiff to proceed with only a narrow omissions theory against the remaining defendants. On April 21, 2021, defendants filed an answer to the complaint. Trial is scheduled to commence on ~~this motion.~~November 6, 2023. We believe that we have meritorious defenses against this action, and we will continue to vigorously defend it.

On February 12 and May 8, 2019, atwo stockholder derivative ~~lawsuit was~~lawsuits were filed in the ~~U.S.~~United States District Court for the Northern District of California. The cases were consolidated, and on July 8, 2019, a single plaintiff filed a consolidated complaint. The consolidated complaint brought various claims relating to the 10b-5 class action described immediately above. The parties agreed to stay the derivative case pending resolution of defendants’ motion to dismiss the securities case, which the court granted in part and denied in part on March 22, 2021.

Plaintiff filed an amended complaint on June 4, 2021. The derivative suit is brought by ~~two~~an alleged ~~stockholders~~stockholder of Oracle, purportedly on Oracle’s behalf, against ~~all members~~our Chief Technology Officer, our Chief Executive Officer, and the

estate of ~~Directors, and Oracle as a nominal defendant. Plaintiffs claim~~Mark Hurd. Plaintiff claims that the alleged actions described in the ~~August 10, 2018~~ class action discussed above caused harm to Oracle, and that ~~Oracle’s Board members~~defendants violated their fiduciary duties of ~~care,~~candor, good faith, loyalty, ~~reasonable inquiry,~~ and ~~good faith~~due care by failing to prevent this alleged harm. ~~Plaintiffs~~Plaintiff also ~~allege that defendants’ actions constitute gross mismanagement, waste, and~~brings derivative claims for violations of federal securities ~~fraud.~~laws. Plaintiffs seek a ruling that this case may proceed as a derivative action, a finding that defendants are liable for breaching their fiduciary duties, damages, an order directing defendants to enact corporate reforms, attorneys’ fees and costs, and unspecified ~~equitable~~ relief. On ~~April 26, 2019,~~June 14, 2021, the court ~~approved~~“so ordered” a ~~stay of this action, which will be lifted if~~stipulation from the ~~class action discussed above is dismissed, if the motion to dismiss the class action is denied, or if either party voluntarily chooses to lift the stay.~~

~~On May 8, 2019, a second derivative action was filed in the~~ ~~U.S.~~ District Court for the Northern District of California. The derivative suit is brought by an alleged stockholder of Oracle, purportedly on Oracle’s behalf, against our Chief Technology Officer, our then‑two Chief Executive Officers, one former Oracle executive, and Oracle as a nominal defendant. Plaintiff claims that the alleged actions described in the August 10, 2018 class action discussed above caused harm to Oracle, and plaintiff raises further allegations of impropriety relating to Oracle’s stock buybacks and acquisition of NetSuite. Plaintiff asserts claims for violation of securities laws, violation of fiduciary duties, contribution and indemnification. Plaintiff seeks a ruling that the case may proceed as a derivative action, and seeks damages, declaratory and other equitable relief, attorneys’ and expert fees and costs. On June 4, 2019, the court issued an order finding thatparties, staying this case ~~was related to~~pending resolution of the ~~derivative case above and staying the case under the court’s prior stay order. On July 8, 2019, plaintiffs in the 2 derivative actions filed a consolidated complaint. The actions remain stayed.~~10b-5 action.

While Oracle continues to evaluate these claims, we do not believe this litigation will have a material impact on our financial position or results of operations.

Derivative Litigation Concerning Oracle’s Board Composition and Hiring Practices

On July 2 and 10, 2020, two alleged stockholders filed derivative lawsuits in the U.S. District Court for the Northern District of California, purportedly on Oracle’s behalf, and thereafter, filed a consolidated complaint on August 21, 2020. On July 30, 2020, a third alleged stockholder filed a derivative lawsuit in the same court. On October 16, 2020, defendants moved to consolidate all these actions, and the court granted this motion on November 30, 2020.

On December 7, 2020, plaintiffs filed a consolidated derivative complaint against all members of our Board of Directors, and Oracle as a nominal defendant, seeking declaratory and injunctive relief, monetary damages, interest, corporate governance changes, disgorgement, restitution, punitive damages, and an award of attorneys’ fees, expert fees, and costs. Plaintiffs allege that: (a) defendants breached their fiduciary duties by permitting Oracle to violate anti-discrimination laws and Oracle’s own policies, failing to ensure sufficient diversity on the board, failing to ensure an independent board chairman, rehiring Ernst & Young LLP as Oracle’s auditors, and by breaching the HP Settlement Agreement (discussed above); (b) defendants made false and misleading statements in Oracle’s proxy statements; (c) defendants received unjust compensation and were unjustly enriched; (d) defendants aided and abetted this conduct; and (e) our Chief Technology Officer and our Chief Executive Officer are liable for abuse of control. On January 6, 2021, defendants moved to dismiss the complaint. On May 24, 2021, the court granted defendants’ motion. Regarding the claims concerning Oracle’s proxy statements, the court granted plaintiffs leave to file an amended complaint within 30 days. Plaintiffs ~~filed~~did not file an ~~opposition~~amended complaint within 30 days. On September 3, 2021, the court entered judgment for defendants on ~~March 1, and defendants’ reply is due by March 22, 2021. A hearing on this motion is scheduled for April 8, 2021.~~these claims. Regarding the remaining claims, the court granted plaintiffs leave to re-file those claims in Delaware Chancery Court.

While Oracle continues to evaluate these claims, we do not believe this litigation will have a material impact on our financial position or results of operations.

We are party to various other legal proceedings and claims, either asserted or unasserted, which arise in the ordinary course of business, including proceedings and claims that relate to acquisitions we have completed or to companies we have acquired or are attempting to acquire. While the outcome of these matters cannot be predicted with certainty, we do not believe that the outcome of any of these matters, individually or in the aggregate, will result in losses that are materially in excess of amounts already recognized, if any.

We begin Management’s Discussion and Analysis of Financial Condition and Results of Operations with an overview of our businesses and significant trends. This overview is followed by a summary of our critical accounting policies and estimates that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results. We then provide a more detailed analysis of our results of operations and financial condition.

Oracle provides products and services that address enterprise information technology (IT) environments. Our products and services include enterprise applications and infrastructure offerings that are delivered worldwide through a variety of flexible and interoperable IT deployment models. These models include ~~on‑premise~~on-premise deployments, ~~cloud‑based~~cloud-based deployments, and hybrid deployments (an approach that combines both on-premise and ~~cloud‑based~~cloud-based deployment) such as our Oracle ~~Cloud at Customer~~Cloud@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. Through our worldwide sales force and Oracle Partner Network, we sell to customers all over the world including businesses of many sizes, government agencies, educational institutions and resellers.

We have three businesses: cloud and license; hardware; and services; each of which comprises a single operating segment. The descriptions set forth below as a part of this Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations and the information contained within Note 109 of Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report provide additional information related to our businesses and operating segments and align to how our chief operating decision makers (CODMs), which include our Chief Executive Officer and Chief Technology Officer, view our operating results and allocate resources.

For a discussion of the impacts on and risks to our business from COVID-19, please refer to “Impacts of the COVID-19 Pandemic on Oracle’s Business” included in Item 1 Business and certain risk factors included in Item 1A Risk Factors in our Annual Report on Form 10-K for the fiscal year ended May 31, ~~2020;~~2021; and the information presented below in Results of Operations as a part of this Item 2 of this Quarterly Report.

Our cloud and license business, which represented 84% of our total revenues on a trailing 4-quarter basis, markets, sells and delivers a broad spectrum of enterprise applications and infrastructure technologies through our cloud and license offerings.

~~Cloud services~~ Revenue streams included in our cloud and license ~~support revenues include:~~business are:

Cloud license and on-premise license revenues include revenues from the licensing of our software products including Oracle Applications, Oracle Database, Oracle Middleware and Java, among others, which our customers deploy within cloud‑based, on‑premise and other IT environments. Our cloud license and on‑premise license transactions are generally perpetual in nature and are generally recognized as revenues up front at the point in time when the software is made available to the customer to download and use. Revenues from usage‑based royalty arrangements for distinct cloud licenses and on-premise licenses are recognized at the point in time when the software end user usage occurs. The timing of a few large license transactions can substantially affect our quarterly license revenues due to the point-in-time nature of revenue recognition for license transactions, which is different than the typical revenue recognition pattern for our cloud services and license support revenues in which revenues are generally recognized ratably over the contractual terms. Cloud license and on-premise license customers have the option to purchase and renew license support contracts, as further described above.

Providing choice and flexibility to our customers as to when and how they deploy Oracle applications and infrastructure technologies are important elements of our corporate strategy. In recent periods, customer demand for our applications and infrastructure technologies delivered through our Oracle Cloud Services has increased. To address customer demand and enable customer choice, we have introduced certain programs for customers to pivot their applications and infrastructure licenses and the related license support to the Oracle Cloud for new deployments and to migrate to and expand with the Oracle Cloud for their existing workloads. WeThe proportion of our cloud services and license support revenues relative to our cloud license and on-premise license revenues, hardware revenues and services revenues has increased and we expect ~~these trends~~this trend to continue. Cloud services and license support revenues represented 76% and 74% of our total revenues in the first three months of fiscal 2022 and 2021, respectively.

