☒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 7, ~~2022~~2023 was: ~~2,696,253,000.~~2,748,922,000.

For purposes of this Quarterly Report on Form 10-Q (this Quarterly Report), the terms “Oracle,” “we,” “us” and “our” refer to Oracle Corporation and its consolidated subsidiaries. This Quarterly Report ~~on Form 10-Q~~ contains statements that are not historical in nature, are predictive in nature, or that depend upon or refer to future events or conditions or otherwise contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended ~~(Exchange~~(the Exchange Act), and Section 27A of the Securities Act of 1933, as amended ~~(Securities~~(the Securities Act). These include, among other things, statements regarding:

•

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

•

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

•

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

•

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

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•

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

•

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

•

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

•

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

•

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

as well as other statements regarding our future operations, financial condition and prospects, and business strategies. Forward-looking statements may be preceded by, followed by or include the words ~~“expects,”~~ “anticipates,~~” “intends,” “plans,~~” “believes,” ~~“seeks,~~“continues,” ~~“strives,~~“could,” “endeavors,” “estimates,” ~~“will,~~“expects,” ~~“should,~~“intends,” “is designed ~~to”~~to,” “may,” “plans,” “potential,” “seeks,” “should,” “strives,” “will” and similar expressions. We claim the protection of the safe harbor for forward-looking statements contained in the Exchange Act and the Securities Act for all forward-looking statements. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to risks, uncertainties and assumptions about our business that could affect our future results and could cause those results or other outcomes to differ materially from those expressed or implied in the forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in “Risk Factors” included in documents we file from time to time with the U.S. Securities and Exchange Commission, including our Annual Report on Form 10-K for ~~our~~the fiscal year ended May 31, ~~2022~~2023 and our other Quarterly Reports on Form 10-Q to be filed by us in our fiscal ~~2023,~~2024, which runs from June 1, ~~2022~~2023 to May 31, ~~2023.~~2024.

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.

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

~~Item 1.~~

~~Financial Statements (Unaudited)~~

ORACLE CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

As of November 30, ~~2022~~2023 and May 31, ~~2022~~2023

(Unaudited)


(in millions, except per share data)	November 30, 2022			May 31, 2022			November 30, 2023			May 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	6,813		$	21,383		$	8,244		$	9,765
Marketable securities		537			519			446			422
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
Trade receivables, net of allowances for credit losses of $470 and $428 as of November 30, 2023 and May 31, 2023, respectively								6,804			6,915
Prepaid expenses and other current assets		4,014			3,778			3,795			3,902
Total current assets		17,561			31,633			19,289			21,004
Non-current assets:
Property, plant and equipment, net		14,351			9,716			18,009			17,069
Intangible assets, net		11,593			1,440			8,378			9,837
Goodwill, net		61,513			43,811			62,231			62,261
Deferred tax assets		12,091			12,782			12,758			12,226
Other non-current assets		11,360			9,915			13,659			11,987
Total non-current assets		110,908			77,664			115,035			113,380
Total assets	$	128,469		$	109,297		$	134,324		$	134,384
LIABILITIES AND STOCKHOLDERS' DEFICIT
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Notes payable and other borrowings, current	$	9,746		$	3,749		$	6,321		$	4,061
Accounts payable		1,647			1,317			1,107			1,204
Accrued compensation and related benefits		1,780			1,944			1,706			2,053
Deferred revenues		8,705			8,357			8,878			8,970
Other current liabilities		5,228			4,144			6,395			6,802
Total current liabilities		27,106			19,511			24,407			23,090
Non-current liabilities:
Notes payable and other borrowings, non-current		81,173			72,110			82,468			86,420
Income taxes payable		11,128			12,210			10,046			11,077
Deferred tax liabilities		7,165			6,031			5,244			5,772
Other non-current liabilities		5,673			5,203			7,781			6,469
Total non-current liabilities		105,139			95,554			105,539			109,738
Commitments and contingencies
Oracle Corporation stockholders' deficit:
Preferred stock, $0.01 par value—authorized: 1.0 shares; outstanding: none		—			—
Common stock, $0.01 par value and additional paid in capital—authorized: 11,000 shares; outstanding: 2,695 shares and 2,665 shares as of November 30, 2022 and May 31, 2022, respectively		28,148			26,808
Oracle Corporation stockholders’ equity:
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: 2,748 shares and 2,713 shares as of November 30, 2023 and May 31, 2023, respectively								30,724			30,215
Accumulated deficit		(30,617	)		(31,336	)		(25,431	)		(27,620	)
Accumulated other comprehensive loss		(1,777	)		(1,692	)		(1,427	)		(1,522	)
Total Oracle Corporation stockholders' deficit		(4,246	)		(6,220	)
Total Oracle Corporation stockholders’ equity								3,866			1,073
Noncontrolling interests		470			452			512			483
Total stockholders' deficit		(3,776	)		(5,768	)
Total liabilities and stockholders' deficit	$	128,469		$	109,297
Total stockholders’ equity								4,378			1,556
Total liabilities and stockholders’ equity							$	134,324		$	134,384

See notes to condensed consolidated financial statements.

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ORACLE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three and Six Months Ended November 30, ~~2022~~2023 and ~~2021~~2022

(Unaudited)


	Three Months Ended November 30,						Six Months Ended November 30,
(in millions, except per share data)	2023			2022			2023			2022
Revenues:
Cloud services and license support	$	9,639		$	8,598		$	19,186		$	17,015
Cloud license and on-premise license		1,178			1,435			1,987			2,339
Hardware		756			850			1,470			1,613
Services		1,368			1,392			2,751			2,753
Total revenues		12,941			12,275			25,394			23,720
Operating expenses:
Cloud services and license support(1)		2,274			1,891			4,452			3,626
Hardware(1)		213			286			432			536
Services(1)		1,253			1,181			2,465			2,233
Sales and marketing(1)		2,093			2,216			4,118			4,393
Research and development		2,226			2,158			4,442			4,251
General and administrative		375			366			769			777
Amortization of intangible assets		755			907			1,518			1,826
Acquisition related and other		47			62			58			103
Restructuring		83			137			222			281
Total operating expenses		9,319			9,204			18,476			18,026
Operating income		3,622			3,071			6,918			5,694
Interest expense		(888	)		(856	)		(1,760	)		(1,643	)
Non-operating expenses, net		(14	)		(71	)		(63	)		(251	)
Income before income taxes		2,720			2,144			5,095			3,800
Provision for income taxes		217			403			172			511
Net income	$	2,503		$	1,741		$	4,923		$	3,289
Earnings per share:
Basic	$	0.91		$	0.65		$	1.80		$	1.22
Diluted	$	0.89		$	0.63		$	1.75		$	1.20
Weighted average common shares outstanding:
Basic		2,746			2,695			2,737			2,690
Diluted		2,817			2,746			2,820			2,747

Three Months Ended
November 30,

Six Months Ended
November 30,

(in millions, except per share data)

2022

2021

2022

2021

Revenues:

Cloud services and license support

$
8,598

$
7,554

$
17,015

$
14,925

Cloud license and on-premise license

1,435

1,237

2,339

2,049

Hardware

850

767

1,613

1,530

Services

1,392

802

2,753

1,583

Total revenues

12,275

10,360

23,720

20,087

Operating expenses:

Cloud services and license support⁽¹⁾

1,891

1,259

3,626

2,472

Hardware⁽¹⁾

286

229

536

474

Services⁽¹⁾

1,181

671

2,233

1,315

Sales and marketing⁽¹⁾

2,216

1,954

4,393

3,808

Research and development

2,158

1,754

4,251

3,438

General and administrative

366

319

777

618

Amortization of intangible assets

907

299

1,826

603

Acquisition related and other

62

4,667

103

4,687

Restructuring

137

32

281

70

Total operating expenses

9,204

11,184

18,026

17,485

Operating income (loss)

3,071

(824
)

5,694

2,602

Interest expense

(856
)

(679
)

(1,643
)

(1,384
)
Non-operating (expenses) income, net

(71
)

7

(251
)

(34
)
Income (loss) before income taxes

2,144

(1,496
)

3,800

1,184

(Provision for) benefit from income taxes

(403
)

249

(511
)

25

Net income (loss)

$
1,741

$
(1,247
)

$
3,289

$
1,209

Earnings (loss) per share:

Basic

$
0.65

$
(0.46
)

$
1.22

$
0.44

Diluted

$
0.63

$
(0.46
)

$
1.20

$
0.43

Weighted average common shares outstanding:

Basic

2,695

2,694

2,690

2,731

Diluted

2,746

2,694

2,747

2,823

(1)

Exclusive of amortization of intangible assets, which is shown separately.

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

See notes to condensed consolidated financial statements.

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ORACLE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME ~~(LOSS)~~

For the Three and Six Months Ended November 30, ~~2022~~2023 and ~~2021~~2022

(Unaudited)


	Three Months Ended November 30,					Six Months Ended November 30,						Three Months Ended November 30,					Six Months Ended November 30,
(in millions)	2022		2021			2022			2021			2023			2022		2023			2022
Net income (loss)	$	1,741	$	(1,247	)	$	3,289		$	1,209
Net income												$	2,503		$	1,741	$	4,923		$	3,289
Other comprehensive income (loss), net of tax:
Net foreign currency translation gains (losses)		95		(222	)		(194	)		(445	)		86			95		42			(194	)
Net unrealized gains (losses) on defined benefit plans		—		2			(1	)		4
Net unrealized gains on cash flow hedges		93		—			110			—
Net unrealized (losses) gains on cash flow hedges													(17	)		93		55			110
Other, net													1			—		(2	)		(1	)
Total other comprehensive income (loss), net		188		(220	)		(85	)		(441	)		70			188		95			(85	)
Comprehensive income (loss)	$	1,929	$	(1,467	)	$	3,204		$	768
Comprehensive income												$	2,573		$	1,929	$	5,018		$	3,204

See notes to condensed consolidated financial statements.

