☒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 December ~~6, 2021~~7, 2022 was: ~~2,670,447,000.~~2,696,253,000.

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 2121E of the Securities Exchange Act of 1934, as amended (Exchange Act), and Section 27A of the ~~Private~~ Securities ~~Litigation Reform~~ Act of ~~1995.~~1933, as amended (Securities Act). 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~~Exchange Act and the 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, ~~2021~~2022 and our other Quarterly Reports on Form 10-Q to be filed by us in our fiscal ~~2022,~~2023, which runs from June 1, ~~2021~~2022 to May 31, ~~2022.~~2023.

We have no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or risks, except to the extent required by applicable securities laws. If we do update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements. New information, future events or risks could cause the forward-looking events we discuss in this Quarterly Report not to occur. You should not place undue reliance on these forward-looking statements, which reflect our expectations only as of the date of this Quarterly Report.

(in millions, except per share data)	November 30, 2021			May 31, 2021			November 30, 2022			May 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	17,938		$	30,098		$	6,813		$	21,383
Marketable securities		4,900			16,456			537			519
Trade receivables, net of allowances for doubtful accounts of $392 and $373 as of November 30, 2021 and May 31, 2021, respectively		4,462			5,409
Trade receivables, net of allowances for credit losses of $403 and $362 as of November 30, 2022 and May 31, 2022, respectively								6,197			5,953
Prepaid expenses and other current assets		3,778			3,604			4,014			3,778
Total current assets		31,078			55,567			17,561			31,633
Non-current assets:
Property, plant and equipment, net		8,029			7,049			14,351			9,716
Intangible assets, net		1,881			2,430			11,593			1,440
Goodwill, net		43,842			43,935			61,513			43,811
Deferred tax assets		13,265			13,636			12,091			12,782
Other non-current assets		8,802			8,490			11,360			9,915
Total non-current assets		75,819			75,540			110,908			77,664
Total assets	$	106,897		$	131,107		$	128,469		$	109,297
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Notes payable, current	$	4,998		$	8,250
Notes payable and other borrowings, current							$	9,746		$	3,749
Accounts payable		1,034			745			1,647			1,317
Accrued compensation and related benefits		1,503			2,017			1,780			1,944
Deferred revenues		7,937			8,775			8,705			8,357
Other current liabilities		3,409			4,377			5,228			4,144
Total current liabilities		18,881			24,164			27,106			19,511
Non-current liabilities:
Notes payable and other borrowings, non-current		73,433			75,995			81,173			72,110
Income taxes payable		12,122			12,345			11,128			12,210
Deferred tax liabilities		6,777			7,864			7,165			6,031
Other non-current liabilities		5,342			4,787			5,673			5,203
Total non-current liabilities		97,674			100,991			105,139			95,554
Commitments and contingencies
Oracle Corporation stockholders’ (deficit) equity:
Preferred stock, $0.01 par value—authorized: 1.0 shares; outstanding: NaN		0			0
Common stock, $0.01 par value and additional paid in capital—authorized: 11,000 shares; outstanding: 2,671 shares and 2,814 shares as of November 30, 2021 and May 31, 2021, respectively		25,591			26,533
Oracle Corporation stockholders' deficit:
Preferred stock, $0.01 par value—authorized: 1.0 shares; outstanding: none								—			—
Common stock, $0.01 par value and additional paid in capital—authorized: 11,000 shares; outstanding: 2,695 shares and 2,665 shares as of November 30, 2022 and May 31, 2022, respectively								28,148			26,808
Accumulated deficit		(34,076	)		(20,120	)		(30,617	)		(31,336	)
Accumulated other comprehensive loss		(1,616	)		(1,175	)		(1,777	)		(1,692	)
Total Oracle Corporation stockholders’ (deficit) equity		(10,101	)		5,238
Total Oracle Corporation stockholders' deficit								(4,246	)		(6,220	)
Noncontrolling interests		443			714			470			452
Total stockholders’ (deficit) equity		(9,658	)		5,952
Total liabilities and stockholders’ (deficit) equity	$	106,897		$	131,107
Total stockholders' deficit								(3,776	)		(5,768	)
Total liabilities and stockholders' deficit							$	128,469		$	109,297

	Three Months Ended November 30,						Six Months Ended November 30,						Three Months Ended November 30,						Six Months Ended November 30,
(in millions, except per share data)	2021			2020			2021			2020			2022			2021			2022			2021
Revenues:
Cloud services and license support	$	7,554		$	7,112		$	14,925		$	14,059		$	8,598		$	7,554		$	17,015		$	14,925
Cloud license and on-premise license		1,237			1,092			2,049			1,978			1,435			1,237			2,339			2,049
Hardware		767			844			1,530			1,658			850			767			1,613			1,530
Services		802			752			1,583			1,472			1,392			802			2,753			1,583
Total revenues		10,360			9,800			20,087			19,167			12,275			10,360			23,720			20,087
Operating expenses:
Cloud services and license support⁽¹⁾		1,259			1,064			2,472			2,075
Hardware⁽¹⁾		229			244			474			490
Cloud services and license support⁽¹⁾														1,891			1,259			3,626			2,472
Hardware⁽¹⁾														286			229			536			474
Services(1)		671			631			1,315			1,254			1,181			671			2,233			1,315
Sales and marketing⁽¹⁾		1,954			1,836			3,808			3,690
Sales and marketing⁽¹⁾														2,216			1,954			4,393			3,808
Research and development		1,754			1,601			3,438			3,190			2,158			1,754			4,251			3,438
General and administrative		319			324			618			619			366			319			777			618
Amortization of intangible assets		299			345			603			690			907			299			1,826			603
Acquisition related and other		4,667			76			4,687			95			62			4,667			103			4,687
Restructuring		32			96			70			270			137			32			281			70
Total operating expenses		11,184			6,217			17,485			12,373			9,204			11,184			18,026			17,485
Operating (loss) income		(824	)		3,583			2,602			6,794
Operating income (loss)														3,071			(824	)		5,694			2,602
Interest expense		(679	)		(600	)		(1,384	)		(1,214	)		(856	)		(679	)		(1,643	)		(1,384	)
Non-operating income (expenses), net		7			(11	)		(34	)		(13	)
(Loss) income before income taxes		(1,496	)		2,972			1,184			5,567
Benefit from (provision for) income taxes		249			(530	)		25			(874	)
Net (loss) income	$	(1,247	)	$	2,442		$	1,209		$	4,693
(Loss) earnings per share:
Non-operating (expenses) income, net														(71	)		7			(251	)		(34	)
Income (loss) before income taxes														2,144			(1,496	)		3,800			1,184
(Provision for) benefit from income taxes														(403	)		249			(511	)		25
Net income (loss)													$	1,741		$	(1,247	)	$	3,289		$	1,209
Earnings (loss) per share:
Basic	$	(0.46	)	$	0.82		$	0.44		$	1.56		$	0.65		$	(0.46	)	$	1.22		$	0.44
Diluted	$	(0.46	)	$	0.80		$	0.43		$	1.53		$	0.63		$	(0.46	)	$	1.20		$	0.43
Weighted average common shares outstanding:
Basic		2,694			2,977			2,731			3,009			2,695			2,694			2,690			2,731
Diluted		2,694			3,046			2,823			3,076			2,746			2,694			2,747			2,823

Three Months Ended
November 30,

Six Months Ended
November 30,

(in millions)

2021

2020

2021

2020

Net (loss) income

$
(1,247
)

$
2,442

$
1,209

$
4,693

Other comprehensive (loss) income, net of tax:

Net foreign currency translation (losses) gains

(222
)

47

(445
)

372

Net unrealized gains on defined benefit plans

2

10

4

56

Net unrealized gains on marketable securities

0

0

0

3

Net unrealized losses on cash flow hedges

0

(6
)

0

(1
)
Total other comprehensive (loss) income, net

(220
)

51

(441
)

430

Comprehensive (loss) income

$
(1,467
)

$
2,493

$
768

$
5,123

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

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ ~~(DEFICIT) EQUITY~~DEFICIT

	Three Months Ended November 30,						Six Months Ended November 30,						Three Months Ended November 30,						Six Months Ended November 30,
(in millions, except per share data)	2021			2020			2021			2020			2022			2021			2022			2021
Common stock and additional paid in capital
Balance, beginning of period	$	25,534		$	26,238		$	26,533		$	26,486		$	27,224		$	25,534		$	26,808		$	26,533
Common stock issued		157			205			305			772			146			157			661			305
Stock-based compensation		681			488			1,226			916			909			681			1,659			1,226
Repurchases of common stock		(711	)		(590	)		(1,583	)		(1,355	)		(61	)		(711	)		(134	)		(1,583	)
Other, net		(70	)		(43	)		(890	)		(521	)		(70	)		(70	)		(846	)		(890	)
Balance, end of period	$	25,591		$	26,298		$	25,591		$	26,298		$	28,148		$	25,591		$	28,148		$	25,591
Accumulated deficit
Balance, beginning of period	$	(25,679	)	$	(15,410	)	$	(20,120	)	$	(12,696	)	$	(31,134	)	$	(25,679	)	$	(31,336	)	$	(20,120	)
Repurchases of common stock		(6,289	)		(3,410	)		(13,417	)		(7,645	)		(361	)		(6,289	)		(847	)		(13,417	)
Cash dividends declared		(861	)		(717	)		(1,748	)		(1,447	)		(863	)		(861	)		(1,723	)		(1,748	)
Net (loss) income		(1,247	)		2,442			1,209			4,693
Net income (loss)														1,741			(1,247	)		3,289			1,209
Balance, end of period	$	(34,076	)	$	(17,095	)	$	(34,076	)	$	(17,095	)	$	(30,617	)	$	(34,076	)	$	(30,617	)	$	(34,076	)
Other stockholders’ (deficit) equity, net
Other stockholders' deficit, net
Balance, beginning of period	$	(985	)	$	(688	)	$	(461	)	$	(1,073	)	$	(1,539	)	$	(985	)	$	(1,240	)	$	(461	)
Other comprehensive (loss) income, net		(220	)		51			(441	)		430
Other comprehensive income (loss), net														188			(220	)		(85	)		(441	)
Other, net		32			50			(271	)		56			44			32			18			(271	)
Balance, end of period	$	(1,173	)	$	(587	)	$	(1,173	)	$	(587	)	$	(1,307	)	$	(1,173	)	$	(1,307	)	$	(1,173	)
Total stockholders’ (deficit) equity	$	(9,658	)	$	8,616		$	(9,658	)	$	8,616
Total stockholders' deficit													$	(3,776	)	$	(9,658	)	$	(3,776	)	$	(9,658	)
Cash dividends declared per common share	$	0.32		$	0.24		$	0.64		$	0.48		$	0.32		$	0.32		$	0.64		$	0.64

	Six Months Ended November 30,						Six Months Ended November 30,
(in millions)	2021			2020			2022			2021
Cash flows from operating activities:
Net income	$	1,209		$	4,693		$	3,289		$	1,209
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		913			742			1,138			913
Amortization of intangible assets		603			690			1,826			603
Deferred income taxes		(820	)		(43	)		(852	)		(820	)
Stock-based compensation		1,226			916			1,659			1,226
Other, net		(176	)		184			289			(176	)
Changes in operating assets and liabilities, net of effects from acquisitions:
Decrease in trade receivables, net		789			1,263			516			789
Decrease in prepaid expenses and other assets		263			545			121			263
Decrease in accounts payable and other liabilities		(918	)		(248	)		(785	)		(918	)
Decrease in income taxes payable		(849	)		(1,243	)		(327	)		(849	)
Decrease in deferred revenues		(531	)		(158	)
Increase (decrease) in deferred revenues								369			(531	)
Net cash provided by operating activities		1,709			7,341			7,243			1,709
Cash flows from investing activities:
Purchases of marketable securities and other investments		(9,631	)		(15,578	)		(603	)		(9,631	)
Proceeds from sales and maturities of marketable securities and other investments		21,617			10,779			462			21,617
Acquisitions, net of cash acquired		(50	)		0			(27,799	)		(50	)
Capital expenditures		(1,987	)		(1,004	)		(4,154	)		(1,987	)
Net cash provided by (used for) investing activities		9,949			(5,803	)
Net cash (used for) provided by investing activities								(32,094	)		9,949
Cash flows from financing activities:
Payments for repurchases of common stock		(15,001	)		(8,962	)		(1,000	)		(15,001	)
Proceeds from issuances of common stock		305			772			661			305
Shares repurchased for tax withholdings upon vesting of restricted stock-based awards		(890	)		(520	)		(895	)		(890	)
Payments of dividends to stockholders		(1,748	)		(1,447	)		(1,723	)		(1,748	)
Repayments of borrowings		(5,750	)		(1,000	)
Proceeds from issuances of commercial paper, net of repayments								1,880			—
Proceeds from issuances of senior notes and other borrowings, net of issuance costs								28,280			—
Repayments of senior notes and other borrowings								(16,692	)		(5,750	)
Other, net		(437	)		110			(56	)		(437	)
Net cash used for financing activities		(23,521	)		(11,047	)
Net cash provided by (used for) financing activities								10,455			(23,521	)
Effect of exchange rate changes on cash and cash equivalents		(297	)		271			(174	)		(297	)
Net decrease in cash and cash equivalents		(12,160	)		(9,238	)		(14,570	)		(12,160	)
Cash and cash equivalents at beginning of period		30,098			37,239			21,383			30,098
Cash and cash equivalents at end of period	$	17,938		$	28,001		$	6,813		$	17,938
Non-cash financing activities:
Change in unsettled repurchases of common stock	$	(1	)	$	38
Fair values of stock awards assumed in connection with acquisitions							$	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, ~~2021.~~2022.

The comparability of our condensed consolidated financial statements during the second quarter and first half of fiscal 2023 compared to the corresponding prior year periods was impacted by $4.7 billion of certain litigation related charges during the fiscal 2022 periods presented. Refer to Note 16 to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended May 31, 2022 for additional information.