Our cloud and license business’ revenue growth is affected by many factors, including the strength of general economic and business conditions; governmental budgetary constraints; the strategy for and competitive position of our offerings; the continued renewal of our cloud services and license support customer contracts by the customer contract base; substantially all customers continuing to purchase license support contracts in connection with their license purchases; the pricing of license support contracts sold in connection with the sales of licenses; the pricing, amounts and volumes of licenses and cloud services sold; our ability to manage Oracle Cloud capacity requirements to meet existing and prospective customer demand; and foreign currency rate fluctuations.

On a constant currency basis, we expect that our total cloud and license revenues generally will continue to increase due to:

We believe these factors should contribute to future growth in our cloud and license business’ total revenues, which should enable us to continue to make investments in research and development and our cloud operations to develop, improve, increase the capacity of and ~~improve~~expand the geographic footprint of our cloud and license products and services.

Our cloud and license business’ margin has historically trended upward over the course of the four quarters within a particular fiscal year due to the historical upward trend of our cloud and license business’ revenues over those quarterly periods and because the majority of our costs for this business are generally fixed in the short term. The historical upward trend of our cloud and license business’ revenues over the course of the four quarters within a particular fiscal year is primarily due to the addition of new cloud services and license support contracts to the

customer contract base that we generally recognize as revenues ~~ratably;~~ratably or based upon customer usage over the respective contractual terms and the renewal of existing customers’ cloud services and license support contracts over the course of each fiscal year that we generally recognize as revenues ~~ratably;~~in a similar manner; and the historical upward trend of our cloud license and on-premise license revenues, which we generally recognize at a point in time upon delivery; in each case over those four fiscal quarterly periods.

Our hardware business, which represented 9%8% of our total revenues on a trailing 4-quarter basis, provides a broad selection of enterprise hardware products and hardware-related software products including Oracle Engineered Systems, servers, storage, industry-specific hardware offerings, operating systems, virtualization, management and

other ~~hardware related~~hardware-related software, and related hardware support. Each hardware product and its related software, such as an operating system or firmware, are highly interdependent and interrelated and are accounted for as a combined performance obligation. The revenues for this combined performance obligation are generally recognized at the point in time that the hardware product and its related software are delivered to the customer and ownership is transferred to the customer. We expect to make investments in research and development to improve existing hardware products and services and to develop new hardware products and services. The majority of our hardware products are sold through indirect channels, including independent distributors and value-added resellers. Our hardware support offerings provide customers with unspecified software updates for software components that are essential to the functionality of our hardware products and associated software ~~products such as Oracle Solaris.~~products. Our hardware support offerings can also include product repairs, maintenance services and technical support services. Hardware support contracts are entered into and renewed at the option of the customer, are generally priced as a percentage of the net hardware products fees and are generally recognized as revenues ratably as the hardware support services are delivered over the contractual terms.

We generally expect our hardware business to have lower operating margins as a percentage of revenues than our cloud and license business due to the incremental costs we incur to produce and distribute these products and to provide support services, including direct materials and labor costs.

Our quarterly hardware revenues are difficult to predict. Our hardware revenues, cost of hardware and hardware operating margins that we report are affected by many factors, including our ~~ability~~manufacturing partners’ abilities to timely manufacture or deliver a few large hardware transactions; our strategy for and the position of our hardware products relative to competitor offerings; customer demand for competing offerings, including cloud infrastructure offerings; the strength of general economic and business conditions; governmental budgetary constraints; whether customers decide to purchase hardware support contracts at or in close proximity to the time of hardware product sale; the percentage of our hardware support contract customer base that renews its support contracts and the close association between hardware products, which have a finite life, and customer demand for related hardware support as hardware products age; customer decisions to either maintain or upgrade their existing hardware infrastructure to newly developed technologies that are available; and foreign currency rate fluctuations.

Our services business, which represented 7%8% of our total revenues on a trailing 4-quarter basis, helps customers and partners maximize the performance of their investments in Oracle applications and infrastructure technologies. We believe that our services are differentiated based on our focus on Oracle technologies, extensive experience, broad sets of intellectual property and best practices. Our services offerings include consulting services and advanced customer ~~services and education~~ services. Our services business has lower margins than our cloud and license and hardware businesses. Our services revenues are affected by many factors including our strategy for, and the competitive position of, our services; customer demand for our cloud and license and hardware offerings and the associated services for these offerings; general economic conditions; governmental budgetary constraints; personnel reductions in our customers’ IT departments; ~~and~~ tighter controls over customer discretionary ~~spending.~~spending; and foreign currency rate fluctuations.

Our selective and active acquisition program is another important element of our corporate strategy. Historically, we have invested billions of dollars to acquire a number of complementary companies, products, services and technologies. The pace of our acquisitions has slowed in recent years, but as compelling opportunities become available, we may acquire companies, products, services and technologies in furtherance of our corporate strategy. Note 2 of Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report provides additional information related to our recent acquisitions.

We believe that we can fund our future acquisitions with our internally available cash, cash equivalents and marketable securities, cash generated from operations, additional borrowings or from the issuance of additional securities. We estimate the financial impact of any potential acquisition with regard to earnings, operating margin, cash flows and return on invested capital targets before deciding to move forward with an acquisition.

Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (GAAP) as set forth in the Financial Accounting Standards Board’s Accounting Standards Codification (ASC), and we consider the various staff accounting bulletins and other applicable guidance issued by the SEC. GAAP, as set forth within the ASC, requires 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 financial statements will be affected. The accounting policies that reflect our more significant estimates, judgments and assumptions and which we believe are the most critical to aid in fully understanding and evaluating our reported financial results include:

During the first ~~nine months~~quarter of fiscal ~~2021,~~2022, there were no significant changes to our critical accounting policies and estimates. Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in Part II, Item 7 of our Annual Report on Form 10-K for our fiscal year ended May 31, ~~2020~~2021 provides a more complete discussion of our critical accounting policies and estimates.

In our results of operations discussion below, we provide an overview of our total consolidated revenues, total consolidated operating expenses and total consolidated operating margin, all of which are presented on a GAAP basis. We also present a GAAP-based discussion below for substantially all of the other expense items as presented in our ~~condensed~~ consolidated statements of operations that are not directly attributable to our three businesses.

In addition, we discuss below the results of each of our three businesses—cloud and license, hardware and services—which are our operating segments as defined pursuant to ASC 280, Segment Reporting. The financial reporting for our three businesses that is presented below is presented in a manner that is consistent with that used by our CODMs. Our operating segment presentation below reflects revenues, direct costs and sales and marketing expenses that correspond to and are directly attributable to each of our three businesses. We also utilize these inputs to calculate and present a segment margin for each of our three businesses in the discussion below.

Consistent with our internal management reporting processes, the below operating segment presentation is noted to include any revenues adjustments related to cloud services and license support contracts that would have otherwise been recorded by the acquired businesses as independent entities but were not recognized in our condensed consolidated statements of operations for the periods presented due to business combination accounting requirements. Refer to “Supplemental Disclosure Related to Certain Charges” below for additional discussion of these items and Note 109 of Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for a reconciliation of the summations of our total operating segment revenues as presented in the discussion below to total revenues as presented per our condensed consolidated statements of operations for all periods presented.

In addition, research and development expenses, general and administrative expenses, stock-based compensation expenses, amortization of intangible assets, certain other expense allocations, acquisition related and other expenses, restructuring expenses, interest expense, non-operating expenses, ~~or income,~~ net and provision for

income taxes are not attributed to our three operating segments because our management does not view the performance of our three businesses including such items and/or it is impractical to do so. Refer to “Supplemental Disclosure Related to Certain Charges” below for additional discussion of certain of these items and Note 109 of Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for a reconciliation of the summations of total segment margin as presented in the discussion below to total income before provision for income taxes as presented per our condensed consolidated statements of operations for all periods presented.

~~Separately, as described further below and in Notes 1 and 9~~We experienced COVID-19 related impacts to our businesses during each of ~~Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report, we recorded a $2.3 billion one-time net deferred tax benefit during~~ the ~~third~~first quarter ~~and first nine months~~ of fiscal ~~2021 that related to a partial realignment~~2022 and 2021. Certain of these historical impacts on our ~~legal entity structure that resulted in the intra-group transfer of certain intellectual property rights.~~operating results are further discussed below. Any future impacts are currently unknown.