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ORACLE CORPORATION

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

For the Three and Six Months Ended November 30, ~~2022~~2023 and ~~2021~~2022

(Unaudited)


	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)	2022			2021			2022			2021			2023			2022			2023			2022
Common stock and additional paid in capital
Balance, beginning of period	$	27,224		$	25,534		$	26,808		$	26,533		$	30,295		$	27,224		$	30,215		$	26,808
Common stock issued		146			157			661			305			118			146			426			661
Stock-based compensation		909			681			1,659			1,226			1,029			909			1,878			1,659
Repurchases of common stock		(61	)		(711	)		(134	)		(1,583	)		(43	)		(61	)		(56	)		(134	)
Shares repurchased for tax withholdings upon vesting of restricted stock-based awards														(673	)		(66	)		(1,733	)		(895	)
Other, net		(70	)		(70	)		(846	)		(890	)		(2	)		(4	)		(6	)		49
Balance, end of period	$	28,148		$	25,591		$	28,148		$	25,591		$	30,724		$	28,148		$	30,724		$	28,148
Accumulated deficit
Balance, beginning of period	$	(31,134	)	$	(25,679	)	$	(31,336	)	$	(20,120	)	$	(26,428	)	$	(31,134	)	$	(27,620	)	$	(31,336	)
Repurchases of common stock		(361	)		(6,289	)		(847	)		(13,417	)		(407	)		(361	)		(544	)		(847	)
Cash dividends declared		(863	)		(861	)		(1,723	)		(1,748	)		(1,099	)		(863	)		(2,190	)		(1,723	)
Net income (loss)		1,741			(1,247	)		3,289			1,209
Net income														2,503			1,741			4,923			3,289
Balance, end of period	$	(30,617	)	$	(34,076	)	$	(30,617	)	$	(34,076	)	$	(25,431	)	$	(30,617	)	$	(25,431	)	$	(30,617	)
Other stockholders' deficit, net
Other stockholders’ equity (deficit), net
Balance, beginning of period	$	(1,539	)	$	(985	)	$	(1,240	)	$	(461	)	$	(1,026	)	$	(1,539	)	$	(1,039	)	$	(1,240	)
Other comprehensive income (loss), net		188			(220	)		(85	)		(441	)		70			188			95			(85	)
Other, net		44			32			18			(271	)		41			44			29			18
Balance, end of period	$	(1,307	)	$	(1,173	)	$	(1,307	)	$	(1,173	)	$	(915	)	$	(1,307	)	$	(915	)	$	(1,307	)
Total stockholders' deficit	$	(3,776	)	$	(9,658	)	$	(3,776	)	$	(9,658	)
Total stockholders’ equity (deficit)													$	4,378		$	(3,776	)	$	4,378		$	(3,776	)
Cash dividends declared per common share	$	0.32		$	0.32		$	0.64		$	0.64		$	0.40		$	0.32		$	0.80		$	0.64

See notes to condensed consolidated financial statements.

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ORACLE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Six Months Ended November 30, ~~2022~~2023 and ~~2021~~2022

(Unaudited)


	Six Months Ended November 30,						Six Months Ended November 30,
(in millions)	2022			2021			2023			2022
Cash flows from operating activities:
Net income	$	3,289		$	1,209		$	4,923		$	3,289
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		1,138			913			1,510			1,138
Amortization of intangible assets		1,826			603			1,518			1,826
Deferred income taxes		(852	)		(820	)		(1,049	)		(852	)
Stock-based compensation		1,659			1,226			1,878			1,659
Other, net		289			(176	)		331			289
Changes in operating assets and liabilities, net of effects from acquisitions:
Decrease in trade receivables, net		516			789			145			516
Decrease in prepaid expenses and other assets		121			263			301			121
Decrease in accounts payable and other liabilities		(785	)		(918	)		(1,048	)		(785	)
Decrease in income taxes payable		(327	)		(849	)		(1,541	)		(327	)
Increase (decrease) in deferred revenues		369			(531	)
Increase in deferred revenues								149			369
Net cash provided by operating activities		7,243			1,709			7,117			7,243
Cash flows from investing activities:
Purchases of marketable securities and other investments		(603	)		(9,631	)		(515	)		(603	)
Proceeds from sales and maturities of marketable securities and other investments		462			21,617			157			462
Acquisitions, net of cash acquired		(27,799	)		(50	)		(59	)		(27,799	)
Capital expenditures		(4,154	)		(1,987	)		(2,394	)		(4,154	)
Net cash (used for) provided by investing activities		(32,094	)		9,949
Net cash used for investing activities								(2,811	)		(32,094	)
Cash flows from financing activities:
Payments for repurchases of common stock		(1,000	)		(15,001	)		(600	)		(1,000	)
Proceeds from issuances of common stock		661			305			426			661
Shares repurchased for tax withholdings upon vesting of restricted stock-based awards		(895	)		(890	)		(1,733	)		(895	)
Payments of dividends to stockholders		(1,723	)		(1,748	)		(2,190	)		(1,723	)
Proceeds from issuances of commercial paper, net of repayments		1,880			—			1,749			1,880
Proceeds from issuances of senior notes and other borrowings, net of issuance costs		28,280			—			—			28,280
Repayments of senior notes and other borrowings		(16,692	)		(5,750	)		(3,500	)		(16,692	)
Other, net		(56	)		(437	)		31			(56	)
Net cash provided by (used for) financing activities		10,455			(23,521	)
Net cash (used for) provided by financing activities								(5,817	)		10,455
Effect of exchange rate changes on cash and cash equivalents		(174	)		(297	)		(10	)		(174	)
Net decrease in cash and cash equivalents		(14,570	)		(12,160	)		(1,521	)		(14,570	)
Cash and cash equivalents at beginning of period		21,383			30,098			9,765			21,383
Cash and cash equivalents at end of period	$	6,813		$	17,938		$	8,244		$	6,813
Non-cash financing activities:
Fair values of stock awards assumed in connection with acquisitions	$	55		$	—		$	—		$	55

See notes to condensed consolidated financial statements.

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ORACLE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

November 30, ~~2022~~ 2023

(Unaudited)

BASIS OF PRESENTATION, RECENT ACCOUNTING PRONOUNCEMENTS AND OTHER

~~BASIS OF PRESENTATION, RECENT ACCOUNTING PRONOUNCEMENTS AND OTHER~~

Basis of Presentation

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).~~Commission. 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, ~~2022.~~2023.

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~~the fiscal year ending May 31, ~~2023.~~2024.

During the first quarter of fiscal 2024, we finalized our adoption of Accounting Standards Update 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting and subsequent amendments to the initial guidance (collectively, Topic 848), which had no material impact to our current or historical condensed consolidated financial statements. There have been no changes to our significant accounting policies as disclosed in our Annual Report on Form 10-K for the fiscal year ended May 31, ~~2022~~2023 that had a significant impact on our condensed consolidated financial statements or notes thereto as of and for the six months ended November 30, ~~2022.~~

~~Table of Contents~~

~~ORACLE CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~2023.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL ~~STATEMENTS~~—STATEMENTS—(Continued)

~~Financial Instruments~~Segment Reporting: In ~~March 2020,~~November 2023, the ~~FASB~~Financial Accounting Standards Board (FASB) issued ASU ~~2020-04,~~2023-07, ~~Reference Rate Reform~~Segment Reporting (Topic ~~848)~~280): ~~Facilitation~~Improvements to Reportable Segment Disclosures (ASU 2023-07), which enhances the disclosures required for operating segments in our annual and interim consolidated financial statements. ASU 2023-07 is effective for us for our annual reporting for fiscal 2025 and for interim period reporting beginning in fiscal 2026 on a retrospective basis. Early adoption is permitted. We are currently evaluating the impact of ~~the Effects of Reference Rate Reform on Financial Reporting~~ (ASU 2020-04) and also issued subsequent amendments to the initial guidance (collectively, Topic 848). Topic 848 provides optional guidance for contract modifications and certain hedging relationships associated with the transition from reference rates that are expected to be discontinued. We will adopt Topic 848 when our ~~relevant contracts are modified upon transition to alternative reference rates. We do not expect our~~pending adoption of ~~Topic 848 to have a material impact~~ASU 2023-07 on our consolidated financial statements.

The changes in intangible assets for fiscal ~~2023~~2024 and the net book value of intangible assets as of November 30, ~~2022~~2023 and May 31, ~~2022~~2023 were as follows:

As of November 30, ~~2022,~~2023, estimated future amortization expenses related to intangible assets were as follows (in millions):

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, ~~2022~~2023 were as follows:

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~~period presented that resulted from foreign currency translations 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 andcertain other ~~general corporate purposes.~~

RESTRUCTURING ACTIVITIES

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.

~~Table of Contents~~

~~ORACLE CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~Fiscal 2024 Oracle Restructuring Plan

~~November 30,~~ ~~2022~~

~~(Unaudited)~~

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

•

~~an amount equal to the amount borrowed reduced by any prepayments multiplied by 1.25% on September 30, 2024 and quarterly thereafter until June 30, 2026;~~

•

~~an amount equal to the amount borrowed reduced by any prepayments multiplied by 2.50% on September 30, 2026 and quarterly thereafter until June 30, 2027; and~~

•

any remaining unpaid principal balance under the Term Loan 1 Facility will become fully due and payable on August 16, 2027 and any remaining unpaid principal balance under the Term Loan 2 Facility will become fully due and payable on August 16, 2025 (subject to any extension of the Term Loan 2 Facility termination date, as set out below), unless the outstanding loans are prepaid earlier at the request of Oracle or accelerated by the lenders if an event of default occurs.

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.~~

~~Senior Notes~~

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

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

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.

~~Table of Contents~~

~~ORACLE CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

~~November 30,~~ ~~2022~~

~~(Unaudited)~~

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.

~~Cash Flow Hedge—Interest Rate Swap Agreements~~

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 that~~corresponding interest expense is recognized.~~

~~We do not use any interest rate swap agreements for trading purposes.~~

~~Cerner Senior Notes and Other Borrowings~~

~~In connection with our acquisition of Cerner, we assumed:~~

•

$1.0 billion par value of legacy Cerner senior notes. The acquisition triggered a mandatory offer to prepay such senior notes in accordance with the terms of the underlying note purchase agreements. Holders of $931 million par value of senior notes exercised the option for prepayment, and accordingly, such notes together with accrued interest were redeemed on June 8, 2022, and the remaining outstanding senior notes together with accrued interest were redeemed during the second quarter of fiscal 2023; and

•

~~$600 million of principal amount of revolving credit loans. The entire loan along with accrued interest was settled and the credit facility was terminated on June 8, 2022.~~

~~Commercial Paper Program and Commercial Paper Notes~~

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.

