Exhibit 99.1
For Immediate Release
| Contact: | Ken Bond Oracle Investor Relations 1.650.607.0349 ken.bond@oracle.com | Deborah Hellinger Oracle Corporate Communications 1.212.508.7935 deborah.hellinger@oracle.com |
ORACLE REPORTS Q2 GAAP EPS UP 17% TO 43 CENTS; Q2 NON-GAAP EPS UP 6% TO 54 CENTS
Trailing Twelve Month Operating Cash Flow Up 45% to $13.1 billion
REDWOOD SHORES, Calif., Dec. 20, 2011 — Oracle Corporation (NASDAQ: ORCL) today announced fiscal 2012 Q2 GAAP and non-GAAP total revenues were up 2% to $8.8 billion. Both GAAP and non-GAAP new software license revenues were up 2% to $2.0 billion. Both GAAP and non-GAAP software license updates and product support revenues were up 9% to $4.0 billion. Both GAAP and non-GAAP hardware systems products revenues were down 14% to $953 million. GAAP operating income was up 12% to $3.1 billion, and GAAP operating margin was 35%. Non-GAAP operating income was up 3% to $3.9 billion, and non-GAAP operating margin was 45%. GAAP net income was up 17% to $2.2 billion, while non-GAAP net income was up 6% to $2.8 billion. GAAP earnings per share were $0.43, up 17% compared to last year while non-GAAP earnings per share were up 6% to $0.54. GAAP operating cash flow on a trailing twelve-month basis was $13.1 billion.
“Non-GAAP operating margins increased to 45% in Q2,” said Oracle President and CFO, Safra Catz, “and we expect those margins to keep growing. Operating cash flow over the last twelve months grew to $13.1 billion; that’s up a remarkable 45% compared to the preceding twelve month period.”
“We have expanded our worldwide sales capacity by adding over 1,700 sales professionals in the first half of this fiscal year,” said Oracle President, Mark Hurd. “We believe that this increase in our field organization combined with innovative new products like Fusion Cloud ERP and Cloud CRM will enable solid organic growth in the second half of this year.”
“Sales of our engineered systems accelerated in Q2,” said Oracle CEO, Larry Ellison. “Exadata growth was well over 100% compared to last year, and Exalogic grew more than 100% on a sequential basis. We shipped our first SPARC SuperCluster in Q2 and expect to begin deliveries of our Exalytics system and the Oracle Big Data Appliance in Q3.”
Oracle announced that its Board of Directors authorized the repurchase of up to an additional $5.0 billion of common stock under its existing share repurchase program in future quarters.
The Board of Directors also declared a quarterly cash dividend of $0.06 per share of outstanding common stock. This dividend will be paid to stockholders of record as of the close of business on January 11, 2012, with a payment date of February 1, 2012.
Q2 Earnings Conference Call and Webcast
Oracle will hold a conference call and webcast today to discuss these results at 2:00 p.m. Pacific. You may listen to the call by dialing (913) 312-0945 or (877) 612-6725, Passcode: 289185. To access the live webcast of this event, please visit the Oracle Investor Relations website at http://www.oracle.com/investor. A replay of the conference call will also be available by dialing (719) 457-0820 or (888) 203-1112, Passcode: 5771640.
About Oracle
Oracle engineers hardware and software to work together in the cloud and in your data center. For more information about Oracle (NASDAQ: ORCL), visit www.oracle.com or contact Investor Relations at investor_us@oracle.com or (650) 506-4073.
# # #
Trademarks
Oracle and Java are registered trademarks of Oracle and/or its affiliates. Other names may be trademarks of their respective owners.
“Safe Harbor” Statement:Statements in this press release relating to Oracle’s future plans, expectations, beliefs, intentions and prospects, including statements regarding operating margin growth, organic growth in the second half of fiscal 2012, Exalytics systems and Oracle Big Data Appliance deliveries and our share repurchase program, are “forward-looking statements” and are subject to material risks and uncertainties. Many factors could affect our current expectations and our actual results, and could cause actual results to differ materially. We presently consider the following to be among the important factors that could cause actual results to differ materially from expectations: (1) Economic, political and market conditions, including the recent recession and current European debt crisis, can adversely affect our business, results of operations and financial condition, including our revenue growth and profitability, which in turn could adversely affect our stock price. (2) We may fail to achieve our financial forecasts due to such factors as delays or size reductions in transactions, fewer large transactions in a particular quarter, unanticipated fluctuations in currency exchange rates, delays in delivery of new products or releases or a decline in our renewal rates for software license updates and product support. (3) Our hardware systems business may not be successful, and we may fail to achieve our financial forecasts with respect to this business. (4) We have an active acquisition program and our acquisitions may not be successful, may involve unanticipated costs or other integration issues or may disrupt our existing operations. (5) Our international sales and operations subject us to additional risks that can adversely affect our operating results, including risks relating to foreign currency gains and losses and risks relating to compliance with international and U.S. laws that apply to our international operations. (6) Intense competitive forces demand rapid technological advances and frequent new product introductions and could require us to reduce prices or cause us to lose customers. (7) If we are unable to develop new or sufficiently differentiated products and services, or to enhance and improve our products and support services in a timely manner or to position and/or price our products and services to meet market demand, customers may not buy new software licenses or hardware systems products or purchase or renew support contracts. A detailed discussion of these factors and other risks that affect our business is contained in our SEC filings, including our most recent reports on Form 10-K and Form 10-Q, particularly under the heading “Risk Factors.” Copies of these filings are available online from the SEC or by contacting Oracle Corporation’s Investor Relations Department at (650) 506-4073 or by clicking on SEC Filings on Oracle’s Investor Relations website at http://www.oracle.com/investor. All information set forth in this press release is current as of December 20, 2011. Oracle undertakes no duty to update any statement in light of new information or future events.