On June 8, 2022, we completed our acquisition of Cerner Corporation (Cerner), a provider of digital information systems used within hospitals and health systems, by means of a merger of one of our wholly owned subsidiaries with and into Cerner such that Cerner became an indirect, wholly owned subsidiary of Oracle. Through our acquisition of Cerner, we enhanced our offerings of each of our three existing businesses, cloud and license, hardware and services. The condensed consolidated financial statements included in this Quarterly Report include the financial results of Cerner prospectively from the date of acquisition. Refer to Note 2 below for additional details regarding our acquisition of Cerner.

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, ~~2022.~~2023.

The comparability of our condensed consolidated financial statements during the second quarter and first half of fiscal 2022 compared to the corresponding prior year periods, and of our condensed consolidated balance sheets as of November 30, 2021 relative to May 31, 2021, were impacted by certain litigation related charges that are more fully described in Note 11 below.

~~During the first half of fiscal 2022, we adopted Accounting Standards Update (ASU) 2019-12,~~ ~~Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (ASU 2019-12); and~~ ~~ASU 2021-08,~~ ~~Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, neither of which had a material impact to our condensed consolidated financial statements as of and for the six months ended November 30, 2021.~~ 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, ~~2021~~2022 that had a significant impact on our condensed consolidated financial statements or notes thereto as of and for the six months ended November 30, ~~2021.~~2022.

Our condensed consolidated financial statements are prepared in accordance with GAAP as set forth in the Financial Accounting Standards Board’s (FASB) Accounting Standards Codification, and we consider various staff accounting bulletins and other applicable guidance issued by the SEC. These accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented. To the extent that there are differences between these estimates, judgments or assumptions and actual results, our consolidated financial statements will be affected. In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require management’s judgment in its application. There are also areas in which management’s judgment in selecting among available alternatives would not produce a materially different result.

During the first quarter of fiscal 2023, we completed an assessment of the useful lives of our servers and increased the estimate of the useful lives from four years to five years effective at the beginning of fiscal 2023. Based on the carrying value of our servers as of May 31, 2022, this change in accounting estimate decreased our total operating expenses by $114 million and $245 million for the second quarter and first half of fiscal 2023, respectively.

Restricted cash that was included within cash and cash equivalents as presented within our condensed consolidated balance sheets as of November 30, ~~2021~~2022 and May 31, ~~2021~~2022 and our condensed consolidated statements of cash flows for the six months ended November 30, ~~2021~~2022 and ~~2020~~2021 was nominal.

Trade receivables, net of allowance for ~~doubtful accounts,~~credit losses, and deferred revenues are reported net of related uncollected deferred revenues in our condensed consolidated balance sheets as of November 30, ~~2021~~2022 and May 31, ~~2021.~~2022. The revenues recognized during the six months ended November 30, ~~2021~~2022 and ~~2020,~~2021, respectively, that were included in the opening deferred revenues balances as of May 31, ~~2021~~2022 and ~~2020,~~2021, respectively, were approximately ~~$6.5~~$6.2 billion and ~~$5.9~~$6.5 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 six months ended November 30, ~~2021~~2022 and ~~2020,~~2021, respectively.

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, ~~2021,~~2022, were ~~$37.2~~$61.2 billion as of November 30, ~~2021,~~2022, approximately ~~59%~~48% of which we expect to recognize as revenues over the next twelve months, ~~30%~~35% 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 $265 million and $1.2 billion for the three and six months ended November 30, 2022, respectively, and $351 million and $1.0 billion for the three and six months ended November 30, 2021, respectively.

Our non-marketable debt investments and equity securities and related instruments totaled $2.0 billion and $1.2 billion as of November 30, 2022 and May 31, 2022, respectively, and ~~$300 million~~are included in other non-current assets in the accompanying consolidated balance sheets and ~~$977 million~~are subject to periodic impairment reviews. Certain of these non-marketable equity securities and related instruments are adjusted for observable price changes from orderly transactions. The majority of the ~~three~~non-marketable investments held as of these dates were with a related party entity for which we follow the equity method of accounting. We are also a counterparty to certain options to acquire additional equity interests in that entity at various times through June 2025 and ~~six months ended November 30, 2020, respectively.~~we could obtain control of that entity should such options be exercised.

Acquisition related and other expenses substantially consisted of certain litigation related charges that we generally do not expect to recur during the fiscal 2022 periods presented as further described in Note 11 below. For all of the periods presented, acquisition related and other expenses also consistedprimarily 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. For the fiscal 2022 periods presented, acquisition related and other expenses included certain litigation related charges.

	Three Months Ended November 30,				Six Months Ended November 30,				Three Months Ended November 30,				Six Months Ended November 30,
(in millions)	2021		2020		2021		2020		2022		2021		2022		2021
Transitional and other employee related costs	$	2	$	1	$	4	$	3	$	21	$	2	$	38	$	4
Business combination adjustments, net		1		0		4		1		3		1		8		4
Litigation related charges and other, net		4,664		75		4,679		91
Other, net										38		4,664		57		4,679
Total acquisition related and other expenses	$	4,667	$	76	$	4,687	$	95	$	62	$	4,667	$	103	$	4,687

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), net gains and losses related to equity investments including losses attributable to equity method investments 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~~from 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 November 30,						Six Months Ended November 30,						Three Months Ended November 30,						Six Months Ended November 30,
(in millions)	2021			2020			2021			2020			2022			2021			2022			2021
Interest income	$	21		$	27		$	40		$	58		$	52		$	21		$	90		$	40
Foreign currency losses, net	��	(46	)		(16	)		(81	)		(66	)		(55	)		(46	)		(125	)		(81	)
Noncontrolling interests in income		(42	)		(43	)		(89	)		(81	)		(41	)		(42	)		(79	)		(89	)
Other, net		74			21			96			76
Total non-operating income (expenses), net	$	7		$	(11	)	$	(34	)	$	(13	)
(Losses) gains from equity investments, net														(40	)		80			(126	)		59
Other gains (losses), net														13			(6	)		(11	)		37
Total non-operating (expenses) income, net													$	(71	)	$	7		$	(251	)	$	(34	)

Financial Instruments: In March 2020, the ~~Financial Accounting Standards Board (FASB)~~FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting ~~(ASU~~(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 and expect this to occur through December 31, 2022.~~rates. We do not expect our adoption of Topic 848 to have a material impact on our consolidated financial statements.

On December 20, 2021, we entered into an Agreement and Plan of Merger (Merger Agreement) with Cerner, a provider of digital information systems used within hospitals and health systems that are designed to enable medical professionals to deliver better healthcare to individual patients and communities.

On January 19, 2022, pursuant to the Merger Agreement, we commenced a tender offer to purchase all of the issued and outstanding shares of common stock of Cerner at a purchase price of $95.00 per share, net to the seller in cash, without interest thereon, based upon the terms and subject to the conditions set forth in the Offer to Purchase dated January 19, 2022, and ~~2021~~the related Letter of Transmittal.

On June 8, 2022, pursuant to the terms of the tender offer and applicable Delaware law, we acquired all the outstanding Cerner shares and effectuated the merger of Cerner with and into a wholly-owned subsidiary of Oracle and Cerner became an indirect, wholly-owned subsidiary of Oracle. Vested equity awards outstanding immediately prior to the consummation of the merger were cancelled in exchange for the right to receive an amount in cash based on a formula contained in the Merger Agreement. The unvested equity awards to acquire Cerner common stock that were outstanding immediately prior to the conclusion of the merger were converted into equity awards denominated in shares of Oracle common stock based on formulas contained in the Merger Agreement. We have included the financial results of Cerner in our consolidated financial statements from the date of acquisition. For the second quarter and first half of fiscal 2023, Cerner contributed $1.5 billion and $3.0 billion to our total revenues, respectively.

The total preliminary purchase price for Cerner was approximately $28.2 billion, which consisted of approximately $28.2 billion in cash and $55 million for the fair values of restricted stock-based awards and stock options assumed. Pursuant to our business combinations accounting policy, we estimated the preliminary fair values of net tangible and intangible assets acquired, and the excess of the consideration transferred over the aggregate of such fair values was recorded as goodwill. The preliminary fair values of net tangible assets and intangible assets acquired were based on preliminary valuations, and our estimates and assumptions are subject to change within the measurement period (up to one year from the acquisition date). The primary areas that remain preliminary relate to the fair values of intangible assets acquired, certain tangible assets and liabilities acquired, certain legal matters, income and non-income based taxes and residual goodwill. We expect to continue to obtain information to assist us in determining the fair values of the net assets acquired during the measurement period. The following table summarizes the estimated preliminary fair values of net tangible and intangible assets acquired from Cerner:

All of the $1.6 billion of senior notes and other borrowings assumed through our Cerner acquisition were paid during the first half of fiscal 2023. Refer to Note 5 below for more information. We do not expect the goodwill recognized as a part of our acquisition of Cerner to be deductible for income tax purposes.

During the first half of fiscal ~~2022~~2023 and full year fiscal ~~2021,~~2022, we acquired certain other companies and purchased certain technology and development assets primarily to expand our products and services ~~offerings~~.offerings. These acquisitions were not significant individually or in the aggregate to our condensed consolidated financial ~~statements.~~statements.

The unaudited pro forma financial information in the table below summarizes the combined results of operations for Oracle and Cerner. The unaudited pro forma financial information for all periods presented included the business combination accounting effects resulting from this acquisition, including amortization charges from acquired intangible assets (certain of which are preliminary), stock-based compensation charges for unvested restricted stock-based awards and stock options assumed and the related tax effects as though Cerner was combined as of the beginning of fiscal 2022. The unaudited pro forma financial information as presented below is for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of fiscal 2022.

The unaudited pro forma financial information for the three and six months ended November 30, 2022 and 2021 combined the historical results of Oracle for the three and six months ended November 30, 2022 and 2021, respectively, the historical results of Cerner for the three and six months ended September 30, 2022 and 2021, respectively, (adjusted due to differences in reporting periods and considering the date we acquired Cerner) and the effects of the pro forma adjustments listed above. The unaudited pro forma financial information was as follows:

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):

	November 30, 2021						May 31, 2021						November 30, 2022						May 31, 2022
	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	$	5,818	$	0	$	5,818	$	12,263	$	0	$	12,263	$	460	$	—	$	460	$	12,842	$	—	$	12,842
Corporate debt securities and other		422		2,268		2,690		1,250		8,220		9,470
Time deposits and other														170		376		546		240		280		520
Commercial paper debt securities		0		2,603		2,603		0		11,712		11,712		—		10		10		—		—		—
Derivative financial instruments		0		0		0		0		73		73		—		110		110		—		—		—
Total assets	$	6,240	$	4,871	$	11,111	$	13,513	$	20,005	$	33,518	$	630	$	496	$	1,126	$	13,082	$	280	$	13,362
Liabilities:
Derivative financial instruments	$	0	$	11	$	11	$	0	$	0	$	0	$	—	$	148	$	148	$	—	$	97	$	97

~~We classify our marketable debt securities as available-for-sale securities at the time~~13

Our marketable securities investments consist of money market funds, ~~Tier 1 commercial paper debt securities, corporate debt securities~~time deposits and certain other securities. Marketable securities as presented per our condensed consolidated balance sheets included debt securities with original maturities at the time of purchase greater than three months and the remainder of the debt securities were included in cash and cash equivalents. We classify our marketable debt securities as available-for-sale debt securities at the time of purchase and reevaluate such classification as of each balance sheet date. As of November 30, ~~2021~~2022 and May 31, ~~2021, substantially~~2022, all of our marketable debt securities investments mature within one year. Our valuation techniques used to measure the fair values of our instruments that were classified as Level 1 in the table above were derived from quoted market prices and active markets for these instruments that exist. Our valuation techniques used to measure the fair values of Level 2 instruments listed in the table above were derived from the following: non-binding market consensus prices that were corroborated by observable market data, quoted market prices for similar instruments, or pricing models, such as discounted cash flow techniques, with all significant inputs derived from or corroborated by observable market data including reference rate yield curves, among others.

Based on the trading prices of the ~~$78.4~~$89.0 billion and ~~$84.2~~$75.9 billion of senior notes and other borrowings and the related fair value hedges that we had outstanding as of November 30, ~~2021~~2022 and May 31, ~~2021,~~2022, respectively, the estimated fair values of the senior notes and other borrowings and the related fair value hedges using Level 2 inputs at November 30, ~~2021~~2022 and May 31, ~~2021~~2022 were ~~$83.8~~$78.7 billion and ~~$89.6~~$67.0 billion, respectively.