~~Table of Contents~~

~~ORACLE CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

~~November 30,~~ ~~2022~~

~~(Unaudited)~~

~~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.~~

6.	~~RESTRUCTURING ACTIVITIES~~

~~Fiscal 2022 Oracle Restructuring Plan~~

~~During fiscal 2022,~~2024, our management approved, committed to and initiated plans to restructure and further improve efficiencies in our operations due to our acquisitions and certain other operational activities ~~(2022~~(2024 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~~2024 Restructuring Plan are up to ~~$927~~$609 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~~$243 million of restructuring expenses in connection with the ~~2022~~2024 Restructuring Plan in the first half of fiscal ~~2023~~2024 and ~~2022, respectively. We~~we expect to incur the majority of the estimated remaining ~~$420~~$366 million through the end of fiscal ~~2023.~~2025. Any changes to the estimates ~~or timing~~ of executing the ~~2022~~2024 Restructuring Plan will be reflected in our future results of operations.

~~Summary of All Plans~~

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)

Initial
Costs⁽³⁾

Adj. to
Cost⁽⁴⁾

Cash
Payments

Others⁽⁵⁾

2022 Restructuring Plan⁽¹⁾

Cloud and license

$
34

$
156

$
2

$
(109
)

$
(1
)

$
82

$
246

$
529

Hardware

7

10

—

(8
)

(1
)

8

21

32

Services

9

15

—

(10
)

(1
)

13

31

36

Other

10

100

1

(74
)

(1
)

36

209

330

Total 2022 Restructuring Plan

$
60

$
281

$
3

$
(201
)

$
(4
)

$
139

$
507

$
927

Total other restructuring plans⁽⁶⁾

$
71

$
—

$
(3
)

$
(13
)

$
(2
)

$
53

Total restructuring plans

$
131

$
281

$
—

$
(214
)

$
(6
)

$
192

⁽¹⁾12

Restructuring costs recorded to each of the operating segments presented primarily related to employee severance costs. Other restructuring costs represented employee severance costs not related to our operating segments and certain other restructuring plan costs.

⁽²⁾	~~As of November 30, 2022 and May 31, 2022, substantially all restructuring liabilities have been recorded in other current liabilities within our condensed consolidated balance sheets.~~

⁽³⁾	~~Costs recorded for the respective restructuring plans during the period presented.~~

⁽⁴⁾	~~All plan adjustments were changes in estimates whereby increases and decreases in costs were generally recorded to operating expenses in the period of adjustments.~~

⁽⁵⁾	~~Represents foreign currency translation and certain other non-cash adjustments.~~

⁽⁶⁾

Other restructuring plans presented in the table above included condensed information for other Oracle based plans and other plans associated with certain of our acquisitions whereby we continued to make cash outlays to settle obligations under these plans during the period presented but for which the periodic impact to our condensed consolidated statements of operations was not significant.

Table of Contents

ORACLE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL ~~STATEMENTS~~—STATEMENTS—(Continued)

November 30, ~~2022~~ 2023

(Unaudited)

Summary of All Plans


	Accrued		Six Months Ended November 30, 2023										Accrued		Total Costs		Total Expected
(in millions)	May 31, 2023(2)		Initial Costs(3)		Adj. to Cost(4)			Cash Payments			Others(5)		November 30, 2023(2)		Accrued to Date		Program Costs
2024 Restructuring Plan(1)
Cloud and license	$	—	$	119	$	(1	)	$	(47	)	$	1	$	72	$	118	$	184
Hardware		—		5		—			(2	)		—		3		5		15
Services		—		32		—			(17	)		—		15		32		177
Other		—		89		(1	)		(56	)		—		32		88		233
Total 2024 Restructuring Plan	$	—	$	245	$	(2	)	$	(122	)	$	1	$	122	$	243	$	609
Total other restructuring plans(6)	$	199	$	—	$	(21	)	$	(64	)	$	2	$	116
Total restructuring plans	$	199	$	245	$	(23	)	$	(186	)	$	3	$	238

(1)

(2)

As of November 30, 2023 and May 31, 2023, substantially all restructuring liabilities have been recorded in other current liabilities within our condensed consolidated balance sheets.

(3)

Costs recorded for the respective restructuring plans during the period presented.

(4)

All plan adjustments were changes in estimates whereby increases and decreases in costs were generally recorded to operating expenses in the period of adjustments.

(5)

Represents foreign currency translation and certain other non-cash adjustments.

(6)

Other restructuring plans presented in the tables above included condensed information for other Oracle based plans and other plans associated with certain of our acquisitions whereby we continued to make cash outlays to settle obligations under these plans during the periods presented but for which the periodic impact to our condensed consolidated statements of operations was not significant.

DEFERRED REVENUES

~~DEFERRED REVENUES~~

Deferred revenues consisted of the following:


(in millions)	November 30, 2022		May 31, 2022		November 30, 2023		May 31, 2023
Cloud services and license support	$	7,758	$	7,406	$	8,004	$	7,983
Hardware		495		555		512		535
Services		401		360		306		400
Cloud license and on-premise license		51		36		56		52
Deferred revenues, current		8,705		8,357		8,878		8,970
Deferred revenues, non-current (in other non-current liabilities)		773		753		1,251		968
Total deferred revenues	$	9,478	$	9,110	$	10,129	$	9,938

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. As of November 30, ~~2022,~~2023, approximately ~~$8.5~~$7.6 billion remained available for stock repurchases pursuant to our stock repurchase program. We repurchased ~~13.6~~5.3 million shares for ~~$981~~$600 million during the six months ended November 30, 2023 and 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~~ 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 trading plan. Our stock repurchase program may be accelerated, suspended, delayed or discontinued at any time.

In December ~~2022,~~2023, our Board of Directors declared a quarterly cash dividend of ~~$0.32~~$0.40 per share of our outstanding common stock. The dividend is payable on January ~~24, 2023~~25, 2024 to stockholders of record as of the close of business on January ~~10, 2023.~~11, 2024. 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 ~~2023,~~2024, we issued 7344 million ~~restricted~~ stock-based ~~units (RSUs),~~awards, substantially all of which were restricted stock-based units (RSUs) 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~~which are subject to service-based vesting restrictions. These fiscal

~~2023~~ 2024 stock-based award issuances were partially offset by stock-based award forfeitures and cancellations of 74 million shares during the first half of fiscal ~~2023.~~2024.

The RSUs that were granted during the six months ended November 30, ~~2022~~2023 have similar vesting restrictions and contractual lives and were valued using methodologies of a similar nature as those described in Note 12 of Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended May 31, ~~2022.~~2023.

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

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

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 following table presents our cloud services and license support revenues by offerings:

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

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

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 109 of Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report provide additional information related to our businesses and operating segments and align to how our chief operating decision makers (CODMs), which ~~include~~are our Chief Executive Officer and Chief Technology Officer, view our operating results and allocate resources.

Our cloud and license business, which represented 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 software 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 revenues relative to our total revenues has increased and we expect this trend to continue. Cloud services revenues represented 37% of our total revenues for each of the three and six months ended November 30, 2023 and 31% of our total revenues for each of the three and six months ended November 30, ~~2022, respectively, and 26% of our total revenues for each of the three and six months ended November 30, 2021, respectively.~~2022.

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 7%6% 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 periods due to global supply chain constraints for certain technology components;~~transactions; our strategy for and the position of our hardware products relative to competitor offerings; customer demand for competing offerings, including cloud infrastructure offerings; the strength of general economic and business conditions; governmental budgetary constraints; whether customers decide to purchase hardware support contracts at or in close proximity to the time of hardware product sale; the percentage of our hardware support contract customer base that renews its support ~~contracts~~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~~.fluctuations.

Our services business, which represented ~~10%~~11% 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. ~~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~~2024 and full year fiscal ~~2022,~~2023, including ~~Cerner.~~Cerner Corporation (Cerner). Refer to Note 2 of Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for additional information related to our acquisition of Cerner and our other recent acquisitions. As compelling opportunities become available, we may acquire companies, products, services and technologies in furtherance of our corporate strategy.

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 various staff accounting bulletins and other applicable guidance issued by the ~~SEC.~~U.S. Securities and Exchange Commission (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 ~~quarter~~half of fiscal 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. There2024, there were no ~~other~~ significant changes to our critical accounting ~~policies~~estimates. Refer to “Critical Accounting Policies and ~~estimates.~~Estimates” under 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~~the fiscal year ended May 31, ~~2022 provides~~2023 for 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, 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 impracticable to do so. Refer to “Supplemental Disclosure Related to Certain Charges” below for additional discussion of certain of these items and Note 109 of Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for a reconciliation of the summations of total segment margin as presented in the discussion below to total income ~~(loss)~~ before income taxes as presented per our condensed consolidated statements of operations for all periods presented.

Separately, as described in Note 16 of Notes to Consolidated Financial Statements included in 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.~~currency. 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, ~~2022,~~2023, 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, ~~2022~~2023 and ~~2021,~~2022, our financial statements would reflect reported revenues of $1.10 million in the first half of fiscal 2024 (using 1.10 as the month-end average exchange rate for the period) and $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). The constant currency presentation, however, would translate the results for each of the first half of fiscal ~~2023~~2024 and ~~2022~~2023 using the May 31, ~~2022~~2023 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.