Q2 FISCAL 2012 FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($ in millions, except per share data)
| Three Months Ended November 30, | % Increase | % Increase (Decrease) | ||||||||||||||||||||||
2011 | % of Revenues | 2010 | % of Revenues | (Decrease) in US $ | in Constant Currency (1) | |||||||||||||||||||
REVENUES | ||||||||||||||||||||||||
New software licenses | $ | 2,048 | 23% | $ | 1,999 | 23% | 2% | 3% | ||||||||||||||||
Software license updates and product support | 3,986 | 46% | 3,645 | 43% | 9% | 9% | ||||||||||||||||||
|
| |||||||||||||||||||||||
Software Revenues | 6,034 | 69% | 5,644 | 66% | 7% | 7% | ||||||||||||||||||
|
| |||||||||||||||||||||||
Hardware systems products | 953 | 11% | 1,112 | 13% | (14% | ) | (14% | ) | ||||||||||||||||
Hardware systems support | 625 | 7% | 641 | 7% | (2% | ) | (3% | ) | ||||||||||||||||
|
| |||||||||||||||||||||||
Hardware Systems Revenues | 1,578 | 18% | 1,753 | 20% | (10% | ) | (10% | ) | ||||||||||||||||
|
| |||||||||||||||||||||||
Services | 1,180 | 13% | 1,185 | 14% | 0% | 0% | ||||||||||||||||||
|
| |||||||||||||||||||||||
Total Revenues | 8,792 | 100% | 8,582 | 100% | 2% | 2% | ||||||||||||||||||
|
| |||||||||||||||||||||||
OPERATING EXPENSES | ||||||||||||||||||||||||
Sales and marketing | 1,697 | 19% | 1,530 | 18% | 11% | 11% | ||||||||||||||||||
Software license updates and product support | 298 | 3% | 307 | 4% | (3% | ) | (3% | ) | ||||||||||||||||
Hardware systems products | 471 | 5% | 525 | 6% | (10% | ) | (10% | ) | ||||||||||||||||
Hardware systems support | 258 | 3% | 356 | 4% | (27% | ) | (28% | ) | ||||||||||||||||
Services | 929 | 11% | 969 | 11% | (4% | ) | (3% | ) | ||||||||||||||||
Research and development | 1,102 | 13% | 1,119 | 13% | (2% | ) | (1% | ) | ||||||||||||||||
General and administrative (2) | 277 | 3% | 156 | 2% | 77% | 77% | ||||||||||||||||||
Amortization of intangible assets | 592 | 7% | 614 | 7% | (4% | ) | (4% | ) | ||||||||||||||||
Acquisition related and other | 5 | 0% | 47 | 1% | (89% | ) | (92% | ) | ||||||||||||||||
Restructuring | 52 | 1% | 189 | 2% | (72% | ) | (72% | ) | ||||||||||||||||
|
| |||||||||||||||||||||||
Total Operating Expenses | 5,681 | 65% | 5,812 | 68% | (2% | ) | (2% | ) | ||||||||||||||||
|
| |||||||||||||||||||||||
OPERATING INCOME | 3,111 | 35% | 2,770 | 32% | 12% | 12% | ||||||||||||||||||
Interest expense | (192 | ) | (2% | ) | (214 | ) | (2% | ) | (11% | ) | (11% | ) | ||||||||||||
Non-operating income, net | 41 | 1% | 90 | 1% | (55% | ) | (49% | ) | ||||||||||||||||
|
| |||||||||||||||||||||||
INCOME BEFORE PROVISION FOR INCOME TAXES | 2,960 | 34% | 2,646 | 31% | 12% | 11% | ||||||||||||||||||
|
| |||||||||||||||||||||||
Provision for income taxes | 768 | 9% | 776 | 9% | (1% | ) | (2% | ) | ||||||||||||||||
|
| |||||||||||||||||||||||
NET INCOME | $ | 2,192 | 25% | $ | 1,870 | 22% | 17% | 17% | ||||||||||||||||
|
| |||||||||||||||||||||||
EARNINGS PER SHARE: | ||||||||||||||||||||||||
Basic | $ | 0.43 | $ | 0.37 | ||||||||||||||||||||
Diluted | $ | 0.43 | $ | 0.37 | ||||||||||||||||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | ||||||||||||||||||||||||
Basic | 5,041 | 5,044 | ||||||||||||||||||||||
Diluted
|
| 5,123
|
|
| 5,117
|
| ||||||||||||||||||
| (1) | We compare the percent change in the results from one period to another period using constant currency disclosure. We present constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the exchange rates in effect on May 31, 2011, which was the last day of our prior fiscal year, rather than the actual exchange rates in effect during the respective periods. Movements in international currencies relative to the United States dollar during the three months ended November 30, 2011 compared with the corresponding prior year period had no impact on our revenues, operating expenses and operating income. |
| (2) | General and administrative expenses for the three months ended November 30, 2010 included a benefit of $120 million related to the recovery of legal costs. |
1
ORACLE CORPORATION
Q2 FISCAL 2012 FINANCIAL RESULTS
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)
($ in millions, except per share data)
| Three Months Ended November 30, | % Increase (Decrease) in US $ | % Increase (Decrease) in Constant Currency (2) | ||||||||||||||||||||||||||||||||||||||
| 2011 GAAP | Adj. | 2011 Non-GAAP | 2010 GAAP | Adj. | 2010 Non-GAAP | GAAP | Non-GAAP | GAAP | Non-GAAP | |||||||||||||||||||||||||||||||
TOTAL REVENUES (3) (4)
| $
| 8,792
|
| $
| 19
|
| $
| 8,811
|
| $
| 8,582
|
| $
| 67
|
| $
| 8,649
|
|
| 2%
|
|
| 2%
|
|
| 2%
|
|
| 2%
|
| ||||||||||
TOTAL SOFTWARE REVENUES (3) | $ | 6,034 | $ | 10 | $ | 6,044 | $ | 5,644 | $ | 22 | $ | 5,666 | 7% | 7% | 7% | 7% | ||||||||||||||||||||||||
New software licenses | 2,048 | — | 2,048 | 1,999 | — | 1,999 | 2% | 2% | 3% | 3% | ||||||||||||||||||||||||||||||
Software license updates and product support (3) | 3,986 | 10 | 3,996 | 3,645 | 22 | 3,667 | 9% | 9% | 9% | 9% | ||||||||||||||||||||||||||||||
TOTAL HARDWARE SYSTEMS REVENUES (4) | $ | 1,578 | $ | 9 | $ | 1,587 | $ | 1,753 | $ | 45 | $ | 1,798 | (10%) | (12%) | (10%) | (12%) | ||||||||||||||||||||||||
Hardware systems products | 953 | — | 953 | 1,112 | — | 1,112 | (14%) | (14%) | (14%) | (14%) | ||||||||||||||||||||||||||||||
Hardware systems support (4) | 625 | 9 | 634 | 641 | 45 | 686 | (2%) | (8%) | (3%) | (8%) | ||||||||||||||||||||||||||||||
TOTAL OPERATING EXPENSES | $ | 5,681 | $ | (799) | $ | 4,882 | $ | 5,812 | $ | (969) | $ | 4,843 | (2%) | 1% | (2%) | 1% | ||||||||||||||||||||||||
Stock-based compensation (5) | 150 | (150) | — | 119 | (119) | — | 26% | * | 26% | * | ||||||||||||||||||||||||||||||
Amortization of intangible assets (6) | 592 | (592) | — | 614 | (614) | — | (4%) | * | (4%) | * | ||||||||||||||||||||||||||||||
Acquisition related and other | 5 | (5) | — | 47 | (47) | — | (89%) | * | (92%) | * | ||||||||||||||||||||||||||||||
Restructuring | 52 | (52) | — | 189 | (189) | — | (72%) | * | (72%) | * | ||||||||||||||||||||||||||||||