Our international operations have provided and are expected to continue to provide a significant portion of each of our businesses’ revenues and expenses. As a result, each of our businesses’ revenues and expenses and our total revenues and expenses will continue to be affected by changes in the U.S. Dollar against major international currencies. In order to provide a framework for assessing how our underlying businesses performed, excluding the effects of foreign currency rate fluctuations, we compare the percent change in the results from one period to another period in this Quarterly Report using constant currency disclosure. To present this information, current and comparative prior period results for entities reporting in currencies other than U.S. Dollars are converted into U.S. Dollars at constant exchange rates (i.e., the rates in effect on May 31, ~~2020,~~2021, which was the last day of our prior fiscal year) rather than the actual exchange rates in effect during the respective periods. For example, if an entity reporting in Euros had revenues of 1.0 million Euros from products sold on ~~February 28,~~August 31, 2021 and ~~February 29,~~ 2020, our financial statements would reflect reported revenues of ~~$1.18~~$1.17 million in the first ~~nine months~~quarter of fiscal ~~2021~~2022 (using ~~1.18~~1.17 as the month-end average exchange rate for the period) and ~~$1.09~~$1.18 million in the first ~~nine months~~quarter of fiscal ~~2020~~2021 (using ~~1.09~~1.18 as the month-end average exchange rate for the period). The constant currency presentation, however, would translate the results for the first ~~nine months~~quarter of fiscal ~~2021~~2022 and ~~2020~~2021 using the May 31, ~~2020~~2021 exchange rate and indicate, in this example, no change in revenues during the period. In each of the tables below, we present the percent change based on actual, unrounded results in reported currency and in constant currency.

	Three Months Ended						Nine Months Ended						Three Months Ended August 31,
	February 28,		Percent Change		February 29,		February 28,		Percent Change		February 29,				Percent Change
(Dollars in millions)	2021		Actual	Constant	2020		2021		Actual	Constant	2020		2021		Actual	Constant	2020
Total Revenues by Geography:
Americas	$	5,424	1%	2%	$	5,363	$	15,751	0%	0%	$	15,817	$	5,321	5%	4%	$	5,068
EMEA⁽¹⁾		2,981	5%	-1%		2,835		8,571	6%	2%		8,083		2,784	2%	-1%		2,738
Asia Pacific		1,680	5%	0%		1,598		4,930	4%	1%		4,729		1,623	4%	3%		1,561
Total revenues		10,085	3%	0%		9,796		29,252	2%	1%		28,629		9,728	4%	2%		9,367
Total Operating Expenses		6,207	-1%	-2%		6,268		18,580	-2%	-3%		19,041		6,301	2%	1%		6,156
Total Operating Margin	$	3,878	10%	5%	$	3,528	$	10,672	11%	9%	$	9,588	$	3,427	7%	5%	$	3,211
Total Operating Margin %	38%				36%		36%				33%		35%				34%
% Revenues by Geography:
Americas	54%				55%		54%				55%		55%				54%
EMEA	29%				29%		29%				28%		28%				29%
Asia Pacific	17%				16%		17%				17%		17%				17%
Total Revenues by Business:
Cloud and license	$	8,528	4%	2%	$	8,161	$	24,565	4%	2%	$	23,715	$	8,184	4%	3%	$	7,833
Hardware		820	-4%	-6%		857		2,478	-3%	-3%		2,542		763	-6%	-7%		814
Services		737	-5%	-8%		778		2,209	-7%	-8%		2,372		781	8%	7%		720
Total revenues	$	10,085	3%	0%	$	9,796	$	29,252	2%	1%	$	28,629	$	9,728	4%	2%	$	9,367
% Revenues by Business:
Cloud and license	85%				83%		84%				83%		84%				83%
Hardware	8%				9%		8%				9%		8%				9%
Services	7%				8%		8%				8%		8%				8%

Excluding the effects of foreign currency rate fluctuations, our total revenues increased ~~modestly~~ in the first quarter of fiscal ~~2021 periods presented,~~2022, relative to the ~~corresponding prior year periods,~~first quarter of fiscal 2021, due to growth in our cloud and license business’ revenues and services business’ revenues, which were partially offset by ~~declines~~a decline in our hardware ~~business’ revenues and services~~ business’ revenues. The constant currency ~~increases~~increase in our cloud and license business’ revenues during the first quarter of fiscal ~~2021 periods presented,~~2022, relative to the ~~corresponding prior year periods, were~~first quarter of fiscal 2021, was primarily attributable to growth in our cloud services and license support ~~revenues and, to a lesser extent, growth in our cloud license and on-premise license~~ revenues as customers purchased our applications and infrastructure technologies via cloud and license deployment models and renewed their related cloud contracts and license support contracts to continue to gain access to the latest versions of our technologies and to receive support services. The constant currency ~~decreases~~increase in our services business’ revenues during the first quarter of fiscal 2022, relative to the first quarter of fiscal 2021, was attributable to an increase in revenues for all of our primary services offerings. The constant currency decrease in our hardware business’ revenues during the first quarter of fiscal 2022, relative to the first quarter of fiscal 2021, ~~periods presented were~~was due to the emphasis we placed on the marketing and sale of our growing cloud-based infrastructure technologies ~~and strategic hardware offerings~~ and the de-emphasis of our sales and marketing efforts for certain of our non-strategic hardware products and related support services. The constant currency decreases in our services business’ revenues during the fiscal 2021 periods presented were substantially attributable to declines in our consulting revenues. Due to the effects of the COVID-19 pandemic, allAll three of our businesses’ revenues were adversely impacted during each of the first quarter of fiscal 2022 and 2021 ~~periods presented relative~~due to the ~~corresponding prior year periods.~~effects of the COVID-19 pandemic. While we expect these effects to be temporary, the impacts of COVID-19 for ~~the remainder of fiscal 2021 and~~ future periods are unknown. In constant currency, total ~~revenue~~revenues growth during the ~~third~~first quarter of fiscal ~~2021~~2022 in the Americas ~~region~~and Asia Pacific regions was partially offset by a slight decline in total revenues growth in the EMEA ~~and Asia Pacific regions. In constant currency, the Americas, EMEA and Asia Pacific regions contributed 26%, 53% and 21%, respectively, to the growth in our total revenues during the first nine months~~region.

Excluding the effects of foreign currency rate fluctuations, our total operating expenses ~~decreased in~~increased during the first quarter of fiscal ~~2021 periods presented,~~2022, relative to the ~~corresponding prior year periods,~~first quarter of fiscal 2021, primarily due to lower sales and marketing expenses, lower hardware expenses and lower services expenses, all of which were primarily attributable to lower headcount and a reduction in certain variable expenditures as further described below. In addition, we also incurred lower amortization of intangible assets during the fiscal 2021 periods presented. These

~~constant currency expense decreases were partially offset by certain constant currency expense increases during the fiscal 2021 periods presented including:~~ higher cloud services and license support expenses, which increased primarily due to higher infrastructure investments that were made to support the increase in our cloud and license business’ revenues; higher services expenses, which increased primarily due to higher external contractor expenses; and higher research and development ~~and general and administrative~~ expenses, ~~each of~~ which increased primarily due to higher employee related ~~expenses; higher acquisition related and other expenses, which increased primarily due to certain right-of-use~~expenses. These constant currency expense increases were partially offset by lower amortization of intangible assets and ~~other assets that were abandoned in connection with plans to improve our cost structure and operations; and higher~~lower restructuring expenses ~~which increased due to actions taken~~ during the first quarter of fiscal 2022. In addition, during the first quarter of fiscal 2022, we recorded a $125 million gain on an operating asset sale, which was allocated as a benefit to most of our operating expense lines as presented per our condensed consolidated statement of operations during this period. During each of the first quarter of fiscal 2022 and fiscal 2021, ~~periods presented pursuant to the Fiscal 2019 Oracle Restructuring Plan (2019 Restructuring Plan). During the fiscal 2021 periods presented,~~ we curtailed a number of variable expenditures across all of our lines of businesses and functions including employee travel expenses and marketing expenses, among others, primarily in response to COVID-19. We expect ~~that~~ certain of these expenses may normalize in future periods provided global economic and health conditions improve.

In constant currency, our total operating margin and total operating margin as a percentage of total revenues increased ~~during~~in the first quarter of fiscal ~~2021 periods presented~~2022, relative to the corresponding prior year period, due to higher ~~total~~ revenues and ~~lower total operating expenses~~the aforementioned gain..

To supplement our condensed consolidated financial information, we believe that the following information is helpful to an overall understanding of our past financial performance and prospects for the future.