Excluding the effects of foreign currency rate fluctuations, our total revenues increased ~~across all of our three businesses during~~in the fiscal ~~2023~~2024 periods presented, relative to the corresponding prior year periods, ~~primarily~~ due to ~~revenue contributions from~~growth in our ~~acquisition of Cerner. Excluding the impact of~~cloud and license business’ revenues, which were partially offset by a decline in our ~~acquisition of Cerner, the~~hardware business’ and services business’ revenues. The constant currency revenues increase ~~during~~in our cloud and license business in the fiscal ~~2023~~2024 periods presented, relative to the corresponding prior year periods, ~~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.~~services, partially offset by a decrease in our cloud license and on-premise license revenues. In our hardware business, the ~~increase~~decrease in revenues in the fiscal 2024 periods presented was ~~primarily~~ due to ~~growth in~~the emphasis we placed on the marketing and sale of our ~~Oracle Exadata~~growing cloud-based

infrastructure technologies and ~~certain other~~ strategic hardware offerings and ~~growth in~~the de-emphasis of our sales and marketing efforts for certain of our ~~nonstrategic~~non-strategic hardware ~~offerings.~~products and related support services. In our services business, the ~~increase~~constant currency decrease in revenues in the fiscal 2024 periods presented was primarily attributable to ~~an increase~~a decrease in ~~revenues for each of~~ our ~~primary services offerings. In reported currency, Cerner contributed $1.5 billion and $3.0 billion to our total revenues during the second quarter and first half of fiscal 2023, respectively.~~consulting revenues. In constant currency, the Americas region contributed ~~84%~~48% and ~~85%~~61%, the EMEA region contributed 28% and 24% and the Asia Pacific region contributed 6%24% and 5%15% of the constant currency total

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.~~2024, respectively.

Excluding the effects of foreign currency rate fluctuations, our total operating expenses ~~decreased during~~remained flat in the second quarter of fiscal ~~2023,~~2024 and increased in the first half of fiscal 2024, relative to the corresponding prior year ~~period, primarily~~periods. The increases in operating expense in the fiscal 2024 periods presented were 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. These constant currency expense decreases were partially offset by additional operating expenses as a result of our acquisition of Cerner, including higher intangible assets amortization; higher cloud services and license support expenses, which 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; and higher ~~hardware~~services and research and development expenses, which were primarily due to higher ~~hardware product cost; higher restructuring expenses; and higher expenses across other operating expense categories primarily due to higher~~ employee related expenses. ~~In addition, during~~These increases in operating expenses were offset in the second quarter of fiscal 2022, we recorded a $125 million gain from an operating asset sale, which was allocated as a benefit to most of our operating expense lines as presented per our condensed consolidated statement of operations which reduced our total operating expenses during the same period.

~~Excluding the effects of foreign currency rate fluctuations, our total operating expenses increased during~~2024, and partially offset in the first half of fiscal ~~2023, relative to the corresponding prior year period,~~2024, by lower hardware expenses in line with lower hardware revenues; lower sales and marketing expenses, primarily due to ~~similar reasons~~lower employee related expenses; lower expenses for amortization of intangible assets 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~~assets were fully amortized; and lower acquisition related and other expenses ~~during the same period.~~and restructuring expenses.

During each of the fiscal 2023 and 2022 periods presented, we curtailed certain variable expenditures including employee travel 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.

In constant currency, our total operating margin and total operating margin as a percentage of revenues increased ~~during~~in the fiscal ~~2023~~2024 periods presented, relative to the corresponding prior year periods, ~~primarily~~ due to ~~certain litigation related charges which increased our constant currency operating expenses during the fiscal 2022 periods presented.~~higher revenues.

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:

⁽²⁾

For all periods presented, acquisition related and other expenses primarily consist of personnel related costs for transitional and certain other employees, certain business combination adjustments including certain adjustments after the measurement period has ended and certain other operating items, net. During the fiscal 2022 periods presented, acquisition related and other expenses also included certain litigation related charges. We consider the litigation related charges that are included in this line item to be outside our ordinary course of business based on the following considerations: (i) the unprecedented nature of the litigation related charges including the nature and size of the damages awarded; (ii) the dissimilarity of this litigation and related charges to recurring litigation of which we are a party in our normal business course for which any and all such charges are included in our GAAP operating results and are not separately quantified and disclosed within this line item or any other line in the table presented above; (iii) the complexity of the case; (iv) the counterparty involved; and (v) our expectation that litigation related charges of this nature will not recur in future periods; amongst other factors.

(5)

For all periods presented, the applicable jurisdictional tax rates applied to our income before income taxes after excluding the tax effects of items within the table above such as for stock-based compensation, amortization of intangible assets, restructuring, and certain acquisition related and other items, and after excluding the net deferred tax effects associated with a previously recorded income tax benefit that resulted from a partial realignment of our legal entity structure. These adjustments resulted in effective tax rates of 18.8% for each of the second quarter and first half of fiscal 2024, instead of 8.0% and 3.4%, respectively, for the second quarter and first half of fiscal 2024 and 20.4% and 19.9%, instead of 18.8% and 13.4%, respectively, for the second quarter and first half of fiscal 2023, which in each case represented our effective tax rates as derived per our condensed consolidated statements of operations.

⁽³⁾

Restructuring expenses during each of the fiscal 2023 and 2022 periods presented primarily related to employee severance in connection with our Fiscal 2022 Oracle Restructuring Plan (2022 Restructuring Plan). Additional information regarding certain of our restructuring plans is provided in management’s discussion below under “Restructuring Expenses,” in Note 6 of Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report and in Note 8 of Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended May 31, 2022.

⁽⁴⁾	~~Stock-based compensation was included in the following operating expense line items of our condensed consolidated statements of operations (in millions):~~

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

⁽⁵⁾

For the second quarter and first half of fiscal 2023, the applicable jurisdictional tax rates applied to our income before income taxes after excluding the tax effects of items within the table above such as for stock-based compensation, amortization of intangible assets, restructuring, and certain acquisition related and other items, and after excluding the net deferred tax effects associated with a previously recorded income tax benefit that resulted from a partial realignment of our legal entity structure, resulted in effective tax rates of 20.4% and 19.9%, respectively, instead of 18.8% and 13.4%, respectively, which represented our effective tax rates as derived per our condensed consolidated statements of operations. For the second quarter and first half of fiscal 2022, the applicable jurisdictional tax rates applied to our (loss) income before benefit from (provision for) income taxes after excluding the tax effects of items within the table above such as for stock-based compensation, amortization of intangible assets, restructuring, and certain acquisition related and other items, and after excluding the net deferred tax effects associated with a previously recorded income tax benefit that resulted from a partial realignment of our legal entity structure, resulted in effective tax rates of 19.2% and 18.6%, respectively, instead of (16.6%) and (2.1%), respectively, which represented our effective tax benefit rates as derived per our condensed consolidated statements of operations.

Cloud and License Business

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 software 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 ratably 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

~~Table of Contents~~

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.

Table of Contents


	Three Months Ended November 30,						Six Months Ended November 30,
			Percent Change						Percent Change
(Dollars in millions)	2023		Actual	Constant	2022		2023		Actual	Constant	2022
Cloud and License Revenues:
Americas	$	6,839	7%	6%	$	6,407	$	13,435	9%	9%	$	12,294
EMEA		2,604	11%	6%		2,350		5,077	12%	7%		4,534
Asia Pacific		1,374	8%	9%		1,276		2,661	5%	7%		2,526
Total revenues		10,817	8%	6%		10,033		21,173	9%	8%		19,354
Expenses:
Cloud services and license support(1)		2,105	21%	19%		1,747		4,145	23%	22%		3,367
Sales and marketing(1)		1,797	-7%	-9%		1,934		3,582	-7%	-9%		3,864
Total expenses(1)		3,902	6%	5%		3,681		7,727	7%	6%		7,231
Total Margin	$	6,915	9%	7%	$	6,352	$	13,446	11%	10%	$	12,123
Total Margin %	64%				63%		64%				63%
% Revenues by Geography:
Americas	63%				64%		63%				64%
EMEA	24%				23%		24%				23%
Asia Pacific	13%				13%		13%				13%
Revenues by Offerings:
Cloud services	$	4,775	25%	24%	$	3,813	$	9,410	27%	26%	$	7,392
License support		4,864	2%	0%		4,785		9,776	2%	0%		9,623
Cloud license and on-premise license		1,178	-18%	-19%		1,435		1,987	-15%	-16%		2,339
Total revenues	$	10,817	8%	6%	$	10,033	$	21,173	9%	8%	$	19,354
Cloud Services and License Support Revenues by Ecosystem:
Applications cloud services and license support	$	4,474	10%	9%	$	4,080	$	8,945	11%	10%	$	8,096
Infrastructure cloud services and license support		5,165	14%	12%		4,518		10,241	15%	13%		8,919
Total cloud services and license support revenues	$	9,639	12%	11%	$	8,598	$	19,186	13%	11%	$	17,015

Three Months Ended November 30,

Six Months Ended November 30,

Percent Change

Percent Change

(Dollars in millions)

2022

Actual

Constant

2021

2022

Actual

Constant

2021

Cloud and License Revenues:

Americas

$
6,407

28%

29%

$
4,994

$
12,294

28%

29%

$
9,575

EMEA

2,350

-4%

7%

2,458

4,534

-5%

7%

4,755

Asia Pacific

1,276

-5%

10%

1,339

2,526

-4%

8%

2,644

Total revenues

10,033

14%

20%

8,791

19,354

14%

20%

16,974

Expenses:

Cloud services and license support⁽¹⁾

1,747

47%

53%

1,184

3,367

44%

49%

2,337

Sales and marketing⁽¹⁾

1,934

14%

19%

1,696

3,864

16%

22%

3,322

Total expenses⁽¹⁾

3,681

28%

33%

2,880

7,231

28%

33%

5,659

Total Margin

$
6,352

8%

14%

$
5,911

$
12,123

7%

13%

$
11,315

Total Margin %

63%

67%

63%

67%

% Revenues by Geography:

Americas

64%

57%

64%

56%

EMEA

23%

28%

23%

28%

Asia Pacific

13%

15%

13%

16%

Revenues by Offerings:

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

1,435

16%

23%

1,237

2,339

14%

21%

2,049

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

$
4,080

30%

35%

$
3,149

$
8,096

31%

36%

$
6,190

Infrastructure cloud services and license support

4,518

3%

9%

4,405

8,919

2%

8%

8,735

Total cloud services and license support revenues

$
8,598

14%

20%

$
7,554

$
17,015

14%

20%

$
14,925

(1)

Excludes stock-based compensation and certain expense allocations. Also excludes amortization of intangible assets and certain other GAAP-based expenses, which were not allocated to our operating segment results for purposes of reporting to and review by our CODMs, as further described under “Presentation of Operating Segment Results and Other Financial Information” above.