OPERATING INCOME | $ | 3,111 | $ | 818 | $ | 3,929 | $ | 2,770 | $ | 1,036 | $ | 3,806 | 12% | 3% | 12% | 3% | ||||||||||||||||||||||||
OPERATING MARGIN % | 35% | 45% | 32% | 44% | 310 bp. | 59 bp. | 291 bp. | 42 bp. | ||||||||||||||||||||||||||||||||
INCOME TAX EFFECTS (7) | $ | 768 | $ | 226 | $ | 994 | $ | 776 | $ | 274 | $ | 1,050 | (1%) | (5%) | (2%) | (6%) | ||||||||||||||||||||||||
NET INCOME | $ | 2,192 | $ | 592 | $ | 2,784 | $ | 1,870 | $ | 762 | $ | 2,632 | 17% | 6% | 17% | 5% | ||||||||||||||||||||||||
DILUTED EARNINGS PER SHARE | $ | 0.43 | $ | 0.54 | $ | 0.37 | $ | 0.51 | 17% | 6% | 16% | 5% | ||||||||||||||||||||||||||||
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
| 5,123 | — | 5,123 | 5,117 | — | 5,117 | 0% | 0% | 0% | 0% | ||||||||||||||||||||||||||||||
| (1) | This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. For a detailed explanation of the adjustments made to comparable GAAP measures, the reasons why management uses these measures, the usefulness of these measures and the material limitations on the usefulness of these measures, please see Appendix A. |
| (2) | We compare the percent change in the results from one period to another period using constant currency disclosure. We present constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the exchange rates in effect on May 31, 2011, which was the last day of our prior fiscal year, rather than the actual exchange rates in effect during the respective periods. |
| (3) | As of November 30, 2011, approximately $11 million, $9 million and $2 million in estimated revenues related to assumed software support contracts will not be recognized for the remainder of fiscal 2012, fiscal 2013 and fiscal 2014, respectively, due to business combination accounting rules. |
| (4) | As of November 30, 2011, approximately $10 million and $11 million in estimated revenues related to hardware systems support contracts will not be recognized for the remainder of fiscal 2012 and fiscal 2013, respectively, due to business combination accounting rules. |
| (5) | Stock-based compensation was included in the following GAAP operating expense categories: |
| Three Months Ended | Three Months Ended | |||||||||||||||||||||||
| November 30, 2011 | November 30, 2010 | |||||||||||||||||||||||
GAAP | Adj. | Non-GAAP | GAAP | Adj. | Non-GAAP | |||||||||||||||||||
Sales and marketing | $ | 29 | $ | (29 | ) | $ | — | $ | 19 | $ | (19 | ) | $ | — | ||||||||||
Software license updates and product support | 5 | (5 | ) | — | 3 | (3 | ) | — | ||||||||||||||||
Hardware systems products | — | — | — | 1 | (1 | ) | — | |||||||||||||||||
Hardware systems support | 2 | (2 | ) | — | 1 | (1 | ) | — | ||||||||||||||||
Services | 6 | (6 | ) | — | 4 | (4 | ) | — | ||||||||||||||||
Research and development | 68 | (68 | ) | — | 55 | (55 | ) | — | ||||||||||||||||
General and administrative | 40 | (40 | ) | — | 36 | (36 | ) | — | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Subtotal | 150 | (150 | ) | — | 119 | (119 | ) | — | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Acquisition related and other | 2 | (2 | ) | — | 5 | (5 | ) | — | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total stock-based compensation | $ | 152 | $ | (152 | ) | $ | — | $ | 124 | $ | (124 | ) | $ | — | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| (6) | Estimated future annual amortization expense related to intangible assets as of November 30, 2011 was as follows: |
Remainder of Fiscal 2012 | $ | 1,162 | ||
Fiscal 2013 | 1,991 | |||
Fiscal 2014 | 1,644 | |||
Fiscal 2015 | 1,244 | |||
Fiscal 2016 | 737 | |||
Fiscal 2017 | 183 | |||
Thereafter | 180 | |||
|
| |||
Total intangible assets subject to amortization | 7,141 | |||
In-process research and development | 11 | |||
|
| |||
Total intangible assets, net | $ | 7,152 | ||
|
|
| (7) | Income tax effects were calculated reflecting an effective GAAP tax rate of 25.9% and 29.3% in the second quarter of fiscal 2012 and 2011, respectively, and an effective non-GAAP tax rate of 26.3% and 28.5% in the second quarter of fiscal 2012 and 2011, respectively. The differences between our GAAP and non-GAAP tax rates in the second quarter of fiscal 2012 and fiscal 2011 were primarily due to differences in jurisdictional tax rates and the related tax benefits attributable to our restructuring expenses in these periods. |
| * | Not meaningful |
2
ORACLE CORPORATION
Q2 FISCAL 2012 YEAR TO DATE FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($ in millions, except per share data)
| Six Months Ended November 30, | % Increase | % Increase (Decrease) | ||||||||||||||||||||||
| 2011 | % of Revenues | 2010 | % of Revenues | (Decrease) in US $ | in Constant Currency (1) | |||||||||||||||||||
REVENUES | ||||||||||||||||||||||||
New software licenses | $ | 3,546 | 21% | $ | 3,284 | 21% | 8% | 6% | ||||||||||||||||
Software license updates and product support | 8,008 | 46% | 7,096 | 44% | 13% | 10% | ||||||||||||||||||
|
| |||||||||||||||||||||||
Software Revenues | 11,554 | 67% | 10,380 | 65% | 11% | 8% | ||||||||||||||||||
|
| |||||||||||||||||||||||
Hardware systems products | 1,981 | 12% | 2,190 | 13% | (10%) | (13%) | ||||||||||||||||||
Hardware systems support | 1,271 | 7% | 1,261 | 8% | 1% | (3%) | ||||||||||||||||||
|
| |||||||||||||||||||||||
Hardware Systems Revenues | 3,252 | 19% | 3,451 | 21% | (6%) | (9%) | ||||||||||||||||||
|
| |||||||||||||||||||||||
Services | 2,360 | 14% | 2,253 | 14% | 5% | 2% | ||||||||||||||||||
|
| |||||||||||||||||||||||
Total Revenues | 17,166 | 100% | 16,084 | 100% | 7% | 4% | ||||||||||||||||||
|
| |||||||||||||||||||||||
OPERATING EXPENSES | ||||||||||||||||||||||||
Sales and marketing | 3,327 | 19% | 2,864 | 18% | 16% | 13% | ||||||||||||||||||
Software license updates and product support | 594 | 3% | 615 | 4% | (3%) | (5%) | ||||||||||||||||||
Hardware systems products | 943 | 6% | 1,082 | 7% | (13%) | (14%) | ||||||||||||||||||
Hardware systems support | 541 | 3% | 656 | 4% | (17%) | (20%) | ||||||||||||||||||