The changes in intangible assets for fiscal ~~2022~~2023 and the net book value of intangible assets as of November 30, ~~2021~~2022 and May 31, ~~2021~~2022 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, 2021		Additions & Adjustments, net⁽¹⁾			November 30, 2021		May 31, 2021			Expense			November 30, 2021			May 31, 2021		November 30, 2021		Weighted Average Useful Life⁽²⁾		May 31, 2022		Additions & Adjustments, net⁽¹⁾		November 30, 2022		May 31, 2022			Expense			November 30, 2022			May 31, 2022		November 30, 2022		Weighted Average Useful Life⁽²⁾
Developed technology	$	4,237	$	59		$	4,296	$	(3,621	)	$	(252	)	$	(3,873	)	$	616	$	423		3	$	3,966	$	2,379	$	6,345	$	(3,660	)	$	(449	)	$	(4,109	)	$	306	$	2,236		4
Cloud services and license support agreements and related relationships		5,497		(5	)		5,492		(3,834	)		(308	)		(4,142	)		1,663		1,350	N.A.			5,260		4,318		9,578		(4,194	)		(749	)		(4,943	)		1,066		4,635		7
Cloud license and on-premise license agreements and related relationships																								356		2,437		2,793		(343	)		(225	)		(568	)		13		2,225		7
Other		1,269		0			1,269		(1,118	)		(43	)		(1,161	)		151		108	N.A.			865		2,845		3,710		(810	)		(403	)		(1,213	)		55		2,497		4
Total intangible assets, net	$	11,003	$	54		$	11,057	$	(8,573	)	$	(603	)	$	(9,176	)	$	2,430	$	1,881			$	10,447	$	11,979	$	22,426	$	(9,007	)	$	(1,826	)	$	(10,833	)	$	1,440	$	11,593

As of November 30, ~~2021,~~2022, estimated future amortization expenses related to intangible assets were as follows (in millions):

Remainder of fiscal 2022	$	534
Fiscal 2023		716
Remainder of fiscal 2023			$	1,755
Fiscal 2024		473		2,995
Fiscal 2025		124		2,283
Fiscal 2026		24		1,620
Fiscal 2027		6		664
Fiscal 2028				635
Thereafter		4		1,641
Total intangible assets, net	$	1,881	$	11,593

The changes in the carrying amounts of goodwill, net, which is generally not deductible for tax purposes, for our operating segments for the six months ended November 30, ~~2021~~2022 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, 2021	$	39,786	$	2,367	$	1,782		$	43,935
Balances as of May 31, 2022											$	39,938		$	2,367	$	1,506		$	43,811
Goodwill from acquisitions												16,460			346		1,065			17,871
Goodwill adjustments, net⁽¹⁾		172		0		(265	)		(93	)		(54	)		—		(115	)		(169	)
Balances as of November 30, 2021	$	39,958	$	2,367	$	1,517		$	43,842
Balances as of November 30, 2022											$	56,344		$	2,713	$	2,456		$	61,513

On June 8, 2022, we borrowed $15.7 billion under a delayed draw term loan credit agreement (Bridge Credit Agreement) that we entered into in March 2022 to partly finance our acquisition of Cerner. The Bridge Credit Agreement provides that, subject to certain exceptions, net cash proceeds received by us from certain debt and equity issuances shall result in mandatory prepayments under the Bridge Credit Agreement. All amounts borrowed under the Bridge Credit Agreement will become due on March 7, 2023, unless settled earlier pursuant to the terms of the Bridge Credit Agreement. Interest is based on either (a) a Term Secured Overnight Financing Rate (SOFR)-based formula plus a margin of 100.0 basis points to 137.5 basis points, depending on the credit rating assigned to our long-term senior unsecured debt, or (b) a Base Rate formula plus a margin of 0.0 basis points to 37.5 basis points, depending on the same such credit rating, each as set forth in the Bridge Credit Agreement. The effective interest rate for the second quarter and first half of fiscal 2023 was 4.40% and 3.39%, respectively. We repaid $12.6 billion borrowed under the Bridge Credit Agreement during the first half of fiscal 2023.

On August 16, 2022, we entered into a $4.4 billion term loan credit agreement (Term Loan Credit Agreement), which provides for a total term loan commitment of $4.4 billion, comprised of a $3.6 billion term loan (Term Loan 1 Facility) and a $790 million term loan (Term Loan 2 Facility and, together with the Term Loan 1 Facility, the Term Loan Facilities). The proceeds of the Term Loan Facilities may only be used to refinance indebtedness incurred under the Bridge Credit Agreement and to pay related fees and expenses.

On November 2, 2022, the total term loan commitment was increased by $1.3 billion, comprised of $1.1 billion under the Term Loan 1 Facility and $170 million under the Term Loan 2 Facility pursuant to the terms of the Term Loan Credit Agreement.

We may request additional commitments under the Term Loan Credit Agreement up to a maximum of $6.0 billion (each, an Incremental Borrowing). The use of proceeds of any Incremental Borrowing will be specified at the time of such borrowing and may include working capital purposes and other general corporate purposes.

We initially borrowed $4.4 billion on August 16, 2022, and we borrowed an incremental $1.3 billion on November 2, 2022, each under the Term Loan Facilities. We used the net proceeds of the borrowings under the Term Loan Credit Agreement to reduce the amount of indebtedness outstanding under the Bridge Credit Agreement. The effective interest rate for these borrowings during the second quarter and first half of fiscal 2023 was 4.86% and 4.74%, respectively.

The Term Loan Credit Agreement provides for repayment of borrowings under the Term Loan Facilities as follows:

The termination date of the Term Loan 2 Facility may be extended at our sole option by up to 2 years. The termination date of each Term Loan Facility may also be further extended at each lender’s option by up to 2 years.

Interest is based on either (a) a Term SOFR-based formula plus a margin of 147.5 basis points to 197.5 basis points, depending on the credit rating assigned to our long-term senior unsecured debt, or (b) a Base Rate formula plus a margin of 47.5 basis points to 97.5 basis points, depending on the same such credit rating, each as set forth in the Term Loan Credit Agreement.

The Term Loan Credit Agreement contains certain customary representations and warranties, covenants and events of default, including the requirement that the ratio of “Consolidated EBITDA” to “Consolidated Net Interest Expense” (each term as defined in the Term Loan Credit Agreement) of Oracle and its subsidiaries shall not be less than 3.0 to 1.0 at the end of any fiscal quarter during the period that the Term Loan Credit Agreement is effective. If an event of default occurs under the Term Loan Credit Agreement and is not cured within the applicable grace period or waived, any unpaid amounts under the Term Loan Credit Agreement may be declared immediately due and payable. We were in compliance with such covenants as of November 30, 2022.

The summary above does not purport to be complete and is qualified in its entirety by reference to the full text of the Term Loan Credit Agreement.

In November 2022, we issued $7.0 billion, par value, of fixed-rate senior notes comprised of the following as of November 30, 2022:

We used the net proceeds from the issuance of the senior notes to reduce the amount of indebtedness outstanding under the Bridge Credit Agreement. The interest is payable semi-annually. We may redeem some or all of the senior notes of each series prior to their maturity, subject to certain restrictions, and the payment of an applicable make-whole premium in certain instances.

The senior notes rank pari passu with any other existing and future unsecured and unsubordinated indebtedness of Oracle. All existing and future indebtedness and liabilities of the subsidiaries of Oracle are or will be effectively senior to the senior notes. We were in compliance with all senior notes-related covenants at November 30, 2022. The material terms and conditions of the senior notes are set forth in, and the foregoing description of the senior notes is qualified in its entirety by reference to, the Officers’ Certificate filed herewith as Exhibit 4.01 and incorporated by reference herein.

In August 2022, we entered into certain interest rate swap agreements to manage the related interest rate risk of $4.4 billion borrowings under the Term Loan Credit Agreement by effectively converting the floating-rate to fixed-rate. The economic effect of the swap agreements was to eliminate the uncertainty of the cash flows associated with floating-rate interest payments of the Term Loan Credit Agreement by a fixed annual interest rate of 3.07%, plus a margin depending on the credit rating assigned to our long-term senior unsecured debt as mentioned above. We have designated these interest rate swap agreements as qualifying hedging instruments and are accounting for these as cash flow hedges pursuant to ASC 815, Derivatives and Hedging.

The fair values of these interest rate swap agreements are recognized either as non-current assets or non-current liabilities in our consolidated balance sheets. Changes in the fair values of these interest rate swap agreements are reported in accumulated other comprehensive loss in our consolidated balance sheets and an amount is reclassified out of accumulated other comprehensive loss into non-operating income or expense, net in the same period thatcorresponding interest expense is recognized.

During the first half of fiscal 2023, our commercial paper program was increased to $6.0 billion. Our commercial paper program allows us to issue and sell unsecured short-term promissory notes pursuant to a private placement exemption from the registration requirements under federal and state securities laws pursuant to dealer agreements with various banks and an Issuing and Paying Agency Agreement with Deutsche Bank Trust Company Americas.

There were $1.9 billion of outstanding commercial paper notes as of November 30, 2022 (none outstanding as of May 31, 2022) that mature at various dates through March 2023. The effective interest rate, including issuance costs for the second quarter and first half of fiscal 2023, was 4.48%. We use the net proceeds from the issuance of commercial paper for general corporate purposes.

There have been no other significant changes in our notes payable or other borrowing arrangements that were disclosed in our Annual Report on Form 10-K for the fiscal year ended May 31, 2022.

During fiscal 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 (2022 Restructuring Plan). In the first half of fiscal 2023, our management supplemented the 2022 Restructuring Plan to reflect additional actions that we expect to take. The total estimated restructuring costs associated with the 2022 Restructuring Plan are up to ~~$353~~$927 million and will be recorded to the restructuring expense line item within our condensed consolidated statements of operations as they are incurred. We recorded $284 million and $92 million of restructuring expenses in connection with the 2022 Restructuring Plan in the first half of fiscal 2023 and 2022, ~~and we~~respectively. We expect to incur the majority of the estimated remaining ~~$261~~$420 million through the end of fiscal 2023. Any changes to the estimates or timing of executing the 2022 Restructuring Plan will be reflected in our future results of operations.

	Accrued May 31, 2021⁽²⁾		Six Months Ended November 30, 2021											Accrued November 30, 2021⁽²⁾		Total Costs Accrued to Date		Total Expected Program Costs		Accrued May 31, 2022⁽²⁾		Six Months Ended November 30, 2022											Accrued November 30, 2022⁽²⁾		Total Costs Accrued to Date		Total Expected Program Costs
(in millions)	Accrued May 31, 2021⁽²⁾		Initial Costs⁽³⁾		Adj. to Cost⁽⁴⁾			Cash Payments			Others⁽⁵⁾			Accrued November 30, 2021⁽²⁾		Total Costs Accrued to Date		Total Expected Program Costs		Accrued May 31, 2022⁽²⁾		Initial Costs⁽³⁾		Adj. to Cost⁽⁴⁾			Cash Payments			Others⁽⁵⁾			Accrued November 30, 2022⁽²⁾		Total Costs Accrued to Date		Total Expected Program Costs
2022 Restructuring Plan⁽¹⁾
Cloud and license	$	0	$	57	$	0		$	(27	)	$	(1	)	$	29	$	57	$	247	$	34	$	156	$	2		$	(109	)	$	(1	)	$	82	$	246	$	529
Hardware		0		5		1			(3	)		0			3		6		26		7		10		—			(8	)		(1	)		8		21		32
Services		0		8		0			(3	)		0			5		8		37		9		15		—			(10	)		(1	)		13		31		36
Other⁽⁶⁾		0		22		(1	)		(11	)		0			10		21		43		10		100		1			(74	)		(1	)		36		209		330
Total 2022 Restructuring Plan	$	0	$	92	$	0		$	(44	)	$	(1	)	$	47	$	92	$	353	$	60	$	281	$	3		$	(201	)	$	(4	)	$	139	$	507	$	927
Total other restructuring plans⁽⁷⁾⁽⁶⁾	$	225	$	0	$	(22	)	$	(72	)	$	(11	)	$	120					$	71	$	—	$	(3	)	$	(13	)	$	(2	)	$	53
Total restructuring plans	$	225	$	92	$	(22	)	$	(116	)	$	(12	)	$	167					$	131	$	281	$	—		$	(214	)	$	(6	)	$	192

(in millions)	November 30, 2021		May 31, 2021		November 30, 2022		May 31, 2022
Cloud services and license support	$	7,046	$	7,728	$	7,758	$	7,406
Hardware		538		618		495		555
Services		311		399		401		360
Cloud license and on-premise license		42		30		51		36
Deferred revenues, current		7,937		8,775		8,705		8,357
Deferred revenues, non-current (in other non-current liabilities)		738		679		773		753
Total deferred revenues	$	8,675	$	9,454	$	9,478	$	9,110

Deferred cloud services and license support revenues and deferred hardware revenues substantially represent customer payments made in advance for cloud or support contracts that are typically billed in advance with corresponding revenues generally being recognized ratably or based upon customer usage over the respective contractual periods. Deferred services revenues include prepayments for our services business and revenues for these services are generally recognized as the services are performed. Deferred cloud license and on-premise license revenues typically resulted from customer payments that related to undelivered products and services or specified enhancements.

Our Board of Directors has approved a program for us to repurchase shares of our common stock. ~~On December 9, 2021, we announced that our Board of Directors approved an expansion of our stock repurchase program by an additional $10.0 billion.~~ As of November 30, ~~2021,~~2022, approximately ~~$648 million~~$8.5 billion remained available for stock repurchases pursuant to our stock repurchase program. We repurchased 13.6 million shares for $981 million during the six months ended November 30, 2022 and 170.9 million shares for $15.0 billion during the six months ended November 30, 2021 ~~(including 0.7 million shares for $65 million that were repurchased but not settled) and 158.1 million shares for $9.0 billion during the six months ended November 30, 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 December ~~2021,~~2022, our Board of Directors declared a quarterly cash dividend of $0.32 per share of our outstanding common stock. The dividend is payable on January ~~19, 2022~~24, 2023 to stockholders of record as of the close of business on January ~~7, 2022.~~10, 2023. 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 half of fiscal ~~2022,~~2023, we issued 5173 million restricted stock-based units (RSUs), substantially all of which were ~~issued as a~~ part of our annual stock-based award process, and assumed 5 million RSUs in connection with our acquisition of Cerner. All issued and assumed RSUs are subject to service-based vesting restrictions. These fiscal

2023 stock-based award issuances were partially offset by stock-based award forfeitures and cancellations of 57 million shares during the first half of fiscal ~~2022.~~2023.

The RSUs that were granted during the six months ended November 30, ~~2021~~2022 have similar vesting restrictions and contractual lives and were valued using methodologies of a similar nature as those described in Note 1312 of Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended May 31, ~~2021.~~

Further, during the first half 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 half 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 are recognizing incremental stock-based compensation expense related to these amended awards for any of the remaining unvested tranches that are 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 as of the amendment date to be approximately three to four years.2022.