⁽¹⁾

Excluding the effects of foreign currency rate fluctuations, our cloud and license business’ total revenues increased in the fiscal ~~2023~~2024 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 services for which we delivered such cloud and support services during the periods ~~presented; and revenue contributions from our Cerner acquisition. In reported currency, Cerner contributed $942 million and $1.8 billion to~~presented. The growth in our cloud services and license ~~business’~~support revenues ~~during the second quarter~~was partially offset by a decrease in our cloud license and ~~first half of fiscal 2023, respectively.~~on-premise license revenues. In constant currency, the Americas region contributed ~~84%~~61% and ~~85%~~67%, the EMEA region contributed 22% and 21% and the Asia Pacific region contributed 7%17% and 6%12% of the constant currency revenue growth for this business during the

~~Table of Contents~~

second quarter and first half of fiscal ~~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.~~2024, respectively.

In constant currency, our total cloud and license business’ expenses increased in the fiscal ~~2023~~2024 periods presented, relative to the corresponding prior year periods, primarily due to ~~higher employee related expenses due to higher headcount;~~ higher technology infrastructure expenses to support the increase in our cloud and license business’ ~~revenues; additional operating~~revenues. These constant currency expense increases were partially offset by lower sales and marketing expenses, which decreased primarily due to ~~our Cerner acquisition;~~lower employee related expenses and ~~an allocation of gains in the fiscal 2022 periods presented from fiscal 2022 operating asset sales as described above.~~lower bad debt expenses. Our cloud services and license support expenses have grown in recent periods, and we expect this growth to continue during fiscal ~~2023~~2024 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 and total margin as a percentage of revenues increased ~~during~~in the fiscal ~~2023~~2024 periods presented, relative to the corresponding prior year periods, due to increases in total revenues for this business. ~~Total margin as a percentage~~

Table of ~~revenues for this business decreased during the fiscal 2023 periods presented, relative to the corresponding prior year periods, due to expenses growth.~~Contents

Hardware Business

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 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,
			Percent Change						Percent Change
(Dollars in millions)	2023		Actual	Constant	2022		2023		Actual	Constant	2022
Hardware Revenues:
Americas	$	364	-18%	-19%	$	447	$	713	-16%	-17%	$	854
EMEA		225	-8%	-11%		243		434	-4%	-8%		453
Asia Pacific		167	4%	4%		160		323	5%	6%		306
Total revenues		756	-11%	-12%		850		1,470	-9%	-10%		1,613
Expenses:
Hardware products and support(1)		204	-27%	-28%		279		415	-20%	-22%		522
Sales and marketing(1)		78	-6%	-8%		83		148	-9%	-10%		162
Total expenses(1)		282	-22%	-24%		362		563	-18%	-19%		684
Total Margin	$	474	-3%	-4%	$	488	$	907	-2%	-4%	$	929
Total Margin %	63%				57%		62%				58%
% Revenues by Geography:
Americas	48%				53%		48%				53%
EMEA	30%				28%		30%				28%
Asia Pacific	22%				19%		22%				19%

~~Table~~

(1)

Excludes stock-based compensation and certain expense allocations. Also excludes amortization of ~~Contents~~

Three Months Ended November 30,

Six Months Ended November 30,

Percent Change

Percent Change

(Dollars in millions)

2022

Actual

Constant

2021

2022

Actual

Constant

2021

Hardware Revenues:

Americas

$
447

21%

22%

$
368

$
854

15%

16%

$
740

EMEA

243

7%

15%

228

453

-2%

7%

460

Asia Pacific

160

-6%

6%

171

306

-7%

4%

330

Total revenues

850

11%

16%

767

1,613

5%

11%

1,530

Expenses:

Hardware products and support⁽¹⁾

279

26%

32%

221

522

14%

19%

459

Sales and marketing⁽¹⁾

83

-5%

0%

88

162

-8%

-3%

177

Total expenses⁽¹⁾

362

17%

23%

309

684

7%

13%

636

Total Margin

$
488

7%

12%

$
458

$
929

4%

10%

$
894

Total Margin %

57%

60%

58%

58%

% Revenues by Geography:

Americas

53%

48%

53%

48%

EMEA

28%

30%

28%

30%

Asia Pacific

19%

22%

19%

22%

intangible assets and certain other GAAP-based expenses, which were not allocated to our operating segment results for purposes of reporting to and review by our CODMs, as further described under “Presentation of Operating Segment Results and Other Financial Information” above.

⁽¹⁾

Our constant currency hardware revenues ~~increased~~decreased in the fiscal ~~2023~~2024 periods presented, relative to the corresponding prior year periods, primarily due to ~~growth in~~ our ~~Oracle Exadata~~continued emphasis on the marketing and ~~certain other~~sale of our cloud-based infrastructure technologies and strategic hardware offerings and ~~revenue contributions from~~the de-emphasis of our ~~Cerner acquisition. In reported currency, Cerner contributed $41 million~~sales and ~~$81 million to~~marketing efforts for certain of our non-strategic hardware products, which resulted in reduced sales volumes of certain of our hardware ~~business’ revenues during~~product lines and also impacted the ~~second quarter and first half~~volume of ~~fiscal 2023, respectively. Our~~ hardware business’ revenues were adversely impacted during each of the fiscal 2023 and 2022 periods presented due to the impacts of the COVID-19 pandemic, including global supply chain shortages for technology components that resultedsupport contracts sold in ~~certain manufacturing delays, and any such prospective impacts are unknown. In~~recent periods. Geographically, we experienced constant currency revenue declines in the Americas ~~region contributed 65%~~ and ~~73%,~~ the EMEA ~~region contributed 27%~~regions and ~~20%, and~~revenue growth in the Asia Pacific region ~~contributed 8% and 7% to~~in the ~~revenue growth for this business during the second quarter and the first half of~~ fiscal ~~2023, respectively.~~2024 periods presented.

Excluding the effects of currency rate fluctuations, total hardware expenses ~~increased~~decreased in the fiscal ~~2023~~2024 periods presented, relative to the corresponding prior year periods, primarily due to ~~higher~~lower hardware product ~~cost driven by higher~~expenses and lower sales and marketing costs, all of which aligned to lower hardware ~~product revenues and incremental hardware product cost from Cerner’s hardware business.~~revenues.

Table of Contents

In constant currency, our hardware business’ total margin ~~increased~~decreased in the fiscal ~~2023~~2024 periods presented, relative to the corresponding prior year periods, due to ~~higher~~lower total revenues for this business. ~~Total~~In constant currency, total margin as a percentage of revenues increased 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~~2024 periods presented, relative to the corresponding prior year ~~period~~.periods, due to lower expenses for this business.

Services Business

Our services offerings are designed to help maximize the performance of customer investments in Oracle applications and infrastructure 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,
			Percent Change						Percent Change
(Dollars in millions)	2023		Actual	Constant	2022		2023		Actual	Constant	2022
Services Revenues:
Americas	$	864	-7%	-8%	$	932	$	1,759	-4%	-4%	$	1,830
EMEA		341	13%	8%		302		664	11%	7%		599
Asia Pacific		163	3%	4%		158		328	1%	3%		324
Total revenues		1,368	-2%	-3%		1,392		2,751	0%	-1%		2,753
Total Expenses(1)		1,166	5%	4%		1,111		2,311	9%	8%		2,118
Total Margin	$	202	-28%	-29%	$	281	$	440	-31%	-31%	$	635
Total Margin %	15%				20%		16%				23%
% Revenues by Geography:
Americas	63%				67%		64%				66%
EMEA	25%				22%		24%				22%
Asia Pacific	12%				11%		12%				12%

~~Table~~

(1)

Excludes stock-based compensation and certain allocations. Also excludes certain other GAAP-based expenses, which were not allocated to our operating segment results for purposes of ~~Contents~~

Three Months Ended November 30,

Six Months Ended November 30,

Percent Change

Percent Change

(Dollars in millions)

2022

Actual

Constant

2021

2022

Actual

Constant

2021

Services Revenues:

Americas

$
932

149%

149%

$
374

$
1,830

147%

147%

$
741

EMEA

302

13%

27%

267

599

15%

29%

522

Asia Pacific

158

-2%

12%

161

324

1%

14%

320

Total revenues

1,392

74%

83%

802

2,753

74%

83%

1,583

Total Expenses⁽¹⁾

1,111

76%

86%

631

2,118

71%

80%

1,240

Total Margin

$
281

63%

73%

$
171

$
635

85%

95%

$
343

Total Margin %

20%

21%

23%

22%

% Revenues by Geography:

Americas

67%

47%

66%

47%

EMEA

22%

33%

22%

33%

Asia Pacific

11%

20%

12%

20%

reporting to and review by our CODMs, as further described under “Presentation of Operating Segment Results and Other Financial Information” above.

⁽¹⁾

Excludes stock-based compensation and certain allocations. Also excludes certain other GAAP-based expenses, which were not allocated to our operating segment results for purposes of reporting to and review by our CODMs, as further described under “Presentation of Operating Segment Results and Other Financial Information” above.

Excluding the effects of currency rate fluctuations, our total services revenues ~~increased~~decreased in the fiscal 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. In reported currency, Cerner contributed $550 million and $1.1 billion, respectively, to our services business’ revenues during the second quarter and first half of fiscal 2023, respectively. In constant currency, the Americas region contributed 87% and 86%, and the EMEA region contributed 10% and 11% to the revenue growth for this business during the second quarter and the first half of fiscal 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 2023~~2024 periods presented, relative to the corresponding prior year periods, primarily due to ~~additional operating~~a decrease in our consulting revenues. A constant currency decrease in services revenues in the Americas region was partially offset by constant currency increases in services revenues in the EMEA and the Asia Pacific regions in the fiscal 2024 periods presented.

In constant currency, total services expenses increased in the fiscal 2024 periods presented, relative to the corresponding prior year periods, primarily due to ~~our acquisition of Cerner, and higher~~an increase in employee related expenses ~~due to higher headcount.~~and bad debt expenses, partially offset by a decrease in external contractor expenses.

In constant currency, our services business’ total margin ~~increased during~~and total margin as a percentage of revenues decreased in the fiscal ~~2023~~2024 periods presented, relative to the corresponding prior year periods, due to lower total revenues and higher total ~~revenues~~expenses for this ~~business during the fiscal 2023 periods presented, relative to the corresponding prior year periods. Total margin as a percentage~~business.