Services | 1,865 | 11% | 1,865 | 11% | 0% | (2%) | ||||||||||||||||||
Research and development | 2,152 | 13% | 2,222 | 14% | (3%) | (4%) | ||||||||||||||||||
General and administrative (2) | 587 | 3% | 428 | 3% | 37% | 34% | ||||||||||||||||||
Amortization of intangible assets | 1,184 | 7% | 1,217 | 7% | (3%) | (3%) | ||||||||||||||||||
Acquisition related and other | 25 | 0% | 130 | 1% | (81%) | (83%) | ||||||||||||||||||
Restructuring | 154 | 1% | 318 | 2% | (52%) | (53%) | ||||||||||||||||||
|
| |||||||||||||||||||||||
Total Operating Expenses | 11,372 | 66% | 11,397 | 71% | 0% | (2%) | ||||||||||||||||||
|
| |||||||||||||||||||||||
OPERATING INCOME | 5,794 | 34% | 4,687 | 29% | 24% | 17% | ||||||||||||||||||
Interest expense | (384) | (2%) | (410) | (2%) | (6%) | (6%) | ||||||||||||||||||
Non-operating income, net | 21 | 0% | 165 | 1% | (87%) | (84%) | ||||||||||||||||||
|
| |||||||||||||||||||||||
INCOME BEFORE PROVISION FOR INCOME TAXES | 5,431 | 32% | 4,442 | 28% | 22% | 16% | ||||||||||||||||||
|
| |||||||||||||||||||||||
Provision for income taxes | 1,399 | 9% | 1,219 | 8% | 15% | 9% | ||||||||||||||||||
|
| |||||||||||||||||||||||
NET INCOME | $ | 4,032 | 23% | $ | 3,223 | 20% | 25% | 19% | ||||||||||||||||
|
| |||||||||||||||||||||||
EARNINGS PER SHARE: | ||||||||||||||||||||||||
Basic | $ | 0.80 | $ | 0.64 | ||||||||||||||||||||
Diluted | $ | 0.78 | $ | 0.63 | ||||||||||||||||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | ||||||||||||||||||||||||
Basic | 5,052 | 5,035 | ||||||||||||||||||||||
Diluted
| 5,137 | 5,100 | ||||||||||||||||||||||
| (1) | We compare the percent change in the results from one period to another period using constant currency disclosure. We present constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the exchange rates in effect on May 31, 2011, which was the last day of our prior fiscal year, rather than the actual exchange rates in effect during the respective periods. Movements in international currencies relative to the United States dollar during the six months ended November 30, 2011 compared with the corresponding prior year period increased our revenues by 3 percentage points, operating expenses by 2 percentage points and operating income by 7 percentage points. |
| (2) | General and administrative expenses for the six months ended November 30, 2010 included a benefit of $120 million related to the recovery of legal costs. |
3
ORACLE CORPORATION
Q2 FISCAL 2012 YEAR TO DATE FINANCIAL RESULTS
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)
($ in millions, except per share data)
| Six Months Ended November 30, | % Increase (Decrease) in US $ | % Increase (Decrease) in Constant Currency (2) | ||||||||||||||||||||||||||||||||||||||
2011 GAAP | Adj. | 2011 Non-GAAP | 2010 GAAP | Adj. | 2010 Non-GAAP | GAAP | Non-GAAP | GAAP | Non-GAAP | |||||||||||||||||||||||||||||||
TOTAL REVENUES (3) (4)
| $
| 17,166
|
| $
| 43
|
| $
| 17,209
|
| $
| 16,084
|
| $
| 153
|
| $
| 16,237
|
|
| 7%
|
|
| 6%
|
|
| 4%
|
|
| 3%
|
| ||||||||||
TOTAL SOFTWARE REVENUES (3) | $ | 11,554 | $ | 24 | $ | 11,578 | $ | 10,380 | $ | 47 | $ | 10,427 | 11% | 11% | 8% | 8% | ||||||||||||||||||||||||
New software licenses | 3,546 | — | 3,546 | 3,284 | — | 3,284 | 8% | 8% | 6% | 6% | ||||||||||||||||||||||||||||||
Software license updates and product support (3) | 8,008 | 24 | 8,032 | 7,096 | 47 | 7,143 | 13% | 12% | 10% | 9% | ||||||||||||||||||||||||||||||
TOTAL HARDWARE SYSTEMS REVENUES (4) | $ | 3,252 | $ | 19 | $ | 3,271 | $ | 3,451 | $ | 106 | $ | 3,557 | (6% | ) | (8% | ) | (9% | ) | (11% | ) | ||||||||||||||||||||
Hardware systems products | 1,981 | — | 1,981 | 2,190 | — | 2,190 | (10% | ) | (10% | ) | (13% | ) | (13% | ) | ||||||||||||||||||||||||||
Hardware systems support (4) | 1,271 | 19 | 1,290 | 1,261 | 106 | 1,367 | 1% | (6% | ) | (3% | ) | (9% | ) | |||||||||||||||||||||||||||
TOTAL OPERATING EXPENSES | $ | 11,372 | $ | (1,658 | ) | $ | 9,714 | $ | 11,397 | $ | (1,913 | ) | $ | 9,484 | 0% | 2% | (2% | ) | 0% | |||||||||||||||||||||
Stock-based compensation (5) | 295 | (295 | ) | — | 248 | (248 | ) | — | 20% | * | 20% | * | ||||||||||||||||||||||||||||
Amortization of intangible assets (6) | 1,184 | (1,184 | ) | — | 1,217 | (1,217 | ) | — | (3% | ) | * | (3% | ) | * | ||||||||||||||||||||||||||
Acquisition related and other | 25 | (25 | ) | — | 130 | (130 | ) | — | (81% | ) | * | (83% | ) | * | ||||||||||||||||||||||||||
Restructuring | 154 | (154 | ) | — | 318 | (318 | ) | — | (52% | ) | * | (53% | ) | * | ||||||||||||||||||||||||||
OPERATING INCOME | $ | 5,794 | $ | 1,701 | $ | 7,495 | $ | 4,687 | $ | 2,066 | $ | 6,753 | 24% | 11% | 17% | 7% | ||||||||||||||||||||||||
OPERATING MARGIN % | 34% | 44% | 29% | 42% | 461 bp. | 196 bp. | 393 bp. | 154 bp. | ||||||||||||||||||||||||||||||||
INCOME TAX EFFECTS (7) | $ | 1,399 | $ | 483 | $ | 1,882 | $ | 1,219 | $ | 528 | $ | 1,747 | 15% | 8% | 9% | 4% | ||||||||||||||||||||||||
NET INCOME | $ | 4,032 | $ | 1,218 | $ | 5,250 | $ | 3,223 | $ | 1,538 | $ | 4,761 | 25% | 10% | 19% | 6% | ||||||||||||||||||||||||
DILUTED EARNINGS PER SHARE | $ | 0.78 | $ | 1.02 | $ | 0.63 | $ | 0.93 | 24% | 9% | 18% | 5% | ||||||||||||||||||||||||||||
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
| 5,137 | — | 5,137 | 5,100 | — | 5,100 | 1% | 1% | 1% | 1% | ||||||||||||||||||||||||||||||
| (1) | This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. For a detailed explanation of the adjustments made to comparable GAAP measures, the reasons why management uses these measures, the usefulness of these measures and the material limitations on the usefulness of these measures, please see Appendix A. |
| (2) | We compare the percent change in the results from one period to another period using constant currency disclosure. We present constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the exchange rates in effect on May 31, 2011, which was the last day of our prior fiscal year, rather than the actual exchange rates in effect during the respective periods. |