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

	Three Months Ended November 30,				Six Months Ended November 30,				Three Months Ended November 30,				Six Months Ended November 30,
(in millions)	2021		2020		2021		2020		2022		2021		2022		2021
Cloud services and license support	$	50	$	36	$	90	$	66	$	113	$	50	$	204	$	90
Hardware		4		3		7		6		5		4		9		7
Services		18		14		32		26		35		18		60		32
Sales and marketing		120		80		215		151		151		120		275		215
Research and development		423		314		767		590		510		423		932		767
General and administrative		66		41		115		77		95		66		179		115
Total stock-based compensation	$	681	$	488	$	1,226	$	916	$	909	$	681	$	1,659	$	1,226

Our effective tax rates for each of the periods presented are the result of the mix of income and losses earned in various tax jurisdictions that apply a broad range of income tax rates. Our (provision for) benefit from ~~(provision for)~~ income taxes varied from ~~that~~the tax computed at the U.S. federal statutory income tax rate for the periods presented primarily due to earnings in foreign operations, state taxes, the U.S. research and development tax credit, settlements with tax authorities, the tax effects of stock-based compensation, the Foreign Derived Intangible Income deduction and the tax effect of Global Intangible Low-Taxed Income. Our effective tax rates were 18.8% and 13.4% for the three and six months ended November 30, 2022, respectively, and our effective tax benefit rates were (16.6%) and (2.1%) for the three and six months ended November 30, 2021, ~~respectively, and our effective tax rates were 17.8% and 15.7% for the three and six months ended November 30, 2020,~~ respectively.

Recently, the U.S. House of Representatives passed the “Build Back Better Act” budget reconciliation bill (the Bill) and it is currently pending action in the Senate. The Bill as currently drafted would substantially increase U.S. taxes on corporations, including, among other changes, raising the level of U.S. tax on profits earned outside the U.S. and further restricting the deductibility of interest expense. If the Senate passes the Bill and it is signed into law in its current form, it likely would have a material adverse impact on our future tax liabilities and consolidated financial results.

Our net deferred tax assets were ~~$6.5~~$4.9 billion and ~~$5.8~~$6.8 billion as of November 30, ~~2021~~2022 and May 31, ~~2021,~~2022, 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 ~~2020.~~2021. Our U.S. federal income tax returns have been examined for all years prior to fiscal ~~2010~~2011 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 or have examined returns ~~affecting our unrecognized~~of Oracle and various acquired entities for years through fiscal 2022. Many of the relevant tax ~~benefits.~~years are at an advanced stage in examination or subsequent controversy resolution processes. With some exceptions, we are generally no longer subject to tax examinations in non-U.S. jurisdictions for years prior to fiscal 2001.

We are under audit by the IRS and various other domestic and foreign tax authorities with regards to income tax and indirect tax matters and are involved in various challenges and litigation in a number of countries, including, in particular, Australia, Brazil, Canada, India, Indonesia, Israel, Italy, 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 that is provided to our CODMs for their review and assists our CODMs with evaluating the company’s performance and allocating company resources.

We have 3three businesses—cloud and license, hardware and services—each of which is comprised of a single operating segment. All 3three of our businesses market and sell our offerings globally to businesses of many sizes, government agencies, educational institutions and resellers with a worldwide sales force positioned to offer the combinations that best meet customer needs.

Our cloud and license business engages in the sale, marketing and delivery of our enterprise applications and infrastructure technologies through cloud and on-premise deployment models including our cloud services and license support offerings; and our cloud license and on-premise license offerings. Cloud services and license support revenues are generated from offerings that are typically contracted with customers directly, billed to customers in advance, delivered to customers over time with our revenue recognition occurring over the contractual terms, and renewed by customers upon completion of the contractual terms. Cloud services and license support contracts provide customers with access to the latest updates to the applications and infrastructure technologies as they become available and for which the customer contracted and also include related technical support services over the contractual term. Cloud license and on-premise license revenues represent fees earned from granting customers licenses, generally on a perpetual basis, to use our database and middleware and our applications software products within cloud and on-premise IT environments. We generally recognize revenues at the point in time the software is made available to the customer to download and use, which typically is immediate upon signature of the license contract. In each fiscal year, our cloud and license business’ contractual activities are typically highest in our fourth fiscal quarter and the related cash flows are typically highest in the following quarter (i.e., in the first fiscal quarter of the next fiscal year) as we receive payments from these contracts.

Our hardware business provides infrastructure technologies including Oracle Engineered Systems, servers, storage, industry-specific hardware, operating systems, virtualization, management and other hardware-related software to support diverse IT environments. Our hardware business also offers hardware support, which provides customers with software updates for the software components that are essential to the functionality of their hardware products and can also include product repairs, maintenance services and technical support ~~services.~~services that are typically delivered and recognized ratably over the contractual term.

Our services business provides services to customers and partners to help maximize the performance of their investments in Oracle applications and infrastructure technologies.

We do not track our assets for each business. Consequently, it is not practical to show assets by operating segment.

	Three Months Ended November 30,				Six Months Ended November 30,				Three Months Ended November 30,				Six Months Ended November 30,
(in millions)	2021		2020		2021		2020		2022		2021		2022		2021
Cloud and license:
Revenues⁽¹⁾	$	8,791	$	8,204	$	16,974	$	16,038
Revenues									$	10,033	$	8,791	$	19,354	$	16,974
Cloud services and license support expenses		1,184		1,008		2,337		1,966		1,747		1,184		3,367		2,337
Sales and marketing expenses		1,696		1,620		3,322		3,253		1,934		1,696		3,864		3,322
Margin⁽²⁾⁽¹⁾	$	5,911	$	5,576	$	11,315	$	10,819	$	6,352	$	5,911	$	12,123	$	11,315
Hardware:
Revenues	$	767	$	844	$	1,530	$	1,658	$	850	$	767	$	1,613	$	1,530
Hardware products and support expenses		221		236		459		475		279		221		522		459
Sales and marketing expenses		88		94		177		192		83		88		162		177
Margin⁽²⁾	$	458	$	514	$	894	$	991
Margin⁽¹⁾									$	488	$	458	$	929	$	894
Services:
Revenues	$	802	$	752	$	1,583	$	1,472	$	1,392	$	802	$	2,753	$	1,583
Services expenses		631		595		1,240		1,180		1,111		631		2,118		1,240
Margin⁽²⁾	$	171	$	157	$	343	$	292
Margin⁽¹⁾									$	281	$	171	$	635	$	343
Totals:
Revenues⁽¹⁾	$	10,360	$	9,800	$	20,087	$	19,168	$	12,275	$	10,360	$	23,720	$	20,087
Expenses		3,820		3,553		7,535		7,066		5,154		3,820		10,033		7,535
Margin⁽²⁾⁽¹⁾	$	6,540	$	6,247	$	12,552	$	12,102	$	7,121	$	6,540	$	13,687	$	12,552

The following table reconciles total operating segment ~~revenues to total revenues as well as total operating segment~~ margin to income (loss) ~~income~~ before income taxes:

Three Months Ended
November 30,

Six Months Ended
November 30,

(in millions)

2021

2020

2021

2020

Total revenues for operating segments

$
10,360

$
9,800

$
20,087

$
19,168

Cloud and license revenues⁽¹⁾

0

0

0

(1
)
Total revenues

$
10,360

$
9,800

$
20,087

$
19,167

	Three Months Ended November 30,						Six Months Ended November 30,
(in millions)	2022			2021			2022			2021
Total margin for operating segments	$	7,121		$	6,540		$	13,687		$	12,552
Research and development		(2,158	)		(1,754	)		(4,251	)		(3,438	)
General and administrative		(366	)		(319	)		(777	)		(618	)
Amortization of intangible assets		(907	)		(299	)		(1,826	)		(603	)
Acquisition related and other		(62	)		(4,667	)		(103	)		(4,687	)
Restructuring		(137	)		(32	)		(281	)		(70	)
Stock-based compensation for operating segments		(304	)		(192	)		(548	)		(344	)
Expense allocations and other, net		(116	)		(101	)		(207	)		(190	)
Interest expense		(856	)		(679	)		(1,643	)		(1,384	)
Non-operating (expenses) income, net		(71	)		7			(251	)		(34	)
Income (loss) before income taxes	$	2,144		$	(1,496	)	$	3,800		$	1,184

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.~~operations.

The following table is a summary of our total revenues by geographic ~~region.~~ region:

The ~~relative proportion of~~following table presents our ~~total~~cloud services and license support 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.~~by offerings:

Thefollowing table presents our cloud services and license support revenues by applications and infrastructure ~~ecosystems.~~ecosystems:

	Three Months Ended November 30,				Six Months Ended November 30,				Three Months Ended November 30,				Six Months Ended November 30,
(in millions)	2021		2020		2021		2020		2022		2021		2022		2021
Applications cloud services and license support	$	3,149	$	2,901	$	6,190	$	5,717	$	4,080	$	3,149	$	8,096	$	6,190
Infrastructure cloud services and license support		4,405		4,211		8,735		8,342		4,518		4,405		8,919		8,735
Total cloud services and license support revenues	$	7,554	$	7,112	$	14,925	$	14,059	$	8,598	$	7,554	$	17,015	$	14,925

Basic earnings (loss) ~~earnings~~ per share is computed by dividing net income (loss) ~~income~~ for the period by the weighted-average number of common shares outstanding during the period. Diluted earnings (loss) ~~earnings~~ per share is computed by dividing net income (loss) ~~income~~ for the period by the 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 should Oracle have net income for the particular reporting period. The following table sets forth the computation of basic and diluted earnings (loss) ~~earnings~~ per share:

	Three Months Ended November 30,					Six Months Ended November 30,				Three Months Ended November 30,					Six Months Ended November 30,
(in millions, except per share data)	2021			2020		2021		2020		2022		2021			2022		2021
Net (loss) income	$	(1,247	)	$	2,442	$	1,209	$	4,693
Net income (loss)										$	1,741	$	(1,247	)	$	3,289	$	1,209
Weighted average common shares outstanding		2,694			2,977		2,731		3,009		2,695		2,694			2,690		2,731
Dilutive effect of employee stock plans		0			69		92		67		51		—			57		92
Dilutive weighted average common shares outstanding		2,694			3,046		2,823		3,076		2,746		2,694			2,747		2,823
Basic (loss) earnings per share	$	(0.46	)	$	0.82	$	0.44	$	1.56
Diluted (loss) earnings per share	$	(0.46	)	$	0.80	$	0.43	$	1.53
Basic earnings (loss) per share										$	0.65	$	(0.46	)	$	1.22	$	0.44
Diluted earnings (loss) per share										$	0.63	$	(0.46	)	$	1.20	$	0.43
Shares subject to anti-dilutive restricted stock-based awards and stock options excluded from calculation⁽¹⁾		121			36		31		36		64		121			68		31

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. 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, which was denied on September 29, 2021.

During the three and six months ended November 30, 2021, Oracle remitted the entirety of the $3.0 billion judgment and related $1.7 billion of accrued post-judgment interest and awarded costs and recorded such amounts as acquisition related and other expenses as presented per our condensed consolidated statements of operations.

We continue to believe that errors were made in the proceedings and intend to petition the U.S. Supreme Court to challenge the judgment amount awarded to HP. Litigation is inherently unpredictable, and the outcome of any actions we pursue related to this action is uncertain.

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)~~(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. On June 21, 2021, the court 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 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 expert discovery.~~On December 23, 2021, the Board member defendant brought a motion for summary judgment, and on May 20, 2022, the court granted this motion in part and denied this motion in part. This Board member remains a defendant in this case. Trial ~~is scheduled to commence~~commenced on July 18, ~~2022.~~2022, and has concluded. On November 18, 2022, the court held a final hearing on the parties’ post-trial briefing. The court has not yet issued a decision.

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 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. ~~The parties are currently conducting discovery.~~ On October 8, 2021, plaintiffs filed a motion for class certification, which the court granted on May 9, 2022. On May 23, 2022, defendants filed a petition in the Ninth Circuit Court of Appeals for permission to appeal the court’s order granting class certification, and plaintiffs filed an opposition on June 2, 2022. On June 3, 2022, the District Court “So Ordered” a stipulation by the parties, which vacated all dates in this case because the parties had reached an agreement to settle this action, subject to the court’s approval. On June 8, 2022, the Ninth Circuit Court of Appeals granted defendants’ unopposed motion to stay the petition for permission to appeal in light of the proposed settlement. On September 15, 2022, the District Court granted plaintiffs’ motion for preliminary

approval of the proposed settlement, under which the Company will pay $17,500,000 to settle this matter. This sum includes all fees and costs. A final approval hearing is scheduled for ~~hearing on March 24, 2022. Trial is scheduled to commence on November 6,~~January 12, 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, two stockholder derivative lawsuits were filed in the 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 an alleged stockholder of Oracle, purportedly on Oracle’s behalf, against our Chief Technology Officer, our Chief Executive Officer, and the estate of Mark Hurd. Plaintiff claims that the alleged actions described in the class action discussed above caused harm to Oracle, and that defendants violated their fiduciary duties of candor, good faith, loyalty, and due care by failing to prevent this alleged harm. Plaintiff also brings derivative claims for violations of federal securities 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 relief. On June 14, 2021, the court “so ordered” a stipulation from the parties, staying this case pending resolution of the 10b-5 action. While the parties were scheduled to participate in a mediation on October 14, 2022, that mediation was canceled. On October 28, 2022, the District Court “So Ordered” a stipulation extending the stay in this case until November 30, 2022, and on December 7, 2022, the court signed a second stipulation, extending the stay until January 31, 2023.

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 did not file an amended complaint within 30 days. On September 3, 2021, the court entered judgment for defendants on these claims. Plaintiffs did not appeal, and their time to appeal has expired, and therefore, the proxy statement claims are now concluded. Regarding the remaining claims, the court granted plaintiffs leave to re-file those claims in Delaware Chancery Court, and plaintiffs have not done so.