Our operating results reported pursuant to GAAP included the following business combination accounting adjustments and expenses related to acquisitions and certain other expense and income items that affected our GAAP net income:

	Three Months Ended						Nine Months Ended						Three Months Ended August 31,
(in millions)	February 28, 2021			February 29, 2020			February 28, 2021			February 29, 2020			2021			2020
Cloud services and license support deferred revenues⁽¹⁾	$	1		$	1		$	2		$	3		$	—		$	1
Amortization of intangible assets⁽²⁾		347			400			1,037			1,221			303			345
Acquisition related and other⁽³⁾		13			7			107			44			21			19
Restructuring⁽⁴⁾		66			60			337			181			38			174
Stock-based compensation, operating segments⁽⁵⁾		132			106			381			325			152			116
Stock-based compensation, R&D and G&A⁽⁵⁾		347			255			1,014			879			393			312
Income tax effects⁽⁶⁾		(2,442	)		(240	)		(2,990	)		(769	)		(420	)		(336	)
	$	(1,536	)	$	589		$	(112	)	$	1,884		$	487		$	631

Three Months Ended

Nine Months Ended

February 28,
2021

February 29,
2020

February 28,
2021

February 29,
2020

Cloud services and license support

$
33

$
22

$
99

$
83

Hardware

2

3

8

8

Services

15

14

41

42

Sales and marketing

82

67

233

192

Stock-based compensation, operating segments

132

106

381

325

Research and development

307

238

897

781

General and administrative

40

17

117

98

Total stock-based compensation

$
479

$
361

$
1,395

$
1,204

	Three Months Ended August 31,
	2021		2020
Cloud services and license support	$	40	$	30
Hardware		3		3
Services		14		12
Sales and marketing		95		71
Stock-based compensation, operating segments		152		116
Research and development		344		276
General and administrative		49		36
Total stock-based compensation	$	545	$	428

Our cloud and license business engages in the sale and marketing of our applications and infrastructure technologies that are delivered through various deployment models and include: Oracle license support offerings; Oracle ~~Cloud Services~~cloud services offerings; and Oracle cloud license and on-premise license offerings. License support revenues are typically generated through the sale of license support contracts related to cloud licenses and on-premise licenses; are purchased by our customers at their option; and are generally recognized as revenues ratably over the contractual term, which is generally one year. Our cloud services deliver applications and infrastructure technologies on a subscription basis via cloud-based deployment models that we develop, provide unspecified updates and enhancements for, deploy, host, manage and support. Revenues for our cloud services are generally recognized over the contractual term, which is generally one to three years, or in the case of usage model contracts, as the cloud services are consumed. 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 and are generally recognized up front at the point in time when the software is made available to the customer to download and use. We continue to place significant emphasis, both domestically and internationally, on direct sales through our own sales force. We also continue to market certain of our offerings through indirect channels. Costs associated with our cloud and license business are included in cloud services and license support expenses, and sales and marketing expenses. These costs are largely personnel and infrastructure related including the cost of providing our cloud services and license support offerings, salaries and commissions earned by our sales force for the sale of our cloud and license offerings, and marketing program costs.

	Three Months Ended						Nine Months Ended						Three Months Ended August 31,
	February 28,		Percent Change		February 29,		February 28,		Percent Change		February 29,				Percent Change
(Dollars in millions)	2021		Actual	Constant	2020		2021		Actual	Constant	2020		2021		Actual	Constant	2020
Cloud and License Revenues:
Americas⁽¹⁾	$	4,698	3%	3%	$	4,569	$	13,513	1%	2%	$	13,396	$	4,582	6%	5%	$	4,321
EMEA⁽¹⁾		2,482	7%	0%		2,320		7,144	8%	4%		6,591		2,297	0%	-3%		2,293
Asia Pacific⁽¹⁾		1,349	6%	0%		1,273		3,910	5%	2%		3,731		1,305	7%	6%		1,220
Total revenues⁽¹⁾		8,529	4%	2%		8,162		24,567	4%	2%		23,718		8,184	4%	3%		7,834
Expenses:
Cloud services and license support⁽²⁾		1,011	7%	5%		943		2,977	5%	4%		2,844		1,153	20%	19%		958
Sales and marketing⁽²⁾		1,694	-7%	-9%		1,816		4,947	-9%	-10%		5,428		1,626	0%	-2%		1,633
Total expenses⁽²⁾		2,705	-2%	-4%		2,759		7,924	-4%	-5%		8,272		2,779	7%	6%		2,591
Total Margin	$	5,824	8%	5%	$	5,403	$	16,643	8%	6%	$	15,446	$	5,405	3%	2%	$	5,243
Total Margin %	68%				66%		68%				65%		66%				67%
% Revenues by Geography:
Americas	55%				56%		55%				56%		56%				55%
EMEA	29%				28%		29%				28%		28%				29%
Asia Pacific	16%				16%		16%				16%		16%				16%
Revenues by Offerings:
Cloud services and license support⁽¹⁾	$	7,253	5%	2%	$	6,931	$	21,313	4%	3%	$	20,549	$	7,371	6%	5%	$	6,948
Cloud license and on-premise license		1,276	4%	0%		1,231		3,254	3%	1%		3,169		813	-8%	-9%		886
Total revenues⁽¹⁾	$	8,529	4%	2%	$	8,162	$	24,567	4%	2%	$	23,718	$	8,184	4%	3%	$	7,834
Cloud Services and License Support Revenues by Ecosystem:
Applications cloud services and license support⁽¹⁾	$	2,952	5%	3%	$	2,809	$	8,670	5%	4%	$	8,268	$	3,041	8%	7%	$	2,817
Infrastructure cloud services and license support⁽¹⁾		4,301	4%	2%		4,122		12,643	3%	2%		12,281		4,330	5%	3%		4,131
Total cloud services and license support revenues⁽¹⁾	$	7,253	5%	2%	$	6,931	$	21,313	4%	3%	$	20,549	$	7,371	6%	5%	$	6,948

Excluding the effects of foreign currency rate fluctuations, our cloud and license business’ total revenues increased in the first quarter of fiscal ~~2021 periods presented,~~2022, relative to the ~~corresponding prior year periods,~~first quarter of fiscal 2021, primarily due to growth in our cloud services and license support ~~revenues and, to a lesser extent, growth in our cloud license and on-premise license~~ revenues as customers purchased our applications and infrastructure technologies via cloud and license deployment models and renewed their related cloud contracts and license support contracts to continue to gain access to the latest versions of our technologies and to receive support for which we delivered such cloud and support services during the ~~fiscal 2021~~ periods presented. This increase in our first quarter of fiscal 2022 cloud and license business’ revenues was partially offset by a decline in EMEA license revenues during the fiscal 2022 period due to an exceptionally strong license result during the corresponding prior year period. The growth in our cloud and license business’ revenues was adversely impacted during each of the first quarter of fiscal 2022 and fiscal 2021 ~~periods presented~~ due to the COVID-19 pandemic, and the impacts of COVID-19 for ~~the rest of fiscal 2021 and~~ future periods are unknown. In constant currency, total revenue growth in the Americas ~~region contributed 95%~~ and ~~41%, respectively,~~Asia Pacific regions was partially offset by a decline in total revenue growth in the EMEA region ~~contributed 2% and 47%, respectively, and the Asia Pacific region contributed 3% and 12%, respectively, to the revenues growth~~ for this business during the ~~third~~first quarter ~~and the first nine months~~ of fiscal ~~2021, respectively.~~2022.

In constant currency, our total cloud and license business’ expenses ~~decreased~~increased in the first quarter of fiscal ~~2021 periods presented,~~2022, relative to the corresponding prior year ~~periods,~~period, due to lower sales and marketing expenses, which decreased primarily due to lower headcount related expenses and our curtailment of variable expenditures, including lower employee travel expenses and lower marketing expenses in response to COVID-19. These constant

~~currency expense decreases were partially offset by~~ higher cloud services and license support expenses during the first quarter of fiscal ~~2021 periods presented,~~2022, which were primarily attributable to higher technology infrastructure expenses and higher employee related expenses to support the increase in our cloud and license business’ revenues. These constant currency expense increases were partially offset by lower sales and marketing expenses, which decreased primarily due to an allocation of the gain from the operating asset sale described above, partially offset by higher employee related expenses and higher marketing expenses. Our cloud services and license support expenses have

grown in recent periods and we expect this growth to accelerate during fiscal 2022 as we increase our existing data center capacity and establish data centers in new geographic locations in order to meet current and expected customer demand.

Excluding the effects of ~~foreign~~ currency rate fluctuations, our cloud and license business’ total margin ~~and~~increased during the first quarter of fiscal 2022 relative to the first quarter of fiscal 2021 due to the increase in total revenues. Total margin as a percentage of revenues ~~increased~~for this segment decreased marginally during the first quarter of fiscal ~~2021 periods presented, relative~~2022 in comparison to the ~~corresponding~~ prior year ~~periods,~~period due to ~~the fiscal 2021 increases in total revenues and the decreases in total~~ expenses ~~for this business.~~growth.

Our hardware business’ revenues are generated from the sales of our Oracle Engineered Systems, server, storage, and industry-specific hardware offerings. The hardware product and related software, such as an operating system or firmware, are highly interdependent and interrelated and are accounted for as a combined performance obligation. The revenues for this combined performance obligation are generally recognized at the point in time that the hardware product is delivered to the customer and ownership is transferred to the customer. Our hardware business also earns revenues from the sale of hardware support contracts purchased by our customers at their option and that are generally recognized as revenues ratably as the hardware support services are delivered over the contractual term, which is generally one year. The majority of our hardware products are sold through indirect channels such as independent distributors and value-added resellers and we also market and sell our hardware products through our direct sales force. Operating expenses associated with our hardware business include the cost of hardware products, which consists of expenses for materials and labor used to produce these products by our internal manufacturing operations or by third-party manufacturers, warranty and related expenses and the impact of periodic changes in inventory valuation, including the impact of inventory determined to be excess and obsolete; the cost of materials used to repair customer products; the cost of labor and infrastructure to provide support services; and sales and marketing expenses, which are largely personnel related and include variable compensation earned by our sales force for the sales of our hardware offerings.