| (3) | As of November 30, 2011, approximately $11 million, $9 million and $2 million in estimated revenues related to assumed software support contracts will not be recognized for the remainder of fiscal 2012, fiscal 2013 and fiscal 2014, respectively, due to business combination accounting rules. |
| (4) | As of November 30, 2011, approximately $10 million and $11 million in estimated revenues related to hardware systems support contracts will not be recognized for the remainder of fiscal 2012 and fiscal 2013, respectively, due to business combination accounting rules. |
| (5) | Stock-based compensation was included in the following GAAP operating expense categories: |
| Six Months Ended November 30, 2011 | Six Months Ended November 30, 2010 | |||||||||||||||||||||||
| GAAP | Adj. | Non-GAAP | GAAP | Adj. | Non-GAAP | |||||||||||||||||||
Sales and marketing | $ | 55 | $ | (55 | ) | $ | — | $ | 42 | $ | (42 | ) | $ | — | ||||||||||
Software license updates and product support | 8 | (8 | ) | — | 8 | (8 | ) | — | ||||||||||||||||
Hardware systems products | 1 | (1 | ) | — | 2 | (2 | ) | — | ||||||||||||||||
Hardware systems support | 3 | (3 | ) | — | 2 | (2 | ) | — | ||||||||||||||||
Services | 10 | (10 | ) | — | 8 | (8 | ) | — | ||||||||||||||||
Research and development | 139 | (139 | ) | — | 114 | (114 | ) | — | ||||||||||||||||
General and administrative | 79 | (79 | ) | — | 72 | (72 | ) | — | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Subtotal | 295 | (295 | ) | — | 248 | (248 | ) | — | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Acquisition related and other | 3 | (3 | ) | — | 6 | (6 | ) | — | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total stock-based compensation | $ | 298 | $ | (298 | ) | $ | — | $ | 254 | $ | (254 | ) | $ | — | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| (6) | Estimated future annual amortization expense related to intangible assets as of November 30, 2011 was as follows: |
Remainder of Fiscal 2012 | $ | 1,162 | ||
Fiscal 2013 | 1,991 | |||
Fiscal 2014 | 1,644 | |||
Fiscal 2015 | 1,244 | |||
Fiscal 2016 | 737 | |||
Fiscal 2017 | 183 | |||
Thereafter | 180 | |||
|
| |||
Total intangible assets subject to amortization | 7,141 | |||
In-process research and development | 11 | |||
|
| |||
Total intangible assets, net | $ | 7,152 | ||
|
|
| (7) | Income tax effects were calculated reflecting an effective GAAP tax rate of 25.8% and 27.4% in the first half of fiscal 2012 and 2011, respectively, and an effective non-GAAP tax rate of 26.4% and 26.8% in the first half of fiscal 2012 and 2011, respectively. The differences between our GAAP and non-GAAP tax rates in the first half of fiscal 2012 were primarily due to income tax effects related to our acquired tax exposures and the differences in jurisdictional tax rates and the related tax benefits attributable to our restructuring expenses. The differences between our GAAP and non-GAAP tax rates in the first half of fiscal 2011 were primarily due to differences in jurisdictional tax rates and the related tax benefits attributable to our restructuring expenses. |
| * | Not meaningful |
4
ORACLE CORPORATION
Q2 FISCAL 2012 FINANCIAL RESULTS
CONDENSED CONSOLIDATED BALANCE SHEETS
($ in millions)
| November 30, 2011 | May 31, 2011 | |||||||
ASSETS
| ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 13,286 | $ | 16,163 | ||||
Marketable securities | 17,726 | 12,685 | ||||||
Trade receivables, net | 4,434 | 6,628 | ||||||
Inventories | 218 | 303 | ||||||
Deferred tax assets | 1,239 | 1,189 | ||||||
Prepaid expenses and other current assets | 1,579 | 2,206 | ||||||
|
| |||||||
Total Current Assets | 38,482 | 39,174 | ||||||
Non-Current Assets: | ||||||||
Property, plant and equipment, net | 2,900 | 2,857 | ||||||
Intangible assets, net | 7,152 | 7,860 | ||||||
Goodwill | 21,994 | 21,553 | ||||||
Deferred tax assets | 1,122 | 1,076 | ||||||
Other assets | 1,260 | 1,015 | ||||||
|
| |||||||
Total Non-Current Assets | 34,428 | 34,361 | ||||||
|
| |||||||
TOTAL ASSETS | $ | 72,910 | $ | 73,535 | ||||
|
| |||||||
LIABILITIES AND EQUITY
| ||||||||
Current Liabilities: | ||||||||
Notes payable, current and other current borrowings | $ | — | $ | 1,150 | ||||
Accounts payable | 445 | 494 | ||||||
Accrued compensation and related benefits | 1,582 | 2,320 | ||||||
Deferred revenues | 6,091 | 6,802 | ||||||
Other current liabilities | 2,954 | 3,426 | ||||||
|
| |||||||
Total Current Liabilities | 11,072 | 14,192 | ||||||
Non-Current Liabilities: | ||||||||
Notes payable and other non-current borrowings | 14,778 | 14,772 | ||||||
Income taxes payable | 3,383 | 3,169 | ||||||
Other non-current liabilities | 1,410 | 1,157 | ||||||
|
| |||||||
Total Non-Current Liabilities | 19,571 | 19,098 | ||||||
Equity | 42,267 | 40,245 | ||||||
|
| |||||||
TOTAL LIABILITIES AND EQUITY | $ | 72,910 | $ | 73,535 | ||||
|
| |||||||
|
| |||||||
5
ORACLE CORPORATION
Q2 FISCAL 2012 FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in millions)
| Six Months Ended November 30, | ||||||||
| 2011 | 2010 | |||||||
| ||||||||
Cash Flows From Operating Activities: | ||||||||
Net income | $ | 4,032 | $ | 3,223 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation | 226 | 194 | ||||||
Amortization of intangible assets | 1,184 | 1,217 | ||||||
Deferred income taxes | (137 | ) | (76 | ) | ||||
Stock-based compensation | 298 | 254 | ||||||
Tax benefits on the exercise of stock options and vesting of restricted stock-based awards | 94 | 142 | ||||||
Excess tax benefits on the exercise of stock options and vesting of restricted stock-based awards | (53 | ) | (86 | ) | ||||
Other, net | 53 | 24 | ||||||
Changes in operating assets and liabilities, net of effects from acquisitions: | ||||||||
Decrease in trade receivables, net | 2,128 | 1,343 | ||||||
Decrease in inventories | 93 | 25 | ||||||
Decrease in prepaid expenses and other assets | 424 | 280 | ||||||
Decrease in accounts payable and other liabilities | (1,306 | ) | (620 | ) | ||||
Increase (decrease) in income taxes payable | 184 | (613 | ) | |||||