~~While Oracle continues to evaluate these claims, we do not believe this litigation~~matters 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 deployments, cloud-based deployments, and hybrid deployments (an approach that combines both on-premise and cloud-based deployments). 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 910 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, 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 ~~85%~~83% 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. Revenue streams included in our cloud and license business are:

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. The proportion of our cloud services ~~and license support~~ revenues relative to our ~~cloud license and on-premise license revenues, hardware revenues and services~~total revenues has increased and we expect this trend to continue. Cloud services ~~and license support~~ revenues represented ~~73% and 74%~~31% of our total revenues for each of the three and six months ended November 30, ~~2021,~~2022, respectively, and ~~72% and 73%~~26% of our total revenues for each of the three and six months ended November 30, ~~2020,~~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; customer satisfaction with 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 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 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 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 8%7% 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 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. 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 manufacturing partners’ abilities to timely manufacture or deliver a few large hardware transactions, with this factor becoming more pronounced in recent ~~quarters~~periods due to global supply chain constraints for certain technology components; 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%10% 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. 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 related services that we may market and sell in connection with these offerings; general economic conditions; governmental budgetary constraints; personnel reductions in our customers’ IT departments; tighter controls over customer discretionary 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~~As compelling opportunities become available, we may acquire companies, products, services and technologies in furtherance of our corporate strategy. We have acquired certain companies and technologies during the first half of fiscal 2023 and full year fiscal 2022, including Cerner. Refer to Note 2 of Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report ~~provides~~for additional information related to our acquisition of Cerner and our other recent acquisitions.

We believe that we can fund our future acquisitions with our internally available cash, cash equivalents and marketable securities balances, 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, among others, 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 ~~half~~quarter of fiscal ~~2022, there~~2023, we completed an assessment of the useful lives of our servers and increased the estimated useful lives from four years to five years, effective at the beginning of fiscal 2023. Refer to Note 1 of Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for more information. There were no other 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, ~~2021~~2022 provides a more complete discussion of our critical accounting policies and estimates.

The comparability of our operating results in the second quarter and first half of fiscal 2023 compared to the same periods of fiscal 2022 was impacted by our recent acquisitions, including Cerner. In our discussion of changes in our results of operations from the second quarter and first half of fiscal 2023 compared to the same periods of fiscal 2022, we may qualitatively disclose the impact of our acquired products and services for the one-year period subsequent to the acquisition date to the growth in certain of our operating segments’ revenues where such qualitative discussions would be meaningful for an understanding of the factors that influenced the changes in our results of operations. When material, we may also provide quantitative disclosures related to such acquired products and services. Expense contributions from our recent acquisitions for each of the respective period comparisons generally were not separately identifiable due to the integration of these businesses and operating segments into our existing operations, and/or were insignificant to our results of operations during the periods presented.

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 for the first half of fiscal 2021 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 9 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 income or expenses, net and (provision for) benefit from ~~(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~~impracticable to do so. Refer to “Supplemental Disclosure Related to Certain Charges” below for additional discussion of certain of these items and Note 910 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 (loss) ~~income~~ before income taxes as presented per our condensed consolidated statements of operations for all periods presented.

We experienced COVID-19 related impacts to our businesses during each of the fiscal ~~2022~~2023 and ~~2021~~2022 periods presented. Certain of these historical impacts to our operating results are further discussed below. Any future impacts are currently unknown.

Separately, as described ~~further below and~~ in Note 1116 of Notes to ~~Condensed~~ Consolidated Financial Statements included ~~elsewhere~~ in ~~this Quarterly~~our Annual Report on Form 10-K for the fiscal year ended May 31, 2022, we remitted and recorded $4.7 billion for certain litigation related items during the fiscal 2022 periods presented.

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, ~~2021,~~2022, 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 November 30, ~~2021~~2022 and ~~2020,~~2021, our financial statements would reflect reported revenues of $1.04 million in the first half of fiscal 2023 (using 1.04 as the month-end average exchange rate for the period) and $1.12 million in the first half of fiscal 2022 (using 1.12 as the month-end average exchange rate for the period) ~~and $1.17 million in the first half of fiscal 2021 (using 1.17 as the month-end average exchange rate for the period)~~. The constant currency presentation, however, would translate the results for each of the first half of fiscal ~~2022~~2023 and ~~2021~~2022 using the May 31, ~~2021~~2022 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 November 30,							Six Months Ended November 30,						Three Months Ended November 30,							Six Months Ended November 30,
				Percent Change						Percent Change						Percent Change							Percent Change
(Dollars in millions)	2021			Actual	Constant	2020		2021		Actual	Constant	2020		2022		Actual	Constant	2021			2022		Actual	Constant	2021
Total Revenues by Geography:
Americas	$	5,736		9%	9%	$	5,259	$	11,056	7%	7%	$	10,327	$	7,786	36%	36%	$	5,736		$	14,978	35%	36%	$	11,056
EMEA⁽¹⁾		2,953		4%	4%		2,852		5,737	3%	2%		5,590		2,895	-2%	9%		2,953			5,586	-3%	9%		5,737
Asia Pacific		1,671		-1%	1%		1,689		3,294	1%	2%		3,250		1,594	-5%	10%		1,671			3,156	-4%	8%		3,294
Total revenues		10,360		6%	6%		9,800		20,087	5%	4%		19,167		12,275	18%	25%		10,360			23,720	18%	24%		20,087
Total Operating Expenses		11,184		80%	79%		6,217		17,485	41%	40%		12,373		9,204	-18%	-15%		11,184			18,026	3%	6%		17,485
Total Operating (Loss) Margin	$	(824	)	*	*	$	3,583	$	2,602	-62%	-60%	$	6,794
Total Operating Margin (Loss)														$	3,071	*	*	$	(824	)	$	5,694	119%	159%	$	2,602
Total Operating Margin %	-8%					37%		13%				35%		25%				-8%			24%				13%
% Revenues by Geography:
Americas	55%					54%		55%				54%		63%				55%			63%				55%
EMEA	29%					29%		29%				29%		24%				29%			24%				29%
Asia Pacific	16%					17%		16%				17%		13%				16%			13%				16%
Total Revenues by Business:
Cloud and license	$	8,791		7%	8%	$	8,204	$	16,974	6%	5%	$	16,037	$	10,033	14%	20%	$	8,791		$	19,354	14%	20%	$	16,974
Hardware		767		-9%	-8%		844		1,530	-8%	-8%		1,658		850	11%	16%		767			1,613	5%	11%		1,530
Services		802		7%	7%		752		1,583	8%	7%		1,472		1,392	74%	83%		802			2,753	74%	83%		1,583
Total revenues	$	10,360		6%	6%	$	9,800	$	20,087	5%	4%	$	19,167	$	12,275	18%	25%	$	10,360		$	23,720	18%	24%	$	20,087
% Revenues by Business:
Cloud and license	85%					83%		84%				83%		82%				85%			82%				84%
Hardware	7%					9%		8%				9%		7%				7%			7%				8%
Services	8%					8%		8%				8%		11%				8%			11%				8%

Excluding the effects of foreign currency rate fluctuations, our total revenues increased inacross all of our three businesses during the fiscal ~~2022~~2023 periods presented, relative to the corresponding prior year periods, primarily due to ~~growth in~~revenue contributions from our ~~cloud and license business’ revenues and services business’ revenues, which were partially offset by a decline in~~acquisition of Cerner. Excluding the impact of our ~~hardware business’ revenues. The~~acquisition of Cerner, the constant currency ~~increases in our cloud and license business’~~ revenues increase during the fiscal ~~2022~~2023 periods presented relative to the corresponding prior year periods ~~were~~in our cloud and license business was attributable to growth in our cloud services and license support revenues and 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 also 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 increases~~In our hardware business, the increase was primarily due to growth in our Oracle Exadata and certain other strategic hardware offerings and growth in certain of our nonstrategic hardware offerings. In our services ~~business’ revenues during~~business, the ~~fiscal 2022 periods presented, relative to the corresponding prior year periods, were~~increase was attributable to an increase in revenues for each of our primary services offerings. ~~The constant~~In reported currency, ~~decreases in~~Cerner contributed $1.5 billion and $3.0 billion to our ~~hardware business’~~total revenues during the ~~fiscal 2022 periods presented, relative to the corresponding prior year periods, were due to the emphasis we placed on the marketing~~second quarter and sale of our growing cloud-based infrastructure technologies and the de-emphasis of our sales and marketing efforts for certain of our non-strategic hardware products and related support services. All three of our businesses’ revenues were adversely impacted during each of the first half of fiscal ~~2022 and 2021 due to the effects of the COVID-19 pandemic. While we expect these effects to be temporary, the impacts of COVID-19 for future periods are unknown.~~2023, respectively. In constant currency, the Americas region contributed ~~76%~~84% and ~~80%~~85%, ~~respectively, the EMEA region contributed 21% and 12%, respectively,~~ and the Asia Pacific region contributed 3%6% and ~~8%, respectively, to~~5% of the constant currency total ~~revenues growth during the second quarter and the first half of fiscal 2022, respectively, in each case relative to the corresponding prior year periods.~~

revenue growth during the second quarter and first half of fiscal 2023, respectively, and the EMEA region contributed 10% of the constant currency total revenue growth during each of the fiscal 2023 periods presented.

Excluding the effects of foreign currency rate fluctuations, our total operating expenses ~~increased~~decreased during the second quarter of fiscal ~~2022 periods presented,~~2023, relative to the corresponding prior year ~~periods, substantially~~period, primarily due to the absence of the unfavorable impact of certain litigation related charges recorded to acquisition related and other expenses during the second quarter of fiscal ~~2022 periods presented and~~2022. These constant currency expense decreases were partially offset by additional operating expenses as ~~further described below and in Note 11~~a result of ~~Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report;~~our acquisition of Cerner, including higher intangible assets amortization; higher cloud services and license support expenses, which ~~increased~~were primarily due to higher employee related expenses due to higher headcount and infrastructure investments that were made to support the increase in our cloud and license business’ revenues; higher ~~services~~hardware expenses, which ~~increased~~were primarily due to higher ~~employee related and external contractor~~hardware product cost; higher restructuring expenses; and higher ~~sales and marketing~~ expenses ~~and research and development expenses, both of which increased~~across other operating expense categories primarily due to higher employee related expenses. These constant currency expense increases were partially offset by lower hardware products and support costs and a related decrease in hardware sales and marketing costs, both of which aligned to lower hardware revenues, lower amortization of intangible assets, lower general and administrative expenses and lower restructuring expenses during the fiscal 2022 periods presented. In addition, during the second quarter ~~and first half~~ of fiscal 2022, we recorded a $125 million ~~and $250 million of gains on~~gain from an operating asset ~~sales, respectively,~~sale, which ~~were~~was allocated as a benefit to most of our operating expense lines as presented per our condensed consolidated ~~statements~~statement of operations which reduced our total operating expenses during ~~these periods.~~ the same period.

Excluding the effects of foreign currency rate fluctuations, our total operating expenses increased during the first half of fiscal 2023, relative to the corresponding prior year period, due to similar reasons as noted above for the fiscal 2023 quarterly increases. These constant currency expense increases were partially offset by certain litigation related charges as described above. Furthermore, during the first half of fiscal 2022, we recorded $250 million gains on operating asset sales, which was allocated as a benefit to most of our operating expense lines as presented per our condensed consolidated statement of operations which reduced our total operating expenses during the same period.

During ~~all~~each of the fiscal 2023 and 2022 periods presented, we curtailed ~~a number of~~certain variable expenditures ~~across all of our lines of businesses and functions~~ including employee travel ~~expenses and certain marketing~~ expenses, among others, primarily in response to COVID-19. We expect certain of these expenses may normalize in future periods provided global economic and health conditions improve.

~~During~~In constant currency, our total operating margin and total operating margin as a percentage of revenues increased during the fiscal ~~2022~~2023 periods presented, certain litigation related charges as further described below and in Note 11 of Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report contributed to our constant currency operating loss during the second quarter of fiscal 2022 and reduced our constant currency operating margin during the first half of fiscal 2022, in each case relative to the corresponding prior year ~~periods. The unfavorable impact of the~~periods, primarily due to certain litigation related charges towhich increased our ~~fiscal 2022~~constant currency operating ~~results was partially offset by higher total margin generated by our operating segments and the aforementioned gains from operating asset sales~~expenses during the fiscal 2022 periods presented.