	Three Months Ended						Nine Months Ended						Three Months Ended August 31,
	February 28,		Percent Change		February 29,		February 28,		Percent Change		February 29,				Percent Change
(Dollars in millions)	2021		Actual	Constant	2020		2021		Actual	Constant	2020		2021		Actual	Constant	2020
Hardware Revenues:
Americas	$	395	-7%	-6%	$	425	$	1,223	-4%	-3%	$	1,275	$	372	-9%	-10%	$	409
EMEA		256	-3%	-8%		265		717	-4%	-7%		749		232	5%	4%		220
Asia Pacific		169	1%	-4%		167		538	4%	1%		518		159	-14%	-15%		185
Total revenues		820	-4%	-6%		857		2,478	-3%	-3%		2,542		763	-6%	-7%		814
Expenses:
Hardware products and support⁽¹⁾		223	-15%	-16%		262		698	-13%	-13%		803		238	0%	-2%		239
Sales and marketing⁽¹⁾		95	-11%	-13%		107		287	-15%	-16%		338		89	-9%	-10%		98
Total expenses⁽¹⁾		318	-14%	-15%		369		985	-14%	-14%		1,141		327	-3%	-4%		337
Total Margin	$	502	3%	0%	$	488	$	1,493	7%	5%	$	1,401	$	436	-9%	-10%	$	477
Total Margin %	61%				57%		60%				55%		57%				59%
% Revenues by Geography:
Americas	48%				50%		49%				50%		49%				50%
EMEA	31%				31%		29%				30%		30%				27%
Asia Pacific	21%				19%		22%				20%		21%				23%

Our constant currency hardware revenues declined in the first quarter of fiscal ~~2021 periods presented,~~2022, relative to the ~~corresponding prior year periods,~~first quarter of fiscal 2021, primarily due to our continued emphasis on the marketing and sale of our growing cloud-based infrastructure technologies ~~and strategic hardware offerings,~~ and the de-emphasis of our sales and marketing efforts for certain of our non-strategic hardware products and related support services, the net impact of which resulted in reduced sales volumes of certain of our hardware product lines and also impacted the volume of hardware support contracts sold in recent periods. Our hardware business’ revenues were also adversely impacted during each of the first quarter of fiscal 2022 and fiscal 2021 ~~periods presented~~due to the impacts of the COVID-19 pandemic, and any such prospective impacts are unknown. Constant currency decreases in hardware revenue growth in the Americas and Asia Pacific regions were partially offset by ~~the unfavorable economic effects caused by COVID-19. Geographically, we experienced~~a constant currency increase in hardware revenue ~~declines~~growth in ~~all regions during~~ the ~~fiscal 2021 periods presented, other than Asia Pacific where revenues increased~~EMEA region during the first ~~nine months~~quarter of fiscal ~~2021.~~2022.

Excluding the effects of ~~foreign~~ currency rate fluctuations, total hardware expenses decreased in the first quarter of fiscal ~~2021 periods presented, relative~~2022 compared to the ~~corresponding prior year periods,~~first quarter of fiscal 2021 primarily due to lower hardware product expenses, lower hardware support costs and lower sales and marketing costs, all of which aligned to lower hardware revenues.

In constant currency, our hardware business’ total margin and total margin as a percentage of revenues ~~increased during~~decreased in the first quarter of fiscal 2022 compared to the first quarter of fiscal 2021 ~~periods presented~~ due to lower total ~~expenses~~revenues for this business.

We offer services to customers and partners to help to maximize the performance of their investments in Oracle applications and infrastructure technologies. Services revenues are generally recognized over time as the services are performed. The cost of providing our services consists primarily of personnel related expenses, technology infrastructure expenditures, facilities expenses and external contractor expenses.

	Three Months Ended						Nine Months Ended						Three Months Ended August 31,
	February 28,		Percent Change		February 29,		February 28,		Percent Change		February 29,				Percent Change
(Dollars in millions)	2021		Actual	Constant	2020		2021		Actual	Constant	2020		2021		Actual	Constant	2020
Services Revenues:
Americas	$	332	-10%	-10%	$	370	$	1,018	-11%	-10%	$	1,150	$	367	8%	7%	$	339
EMEA		243	-2%	-8%		249		709	-4%	-8%		743		255	13%	10%		225
Asia Pacific		162	2%	-3%		159		482	1%	-2%		479		159	2%	2%		156
Total revenues		737	-5%	-8%		778		2,209	-7%	-8%		2,372		781	8%	7%		720
Total Expenses⁽¹⁾		587	-11%	-14%		660		1,767	-13%	-14%		2,025		609	4%	2%		585
Total Margin	$	150	27%	23%	$	118	$	442	28%	26%	$	347	$	172	28%	27%	$	135
Total Margin %	20%				15%		20%				15%		22%				19%
% Revenues by Geography:
Americas	45%				48%		46%				49%		47%				47%
EMEA	33%				32%		32%				31%		33%				31%
Asia Pacific	22%				20%		22%				20%		20%				22%

Excluding the effects of ~~foreign~~ currency rate fluctuations, our total services revenues ~~decreased during~~increased in the first quarter of fiscal ~~2021 periods presented,~~2022, relative to the ~~corresponding prior year periods, substantially~~first quarter of fiscal 2021, due to ~~declines~~revenue increases in each of our ~~consulting revenues.~~primary services offerings. Our services business revenues were ~~also~~ adversely ~~impacted~~affected during each of the first quarter of fiscal 2022 and fiscal 2021 ~~periods presented~~ by the impacts of COVID-19, including the impacts of consulting project delays due to customer resource constraints and in-person meeting restrictions imposed by certain jurisdictions. In ~~addition, we incurred lower billable travel~~constant currency, the Americas, EMEA and Asia Pacific regions contributed 48%, 47% and 5%, respectively, to the constant currency revenues growth for this business in the first quarter of fiscal 2022.

In constant currency, total services expenses ~~and lower billable sub-contractor expenses for which we would have been reimbursed by our customers, which reduced~~increased in the ~~amounts~~first quarter of ~~revenues and expenses we reported for our services business during~~fiscal 2022 compared to the first quarter of fiscal 2021 ~~periods presented. Geographically, we experienced constant currency revenue declines in all regions during the fiscal 2021 periods presented.~~primarily due to higher external contractor expenses.

In constant currency, total services expenses decreased during the fiscal 2021 periods presented, relative to the corresponding prior year periods, primarily due to lower employee related costs caused by lower headcount in addition to lower travel and sub-contractor expenses as described above.

In constant currency, total margin and total margin as a percentage of total services revenues increased during the first quarter of fiscal ~~2021 periods presented,~~2022, relative to the ~~corresponding prior year periods,~~first quarter of fiscal 2021, in each case due to ~~lower~~higher total ~~expenses~~revenues for this business.

Research and Development Expenses: Research and development expenses consist primarily of personnel related expenditures. We intend to continue to invest significantly in our research and development efforts because, in our judgment, they are essential to maintaining our competitive position.

	Three Months Ended						Nine Months Ended						Three Months Ended August 31,
	February 28,		Percent Change		February 29,		February 28,		Percent Change		February 29,				Percent Change
(Dollars in millions)	2021		Actual	Constant	2020		2021		Actual	Constant	2020		2021		Actual	Constant	2020
Research and development⁽¹⁾	$	1,314	4%	4%	$	1,262	$	3,915	3%	3%	$	3,807	$	1,340	2%	1%	$	1,313
Stock-based compensation		307	29%	29%		238		897	15%	15%		781		344	25%	25%		276
Total expenses	$	1,621	8%	8%	$	1,500	$	4,812	5%	5%	$	4,588	$	1,684	6%	5%	$	1,589
% of Total Revenues	16%				15%		17%				16%		18%				17%

On a constant currency basis, total research and development expenses increased ~~during~~in the first quarter of fiscal ~~2021 periods presented, relative~~2022 compared to the ~~corresponding prior year periods,~~first quarter of fiscal 2021 primarily due to higher ~~fiscal 2021~~ employee related ~~expenses including higher salary~~ expenses due to increased headcount ~~higher variable compensation expenses,~~ and higher stock-based compensation ~~expenses. These constant currency expense increases were~~expenses, partially offset by ~~lower travel expenses during~~an allocation of the ~~fiscal 2021 periods presented due to~~gain from the ~~impacts of COVID-19.~~operating asset sale described above.

General and Administrative Expenses: General and administrative expenses primarily consist of personnel related expenditures for IT, finance, legal and human resources support functions.

	Three Months Ended						Nine Months Ended						Three Months Ended August 31,
	February 28,		Percent Change		February 29,		February 28,		Percent Change		February 29,				Percent Change
(Dollars in millions)	2021		Actual	Constant	2020		2021		Actual	Constant	2020		2021		Actual	Constant	2020
General and administrative⁽¹⁾	$	290	7%	6%	$	271	$	832	3%	3%	$	805	$	249	-4%	-5%	$	259
Stock-based compensation		40	129%	129%		17		117	20%	20%		98		49	38%	38%		36
Total expenses	$	330	15%	14%	$	288	$	949	5%	5%	$	903	$	298	1%	0%	$	295
% of Total Revenues	3%				3%		3%				3%		3%				3%

Excluding the effects of foreign currency rate fluctuations, total general and administrative expenses ~~increased~~were flat during the first quarter of fiscal 2022 in comparison to the first quarter of fiscal 2021 ~~periods presented, relative to the corresponding prior year periods, primarily due to certain higher employee related expenses including higher variable compensation expenses and~~as higher stock-based compensation expenses ~~and due to higher professional services expenses. These fiscal 2021 constant currency expense increases~~ were offset by ~~lower salary expenses due to lower headcount, and by lower travel expenses and certain other variable expense reductions that we implemented during~~an allocation of the fiscal 2021 periods presented due to the impacts of COVID-19. In addition, general and administrative expenses during the first nine months of fiscal 2021 were unfavorably affected in comparison to the corresponding prior year period due to a $29 million litigation related benefit that reduced our expenses during the first nine months of fiscal 2020.gain from an operating asset sale as described above.