Decrease in deferred revenues | (544 | ) | (546 | ) | ||||
|
| |||||||
Net cash provided by operating activities | 6,676 | 4,761 | ||||||
|
| |||||||
Cash Flows From Investing Activities: | ||||||||
Purchases of marketable securities and other investments | (21,422 | ) | (16,802 | ) | ||||
Proceeds from maturities and sales of marketable securities and other investments | 16,335 | 11,153 | ||||||
Acquisitions, net of cash acquired | (571 | ) | (806 | ) | ||||
Capital expenditures | (289 | ) | (239 | ) | ||||
|
| |||||||
Net cash used for investing activities | (5,947 | ) | (6,694 | ) | ||||
|
| |||||||
Cash Flows From Financing Activities: | ||||||||
Payments for repurchases of common stock | (1,798 | ) | (504 | ) | ||||
Proceeds from issuances of common stock | 434 | 734 | ||||||
Payments of dividends to stockholders | (607 | ) | (504 | ) | ||||
Proceeds from borrowings, net of issuance costs | — | 3,204 | ||||||
Repayments of borrowings | (1,150 | ) | (890 | ) | ||||
Excess tax benefits on the exercise of stock options and vesting of restricted stock-based awards | 53 | 86 | ||||||
Distributions to noncontrolling interests | (163 | ) | (38 | ) | ||||
|
| |||||||
Net cash (used for) provided by financing activities | (3,231 | ) | 2,088 | |||||
|
| |||||||
Effect of exchange rate changes on cash and cash equivalents | (375 | ) | 351 | |||||
|
| |||||||
Net (decrease) increase in cash and cash equivalents | (2,877 | ) | 506 | |||||
|
| |||||||
Cash and cash equivalents at beginning of period | 16,163 | 9,914 | ||||||
|
| |||||||
Cash and cash equivalents at end of period | $ | 13,286 | $ | 10,420 | ||||
|
| |||||||
|
| |||||||
6
ORACLE CORPORATION
Q2 FISCAL 2012 FINANCIAL RESULTS
FREE CASH FLOW—TRAILING 4-QUARTERS (1)
($ in millions)
| Fiscal 2011 | Fiscal 2012 | |||||||||||||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | |||||||||||||||||||||
GAAP Operating Cash Flow | $ | 8,760 | $ | 9,053 | $ | 9,948 | $ | 11,214 | $ | 12,818 | $ | 13,129 | ||||||||||||||||
Capital Expenditures (2) | (293 | ) | (369 | ) | (441 | ) | (450 | ) | (492 | ) | (500 | ) | ||||||||||||||||
|
| |||||||||||||||||||||||||||
Free Cash Flow | $ | 8,467 | $ | 8,684 | $ | 9,507 | $ | 10,764 | $ | 12,326 | $ | 12,629 | ||||||||||||||||
|
| |||||||||||||||||||||||||||
% Growth over prior year | 0% | 3% | 19% | 27% | 46% | 45% | ||||||||||||||||||||||
GAAP Net Income | $ | 6,363 | $ | 6,776 | $ | 7,701 | $ | 8,547 | $ | 9,035 | $ | 9,356 | ||||||||||||||||
Free Cash Flow as a % of Net Income
| 133% | 128% | 123% | 126% | 136% | 135% | ||||||||||||||||||||||
| (1) | 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 flow generated from operations. We believe 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. |
| (2) | Represents capital expenditures as reported in cash flows from investing activities on our cash flow statements presented in accordance with GAAP. |
7
ORACLE CORPORATION
Q2 FISCAL 2012 FINANCIAL RESULTS
SUPPLEMENTAL ANALYSIS OF GAAP REVENUES AND HEADCOUNT (1)
($ in millions)
| Fiscal 2011 | Fiscal 2012 | |||||||||||||||||||||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | TOTAL | Q1 | Q2 | Q3 | Q4 | TOTAL | |||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||
REVENUES | ||||||||||||||||||||||||||||||||||||
New software licenses | $ | 1,286 | $ | 1,999 | $ | 2,214 | $ | 3,736 | $ | 9,235 | $ | 1,498 | $ | 2,048 | $ | 3,546 | ||||||||||||||||||||
Software license updates and product support | 3,450 | 3,645 | 3,740 | 3,961 | 14,796 | 4,022 | 3,986 | 8,008 | ||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||
Software Revenues | 4,736 | 5,644 | 5,954 | 7,697 | 24,031 | 5,520 | 6,034 | 11,554 | ||||||||||||||||||||||||||||
Hardware systems products | 1,079 | 1,112 | 1,035 | 1,157 | 4,382 | 1,029 | 953 | 1,981 | ||||||||||||||||||||||||||||
Hardware systems support | 619 | 641 | 629 | 673 | 2,562 | 645 | 625 | 1,271 | ||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||
Hardware Systems Revenues | 1,698 | 1,753 | 1,664 | 1,830 | 6,944 | 1,674 | 1,578 | 3,252 | ||||||||||||||||||||||||||||
Services Revenues | 1,068 | 1,185 | 1,146 | 1,248 | 4,647 | 1,180 | 1,180 | 2,360 | ||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||
Total Revenues | $ | 7,502 | $ | 8,582 | $ | 8,764 | $ | 10,775 | $ | 35,622 | $ | 8,374 | $ | 8,792 | $ | 17,166 | ||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||
AS REPORTED REVENUE GROWTH RATES | ||||||||||||||||||||||||||||||||||||
New software licenses | 25% | 21% | 29% | 19% | 23% | 17% | 2% | 8% | ||||||||||||||||||||||||||||
Software license updates and product support | 11% | 12% | 13% | 15% | 13% | 17% | 9% | 13% | ||||||||||||||||||||||||||||
Software Revenues | 14% | 15% | 19% | 17% | 17% | 17% | 7% | 11% | ||||||||||||||||||||||||||||
Hardware systems products | * | * | 279% | (6% | ) | 191% | (5% | ) | (14% | ) | (10% | ) | ||||||||||||||||||||||||
Hardware systems support | * | * | 239% | 12% | 227% | 4% | (2% | ) | 1% | |||||||||||||||||||||||||||
Hardware Systems Revenues | * | * | 263% | 0% | 203% | (1% | ) | (10% | ) | (6% | ) | |||||||||||||||||||||||||
Services Revenues | 18% | 24% | 23% | 13% | 19% | 10% | 0% | 5% | ||||||||||||||||||||||||||||
Total Revenues | 48% | 47% | 37% | 13% | 33% | 12% | 2% | 7% | ||||||||||||||||||||||||||||
CONSTANT CURRENCY GROWTH RATES (2) | ||||||||||||||||||||||||||||||||||||
New software licenses | 25% | 23% | 27% | 12% | 19% | 11% | 3% | 6% | ||||||||||||||||||||||||||||
Software license updates and product support | 12% | 13% | 12% | 10% | 12% | 10% | 9% | 10% | ||||||||||||||||||||||||||||
Software Revenues | 15% | 17% | 17% | 11% | 15% | 11% | 7% | 8% | ||||||||||||||||||||||||||||
Hardware systems products | * | * | 274% | (11% | ) | 184% | (11% | ) | (14% | ) | (13% | ) | ||||||||||||||||||||||||
Hardware systems support | * | * | 234% | 6% | 218% | (3% | ) | (3% | ) | (3% | ) | |||||||||||||||||||||||||
Hardware Systems Revenues | * | * | 258% | (5% | ) | 195% | (8% | ) | (10% | ) | (9% | ) | ||||||||||||||||||||||||