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 (loss) ~~income:~~:

Three Months Ended
November 30,

Six Months Ended
November 30,

(in millions)

2021

2020

2021

2020

Cloud services and license support deferred revenues⁽¹⁾

$
—

$
—

$
—

$
1

Amortization of intangible assets⁽²⁾

299

345

603

690

Acquisition related and other⁽³⁾

4,667

76

4,687

95

Restructuring⁽⁴⁾

32

96

70

270

Stock-based compensation, operating segments⁽⁵⁾

192

133

344

249

Stock-based compensation, R&D and G&A⁽⁵⁾

489

355

882

667

Income tax effects⁽⁶⁾

(1,052
)

(212
)

(1,473
)

(548
)

$
4,627

$
793

$
5,113

$
1,424

	Three Months Ended November 30,						Six Months Ended November 30,
(in millions)	2022			2021			2022			2021
Amortization of intangible assets⁽¹⁾	$	907		$	299		$	1,826		$	603
Acquisition related and other⁽²⁾		62			4,667			103			4,687
Restructuring⁽³⁾		137			32			281			70
Stock-based compensation, operating segments⁽⁴⁾		304			192			548			344
Stock-based compensation, R&D and G&A⁽⁴⁾		605			489			1,111			882
Income tax effects⁽⁵⁾		(444	)		(1,052	)		(1,018	)		(1,473	)
	$	1,571		$	4,627		$	2,851		$	5,113

Three Months Ended
November 30,

Six Months Ended
November 30,

2021

2020

2021

2020

Cloud services and license support

$
50

$
36

$
90

$
66

Hardware

4

3

7

6

Services

18

14

32

26

Sales and marketing

120

80

215

151

Stock-based compensation, operating segments

192

133

344

249

Research and development

423

314

767

590

General and administrative

66

41

115

77

Total stock-based compensation

$
681

$
488

$
1,226

$
916

	Three Months Ended November 30,				Six Months Ended November 30,
	2022		2021		2022		2021
Cloud services and license support	$	113	$	50	$	204	$	90
Hardware		5		4		9		7
Services		35		18		60		32
Sales and marketing		151		120		275		215
Stock-based compensation, operating segments		304		192		548		344
Research and development		510		423		932		767
General and administrative		95		66		179		115
Total stock-based compensation	$	909	$	681	$	1,659	$	1,226

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 offerings; and Oracle cloud license and on-premise license offerings. License support revenues are typically generated through the sale of applications and infrastructure 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 November 30,						Six Months Ended November 30,						Three Months Ended November 30,						Six Months Ended November 30,
			Percent Change						Percent Change						Percent Change						Percent Change
(Dollars in millions)	2021		Actual	Constant	2020		2021		Actual	Constant	2020⁽¹⁾		2022		Actual	Constant	2021		2022		Actual	Constant	2021
Cloud and License Revenues:
Americas	$	4,994	11%	11%	$	4,494	$	9,575	9%	8%	$	8,815	$	6,407	28%	29%	$	4,994	$	12,294	28%	29%	$	9,575
EMEA		2,458	4%	5%		2,369		4,755	2%	1%		4,662		2,350	-4%	7%		2,458		4,534	-5%	7%		4,755
Asia Pacific		1,339	0%	2%		1,341		2,644	3%	4%		2,561		1,276	-5%	10%		1,339		2,526	-4%	8%		2,644
Total revenues		8,791	7%	8%		8,204		16,974	6%	5%		16,038		10,033	14%	20%		8,791		19,354	14%	20%		16,974
Expenses:
Cloud services and license support⁽²⁾⁽¹⁾		1,184	17%	18%		1,008		2,337	19%	18%		1,966		1,747	47%	53%		1,184		3,367	44%	49%		2,337
Sales and marketing⁽²⁾⁽¹⁾		1,696	5%	5%		1,620		3,322	2%	2%		3,253		1,934	14%	19%		1,696		3,864	16%	22%		3,322
Total expenses⁽²⁾⁽¹⁾		2,880	10%	10%		2,628		5,659	8%	8%		5,219		3,681	28%	33%		2,880		7,231	28%	33%		5,659
Total Margin	$	5,911	6%	7%	$	5,576	$	11,315	5%	4%	$	10,819	$	6,352	8%	14%	$	5,911	$	12,123	7%	13%	$	11,315
Total Margin %	67%				68%		67%				67%		63%				67%		63%				67%
% Revenues by Geography:
Americas	57%				55%		56%				55%		64%				57%		64%				56%
EMEA	28%				29%		28%				29%		23%				28%		23%				28%
Asia Pacific	15%				16%		16%				16%		13%				15%		13%				16%
Revenues by Offerings:
Cloud services and license support⁽¹⁾	$	7,554	6%	6%	$	7,112	$	14,925	6%	6%	$	14,060
Cloud services													$	3,813	43%	48%	$	2,667	$	7,392	44%	49%	$	5,128
License support														4,785	-2%	4%		4,887		9,623	-2%	4%		9,797
Cloud license and on-premise license		1,237	13%	16%		1,092		2,049	4%	4%		1,978		1,435	16%	23%		1,237		2,339	14%	21%		2,049
Total revenues⁽¹⁾	$	8,791	7%	8%	$	8,204	$	16,974	6%	5%	$	16,038
Total revenues													$	10,033	14%	20%	$	8,791	$	19,354	14%	20%	$	16,974
Cloud Services and License Support Revenues by Ecosystem:
Applications cloud services and license support	$	3,149	9%	8%	$	2,901	$	6,190	8%	7%	$	5,718	$	4,080	30%	35%	$	3,149	$	8,096	31%	36%	$	6,190
Infrastructure cloud services and license support		4,405	5%	5%		4,211		8,735	5%	4%		8,342		4,518	3%	9%		4,405		8,919	2%	8%		8,735
Total cloud services and license support revenues	$	7,554	6%	6%	$	7,112	$	14,925	6%	6%	$	14,060	$	8,598	14%	20%	$	7,554	$	17,015	14%	20%	$	14,925

Excluding the effects of foreign currency rate fluctuations, our cloud and license business’ total revenues increased in the fiscal ~~2022~~2023 periods presented, relative to the corresponding prior year periods, due to growth in our cloud services and license support revenues and 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 periods ~~presented. The growth in~~presented; and revenue contributions from our Cerner acquisition. In reported currency, Cerner contributed $942 million and $1.8 billion to our cloud and license business’ revenues ~~was adversely impacted~~ during ~~each~~the second quarter and first half of ~~the~~ fiscal ~~2022 and 2021 periods presented due to the COVID-19 pandemic, and the impacts of COVID-19 for future periods are unknown.~~2023, respectively. In constant currency, the Americas region contributed ~~77%~~84% and ~~82%~~85%, ~~respectively, the EMEA region contributed 18% and 6%, respectively,~~ and the Asia Pacific region contributed 5%7% and ~~12%, respectively, to~~6% of the ~~revenues~~constant currency revenue growth for this business during the

second quarter and ~~the~~ first half of fiscal ~~2022, respectively.~~2023, respectively, and the EMEA region contributed 9% of the constant currency revenue growth for this business during each of the fiscal 2023 periods presented.

In constant currency, our total cloud and license business’ expenses increased in the fiscal ~~2022~~2023 periods presented, relative to the corresponding prior year periods, primarily due to ~~higher cloud services and license support expenses which were primarily attributable to higher technology infrastructure expenses and~~ higher employee related expenses due to higher ~~headcount~~headcount; higher technology infrastructure expenses to support the increase in our cloud and license business’ revenues; ~~and higher sales and marketing~~additional operating expenses ~~primarily~~ due to ~~higher employee related expenses from higher headcount. These constant currency expense increases were partially offset by~~our Cerner acquisition; and an allocation of gains in the fiscal 2022 periods presented from fiscal 2022 operating asset sales as described above. Our cloud services and license support expenses have grown in recent periods, and we expect this growth to continue ~~to accelerate~~ during fiscal ~~2022~~2023 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 currency rate fluctuations, our cloud and license business’ total margin increased during the fiscal ~~2022~~2023 periods presented, relative to the corresponding prior year periods, due to ~~the increase~~increases in total revenues for this business. ~~In constant currency, total~~Total margin as a percentage of revenues for this ~~segment was flat in the second quarter of fiscal 2022 and~~business decreased ~~slightly~~ during the ~~first half of~~ fiscal ~~2022, each in comparison~~2023 periods presented, relative to the corresponding prior year periods, due to expenses 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;~~products with eligible support contracts; 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 November 30,						Six Months Ended November 30,						Three Months Ended November 30,						Six Months Ended November 30,
			Percent Change						Percent Change						Percent Change						Percent Change
(Dollars in millions)	2021		Actual	Constant	2020		2021		Actual	Constant	2020		2022		Actual	Constant	2021		2022		Actual	Constant	2021
Hardware Revenues:
Americas	$	368	-12%	-12%	$	419	$	740	-11%	-11%	$	828	$	447	21%	22%	$	368	$	854	15%	16%	$	740
EMEA		228	-5%	-4%		241		460	0%	0%		461		243	7%	15%		228		453	-2%	7%		460
Asia Pacific		171	-7%	-6%		184		330	-10%	-10%		369		160	-6%	6%		171		306	-7%	4%		330
Total revenues		767	-9%	-8%		844		1,530	-8%	-8%		1,658		850	11%	16%		767		1,613	5%	11%		1,530
Expenses:
Hardware products and support⁽¹⁾		221	-6%	-6%		236		459	-3%	-4%		475		279	26%	32%		221		522	14%	19%		459
Sales and marketing⁽¹⁾		88	-6%	-6%		94		177	-8%	-8%		192		83	-5%	0%		88		162	-8%	-3%		177
Total expenses⁽¹⁾		309	-6%	-6%		330		636	-5%	-5%		667		362	17%	23%		309		684	7%	13%		636
Total Margin	$	458	-11%	-10%	$	514	$	894	-10%	-10%	$	991	$	488	7%	12%	$	458	$	929	4%	10%	$	894
Total Margin %	60%				61%		58%				60%		57%				60%		58%				58%
% Revenues by Geography:
Americas	48%				50%		48%				50%		53%				48%		53%				48%
EMEA	30%				28%		30%				28%		28%				30%		28%				30%
Asia Pacific	22%				22%		22%				22%		19%				22%		19%				22%

Our constant currency hardware revenues ~~declined~~increased in the fiscal ~~2022~~2023 periods presented, relative to the corresponding prior year periods, primarily due to growth in our ~~continued emphasis on the marketing~~Oracle Exadata and ~~sale of~~certain other strategic hardware offerings and revenue contributions from our ~~growing cloud-based infrastructure technologies~~Cerner acquisition. In reported currency, Cerner contributed $41 million 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$81 million to our hardware ~~product lines~~business’ revenues during the second quarter and ~~also impacted the volume~~first half of ~~hardware support contracts sold in recent periods.~~fiscal 2023, respectively. Our hardware business’ revenues were ~~also~~ adversely impacted during each of the fiscal ~~2022~~2023 and ~~2021~~2022 periods presented due to the impacts of the COVID-19 pandemic, including global supply chain shortages for technology components that resulted in certain manufacturing delays, and any such prospective impacts are unknown. ~~Geographically, we experienced~~In constant currency, the Americas region contributed 65% and 73%, the EMEA region contributed 27% and 20%, and the Asia Pacific region contributed 8% and 7% to the revenue ~~declines in all regions~~growth for this business during the second quarter and the first half of fiscal ~~2022 periods presented.~~2023, respectively.

Excluding the effects of currency rate fluctuations, total hardware expenses ~~decreased~~increased in the fiscal ~~2022~~2023 periods presented, relative to the corresponding prior year periods, primarily due to ~~lower~~higher hardware product ~~expenses, lower~~cost driven by higher hardware ~~support costs~~product revenues and ~~lower sales and marketing costs, all of which aligned to lower~~incremental hardware ~~revenues.~~product cost from Cerner’s hardware business.

In constant currency, our hardware business’ total margin ~~and total margin as a percentage of revenues decreased during~~increased in the fiscal ~~2022~~2023 periods presented, relative to the corresponding prior year periods, due to ~~lower~~higher total revenues for this business. Total margin as a percentage of revenues in constant currency for this business decreased during the second quarter of fiscal 2023 due to expenses growth and remained flat during the first half of fiscal 2023, in each case relative to the corresponding prior year period.

~~We offer~~Our services ~~to customers and partners~~offerings are designed to help maximize the performance of ~~their~~customer investments in Oracle applications and infrastructure ~~technologies.~~technologies and substantially include our consulting services and advanced customer services offerings. 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 November 30,						Six Months Ended November 30,						Three Months Ended November 30,						Six Months Ended November 30,
			Percent Change						Percent Change						Percent Change						Percent Change
(Dollars in millions)	2021		Actual	Constant	2020		2021		Actual	Constant	2020		2022		Actual	Constant	2021		2022		Actual	Constant	2021
Services Revenues:
Americas	$	374	8%	8%	$	347	$	741	8%	8%	$	686	$	932	149%	149%	$	374	$	1,830	147%	147%	$	741
EMEA		267	11%	11%		241		522	12%	11%		466		302	13%	27%		267		599	15%	29%		522
Asia Pacific		161	-2%	0%		164		320	0%	1%		320		158	-2%	12%		161		324	1%	14%		320
Total revenues		802	7%	7%		752		1,583	8%	7%		1,472		1,392	74%	83%		802		2,753	74%	83%		1,583
Total Expenses⁽¹⁾		631	6%	6%		595		1,240	5%	4%		1,180		1,111	76%	86%		631		2,118	71%	80%		1,240
Total Margin	$	171	9%	10%	$	157	$	343	18%	18%	$	292	$	281	63%	73%	$	171	$	635	85%	95%	$	343
Total Margin %	21%				21%		22%				20%		20%				21%		23%				22%
% Revenues by Geography:
Americas	47%				46%		47%				46%		67%				47%		66%				47%
EMEA	33%				32%		33%				32%		22%				33%		22%				33%
Asia Pacific	20%				22%		20%				22%		11%				20%		12%				20%

Excluding the effects of currency rate fluctuations, our total services revenues increased in the fiscal ~~2022~~2023 periods presented, relative to the corresponding prior year periods, due to revenue contributions from our Cerner acquisition, and revenue increases in each of our primary services offerings. ~~Our~~In reported currency, Cerner contributed $550 million and $1.1 billion, respectively, to our services ~~business~~business’ revenues ~~were adversely affected~~ during the second quarter and first half of fiscal 2022 and 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, among others, and any such prospective impacts are unknown.2023, respectively. In constant currency, the Americas region contributed ~~49% of our services revenues growth for each of the fiscal 2022 periods presented, while~~87% and 86%, and the EMEA region contributed ~~50%~~10% and ~~48%, respectively, and the Asia Pacific region contributed 1% and 3%, respectively,~~11% to the ~~revenues~~revenue growth for this business during the second quarter and the first half of fiscal ~~2022, respectively.~~2023, respectively, and the Asia Pacific region contributed 3% to the revenue growth for this business during each of the fiscal 2023 periods presented.

In constant currency, total services expenses increased during the fiscal ~~2022~~2023 periods presented, relative to the corresponding prior year periods, primarily due to additional operating expenses due to our acquisition of Cerner, and higher employee related expenses ~~and~~due to higher ~~external contractor expenses.~~headcount.

In constant currency, our services business’ total margin ~~and total margin as a percentage of revenues~~ increased during the fiscal ~~2022~~2023 periods presented, relative to the corresponding prior year periods, due to higher total revenues for this ~~business.~~business during the fiscal 2023 periods presented, relative to the corresponding prior year periods. Total margin as a percentage of revenues in constant currency for this business decreased during the second quarter of fiscal 2023 due to expenses growth and increased during the first half of fiscal 2023 due to revenue growth, in each case relative to the corresponding prior year period.