Amortization of Intangible Assets: Substantially all of our intangible assets were acquired through our business combinations. We amortize our intangible assets over, and monitor the appropriateness of, the estimated useful lives of these assets. We also periodically review these intangible assets for potential impairment based upon relevant facts and circumstances. Note 4 of Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report has additional information regarding our intangible assets and related amortization.

	Three Months Ended						Nine Months Ended						Three Months Ended August 31,
	February 28,		Percent Change		February 29,		February 28,		Percent Change		February 29,				Percent Change
(Dollars in millions)	2021		Actual	Constant	2020		2021		Actual	Constant	2020		2021		Actual	Constant	2020
Developed technology	$	161	-19%	-19%	$	200	$	477	-22%	-23%	$	615	$	127	-19%	-19%	$	158
Cloud services and license support agreements and related relationships		164	-3%	-3%		169		493	-4%	-4%		511		155	-6%	-5%		164
Other		22	-29%	-29%		31		67	-29%	-29%		95		21	-6%	-6%		23
Total amortization of intangible assets	$	347	-13%	-14%	$	400	$	1,037	-15%	-15%	$	1,221	$	303	-12%	-12%	$	345

Amortization of intangible assets decreased ~~during~~in the first quarter of fiscal ~~2021 periods presented, relative to the corresponding prior year periods,~~2022 due to ~~reductions~~a reduction in expenses associated with certain of our intangible assets that became fully amortized, partially offset by a smaller amount of additional amortization from intangible assets that we acquired in connection with our recent acquisitions.

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						Nine Months Ended						Three Months Ended August 31,
	February 28,		Percent Change		February 29,		February 28,		Percent Change		February 29,				Percent Change
(Dollars in millions)	2021		Actual	Constant	2020		2021		Actual	Constant	2020		2021		Actual	Constant	2020
Transitional and other employee related costs	$	1	-48%	-48%	$	2	$	4	-56%	-56%	$	9	$	2	-6%	-6%	$	2
Business combination adjustments, net		2	4%	3%		2		3	-25%	-25%		4		3	182%	181%		1
Other, net		10	245%	244%		3		100	224%	225%		31		16	-6%	-6%		16
Total acquisition related and other expenses	$	13	92%	91%	$	7	$	107	144%	145%	$	44	$	21	4%	4%	$	19

On a constant currency basis, acquisition related and other expenses increased modestly during the first quarter of fiscal ~~2021 periods presented,~~2022, relative to the ~~corresponding prior year periods,~~first quarter of fiscal 2021, primarily due to higher other expenses, net, which primarily related to certain facilities-related right-of-use assets and certain other assets that were abandoned in connection with plans to improve our cost structure and operations during the periods presented.business combination adjustments, net.

Restructuring Expenses: Restructuring expenses resulted from the execution of management approved restructuring plans that were generally developed to improve our cost structure and/or operations, often in conjunction with our acquisition integration ~~strategies.~~strategies and/or other strategic initiatives. Restructuring expenses consist of employee severance costs and other contract termination costs to improve our cost structure prospectively. For additional information regarding our restructuring plans, see Note 5 of Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report and Note 8 of Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended May 31, ~~2020.~~2021.

	Three Months Ended						Nine Months Ended						Three Months Ended August 31,
	February 28,		Percent Change		February 29,		February 28,		Percent Change		February 29,				Percent Change
(Dollars in millions)	2021		Actual	Constant	2020		2021		Actual	Constant	2020		2021		Actual	Constant	2020
Restructuring expenses	$	66	10%	1%	$	60	$	337	87%	82%	$	181	$	38	-78%	-78%	$	174

Restructuring expenses in the first quarter of fiscal 2022 primarily related to our 2022 Restructuring Plan. Restructuring expenses in the first quarter of fiscal 2021 ~~and 2020 periods presented~~ primarily related to our 2019 Restructuring ~~Plan.~~Plan, which is substantially complete. Our management approved, committed to and initiated the 2022 Restructuring Plan and the 2019 Restructuring Plan in order to restructure and further improve efficiencies in our operations. We may incur additional restructuring expenses in future periods due to the initiation of new restructuring plans or from changes in estimated costs associated with existing restructuring plans.

The majority of the initiatives undertaken by our ~~2019~~2022 Restructuring Plan were effected to implement our continued emphasis in developing, marketing and selling our cloud-based offerings. These initiatives impacted certain of our sales and marketing and research and development operations. Certain of the cost savings realized pursuant to our ~~2019~~2022 Restructuring Plan initiatives were offset by investments in resources and geographies that ~~best~~better address the development, marketing, sale and delivery of our cloud‑based offerings including investments in our second‑generation cloud infrastructure.

	Three Months Ended						Nine Months Ended						Three Months Ended August 31,
	February 28,		Percent Change		February 29,		February 28,		Percent Change		February 29,				Percent Change
(Dollars in millions)	2021		Actual	Constant	2020		2021		Actual	Constant	2020		2021		Actual	Constant	2020
Interest expense	$	585	28%	28%	$	456	$	1,799	27%	27%	$	1,416	$	705	15%	15%	$	614

Interest expense increased during the first quarter of fiscal ~~2021 periods presented,~~2022, relative to the ~~corresponding prior year periods, substantially~~first quarter of fiscal 2021, primarily due to higher average borrowings resulting from our issuance of ~~$20.0~~$15.0 billion of senior notes in ~~April 2020.~~March 2021.

Non-Operating ~~(Expenses) Income,~~Expenses, net: Non-operating ~~(expenses) 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) and net other income and expenses, including net realized gains and losses related to all of our investments, net unrealized gains and losses related to the small portion of our investment portfolio related to our deferred compensation plan, net unrealized gains and losses related to equity securities and non-service net periodic pension income and losses.

	Three Months Ended								Nine Months Ended								Three Months Ended August 31,
	February 28,			Percent Change		February 29,			February 28,			Percent Change		February 29,						Percent Change
(Dollars in millions)	2021			Actual	Constant	2020			2021			Actual	Constant	2020			2021			Actual		Constant	2020
Interest income	$	23		-82%	-82%	$	122		$	80		-82%	-82%	$	457		$	20		-37%		-37%	$	31
Foreign currency losses, net		(18	)	-62%	-72%		(47	)		(84	)	-34%	-41%		(127	)		(35	)	-31%		-35%		(50	)
Noncontrolling interests in income		(46	)	62%	62%		(28	)		(127	)	11%	11%		(115	)		(47	)	25%		25%		(38	)
Other, net		24		*	*		(43	)		101		*	*		(20	)		21		-62%		-61%		55
Total non-operating (expenses) income, net	$	(17	)	*	*	$	4		$	(30	)	*	*	$	195
Total non-operating expenses, net																	$	(41	)		*	*	$	(2	)

Our non-operating expenses, net ~~during~~increased in the first quarter of fiscal 2022 compared to the first quarter of fiscal 2021 ~~periods presented in comparison to non-operating income, net during the fiscal 2020 periods presented. The changes to non-operating expenses, net during the fiscal 2021 periods presented were~~ primarily due to lower interest income amounts that we recognized during the fiscal 2021 periods presented, which were caused by lower average interest rates that were applicable to our cash, cash equivalent and marketable securities balances. This variance to our non-operating expenses, net during the fiscal 2021 periods presented was partially offset by other income, net, which was primarily attributable to ~~higher~~changes in market values associated with certain marketable equity securities that we held for certain employee benefit plans and classified as trading, and for which an equal and offsetting amount was recorded to our operating expenses in the same ~~period.~~period; and due to higher losses associated with equity investments for which we follow the equity method of accounting; in each case during the first quarter of fiscal 2022 relative to the first quarter of fiscal 2021.

~~Benefit from (Provision for)~~Provision for Income Taxes: Our effective income tax rates for each of the periods presented were the result of the mix of income earned in various tax jurisdictions that apply a broad range of income tax rates. ~~For the three and nine months ended February 28, 2021, our benefit from~~Our provision for income taxes varied from the tax computed at the U.S. federal statutory income tax rate for the periods presented primarily due to a total net deferred tax benefit of $2.3 billion that we recognized during the fiscal 2021 periods presented as a result of a partial realignment of our legal entity structure that resulted in the intra-group transfer of certain intellectual property rights, 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 (GILTI). For the three and nine months ended February 29, 2020, our provision for income taxes varied from the U.S. federal statutory income tax rate 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 GILTI.~~Income. Future effective tax rates could be adversely affected by an unfavorable shift of earnings weighted to jurisdictions with higher tax rates, by unfavorable changes in tax laws and regulations, by adverse rulings in tax related litigation, or by shortfalls in stock-based compensation realized by employees relative to stock-based compensation that was recorded for book purposes, among others.