Services Revenues | 18% | 25% | 21% | 7% | 17% | 5% | 0% | 2% | ||||||||||||||||||||||||||||
Total Revenues | 49% | 48% | 35% | 7% | 30% | 5% | 2% | 4% | ||||||||||||||||||||||||||||
GEOGRAPHIC REVENUES | ||||||||||||||||||||||||||||||||||||
REVENUES | ||||||||||||||||||||||||||||||||||||
Americas | $ | 3,904 | $ | 4,452 | $ | 4,509 | $ | 5,487 | $ | 18,352 | $ | 4,226 | $ | 4,532 | $ | 8,758 | ||||||||||||||||||||
Europe, Middle East & Africa | 2,381 | 2,738 | 2,815 | 3,564 | 11,497 | 2,704 | 2,756 | 5,460 | ||||||||||||||||||||||||||||
Asia Pacific | 1,217 | 1,392 | 1,440 | 1,724 | 5,773 | 1,444 | 1,504 | 2,948 | ||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||
Total Revenues | $ | 7,502 | $ | 8,582 | $ | 8,764 | $ | 10,775 | $ | 35,622 | $ | 8,374 | $ | 8,792 | $ | 17,166 | ||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||
HEADCOUNT | ||||||||||||||||||||||||||||||||||||
GEOGRAPHIC AREA | ||||||||||||||||||||||||||||||||||||
Americas | 44,494 | 44,815 | 45,825 | 45,887 | 46,338 | 46,672 | ||||||||||||||||||||||||||||||
Europe, Middle East & Africa | 22,886 | 22,690 | 22,705 | 22,394 | 22,210 | 22,725 | ||||||||||||||||||||||||||||||
Asia Pacific | 37,856 | 38,225 | 39,340 | 40,148 | 40,840 | 41,901 | ||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||
Total Company | 105,236 | 105,730 | 107,870 | 108,429 | 109,388 | 111,298 | ||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||
| (1) | The sum of the quarterly financial information may vary from year-to-date financial information due to rounding. |
| (2) | We compare the percent change in the results from one period to another period using constant currency disclosure. We present constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the exchange rates in effect on May 31, 2011 and 2010 for the fiscal 2012 and fiscal 2011 constant currency growth rate calculations presented, respectively, rather than the actual exchange rates in effect during the respective periods. |
| * | Not meaningful |
8
ORACLE CORPORATION
Q2 FISCAL 2012 FINANCIAL RESULTS
SUPPLEMENTAL TOTAL SOFTWARE PRODUCT REVENUE ANALYSIS (1)
($ in millions)
| Fiscal 2011 | Fiscal 2012 | |||||||||||||||||||||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | TOTAL | Q1 | Q2 | Q3 | Q4 | TOTAL | |||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||
SOFTWARE REVENUES
| ||||||||||||||||||||||||||||||||||||
DATABASE & MIDDLEWARE REVENUES | ||||||||||||||||||||||||||||||||||||
New software licenses | $ | 937 | $ | 1,420 | $ | 1,575 | $ | 2,694 | $ | 6,626 | $ | 1,070 | $ | 1,479 | $ | 2,548 | ||||||||||||||||||||
Software license updates and product support | 2,316 | 2,443 | 2,523 | 2,663 | 9,945 | 2,710 | 2,707 | 5,416 | ||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||
Database and Middleware Revenues | $ | 3,253 | $ | 3,863 | $ | 4,098 | $ | 5,357 | $ | 16,571 | $ | 3,780 | $ | 4,186 | $ | 7,964 | ||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||
AS REPORTED GROWTH RATES | ||||||||||||||||||||||||||||||||||||
New software licenses | 32% | 21% | 27% | 18% | 23% | 14% | 4% | 8% | ||||||||||||||||||||||||||||
Software license updates and product support | 12% | 15% | 15% | 15% | 14% | 17% | 11% | 14% | ||||||||||||||||||||||||||||
Database and Middleware Revenues | 17% | 17% | 19% | 17% | 18% | 16% | 8% | 12% | ||||||||||||||||||||||||||||
CONSTANT CURRENCY GROWTH RATES (2) | ||||||||||||||||||||||||||||||||||||
New software licenses | 32% | 23% | 26% | 10% | 19% | 8% | 4% | 6% | ||||||||||||||||||||||||||||
Software license updates and product support | 13% | 16% | 14% | 10% | 13% | 12% | 13% | 13% | ||||||||||||||||||||||||||||
Database and Middleware Revenues | 18% | 18% | 18% | 10% | 15% | 11% | 10% | 10% | ||||||||||||||||||||||||||||
APPLICATIONS REVENUES
| ||||||||||||||||||||||||||||||||||||
New software licenses | $ | 349 | $ | 579 | $ | 639 | $ | 1,042 | $ | 2,609 | $ | 428 | $ | 569 | $ | 998 | ||||||||||||||||||||
Software license updates and product support | 1,134 | 1,202 | 1,217 | 1,298 | 4,851 | 1,312 | 1,279 | 2,592 | ||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||
Applications Revenues | $ | 1,483 | $ | 1,781 | $ | 1,856 | $ | 2,340 | $ | 7,460 | $ | 1,740 | $ | 1,848 | $ | 3,590 | ||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||
AS REPORTED GROWTH RATES | ||||||||||||||||||||||||||||||||||||
New software licenses | 10% | 21% | 34% | 22% | 23% | 23% | (2% | ) | 8% | |||||||||||||||||||||||||||
Software license updates and product support | 8% | 8% | 10% | 16% | 10% | 16% | 6% | 11% | ||||||||||||||||||||||||||||
Applications Revenues | 8% | 12% | 17% | 18% | 14% | 17% | 4% | 10% | ||||||||||||||||||||||||||||
CONSTANT CURRENCY GROWTH RATES (2) | ||||||||||||||||||||||||||||||||||||
New software licenses | 10% | 22% | 31% | 16% | 20% | 19% | (1% | ) | 7% | |||||||||||||||||||||||||||
Software license updates and product support | 9% | 9% | 9% | 10% | 9% | 7% | 2% | 4% | ||||||||||||||||||||||||||||
Applications Revenues | 9% | 13% | 16% | 12% | 13% | 10% | 1% | 5% | ||||||||||||||||||||||||||||
| (1) | The sum of the quarterly financial information may vary from year-to-date financial information due to rounding. |
| (2) | We compare the percent change in the results from one period to another period using constant currency disclosure. We present constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the exchange rates in effect on May 31, 2011 and 2010 for the fiscal 2012 and fiscal 2011 constant currency growth rate calculations presented, respectively, rather than the actual exchange rates in effect during the respective periods. |
9
ORACLE CORPORATION
Q2 FISCAL 2012 FINANCIAL RESULTS
SUPPLEMENTAL GEOGRAPHIC NEW SOFTWARE LICENSE AND HARDWARE SYSTEMS PRODUCTS REVENUES ANALYSIS (1)
($ in millions)
| Fiscal 2011 | Fiscal 2012 | |||||||||||||||||||||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | TOTAL | Q1 | Q2 | Q3 | Q4 | TOTAL | |||||||||||||||||||||||||||
AMERICAS | ||||||||||||||||||||||||||||||||||||