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 November 30,						Six Months Ended November 30,						Three Months Ended November 30,						Six Months Ended November 30,
			Percent Change						Percent Change						Percent Change						Percent Change
(Dollars in millions)	2021		Actual	Constant	2020		2021		Actual	Constant	2020		2022		Actual	Constant	2021		2022		Actual	Constant	2021
Research and development⁽¹⁾	$	1,331	3%	3%	$	1,287	$	2,671	3%	2%	$	2,600	$	1,648	24%	28%	$	1,331	$	3,319	24%	28%	$	2,671
Stock-based compensation		423	35%	35%		314		767	30%	30%		590		510	20%	20%		423		932	21%	21%		767
Total expenses	$	1,754	10%	9%	$	1,601	$	3,438	8%	7%	$	3,190	$	2,158	23%	26%	$	1,754	$	4,251	24%	26%	$	3,438
% of Total Revenues	17%				16%		17%				17%		18%				17%		18%				17%

On a constant currency basis, total research and development expenses increased during the fiscal ~~2022~~2023 periods presented, relative to the corresponding prior year periods, primarily due to higher employee related expenses, ~~due to increased headcount and~~including higher stock-based compensation ~~expenses. The constant currency expense increases~~and additional operating expenses due to our acquisition of Cerner. Furthermore, an allocation of gains from operating asset sales during the fiscal 2022 periods presented ~~were partially offset by an allocation of gains from~~decreased our expenses during those periods, with no comparable transaction during the fiscal ~~2022 operating asset sales as described above.~~2023 periods presented.

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 November 30,						Six Months Ended November 30,						Three Months Ended November 30,						Six Months Ended November 30,
			Percent Change						Percent Change						Percent Change						Percent Change
(Dollars in millions)	2021		Actual	Constant	2020		2021		Actual	Constant	2020		2022		Actual	Constant	2021		2022		Actual	Constant	2021
General and administrative⁽¹⁾	$	253	-10%	-10%	$	283	$	503	-7%	-8%	$	542	$	271	7%	12%	$	253	$	598	19%	24%	$	503
Stock-based compensation		66	58%	58%		41		115	49%	49%		77		95	46%	46%		66		179	56%	56%		115
Total expenses	$	319	-2%	-2%	$	324	$	618	0%	-1%	$	619	$	366	15%	19%	$	319	$	777	26%	30%	$	618
% of Total Revenues	3%				3%		3%				3%		3%				3%		3%				3%

Excluding the effects of foreign currency rate fluctuations, total general and administrative expenses ~~decreased slightly~~increased during the fiscal ~~2022~~2023 periods presented, relative to the corresponding prior year periods, primarily due to additional operating expenses due to our acquisition of Cerner and higher stock-based compensation expenses. In addition, an allocation of gains from ~~fiscal 2022~~ operating asset sales ~~as described above, partially offset by higher stock-based compensation expenses.~~during the fiscal 2022 periods presented decreased our expenses during those periods, with no comparable transaction in the fiscal 2023 periods presented.

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. Refer to Note 4 of Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report ~~has~~for additional information regarding our intangible assets and related amortization.

	Three Months Ended November 30,						Six Months Ended November 30,						Three Months Ended November 30,						Six Months Ended November 30,
			Percent Change						Percent Change						Percent Change						Percent Change
(Dollars in millions)	2021		Actual	Constant	2020		2021		Actual	Constant	2020		2022		Actual	Constant	2021		2022		Actual	Constant	2021
Developed technology	$	125	-21%	-21%	$	158	$	252	-20%	-20%	$	316	$	215	73%	73%	$	125	$	449	78%	78%	$	252
Cloud services and license support agreements and related relationships		153	-7%	-6%		165		308	-6%	-6%		329		364	138%	137%		153		749	143%	143%		308
Cloud license and on-premise license agreements and related relationships														117	*	*		5		225	*	*		10
Other		21	-6%	-5%		22		43	-6%	-6%		45		211	*	*		16		403	*	*		33
Total amortization of intangible assets	$	299	-13%	-13%	$	345	$	603	-13%	-13%	$	690	$	907	203%	204%	$	299	$	1,826	203%	204%	$	603

Amortization of intangible assets ~~decreased during~~increased in the fiscal ~~2022~~2023 periods presented,relative to the corresponding prior year periods, due to additional amortization from intangible assets that we acquired in recent periods, primarily from our acquisition of Cerner, partially offset by 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.~~amortized.

Acquisition Related and Other Expenses: Acquisition related and other expenses substantially consisted of certain litigation related charges that we generally do not expect to recur during the fiscal 2022 periods presented as further described in Note 11 of Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report. For all periods presented, acquisition related and other expenses also consistedconsist 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 November 30,						Six Months Ended November 30,						Three Months Ended November 30,						Six Months Ended November 30,
			Percent Change						Percent Change						Percent Change						Percent Change
(Dollars in millions)	2021		Actual	Constant	2020		2021		Actual	Constant	2020		2022		Actual	Constant	2021		2022		Actual	Constant	2021
Transitional and other employee related costs	$	2	103%	102%	$	1	$	4	35%	34%	$	3	$	21	*	*	$	2	$	38	*	*	$	4
Business combination adjustments, net		1	*	*		—		4	*	*		1		3	304%	311%		1		8	218%	223%		4
Litigation related charges and other, net		4,664	*	*		75		4,679	*	*		91
Other, net														38	-99%	-99%		4,664		57	-99%	-99%		4,679
Total acquisition related and other expenses	$	4,667	*	*	$	76	$	4,687	*	*	$	95	$	62	-99%	-99%	$	4,667	$	103	-98%	-98%	$	4,687

On a constant currency basis, acquisition related and other expenses ~~increased~~decreased during the fiscal ~~2022~~2023 periods presented, relative to the corresponding prior year periods, primarily due to the absence of unfavorable impact of certain litigation related charges recorded to acquisition related and other expenses during the fiscal 2022 periods presented that we generally do not expect to recur, ~~as further described~~partially offset by higher transitional employee related cost related to our acquisition of Cerner and certain facilities-related right-of-use assets that were abandoned in ~~Note 11 of Notes~~connection with plans to ~~Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report.~~improve our cost structure and operations during the fiscal 2023 periods presented.

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 and/or other strategic initiatives. Restructuring expenses consist of employee severance costs, ~~and other~~ contract termination costs and certain other exit costs to improve our cost structure prospectively. For additional information regarding our restructuring plans, see Note 56 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, ~~2021.~~2022.

	Three Months Ended November 30,						Six Months Ended November 30,						Three Months Ended November 30,						Six Months Ended November 30,
			Percent Change						Percent Change						Percent Change						Percent Change
(Dollars in millions)	2021		Actual	Constant	2020		2021		Actual	Constant	2020		2022		Actual	Constant	2021		2022		Actual	Constant	2021
Restructuring expenses	$	32	-67%	-67%	$	96	$	70	-74%	-74%	$	270	$	137	330%	376%	$	32	$	281	301%	340%	$	70

Restructuring expenses in each of the fiscal 2023 and 2022 periods presented primarily related to our 2022 Restructuring Plan. ~~Restructuring expenses in the fiscal 2021 periods presented primarily related to our 2019 Restructuring 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 2022 Restructuring Plan were effected to implement our continued emphasis in developing, marketing, selling and ~~selling~~delivering our cloud-based offerings. ~~These initiatives primarily impacted certain of our sales and marketing and research and development operations.~~ Certain of the cost savings realized pursuant to our 2022 Restructuring Plan initiatives were offset by investments in resources and geographies that better address the development, marketing, sale and delivery of our cloud‑based offerings including investments in the development and delivery of our second‑generation cloud infrastructure.

Interest expense increased during the fiscal ~~2022~~2023 periods presented, relative to the corresponding prior year periods, primarily due to higher average borrowings during the first half of fiscal 2023 resulting from ~~our~~borrowings, net of partial repayment pursuant to a $15.7 billion delayed draw term loan credit agreement (Bridge Credit Agreement), a $5.6 billion term loan credit agreement (Term Loan Credit Agreement); the issuance of ~~$15.0~~$7.0 billion of senior notes in ~~March 2021,~~November 2022; and borrowings through commercial paper notes during the first half of fiscal 2023. The increase in interest expense was partially offset by lower interest expense that resulted from ~~$5.8~~$8.3 billion and $2.5 billion of scheduled repayments made during ~~the first half~~fiscal 2022 and second quarter of fiscal ~~2022.~~2023, respectively. Refer to Note 5 of Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for additional information.

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), net gains and losses related to equity investments including losses attributable to equity method investments 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~~from 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 November 30,								Six Months Ended November 30,								Three Months Ended November 30,								Six Months Ended November 30,
				Percent Change								Percent Change								Percent Change								Percent Change
(Dollars in millions)	2021			Actual	Constant	2020			2021			Actual	Constant	2020			2022			Actual	Constant	2021			2022			Actual	Constant	2021
Interest income	$	21		-23%	-21%	$	27		$	40		-30%	-30%	$	58		$	52		151%	162%	$	21		$	90		124%	133%	$	40
Foreign currency losses, net		(46	)	179%	192%		(16	)		(81	)	21%	18%		(66	)		(55	)	18%	17%		(46	)		(125	)	55%	56%		(81	)
Noncontrolling interests in income		(42	)	-2%	-2%		(43	)		(89	)	11%	11%		(81	)		(41	)	-4%	-4%		(42	)		(79	)	-12%	-12%		(89	)
Other, net		74		251%	270%		21			96		25%	29%		76
Total non-operating income (expenses), net	$	7		*	*	$	(11	)	$	(34	)	158%	97%	$	(13	)
(Losses) gains from equity investments, net																		(40	)	*	*		80			(126	)	*	*		59
Other gains (losses), net																		13		*	*		(6	)		(11	)	*	*		37
Total non-operating (expenses) income, net																	$	(71	)	*	*	$	7		$	(251	)	638%	658%	$	(34	)

Fiscal Second Quarter ~~2022~~2023 Compared to Fiscal Second Quarter ~~2021~~2022:In constant currency, we recorded non-operating expenses, net during the second quarter of fiscal 2023 in comparison to non-operating income, net during the second quarter of fiscal ~~2022 in comparison to non-operating~~2022. Non-operating expenses, net ~~that we incurred~~ during the second quarter of fiscal ~~2021. Non-operating income, net during~~2023, in comparison to the second quarter of fiscal 2022, was primarily due to higher foreign currency losses and higher net losses associated with equity investments, partially offset by higher interest income and higher other income, net, which was primarily attributable to higher unrealized investment gains onassociated with certain marketable equity securities ~~investments~~that we held for employee benefit plans and ~~was partially reduced by higher losses associated with equity investments~~ for which ~~we follow the equity method of accounting, in each case~~an equal and offsetting amount was recorded to our operating expenses during the ~~second quarter of fiscal 2022~~same period, each in comparison to the corresponding prior year period. ~~This increase in other income, net during the second quarter of fiscal 2022 was partially offset by lower interest income and higher foreign currency losses, net during this period.~~

First Half of Fiscal ~~2022~~2023 Compared to First Half of Fiscal ~~2021~~2022:Our non-operating expenses, net increased in the first half of fiscal ~~2022~~2023 compared to the first half of fiscal ~~2021~~2022 primarily due to ~~lower interest income amounts and~~ higher foreign currency losses, higher net losses associated with equity investments and higher other expense, net, which was primarily attributable to higher unrealized investment losses associated with certain marketable equity securities that we ~~recognized during the first half of fiscal 2022. These increases~~held for employee benefit plans as described above. The increase in ~~our~~ non-operating expenses, net ~~were~~was partially offset by higher ~~other income, net as described above.~~interest income.

(Provision for) Benefit from ~~(Provision for)~~ Income Taxes: Our effective income tax rates for each of the periods presented were the result of the mix of income and losses earned in various tax jurisdictions that apply a broad range of income tax rates. ~~Our benefit from (provision for)~~Refer to Note 9 of Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for a discussion regarding the differences between the effective income ~~taxes varied from that computed at~~tax rates as presented for the periods below and the U.S. federal statutory income tax ~~rate for the periods presented primarily due to earnings~~rates that were 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.~~during these periods. 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~~increased during the fiscal ~~2022~~2023 periods presented, due primarily to tax implications of lower income before provision that, in each case, were primarily attributable to certain litigation related charges as further described in Note 11 of Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report and, to a much lesser extent, an increase in tax benefits recognized on stock-based compensation during the fiscal 2022 periods. These decreases to our fiscal 2022 income taxes relative to the corresponding prior year periods, ~~were~~primarily due to higher income before income taxes in the fiscal 2023 periods presented resulting from the absence of certain litigation related charges we incurred in the fiscal 2022 periods presented. The increase was partially offset by the ~~absence~~excess of ~~favorable~~the benefit of amortization of Cerner intangible assets over a lesser increase in taxes attributable to the combination of reduced tax benefits related to stock-based compensation and increased tax expense from unrecognized tax benefits due to settlements with tax authorities and other events, ~~that we realized~~ in each case during the fiscal ~~2021~~2023 periods presented.