Table 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.Contents

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,
			Percent Change						Percent Change
(Dollars in millions)	2023		Actual	Constant	2022		2023		Actual	Constant	2022
Research and development(1)	$	1,653	0%	0%	$	1,648	$	3,385	2%	2%	$	3,319
Stock-based compensation		573	13%	13%		510		1,057	13%	13%		932
Total expenses	$	2,226	3%	3%	$	2,158	$	4,442	4%	4%	$	4,251
% of Total Revenues	17%				18%		17%				18%

Three Months Ended November 30,

Six Months Ended November 30,

Percent Change

Percent Change

(Dollars in millions)

2022

Actual

Constant

2021

2022

Actual

Constant

2021

Research and development⁽¹⁾

$
1,648

24%

28%

$
1,331

$
3,319

24%

28%

$
2,671

Stock-based compensation

510

20%

20%

423

932

21%

21%

767

Total expenses

$
2,158

23%

26%

$
1,754

$
4,251

24%

26%

$
3,438

% of Total Revenues

18%

17%

18%

17%

(1)

Excluding stock-based compensation

⁽¹⁾	~~Excluding stock-based compensation~~

~~Table of Contents~~

On a constant currency basis, total research and development expenses increased ~~during~~in the fiscal ~~2023~~2024 periods presented, relative to the corresponding prior year periods, primarily due to higher employee related expenses, including higher stock-based compensation 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 decreased our expenses during those periods, with no comparable transaction during the fiscal 2023 periods presented.expenses.

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,
			Percent Change						Percent Change
(Dollars in millions)	2023		Actual	Constant	2022		2023		Actual	Constant	2022
General and administrative(1)	$	281	4%	2%	$	271	$	594	-1%	-2%	$	598
Stock-based compensation		94	-1%	-1%		95		175	-3%	-3%		179
Total expenses	$	375	3%	2%	$	366	$	769	-1%	-2%	$	777
% of Total Revenues	3%				3%		3%				3%

Three Months Ended November 30,

Six Months Ended November 30,

Percent Change

Percent Change

(Dollars in millions)

2022

Actual

Constant

2021

2022

Actual

Constant

2021

General and administrative⁽¹⁾

$
271

7%

12%

$
253

$
598

19%

24%

$
503

Stock-based compensation

95

46%

46%

66

179

56%

56%

115

Total expenses

$
366

15%

19%

$
319

$
777

26%

30%

$
618

% of Total Revenues

3%

3%

3%

3%

(1)

Excluding stock-based compensation

⁽¹⁾	~~Excluding stock-based compensation~~

Fiscal Second Quarter 2024 Compared to Fiscal Second Quarter 2023: Excluding the effects of ~~foreign~~ currency rate fluctuations, our total general and administrative expenses increased ~~during~~in the second quarter of fiscal ~~2023 periods presented,~~2024, relative to the corresponding prior year ~~periods,~~period, primarily due to ~~additional operating~~higher facilities related expenses, partially offset by lower professional fees.

First Half of Fiscal 2024 Compared to First Half of Fiscal 2023: Excluding the effects of currency rate fluctuations, our total general and administrative expenses decreased in the first half of fiscal 2024, relative to the corresponding prior year period, primarily due to ~~our acquisition of Cerner and~~lower professional fees, partially offset by higher ~~stock-based compensation~~facilities related expenses. In addition, an allocation of gains from operating asset sales 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 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)	2022		Actual	Constant	2021		2022		Actual	Constant	2021		2023		Actual	Constant	2022		2023		Actual	Constant	2022
Developed technology	$	215	73%	73%	$	125	$	449	78%	78%	$	252	$	169	-21%	-21%	$	215	$	337	-25%	-25%	$	449
Cloud services and license support agreements and related relationships		364	138%	137%		153		749	143%	143%		308		259	-29%	-29%		364		528	-30%	-30%		749
Cloud license and on-premise license agreements and related relationships		117	*	*		5		225	*	*		10		117	0%	0%		117		233	4%	4%		225
Other		211	*	*		16		403	*	*		33		210	0%	0%		211		420	4%	4%		403
Total amortization of intangible assets	$	907	203%	204%	$	299	$	1,826	203%	204%	$	603	$	755	-17%	-17%	$	907	$	1,518	-17%	-17%	$	1,826

Table of Contents

~~Not meaningful~~

Amortization of intangible assets ~~increased~~decreased in the fiscal ~~2023~~2024 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.

~~Table of Contents~~

Acquisition Related and Other Expenses: Acquisition related and other expenses consist of personnel related costs for transitional and certain other employees, certain business combination adjustments, including adjustments after the measurement period has ended, and certain other operating items, net.

Three Months Ended November 30,

Six Months Ended November 30,

Percent Change

Percent Change

(Dollars in millions)

2022

Actual

Constant

2021

2022

Actual

Constant

2021

Transitional and other employee related costs

$
21

*

*

$
2

$
38

*

*

$
4

Business combination adjustments, net

3

304%

311%

1

8

218%

223%

4

Other, net

38

-99%

-99%

4,664

57

-99%

-99%

4,679

Total acquisition related and other expenses

$
62

-99%

-99%

$
4,667

$
103

-98%

-98%

$
4,687


	Three Months Ended November 30,						Six Months Ended November 30,
			Percent Change						Percent Change
(Dollars in millions)	2023		Actual	Constant	2022		2023		Actual	Constant	2022
Transitional and other employee related costs	$	6	-71%	-72%	$	21	$	12	-69%	-69%	$	38
Business combination adjustments, net		12	286%	280%		3		13	67%	65%		8
Other, net		29	-22%	-23%		38		33	-41%	-41%		57
Total acquisition related and other expenses	$	47	-23%	-24%	$	62	$	58	-43%	-43%	$	103

~~Not meaningful~~

On a constant currency basis, acquisition related and other expenses decreased ~~during~~in the fiscal ~~2023~~2024 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~~lower transitional and other employee related costs and lower other expenses, ~~during the fiscal 2022 periods presented that we generally do not expect to recur,~~ 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 connection with plans to improve our cost structure and operations during the fiscal 2023 periods presented.expenses for business combination adjustments.

Restructuring Expenses: Restructuring expenses resulted from the execution of ~~management approved~~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, contract termination costs and certain other exit costs to improve our cost structure prospectively. For additional information regarding our restructuring plans, see Note 65 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, ~~2022.~~2023.


	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)	2022		Actual	Constant	2021		2022		Actual	Constant	2021		2023		Actual	Constant	2022		2023		Actual	Constant	2022
Restructuring expenses	$	137	330%	376%	$	32	$	281	301%	340%	$	70	$	83	-39%	-42%	$	137	$	222	-21%	-22%	$	281

Restructuring expenses in ~~each of~~the fiscal 2024 periods presented primarily related to our 2024 Restructuring Plan. Restructuring expenses in the fiscal 2023 ~~and 2022~~ periods presented primarily related to our 2022 Restructuring ~~Plan.~~Plan, which is substantially complete. Our management approved, committed to and initiated the 2024 Restructuring Plan and the 2022 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~~2024 Restructuring Plan were effected to implement our continued emphasis in developing, marketing, selling and delivering our cloud-based offerings. Certain of the cost savings realized pursuant to our ~~2022~~2024 Restructuring Plan initiatives were offset by investments in resources and geographies that we believe 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:


	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)	2022		Actual	Constant	2021		2022		Actual	Constant	2021		2023		Actual	Constant	2022		2023		Actual	Constant	2022
Interest expense	$	856	26%	26%	$	679	$	1,643	19%	19%	$	1,384	$	888	4%	4%	$	856	$	1,760	7%	7%	$	1,643

4032

Table of Contents

Interest expense increased ~~during~~in the fiscal ~~2023~~2024 periods presented, relative to the corresponding prior year periods, primarily due to higher average borrowings ~~during the first half of fiscal 2023~~ resulting from ~~borrowings, net~~our issuance of ~~partial repayment~~$12.3 billion of senior notes and $5.6 billion of borrowings 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 $7.0 billion senior notes~~ in ~~November 2022;~~fiscal 2023 and ~~borrowings through~~higher average commercial paper ~~notes during~~outstanding in the ~~first half of~~ fiscal ~~2023.~~2024 periods presented. The increase in interest expense was partially offset by lower interest expense that resulted from ~~$8.3~~$3.8 billion and ~~$2.5~~$3.5 billion of scheduled repayments made during fiscal ~~2022~~2023 and ~~second quarter~~the first half of fiscal ~~2023, respectively. Refer~~2024, respectively, and the repayment of borrowings pursuant to ~~Note 5 of Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for additional information.~~a $15.7 billion delayed draw term loan credit agreement (Bridge Credit Agreement) during fiscal 2023.

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 unrealized gains and losses from our investment portfolio related to our deferred compensation plan and non-service net periodic pension income and losses.


	Three Months Ended 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)	2022			Actual	Constant	2021			2022			Actual	Constant	2021			2023			Actual	Constant	2022			2023			Actual	Constant	2022
Interest income	$	52		151%	162%	$	21		$	90		124%	133%	$	40		$	133		157%	159%	$	52		$	269		199%	203%	$	90
Foreign currency losses, net		(55	)	18%	17%		(46	)		(125	)	55%	56%		(81	)		(32	)	-42%	-45%		(55	)		(113	)	-10%	-14%		(125	)
Noncontrolling interests in income		(41	)	-4%	-4%		(42	)		(79	)	-12%	-12%		(89	)		(41	)	1%	1%		(41	)		(78	)	-1%	-1%		(79	)
(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	)
Losses from equity investments, net																		(79	)	98%	96%		(40	)		(197	)	56%	54%		(126	)
Other income (expenses), net																		5		-65%	-66%		13			56		*	*		(11	)
Total non-operating expenses, net																	$	(14	)	-79%	-81%	$	(71	)	$	(63	)	-75%	-76%	$	(251	)


*	Not meaningful

~~Fiscal Second Quarter 2023 Compared to Fiscal Second Quarter 2022~~: ~~In constant currency, we recorded~~Our non-operating expenses, net ~~during~~decreased in the ~~second quarter of~~ fiscal ~~2023 in comparison to non-operating income, net during the second quarter of fiscal 2022. Non-operating expenses, net during the second quarter of fiscal 2023, in comparison~~2024 periods presented, relative to the ~~second quarter of fiscal 2022, was~~corresponding prior year periods, primarily due to higher interest income due to a combination of higher average interest-bearing balances and higher average interest rates that were applicable to such balances, and lower foreign currency losses, ~~and higher~~net. The decline in non-operating expenses, net ~~losses associated with equity investments,~~was partially offset by higher ~~interest income and higher other~~losses from equity investments. Other income, net, which was primarily attributable to ~~higher~~ unrealized investment ~~gains~~gain associated with certain marketable equity securities that we held for employee benefit plans, and for which an equal and offsetting amount was recorded to our operating expenses during the same period, was lower during the second quarter of fiscal 2024, and higher for the first half of fiscal 2024, in each ~~in comparison~~case relative to the corresponding prior year period.