Provision for income taxes decreased during the first quarter of fiscal ~~2021 periods presented,~~2022, relative to the ~~corresponding prior year periods,~~first quarter of fiscal 2021, primarily due to ~~the favorable impact of a $2.3 billion net tax benefit arising from~~ an increase in ~~a net deferred~~ tax ~~asset associated with a partial realignment of our legal entity structure in fiscal 2021 (as described above) and a favorable jurisdictional mix of earnings,~~benefits related to stock-based compensation partially offset by higher ~~pre-tax~~ income ~~during the fiscal 2021 periods presented.~~before provision for income taxes.

(Dollars in millions)

February 28,

2021

Change

May 31,

2020

August 31,

2021

Change

May 31,

2021

Working capital

23,494

-33%

34,940

24,046

-23%

31,403

Cash, cash equivalents and marketable securities

35,864

-17%

43,057

39,310

-16%

46,554

Working capital: The decrease in working capital as of ~~February 28,~~August 31, 2021 in comparison to May 31, ~~2020~~2021 was primarily due to cash used for repurchases of our common stock, ~~the reclassification of $5.8 billion of long-term senior notes as current liabilities,~~ cash used to pay dividends to our stockholders and cash used for capital expenditures during the first ~~nine months~~quarter of fiscal ~~2021.~~2022. These unfavorable impacts were partially offset by the favorable ~~effects~~impacts to our net current assets resulting from our net income during the first ~~nine months~~quarter of fiscal ~~2021~~2022 and cash proceeds from stock option exercises. Our working capital may be impacted by some or all of the aforementioned factors in future periods, the amounts and timing of which are variable.

Cash, cash equivalents and marketable securities: Cash and cash equivalents primarily consist of deposits held at major banks, money market funds, Tier-1 commercial paper and other securities with original maturities of 90 days or less. Marketable securities consist of corporate debt securities and certain other securities. The decrease in cash, cash equivalents and marketable securities at ~~February 28,~~August 31, 2021 in comparison to May 31, ~~2020~~2021 was primarily due to ~~$13.0~~$8.0 billion of settled repurchases of our common stock, ~~the repayment of $2.6 billion of borrowings,~~debt repayments, payments of cash dividends to our stockholders and cash used for capital expenditures. These cash outflows during the first ~~nine months~~quarter of fiscal ~~2021~~2022 were partially offset by certain cash inflows ~~primarily cash inflows~~ generated by our operations and ~~cash inflows~~ from stock option exercises during the first ~~nine months~~quarter of fiscal ~~2021.~~2022.

The amount of cash, cash equivalents and marketable securities that we report in U.S. Dollars for a significant portion of the cash, cash equivalents and marketable securities balances held by our foreign subsidiaries is subject to translation adjustments caused by changes in foreign currency exchange rates as of the end of each respective reporting period (the offset to which is substantially recorded to accumulated other comprehensive loss in our condensed consolidated balance sheets and is also presented as a line item in our condensed consolidated statements of comprehensive income included elsewhere in this Quarterly Report). As the U.S. Dollar generally ~~weakened~~strengthened against certain major international currencies ~~on a net basis~~ during the first ~~nine months~~quarter of fiscal ~~2021,~~2022, the amount of cash, cash equivalents and marketable securities that we reported in U.S. Dollars for these subsidiaries ~~increased~~decreased on a net basis as of ~~February 28,~~August 31, 2021 relative to what we would have reported ~~as of~~using constant currency rates from the May 31, ~~2020.~~

Cash flows from operating activities: Our largest source of operating cash flows is cash collections from our customers following the purchase and renewal of their license support agreements. Payments from customers for these license support agreements are generally received near the beginning of the contracts’ terms, which are generally one year in length. Over the course of a fiscal year, we also have historically generated cash from the sales of new licenses, cloud services, hardware offerings and other services. Our primary uses of cash from operating activities are for employee related expenditures, material and manufacturing costs related to the production of our hardware products, taxes, interest payments and leased facilities.

Net cash provided by operating activities ~~increased~~decreased during the first ~~nine months~~quarter of fiscal 2022 compared to the first quarter of fiscal 2021 ~~relative to the corresponding prior year period,~~ primarily due to certain cash unfavorable working capital changes, net, partially offset by higher net income, higher cash collections from customers, a portion of which were previously delayed due to the global economic effects that resulted from COVID-19, and certain other cash favorable working capital changes, in each case ~~during~~in the first ~~nine months~~quarter of fiscal ~~2021~~2022, relative to the first ~~nine months~~quarter of fiscal ~~2020~~2021.

Cash flows from investing activities: The changes in cash flows from investing activities primarily relate to the timing of our purchases, maturities and sales of our investments in marketable securities, and investments in capital and other assets, including certain intangible assets, to support our growth.

Net cash used for investing activities ~~was $9.2 billion~~decreased during the first ~~nine months~~quarter of fiscal ~~2021 in comparison~~2022 compared to ~~net cash provided by investing activities of $14.1 billion during~~ the first ~~nine months of fiscal 2020. Net cash used for investing activities during the first nine months~~quarter of fiscal 2021 primarily ~~resulted~~resulting from ~~an increase~~a decrease in cash used for the purchases of marketable securities and other investments ~~partially offset by~~and an increase in cash proceeds from sales and maturities of marketable securities and other investments, partially offset by an increase in capital expenditures, in each case during the first ~~nine months~~quarter of fiscal ~~2021~~2022 relative to the first ~~nine months~~quarter of fiscal ~~2020.~~2021.

Cash flows from financing activities:The changes in cash flows from financing activities primarily relate to borrowings and repayments related to our debt instruments, stock repurchases, dividend payments and net proceeds related to employee stock programs.

Net cash used for financing activities inincreased during the first ~~nine months~~quarter of fiscal ~~2021 decreased~~2022 compared to the first ~~nine months~~quarter of fiscal ~~2020~~2021 primarily due to ~~lower debt repayments; lower~~higher stock ~~repurchases; and lower~~repurchases, higher payments of ~~dividends;~~dividends, higher net cash used for our employee stock program and higher debt repayments, in each case during the first ~~nine months~~quarter of fiscal ~~2021~~2022 in comparison to the first ~~nine months~~quarter of fiscal ~~2020.~~2021.

Free cash flow: To supplement our statements of cash flows presented on a GAAP basis, we use non-GAAP measures of cash flows on a trailing 4-quarter basis to analyze cash flows generated from our operations. We believe that free cash flow is also useful as one of the bases for comparing our performance with our competitors. The presentation of non-GAAP free cash flow is not meant to be considered in isolation or as an alternative to net income as an indicator of our performance, or as an alternative to cash flows from operating activities as a measure of liquidity. We calculate free cash flow as follows:

	Trailing 4-Quarters Ended							Trailing 4-Quarters Ended August 31,
(Dollars in millions)	February 28, 2021			Change	February 29, 2020			2021			Change	2020
Net cash provided by operating activities	$	14,659		5%	$	13,947		$	15,325		17%	$	13,092
Capital expenditures		(1,851	)	20%		(1,544	)		(2,761	)	71%		(1,614	)
Free cash flow	$	12,808		3%	$	12,403		$	12,564		9%	$	11,478
Net income	$	12,830			$	10,759		$	13,952			$	10,249
Free cash flow as percent of net income	100%				115%			90%				112%

~~Long-Term Customer Financing~~: We offer certain of our customers the option to acquire licenses, cloud services, hardware and other 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 generally 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. We financed $546 million and $548 million, respectively, or approximately 17%, of our cloud license and on-premise license revenues in each of the first nine months of fiscal 2021 and 2020.

~~Cash Dividends: In March 2021, our Board of Directors declared a quarterly cash dividend of $0.32 per share of our outstanding common stock,~~ ~~an increase of $0.08 per share over the dividend declared in December 2020~~. The dividend is payable on April 22, 2021 to stockholders of record as of the close of business on April 8, 2021. Future declarations of dividends and the establishment of future record and payment dates are subject to the final determination of our Board of Directors.

~~Common Stock Repurchase Program~~: Our Board of Directors has approved a program for us to repurchase shares of our common stock. On March 10, 2021, we announced that our Board of Directors approved an expansion of our stock repurchase program by an additional $20.0 billion. As of February 28, 2021, approximately $3.6 billion remained available for stock repurchases pursuant to our stock repurchase program. 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 plan. Our stock repurchase program may be accelerated, suspended, delayed or discontinued at any time.

Contractual Obligations:During the first ~~nine months~~quarter of fiscal ~~2021,~~2022, there were no significant changes to our estimates of future payments under our fixed contractual obligations and commitments as presented in Part II, Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for our fiscal year ended May 31, ~~2020.~~2021.