(Dollars in millions)

November 30,

2021

Change

May 31,

2021

November 30,

2022

Change

May 31,

2022

Working capital

12,197

-61%

31,403

(9,545

)

12,122

Cash, cash equivalents and marketable securities

22,838

-51%

46,554

7,350

-66%

21,902

Working capital: The decrease in working capital as of November 30, ~~2021~~2022 in comparison to May 31, ~~2021~~2022 was primarily due to ~~$15.0~~$27.8 billion ofnet cash used for ~~repurchases~~our acquisition of ~~our common stock, $4.7~~Cerner, $1.6 billion of ~~cash paid for certain litigation related items that we generally do not expect to recur, $2.5~~repayment of senior notes assumed from our acquisition of Cerner, $3.5 billion of long-term senior notes that were reclassified to current liabilities, cash used for repurchases of our common stock, cash used to pay dividends to our stockholders and cash used for capital expenditures during the first half of fiscal ~~2022.~~2023. These unfavorable impacts were partially offset by cash proceeds from borrowings pursuant to the Term Loan Credit Agreement and the issuance of senior notes in November 2022 (refer to Note 5 of Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for additional information), the favorable impacts to our net current assets resulting from ~~our~~ net income ~~net cash proceeds of $318 million associated with the sale of certain operating assets,~~ and cash proceeds from stock option ~~exercises, all of which occurred during the first half of fiscal 2022.~~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~~time deposits, marketable equity securities and certain other securities. The decrease in cash, cash equivalents and marketable securities at November 30, ~~2021~~2022 in comparison to May 31, ~~2021~~2022 was primarily due to ~~$15.0~~the net cash outflows of $27.8 billion for our acquisition of Cerner, $1.6 billion of ~~settled~~repayment of senior notes assumed from our acquisition of Cerner, $2.5 billion of repayment of senior notes due October 2022, repurchases of our common stock, ~~$5.8 billion of debt repayments, $4.7 billion of cash paid for certain litigation related items that we generally do not expect to recur,~~ payments of cash dividends to our stockholders and cash used for capital expenditures. These cash outflows during the first half of fiscal ~~2022~~2023 were partially offset by certain cash inflows, primarily due to cash inflows generated by borrowings, net of partial repayments pursuant to the Bridge Credit Agreement, the Term Loan Credit Agreement, the issuance of senior notes in November 2022 and the commercial paper program, cash inflows from our ~~normal business~~ operations ~~from the sales of certain operating assets,~~ and ~~from~~ stock option exercises during the first half of fiscal ~~2022.~~2023.

	Six Months Ended November 30,							Six Months Ended November 30,
(Dollars in millions)	2021			Change	2020			2022			Change	2021
Net cash provided by operating activities	$	1,709		-77%	$	7,341		$	7,243		324%	$	1,709
Net cash provided by (used for) investing activities	$	9,949		*	$	(5,803	)
Net cash used for financing activities	$	(23,521	)	113%	$	(11,047	)
Net cash (used for) provided by investing activities								$	(32,094	)	*	$	9,949
Net cash provided by (used for) financing activities								$	10,455		*	$	(23,521	)

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 typically 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 ~~decreased~~increased during the first half of fiscal ~~2022,~~2023, relative to the corresponding prior year period, primarily due to ~~lower net income that was primarily the result of cash payments made in connection with~~ certain litigation related charges recorded during the first half of fiscal 2022 that we generally do not expect to recur and certain ~~other~~ cash ~~unfavorable~~favorable working capital changes, net in ~~each case during~~ the first half of fiscal ~~2022~~2023, relative to the ~~first half of fiscal 2021~~corresponding prior year period.

Cash flows from investing activities: The changes in cash flows from investing activities primarily relate to our acquisitions, 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 ~~provided by~~used for investing activities ~~was $9.9 billion~~increased during the first half of fiscal ~~2022~~2023 compared to ~~$5.8 billion of~~ net cash ~~used for~~provided by investing activities during the first half of fiscal ~~2021. The increase in net cash provided by investing activities was~~2022 primarily due to the cash used for our acquisition of Cerner in the first half of fiscal 2023, an increase in cash used for capital expenditures and decrease in cash proceeds from sales and maturities of marketable securities and other investments, ~~and~~partially offset by a decrease in ~~the~~ cash used for the purchases of marketable securities and other investments, ~~partially offset by an increase in cash used for capital expenditures,~~ in each case during the first half of fiscal ~~2022~~2023 relative to the first half of fiscal ~~2021.~~2022.

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~~provided by financing activities increased during the first half of fiscal ~~2022~~2023 compared to the net cash used for financing activities in the first half of fiscal ~~2021~~2022 primarily due to ~~higher~~the cash proceeds from borrowings, net of partial repayments pursuant to the Bridge Credit Agreement, the Term Loan Credit Agreement, the issuance of senior notes in November 2022 and the commercial paper program; lower stock ~~repurchases, higher debt repayments, higher payments~~repurchases; lower maturities of ~~dividends~~senior notes and higher net cash ~~used for~~from our employee stock program, in each case during the first half of fiscal ~~2022~~2023 in comparison to the first half of fiscal ~~2021.~~2022.

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 November 30,							Trailing 4-Quarters Ended November 30,
(Dollars in millions)	2021			Change	2020			2022			Change	2021
Net cash provided by operating activities	$	10,255		-27%	$	13,967		$	15,073		47%	$	10,255
Capital expenditures		(3,118	)	70%		(1,833	)		(6,678	)	114%		(3,118	)
Free cash flow	$	7,137		-41%	$	12,134		$	8,395		18%	$	7,137
Net income	$	10,262			$	10,380		$	8,797			$	10,262
Free cash flow as percent of net income	70%				117%			95%				70%

~~Common Stock Repurchase Program~~: Our Board of Directors has approved a program for us to repurchase shares of our common stock. On December 9, 2021, we announced that our Board of Directors approved an expansion of our stock repurchase program by an additional $10.0 billion. As of November 30, 2021, approximately $648 million 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.

Credit Agreements and Related Borrowings: On June 8, 2022, we borrowed $15.7 billion under the Bridge Credit Agreement to partly finance our acquisition of Cerner. The amount is due and payable in full on March 7, 2023 unless settled earlier pursuant to the terms of the Bridge Credit Agreement.

During the first half of fiscal 2023, we entered into and subsequently expanded the Term Loan Credit Agreement and borrowed a total of $4.7 billion under the Term Loan 1 Facility and $960 million under the Term Loan 2 Facility. We used the net proceeds of these borrowings to reduce the amount of indebtedness outstanding under the Bridge Credit Agreement. We will begin making quarterly repayments of amounts borrowed under both Term Loan Facilities in September 2024. Any remaining unpaid principal balance under the Term Loan 1 Facility will be fully due and payable on August 16, 2027 and any remaining unpaid principal balance under the Term Loan 2 Facility will be fully due and payable on August 16, 2025, unless the termination date of one or both of the Term Loan Facilities is extended.

Senior Notes: In November 2022, we issued $7.0 billion of senior notes comprised of the following:

We used the net proceeds from the senior notes to reduce the amount of indebtedness outstanding under the Bridge Credit Agreement.

Cerner Senior Notes and Other Borrowings: We assumed $1.6 billion of senior notes and other borrowings through our Cerner acquisition, all of which were paid during the first half of fiscal 2023.

Commercial Paper Program: During the first half of fiscal 2023, our commercial paper program was increased to $6.0 billion. Our commercial paper program allows us to issue and sell unsecured short-term promissory notes pursuant to a private placement exemption from the registration requirements under federal and state securities laws pursuant to dealer agreements with various banks and an Issuing and Paying Agency Agreement with Deutsche Bank Trust Company Americas. There were $1.9 billion of outstanding commercial paper notes as of November 30, 2022 (none outstanding as of May 31, 2022) that mature at various dates through March 2023. The effective interest rate, including issuance costs for the second quarter and first half of fiscal 2023 was 4.48%. We use the net proceeds from the issuance of commercial paper for general corporate purposes.

Additional details regarding these activities above are included in Note 5 of Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report.

Contractual Obligations: During the first half of fiscal 2023, 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, ~~2021.~~2022, other than the closure of our acquisition of Cerner on June 8, 2022, for which we borrowed $15.7 billion on the same day pursuant to the Bridge Credit Agreement. We also issued $7.0 billion of senior notes and borrowed a total of $5.6 billion pursuant to the Term Loan Credit Agreement. The net proceeds of both borrowings were used for partial repayment of borrowings under the Bridge Credit Agreement. We also issued $1.9 billion of commercial paper, net of repayments, during the first half of fiscal 2023. Additional details are included in the discussion above and in Note 5 of Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report.

Further, our operating lease commitments, primarily for data centers, that are generally expected to commence between the remainder of fiscal 2023 and fiscal 2026 for terms of three to fifteen years increased to $7.1 billion as of November 30, 2022. We have not recorded these lease commitments on our Condensed Consolidated Balance Sheets as of November 30, 2022. Refer to Note 10 of Notes to Consolidated Financial Statements included in our

Annual Report on Form 10-K for the fiscal year ended May 31, 2022 for more information about our lease commitments.

We believe that our current cash, cash equivalents and marketable securities ~~and~~balances, cash generated from operations, and our $6.0 billion, five-year revolving credit agreement will be sufficient to meet our working capital, capital expenditures and contractual ~~obligation~~obligations 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.

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, ~~2018~~2019 has been a weighted-average annualized rate of ~~0.9%~~1.3% 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~~if applicable, are exercised. Of the outstanding stock options at November 30, ~~2021,~~2022, which generally have a ten-year exercise period, 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 November 30, ~~2021,~~2022, 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 ~~8.4%~~9.0%.

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 half of fiscal ~~2022.~~2023. 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, ~~2021~~2022 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~~As a result of our acquisition of Cerner on June 8, 2022, our internal control over financial reporting, subsequent to the date of acquisition, includes certain additional internal controls relating to Cerner. Except as described above, there were no changes in our internal control over financial

reporting identified in connection with the evaluation required by paragraph (d) of the Exchange Act Rules 13a-15 or 15d-15 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 89 (pertaining to information regarding contingencies related to our income taxes) and Note 1112 (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 in our Annual Report on Form 10-K for our fiscal year ended May 31, ~~2021.~~2022. 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 November 30, ~~2021~~2022 and the approximate dollar value of shares that may yet be purchased pursuant to our stock repurchase program:

~~Exhibit~~

~~No.~~

~~Incorporated by Reference~~

~~Exhibit Description~~

~~Form~~

~~File No.~~

~~Exhibit~~

~~Filing Date~~

~~Filed By~~

10.15*

~~Oracle Corporation Amended and Restated 2020 Equity Incentive Plan (as approved by the stockholders on November 10, 2021)~~

~~8-K~~

~~001-35992~~

~~10.16~~

~~11/12/21~~

~~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~~ ~~November 30, 2021 and May 31, 2021, (ii) Condensed Consolidated Statements of Operations for the three and six months ended~~ ~~November 30~~, 2021 and 2020, (iii) Condensed Consolidated Statements of Comprehensive (Loss) Income for the three and six months ended November 30, 2021 and 2020, (iv) Condensed Consolidated Statements of Stockholders’ (Deficit) Equity for the three and six months ended November 30, 2021 and 2020, (v) Condensed Consolidated Statements of Cash Flows for the six months ended ~~November 30, 2021 and 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~~ ~~November 30, 2021, formatted in Inline XBRL~~

Exhibit

No.

Incorporated by Reference

Exhibit Description

Form

File No.

Exhibit

Filing Date

Filed By

4.01

Forms of 5.800% Notes due 2025, 6.150% Notes due 2029, 6.250% Notes due 2032 and 6.900% Notes due 2052, together with an Officers’ Certificate issued November 9, 2022 setting forth the terms of the Notes

8-K

001-35992

4.1

11/9/22

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 November 30, 2022 and May 31, 2022, (ii) Condensed Consolidated Statements of Operations for the three and six months ended November 30, 2022 and 2021, (iii) Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended November 30, 2022 and 2021, (iv) Condensed Consolidated Statements of Stockholders’ Deficit for the three and six months ended November 30, 2022 and 2021, (v) Condensed Consolidated Statements of Cash Flows for the six months ended November 30, 2022 and 2021 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 November 30, 2022, 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 November 30, ~~2021~~2022 and May 31, ~~2021~~2022	3

	Condensed Consolidated Statements of Operations for the Three and Six Months Ended November 30, ~~2021~~2022 and ~~2020~~2021	4

	Condensed Consolidated Statements of Comprehensive Income (Loss) ~~Income~~ for the Three and Six Months Ended November 30, ~~2021~~2022 and ~~2020~~2021	5

	Condensed Consolidated Statements of Stockholders’ ~~(Deficit) Equity~~Deficit for the Three and Six Months Ended November 30, ~~2021~~2022 and ~~2020~~2021	6

	Condensed Consolidated Statements of Cash Flows for the Six Months Ended November 30, ~~2021~~2022 and ~~2020~~2021	7

	Notes to Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2427

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4145

Item 4.	Controls and Procedures	4245

PART II.	OTHER INFORMATION	4347

Item 1.	Legal Proceedings	4347

Item 1A.	Risk Factors	4347

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4347

Item 6.	Exhibits	4448

	Signatures	4549

(in millions)
Cash and marketable securities	$	769
Trade receivables, net		843
Property, plant and equipment, net		1,514
Intangible assets		11,972
Goodwill		17,777
Other assets		837
Accounts payable and other liabilities		(979	)
Deferred revenues		(297	)
Senior notes and other borrowings		(1,600	)
Deferred tax liabilities, net		(2,611	)
Total	$	28,225

	November 30, 2022
(Dollars in millions)	Amount			Effective Interest Rate
$1,000, 5.80%, due November 2025	$	1,000		5.93%
$1,250, 6.15%, due November 2029		1,250		6.21%
$2,250, 6.25%, due November 2032		2,250		6.32%
$2,500, 6.90%, due November 2052		2,500		6.94%
Total fixed rate senior notes	$	7,000
Unamortized discount/issuance costs		(33	)
Total fixed-rate senior notes, net	$	6,967

(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
September 1, 2021—September 30, 2021		43.1	$	89.06		43.1	$	3,805.5
October 1, 2021—October 31, 2021		26.5	$	93.40		26.5	$	1,335.5
November 1, 2021—November 30, 2021		7.3	$	94.35		7.3	$	648.4
Total		76.9	$	91.05		76.9

	ORACLE CORPORATION

Date: December~~10, 2021~~ 13, 2022	By:	/s/ Safra A. Catz
		Safra A. Catz Chief Executive Officer and Director (Principal Executive and Financial Officer)

Date: December~~10, 2021~~ 13, 2022	By:	/s/ William Corey West
		William Corey West
		Executive Vice President, Chief Accounting Officer (Principal Accounting Officer)