~~First Half of Fiscal 2023 Compared to First Half of Fiscal 2022~~: Our non-operating expenses, net increased in the first half of fiscal 2023 compared to the first half of fiscal 2022 primarily due to 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 held for employee benefit plans as described above. The increase in non-operating expenses, net was partially offset by higher interest income.

(Provision ~~for) Benefit from~~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. Refer to Note 98 of Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for a discussion regarding the differences between the effective income tax rates as presented for the periods below and the U.S. federal statutory income tax rates that were in effect 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.


	Three Months Ended November 30,						Six Months Ended November 30,
			Percent Change						Percent Change
(Dollars in millions)	2023		Actual	Constant	2022		2023		Actual	Constant	2022
Provision for income taxes	$	217	-46%	-48%	$	403	$	172	-66%	-68%	$	511
Effective tax rate	8.0%				18.8%		3.4%				13.4%

~~Table of Contents~~

Three Months Ended November 30,

Six Months Ended November 30,

Percent Change

Percent Change

(Dollars in millions)

2022

Actual

Constant

2021

2022

Actual

Constant

2021

(Provision for) benefit from income taxes

$
(403
)

*

*

$
249

$
(511
)

*

*

$
25

Effective tax expense (benefit) rate

18.8%

(16.6%)

13.4%

(2.1%)

*	~~Not meaningful~~

Provision for income taxes ~~increased during~~decreased in the fiscal ~~2023~~2024 periods presented, relative to the corresponding prior year periods, 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 excess of the benefit of amortization of Cerner intangible assets over a lesseran increase in ~~taxes attributable to the combination of reduced~~ tax benefits related to stock-based compensation and ~~increased~~the revaluation of net deferred tax ~~expense from unrecognized tax benefits~~assets due to ~~settlements with~~a change in the tax ~~authorities and other events,~~rate, partially offset by higher income before provision for income taxes. In addition, the decrease in ~~each case~~provision for income taxes during the first half of fiscal ~~2023 periods presented.~~2024 was also partially offset by an unfavorable jurisdictional mix of earnings.

Table of Contents

Liquidity and Capital Resources


(Dollars in millions)	November 30, 2022			Change	May 31, 2022		November 30, 2023			Change	May 31, 2023
Working capital	$	(9,545	)	*	$	12,122	$	(5,118	)	145%	$	(2,086	)
Cash, cash equivalents and marketable securities	$	7,350		-66%	$	21,902	$	8,690		-15%	$	10,187

*	~~Not meaningful~~

Working capital: The decrease in working capital as of November 30, ~~2022~~2023 in comparison to May 31, ~~2022~~2023 was primarily due to ~~$27.8 billion net cash used for our acquisition of Cerner, $1.6 billion of repayment of senior notes assumed from our acquisition of Cerner, $3.5~~$4.0 billion of long-term senior notes that were reclassified to current liabilities, cash used to pay dividends to our stockholders, cash used for capital expenditures, cash used for purchases of non-marketable investments, net cash used for our employee stock programs and 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 ~~2023.~~2024. 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 net income ~~and cash proceeds from stock option exercises.~~during the first half of fiscal 2024. 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 and other securities with original maturities of 90 days or less. Marketable securities consist of time deposits, marketable equity securities and certain other securities. The decrease in cash, cash equivalents and marketable securities at November 30, ~~2022~~2023 in comparison to May 31, ~~2022~~2023 was primarily due to ~~the net cash outflows of $27.8 billion for our acquisition of Cerner, $1.6 billion of repayment of senior notes assumed from our acquisition of Cerner, $2.5~~$3.5 billion of repayment of senior notes due ~~October 2022, repurchases~~July 2023 and September 2023, cash used for capital expenditures and purchases of ~~our common stock,~~non-marketable investments, payments of cash dividends to our stockholders, ~~and~~net cash used for ~~capital expenditures. These~~our employee stock programs and repurchases of our common stock. This decrease was partially offset by cash ~~outflows~~inflows from our operations and our issuances of $1.7 billion of commercial paper notes, net of repayments, during the first half of fiscal 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 operations and stock option exercises during the first half of fiscal 2023.2024.


	Six Months Ended November 30,							Six Months Ended November 30,
(Dollars in millions)	2022			Change	2021			2023			Change	2022
Net cash provided by operating activities	$	7,243		324%	$	1,709		$	7,117		-2%	$	7,243
Net cash (used for) provided by investing activities	$	(32,094	)	*	$	9,949
Net cash provided by (used for) financing activities	$	10,455		*	$	(23,521	)
Net cash used for investing activities								$	(2,811	)	-91%	$	(32,094	)
Net cash (used for) provided by financing activities								$	(5,817	)	*	$	10,455


*	Not meaningful

~~Table of Contents~~

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 and cloud services agreements. ~~Payments from customers~~Customers for these license support and cloud services agreements are generally ~~received near the beginning~~billed in advance of ~~the contracts’ terms, which are generally one year in length.~~services being provided. 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 ~~increased~~decreased during the first half of fiscal ~~2023,~~2024, relative to the corresponding prior year period, primarily due to certain ~~litigation related charges recorded during the first half of fiscal 2022 that we generally do not expect to recur and certain~~ cash ~~favorable~~unfavorable working capital changes, net, ~~in the first half of fiscal 2023, relative to the corresponding prior year period~~.partially offset by higher net income.

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 other instruments, and investments in capital and other assets, including certain intangible assets, to support our growth.

Net cash used for investing activities ~~increased~~decreased during the first half of fiscal ~~2023 compared~~2024, relative to ~~net cash provided by investing activities during~~ the ~~first half of fiscal 2022~~corresponding prior year period, 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, partially offset by a decrease in cash used for ~~the purchases~~acquisitions, net of ~~marketable securities~~cash acquired and ~~other investments, in each case during the first half of fiscal 2023 relative to the first half of fiscal 2022.~~lower capital expenditures.

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 ~~provided by~~used for financing activities ~~increased~~was $5.8 billion during the first half of fiscal ~~2023~~2024 compared to the net cash ~~used for~~provided by financing activities of $10.5 billion in the first half of fiscal ~~2022~~2023. The increase in net cash used for

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financing activities was primarily due to the absence of the cash proceeds from borrowings, net of partial repayments pursuant to the Bridge Credit Agreement and the Term Loan Credit Agreement, ~~the issuance of senior notes in November 2022 and the commercial paper program; lower stock repurchases; lower~~higher maturities of senior notes, lower net proceeds from issuances and repayments of commercial paper notes, higher net cash ~~from~~used for our employee stock ~~program,~~programs and higher dividend payments partially offset by lower stock repurchases, in each case during the first half of fiscal ~~2023 in comparison~~2024 relative to the first half of fiscal ~~2022.~~2023.

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,

(Dollars in millions)

2022

Change

2021

Net cash provided by operating activities

$
15,073

47%

$
10,255

Capital expenditures

(6,678
)

114%

(3,118
)
Free cash flow

$
8,395

18%

$
7,137

Net income

$
8,797

$
10,262

Free cash flow as percent of net income

95%

70%

~~Table of Contents~~

~~Recent Financing Activities~~:


	Trailing 4-Quarters Ended November 30,
(Dollars in millions)	2023			Change	2022
Net cash provided by operating activities	$	17,039		13%	$	15,073
Capital expenditures		(6,935	)	4%		(6,678	)
Free cash flow	$	10,104		20%	$	8,395
Net income	$	10,137			$	8,797
Net cash provided by operating activities as a percent of net income	168%				171%
Free cash flow as percent of net income	100%				95%

~~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:~~

•

~~$1.0 billion of 5.80% senior notes due November 2025;~~

•

~~$1.25 billion of 6.15% senior notes due November 2029;~~

•

~~$2.25 billion of 6.25% senior notes due November 2032; and~~

•

~~$2.5 billion of 6.90% senior notes due November 2052.~~

~~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~~Contractual Obligations: 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,~~2024, 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~~the fiscal year ended May 31, ~~2022,~~2023, 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 includedan increase 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 to $10.6 billion as of November 30, 2023. Our operating lease commitments, which are primarily for data centers, ~~that~~ are generally expected to commence between the remainder of fiscal ~~2023~~2024 and fiscal ~~2026~~2027 and for terms of ~~three~~eight to fifteen ~~years increased to $7.1 billion as of November 30, 2022.~~years. We have not recorded these lease commitments on our Condensed Consolidated Balance Sheets as of November 30, ~~2022.~~2023. Refer to Note 10 of Notes to Consolidated Financial Statements included in our

~~Table of Contents~~

Annual Report on Form 10-K for the fiscal year ended May 31, ~~2022~~2023 for more information about our lease commitments.

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

Stock-Based Awards

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 stock-based awards 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, ~~2019~~2020 has been ~~a weighted-average~~an annualized rate of ~~1.3%~~1.7% per year. The potential dilution percentage is calculated as the average annualized new stock-based awards granted and assumed, net of stock-based awards 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 stock-based awards vest and, if applicable, are exercised. Of the outstanding stock options at November 30, ~~2022,~~2023, 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~~partially 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

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indebtedness or for other purposes. At November 30, ~~2022,~~2023, the maximum potential dilution from all outstanding stock-based awards, regardless of when granted and regardless of whether vested or unvested, was ~~9.0%~~7.4%.