We believe that our current cash, cash equivalents and marketable securities and cash generated from operations will be sufficient to meet our working capital, capital expenditures and contractual obligation requirements. In addition, we believe that we could fund our future acquisitions, dividend payments and repurchases of common stock or debt with our internally available cash, cash equivalents and marketable securities, cash generated from operations, additional borrowings or from the issuance of additional securities.

~~Off-Balance Sheet Arrangements~~: We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

Our stock-based compensation program is a key component of the compensation package we provide to attract and retain certain of our talented employees and align their interests with the interests of existing stockholders.

We recognize that restricted stock-based awards and stock options dilute existing stockholders and have sought to control the number of stock-based awards granted while providing competitive compensation packages. Consistent with these dual goals, our cumulative potential dilution since June 1, ~~2017~~2018 has been a weighted-average annualized rate of ~~1.3%~~1.0% per year. The potential dilution percentage is calculated as the average annualized new restricted stock-based awards and stock options granted and assumed, net of restricted stock-based awards and stock options forfeited by employees leaving the company, divided by the weighted-average outstanding shares during the calculation period. This maximum potential dilution will only result if all restricted stock-based awards vest and all stock options are exercised. Of the outstanding stock options at ~~February 28,~~August 31, 2021, which generally have a ten-year exercise period, ~~substantially~~ all have exercise prices lower than the market price of our common stock on such date. In recent years, our stock repurchase program has more than offset the dilutive effect of our stock-based compensation program. However, we may modify the levels of our stock repurchases in the future

depending on a number of factors, including the amount of cash we have available for acquisitions, to pay dividends, to repay or repurchase indebtedness or for other purposes. At ~~February 28,~~August 31, 2021, the maximum potential dilution from all outstanding restricted stock-based awards and unexercised stock options, regardless of when granted and regardless of whether vested or unvested, was 8.3%.

For information with respect to recent accounting pronouncements, if any, and the impact of these pronouncements on our consolidated financial statements, if any, see Note 1 of Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report.

There were no significant changes to our quantitative and qualitative disclosures about market risk during the first ~~nine months~~quarter of fiscal ~~2021.~~2022. Please refer to Part II, Item 7A Quantitative and Qualitative Disclosures about Market Risk included in our Annual Report on Form 10-K for our fiscal year ended May 31, ~~2020~~2021 for a more complete discussion of the market risks we encounter.

Evaluation of Disclosure Controls and Procedures: Based on our management’s evaluation (with the participation of our Principal Executive and Financial Officer), as of the end of the period covered by this Quarterly Report, our Principal Executive and Financial Officer has concluded that our “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) were effective to provide reasonable assurance that the information required to be disclosed by us in our reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to our management (including our Principal Executive and Financial Officer) as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting: There were no changes in our internal control over financial reporting that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls: Our management, including our Principal Executive and Financial Officer, believes that our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving their objectives and are effective at the reasonable assurance level. However, our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well-conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision making can be faulty and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

The material set forth in Note 98 (pertaining to information regarding contingencies related to our income taxes) and Note 1211 (pertaining to information regarding legal contingencies) of Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q is incorporated herein by reference.

In addition to the other information set forth in this Quarterly Report, you should carefully consider the factors discussed in Part I, Item 1A ~~“Risk Factors”~~Risk Factors in our Annual Report on Form 10-K for our fiscal year ended May 31, ~~2020.~~2021. The risks discussed in our Annual Report on Form 10-K could materially affect our business, financial condition and future results. The risks described in our Annual Report on Form 10-K are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be insignificant also may materially and adversely affect our business, financial condition or operating results in the future.

The following table summarizes the stock repurchase activity for the three months ended ~~February 28,~~August 31, 2021 and the approximate dollar value of shares that may yet be purchased pursuant to our stock repurchase program:

(in millions, except per share amounts)

Total Number of
Shares
Purchased

Average Price
Paid per
Share

Total Number of
Shares Purchased as
Part of Publicly
Announced
Program

Approximate Dollar
Value of Shares that
May Yet Be
Purchased
Under the Program

December 1, 2020—December 31, 2020

42.7

$
62.18

42.7

$
4,990.7

January 1, 2021—January 31, 2021

5.5

$
62.10

5.5

$
4,648.4

February 1, 2021—February 28, 2021

15.9

$
62.91

15.9

$
3,648.4

Total

64.1

$
62.36

64.1

(in millions, except per share amounts)	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Program		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program
June 1, 2021—June 30, 2021		30.8	$	81.19		30.8	$	13,148.4
July 1, 2021—July 31, 2021		52.0	$	86.49		52.0	$	8,648.4
August 1, 2021—August 31, 2021		11.2	$	89.50		11.2	$	7,648.4
Total		94.0	$	85.11		94.0

Exhibit

No.

Incorporated by Reference

Exhibit Description

Form

File No.

Exhibit

Filing Date

Filed By

10.15*

First Amendment to Performance-Based Stock Option Agreement with Lawrence J. Ellison and Safra A. Catz under the Amended and Restated 2000 Long-Term Equity Incentive Plan

8-K

001-35992

10.15

7/7/21

Oracle Corporation

31.01‡

Rule 13a-14(a)/15d-14(a) Certification of Principal Executive and Financial Officer

32.01†

Section 1350 Certification of Principal Executive and Financial Officer

101‡

Interactive Data Files Pursuant to Rule 405 of Regulation S-T, formatted in Inline XBRL: (i) Condensed Consolidated Balance Sheets as of ~~February 28,~~August 31, 2021 and May 31, ~~2020,~~2021, (ii) Condensed Consolidated Statements of Operations for the three ~~and nine~~ months ended ~~February 28,~~August 31, 2021 and ~~February 29,~~ 2020, (iii) Condensed Consolidated Statements of Comprehensive Income for the three ~~and nine~~ months ended ~~February 28,~~August 31, 2021 and ~~February 29,~~ 2020, (iv) Condensed Consolidated Statements of Stockholders’ (Deficit) Equity for the three ~~and nine~~ months ended ~~February 28,~~August 31, 2021 and ~~February 29,~~ 2020, (v) Condensed Consolidated Statements of Cash Flows for the ~~nine~~three months ended ~~February 28,~~August 31, 2021 and ~~February 29,~~ 2020 and (vi) Notes to Condensed Consolidated Financial Statements

104‡

The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~February 28,~~August 31, 2021, formatted in Inline XBRL

Pursuant to the requirements of the Securities Exchange Act of 1934, Oracle Corporation has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

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)

Large accelerated filer ☒		Accelerated filer ☐
Non-accelerated filer ☐		Smaller reporting company ☐
Emerging growth company ☐

		Page

PART I.	FINANCIAL INFORMATION	3

Item 1.	Financial Statements (Unaudited)	3

	Condensed Consolidated Balance Sheets as of ~~February 28,~~August 31, 2021 and May 31, ~~2020~~2021	3

	Condensed Consolidated Statements of Operations for the Three ~~and Nine~~ Months Ended ~~February 28,~~August 31, 2021 and ~~February 29,~~ 2020	4

	Condensed Consolidated Statements of Comprehensive Income for the Three ~~and Nine~~ Months Ended ~~February 28,~~August 31, 2021 and ~~February 29,~~ 2020	5

	Condensed Consolidated Statements of Stockholders’ (Deficit) Equity for the Three ~~and Nine~~ Months Ended ~~February 28,~~August 31, 2021 and ~~February 29,~~ 2020	6

	Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Three Months Ended ~~February 28,~~August 31, 2021 and ~~February 29,~~ 2020	7

	Notes to Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2624

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4340

Item 4.	Controls and Procedures	4340

PART II.	OTHER INFORMATION	4441

Item 1.	Legal Proceedings	4441

Item 1A.	Risk Factors	4441

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4441

Item 6.	Exhibits	4542

	Signatures	4643

(in millions)	February 28, 2021		May 31, 2020
Notes payable, current:
Carrying amount of hedged item	$	1,510	$	0
Cumulative hedging adjustment included in the carrying amount	$	10	$	0
Notes payable and other borrowings, non-current:
Carrying amounts of hedged items	$	2,220	$	3,680
Cumulative hedging adjustments included in the carrying amount	$	108	$	75

		Fair Value as of
(in millions)	Balance Sheet Location	February 28, 2021		May 31, 2020
Derivative assets:
Interest rate swap agreements designated as fair value hedges	Other current assets	$	10	$	0
Cross-currency interest rate swap agreements designated as fair value hedges	Other non-current assets		61		0
Interest rate swap agreements designated as fair value hedges	Other non-current assets		0		29
Total derivative assets		$	71	$	29
Derivative liabilities:
Cross-currency swap agreements designated as cash flow hedges	Other current liabilities	$	0	$	251
Cross-currency interest rate swap agreements designated as fair value hedges	Other non-current liabilities		0		17
Total derivative liabilities		$	0	$	268

	ORACLE CORPORATION

Date: ~~March 11,~~September 13, 2021	By:	/s/ Safra A. Catz
		Safra A. Catz Chief Executive Officer and Director (Principal Executive and Financial Officer)

Date: ~~March 11,~~September 13, 2021	By:	/s/ William Corey West
		William Corey West
		Executive Vice President, Chief Accounting Officer (Principal Accounting Officer)