Recent Accounting Pronouncements

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.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

~~Item 3.~~

~~Quantitative and Qualitative Disclosures About Market Risk~~

There were no significant changes to our quantitative and qualitative disclosures about market risk during the first half of fiscal ~~2023.~~2024. 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~~the fiscal year ended May 31, ~~2022~~2023 for a more complete discussion of the market risks we encounter.

Item 4. Controls and Procedures

~~Item 4.~~

~~Controls and Procedures~~

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 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: 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, thereThere were no changes in our internal control over financial

~~Table of Contents~~

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.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

~~Item 1.~~

~~Legal Proceedings~~

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

Item 1A. Risk Factors

~~Item 1A.~~

~~Risk Factors~~

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~~the fiscal year ended May 31, ~~2022.~~2023. 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.

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

~~Item 2.~~

~~Unregistered Sales of Equity Securities and Use of Proceeds~~

Our stock repurchase authorization does not have an expiration date and the pace of our repurchase activity will depend on factors such as our working capital needs, our cash requirements for acquisitions and dividend payments, our debt repayment obligations or repurchases of our debt, our stock price, and economic and market conditions. Our stock repurchases may be effected from time to time through open market purchases or pursuant to a Rule 10b5-1 trading plan. Our stock repurchase program may be accelerated, suspended, delayed or discontinued at any time.

The following table summarizes the stock repurchase activity for the three months ended November 30, ~~2022~~2023 and the approximate dollar value of shares that may yet be purchased pursuant to our stock repurchase program:

(in millions, except per share amounts)

Total Number of
Shares
Purchased

Average Price
Paid per
Share

Total Number of
Shares Purchased as
Part of Publicly
Announced
Program

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

September 1, 2022—September 30, 2022

3.2

$
70.10

3.2

$
8,661.8

October 1, 2022—October 31, 2022

2.7

$
67.90

2.7

$
8,479.6

November 1, 2022—November 30, 2022

0.2

$
77.06

0.2

$
8,467.1

Total

6.1

$
69.32

6.1


(in millions, except per share amounts)	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Program		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program
September 1, 2023—September 30, 2023		3.6	$	112.48		3.6	$	7,604.7
October 1, 2023—October 31, 2023		0.3	$	107.44		0.3	$	7,575.6
November 1, 2023—November 30, 2023		0.1	$	114.02		0.1	$	7,562.2
Total		4.0	$	112.18		4.0

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Item 5. Other Information

Rule 10b5-1 Trading Plans

Our Section 16 officers and directors (as defined in Rule 16a-1 under the Exchange Act) may from time to time enter into plans for the purchase or sale of Oracle stock that are intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act. During the quarter ended November 30, 2023, the following Section 16 officer adopted, modified or terminated “Rule 10b5-1 trading arrangements” (as defined in Item 408 under Regulation S-K of the Exchange Act):

•

Jeffrey O. Henley, our Vice Chairman of the Board of Directors, adopted a new trading plan on October 9, 2023. The plan’s maximum duration is until July 1, 2024, and first trades will not occur until January 8, 2024, at the earliest. The trading plan is intended to permit Mr. Henley to exercise and sell 400,000 stock options expiring on July 24, 2024.

The Rule 10b5-1 trading arrangement described above was adopted and precleared in accordance with Oracle’s Insider Trading Policy and actual sale transactions made pursuant to such trading arrangements will be disclosed publicly in future Section 16 filings with the SEC.

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Item 6. Exhibits

Exhibit

No.

Incorporated by Reference

Exhibit Description

Form

File No.

Exhibit

Filing Date

Filed By

3.02

Amended and Restated Bylaws of Oracle Corporation

8-K

001-35992

3.02

11/17/23

Oracle Corporation

10.18*

Oracle Corporation Amended and Restated 2020 Equity Incentive Plan, as approved on November 15, 2023

8-K

001-35992

10.18

11/17/23

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, 2023 and May 31, 2023, (ii) Condensed Consolidated Statements of Operations for the three and six months ended November 30, 2023 and 2022, (iii) Condensed Consolidated Statements of Comprehensive Income for the three and six months ended November 30, 2023 and 2022, (iv) Condensed Consolidated Statements of Stockholders’ Equity (Deficit) for the three and six months ended November 30, 2023 and 2022, (v) Condensed Consolidated Statements of Cash Flows for the six months ended November 30, 2023 and 2022 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, 2023, formatted in Inline XBRL and included in Exhibit 101


*	~~Exhibits~~Indicates management contract or compensatory plan or arrangement.

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

‡	Filed herewith.

†	Furnished herewith.

Table of Contents

SIGNATURES

~~SIGNATURES~~

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.


	ORACLE CORPORATION

Date: December ~~13, 2022~~12, 2023	By:	/s/ Safra A. Catz
		Safra A. Catz Chief Executive Officer and Director (Principal Executive and Financial Officer)

~~Date: December 13, 2022~~	~~By:~~	~~/s/~~ ~~William Corey West~~
		~~William Corey West~~
Date: December 12, 2023	By:	/s/ Maria Smith
		Maria Smith
		Executive Vice President, Chief Accounting Officer (Principal Accounting Officer)


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 ☐

(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


	Intangible Assets, Gross						Accumulated Amortization									Intangible Assets, Net				Weighted Average Useful Life⁽²⁾		Intangible Assets, Gross						Accumulated Amortization									Intangible Assets, Net				Weighted Average
(Dollars in millions)	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⁾		May 31, 2023		Additions		November 30, 2023		May 31, 2023			Expense			November 30, 2023			May 31, 2023		November 30, 2023		Useful Life(1)
Developed technology	$	3,966	$	2,379	$	6,345	$	(3,660	)	$	(449	)	$	(4,109	)	$	306	$	2,236		4	$	4,300	$	59	$	4,359	$	(2,407	)	$	(337	)	$	(2,744	)	$	1,893	$	1,615		3
Cloud services and license support agreements and related relationships		5,260		4,318		9,578		(4,194	)		(749	)		(4,943	)		1,066		4,635		7		9,456		—		9,456		(5,579	)		(528	)		(6,107	)		3,877		3,349	N.A.
Cloud license and on-premise license agreements and related relationships		356		2,437		2,793		(343	)		(225	)		(568	)		13		2,225		7		2,688		—		2,688		(697	)		(233	)		(930	)		1,991		1,758	N.A.
Other		865		2,845		3,710		(810	)		(403	)		(1,213	)		55		2,497		4		3,582		—		3,582		(1,506	)		(420	)		(1,926	)		2,076		1,656	N.A.
Total intangible assets, net	$	10,447	$	11,979	$	22,426	$	(9,007	)	$	(1,826	)	$	(10,833	)	$	1,440	$	11,593			$	20,026	$	59	$	20,085	$	(10,189	)	$	(1,518	)	$	(11,707	)	$	9,837	$	8,378

Remainder of fiscal 2023	$	1,755
Fiscal 2024		2,995

Remainder of fiscal 2024			$	1,488
Fiscal 2025		2,283		2,303
Fiscal 2026		1,620		1,639
Fiscal 2027		664		672
Fiscal 2028		635		635
Fiscal 2029				561
Thereafter		1,641		1,080
Total intangible assets, net	$	11,593	$	8,378


		Page

PART I.	FINANCIAL INFORMATION	3
	3
Item 1.
~~Item 1.~~	Financial Statements (Unaudited)	3
	3

	Condensed Consolidated Balance Sheets as of November 30, ~~2022~~2023 and May 31, ~~2022~~2023	3
	3

	Condensed Consolidated Statements of Operations for the Three and Six Months Ended November 30, ~~2022~~2023 and ~~2021~~2022	4
	4

	Condensed Consolidated Statements of Comprehensive Income ~~(Loss)~~ for the Three and Six Months Ended November 30, ~~2022~~2023 and ~~2021~~2022	5
	5

	Condensed Consolidated Statements of Stockholders’ ~~Deficit~~Equity (Deficit) for the Three and Six Months Ended November 30, ~~2022~~2023 and ~~2021~~2022	6
	6

	Condensed Consolidated Statements of Cash Flows for the Six Months Ended November 30, ~~2022~~2023 and ~~2021~~2022	7
	7

	Notes to Condensed Consolidated Financial Statements	8
	8
Item 2.
~~Item 2.~~	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
	27
Item 3.
~~Item 3.~~	Quantitative and Qualitative Disclosures About Market Risk	36
	45
Item 4.
~~Item 4.~~	Controls and Procedures	36
	45
PART II.
~~PART II.~~	OTHER INFORMATION	37
	47
Item 1.
~~Item 1.~~	Legal Proceedings	37
	47
Item 1A.
~~Item 1A.~~	Risk Factors	37
	47
Item 2.
~~Item 2.~~	Unregistered Sales of Equity Securities and Use of Proceeds	37
	47
Item 5.	Other Information	38
~~Item 6.~~
Item 6.	Exhibits	39
	48

	Signatures		4940


	November 30, 2022						May 31, 2022						November 30, 2023						May 31, 2023
	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	$	460	$	—	$	460	$	12,842	$	—	$	12,842	$	1,568	$	—	$	1,568	$	1,694	$	—	$	1,694
Time deposits and other		170		376		546		240		280		520		151		384		535		180		288		468
Commercial paper debt securities		—		10		10		—		—		—
Derivative financial instruments		—		110		110		—		—		—		—		158		158		—		102		102
Total assets	$	630	$	496	$	1,126	$	13,082	$	280	$	13,362	$	1,719	$	542	$	2,261	$	1,874	$	390	$	2,264
Liabilities:
Derivative financial instruments	$	—	$	148	$	148	$	—	$	97	$	97	$	—	$	94	$	94	$	—	$	126	$	126

	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

	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, 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	$	34	$	156	$	2		$	(109	)	$	(1	)	$	82	$	246	$	529
Hardware		7		10		—			(8	)		(1	)		8		21		32
Services		9		15		—			(10	)		(1	)		13		31		36
Other		10		100		1			(74	)		(1	)		36		209		330
Total 2022 Restructuring Plan	$	60	$	281	$	3		$	(201	)	$	(4	)	$	139	$	507	$	927
Total other restructuring plans⁽⁶⁾	$	71	$	—	$	(3	)	$	(13	)	$	(2	)	$	53
Total restructuring plans	$	131	$	281	$	—		$	(214	)	$	(6	)	$	192