Database & Middleware | $ | 446 | $ | 671 | $ | 755 | $ | 1,284 | $ | 3,155 | $ | 478 | $ | 669 | $ | 1,146 | ||||||||||||||||||||
Applications | 212 | 359 | 355 | 580 | 1,507 | 249 | 358 | 608 | ||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||
New Software License Revenues | $ | 658 | $ | 1,030 | $ | 1,110 | $ | 1,864 | $ | 4,662 | $ | 727 | $ | 1,027 | $ | 1,754 | ||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||
Hardware Systems Products Revenues | $ | 543 | $ | 602 | $ | 506 | $ | 599 | $ | 2,248 | $ | 475 | $ | 496 | $ | 971 | ||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||
AS REPORTED GROWTH RATES | ||||||||||||||||||||||||||||||||||||
Database & Middleware | 44% | 36% | 40% | 14% | 28% | 7% | 0% | 3% | ||||||||||||||||||||||||||||
Applications | 14% | 26% | 26% | 20% | 22% | 18% | 0% | 6% | ||||||||||||||||||||||||||||
New Software License Revenues | 33% | 32% | 35% | 16% | 26% | 10% | 0% | 4% | ||||||||||||||||||||||||||||
Hardware Systems Products Revenues | * | * | 287% | (3% | ) | 201% | (12% | ) | (17% | ) | (15% | ) | ||||||||||||||||||||||||
CONSTANT CURRENCY GROWTH RATES (2) | ||||||||||||||||||||||||||||||||||||
Database & Middleware | 43% | 36% | 39% | 12% | 27% | 6% | 1% | 3% | ||||||||||||||||||||||||||||
Applications | 14% | 26% | 24% | 18% | 20% | 16% | 1% | 7% | ||||||||||||||||||||||||||||
New Software License Revenues | 32% | 32% | 34% | 14% | 24% | 9% | 1% | 4% | ||||||||||||||||||||||||||||
Hardware Systems Products Revenues | * | * | 285% | (4% | ) | 199% | (13% | ) | (17% | ) | (15% | ) | ||||||||||||||||||||||||
EUROPE / MIDDLE EAST / AFRICA | ||||||||||||||||||||||||||||||||||||
Database & Middleware | $ | 279 | $ | 426 | $ | 505 | $ | 925 | $ | 2,137 | $ | 322 | $ | 443 | $ | 765 | ||||||||||||||||||||
Applications | 73 | 148 | 197 | 308 | 724 | 118 | 141 | 259 | ||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||
New Software License Revenues | $ | 352 | $ | 574 | $ | 702 | $ | 1,233 | $ | 2,861 | $ | 440 | $ | 584 | $ | 1,024 | ||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||
Hardware Systems Products Revenues | $ | 338 | $ | 329 | $ | 330 | $ | 341 | $ | 1,337 | $ | 344 | $ | 272 | $ | 615 | ||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||
AS REPORTED GROWTH RATES | ||||||||||||||||||||||||||||||||||||
Database & Middleware | 25% | (1% | ) | 11% | 23% | 15% | 15% | 4% | 8% | |||||||||||||||||||||||||||
Applications | (19% | ) | 23% | 47% | 18% | 20% | 63% | (4% | ) | 18% | ||||||||||||||||||||||||||
New Software License Revenues | 12% | 5% | 19% | 22% | 16% | 25% | 2% | 11% | ||||||||||||||||||||||||||||
Hardware Systems Products Revenues | * | * | 246% | (13% | ) | 176% | 2% | (17% | ) | (8% | ) | |||||||||||||||||||||||||
CONSTANT CURRENCY GROWTH RATES (2) | ||||||||||||||||||||||||||||||||||||
Database & Middleware | 32% | 7% | 12% | 9% | 12% | 5% | 5% | 5% | ||||||||||||||||||||||||||||
Applications | (16% | ) | 31% | 46% | 7% | 16% | 55% | (3% | ) | 16% | ||||||||||||||||||||||||||
New Software License Revenues | 18% | 12% | 20% | 9% | 13% | 15% | 3% | 7% | ||||||||||||||||||||||||||||
Hardware Systems Products Revenues | * | * | 246% | (21% | ) | 165% | (11% | ) | (17% | ) | (14% | ) | ||||||||||||||||||||||||
ASIA PACIFIC | ||||||||||||||||||||||||||||||||||||
Database & Middleware | $ | 212 | $ | 323 | $ | 315 | $ | 485 | $ | 1,334 | $ | 270 | $ | 367 | $ | 637 | ||||||||||||||||||||
Applications | 64 | 72 | 87 | 154 | 378 | 61 | 70 | 131 | ||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||
New Software License Revenues | $ | 276 | $ | 395 | $ | 402 | $ | 639 | $ | 1,712 | $ | 331 | $ | 437 | $ | 768 | ||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||
Hardware Systems Products Revenues | $ | 198 | $ | 181 | $ | 199 | $ | 217 | $ | 797 | $ | 210 | $ | 185 | $ | 395 | ||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||
AS REPORTED GROWTH RATES | ||||||||||||||||||||||||||||||||||||
Database & Middleware | 19% | 27% | 28% | 20% | 23% | 28% | 14% | 19% | ||||||||||||||||||||||||||||
Applications | 54% | (1% | ) | 45% | 41% | 33% | (4% | ) | (4% | ) | (4% | ) | ||||||||||||||||||||||||
New Software License Revenues | 26% | 21% | 32% | 24% | 25% | 20% | 11% | 14% | ||||||||||||||||||||||||||||
Hardware Systems Products Revenues | * | * | 325% | (4% | ) | 191% | 6% | 2% | 4% | |||||||||||||||||||||||||||
CONSTANT CURRENCY GROWTH RATES (2) | ||||||||||||||||||||||||||||||||||||
Database & Middleware | 13% | 22% | 20% | 8% | 15% | 15% | 12% | 13% | ||||||||||||||||||||||||||||
Applications | 47% | (5% | ) | 34% | 27% | 24% | (11% | ) | (6% | ) | (9% | ) | ||||||||||||||||||||||||
New Software License Revenues | 19% | 16% | 23% | 12% | 16% | 9% | 8% | 9% | ||||||||||||||||||||||||||||
Hardware Systems Products Revenues | * | * | 295% | (13% | ) | 173% | (5% | ) | (1% | ) | (3% | ) | ||||||||||||||||||||||||
TOTAL COMPANY | ||||||||||||||||||||||||||||||||||||
Database & Middleware | $ | 937 | $ | 1,420 | $ | 1,575 | $ | 2,694 | $ | 6,626 | $ | 1,070 | $ | 1,479 | $ | 2,548 | ||||||||||||||||||||
Applications | 349 | 579 | 639 | 1,042 | 2,609 | 428 | 569 | 998 | ||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||
New Software License Revenues | $ | 1,286 | $ | 1,999 | $ | 2,214 | $ | 3,736 | $ | 9,235 | $ | 1,498 | $ | 2,048 | $ | 3,546 | ||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||
Hardware Systems Products Revenues | $ | 1,079 | $ | 1,112 | $ | 1,035 | $ | 1,157 | $ | 4,382 | $ | 1,029 | $ | 953 | $ | 1,981 | ||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||
AS REPORTED GROWTH RATES | ||||||||||||||||||||||||||||||||||||
Database & Middleware | 32% | 21% | 27% | 18% | 23% | 14% | 4% | 8% | ||||||||||||||||||||||||||||
Applications | 10% | 21% | 34% | 22% | 23% | 23% | (2% | ) | 8% | |||||||||||||||||||||||||||
New Software License Revenues | 25% | 21% | 29% | 19% | 23% | 17% | 2% | 8% | ||||||||||||||||||||||||||||
Hardware Systems Products Revenues | * | * | 279% | (6% | ) | 191% | (5% | ) | (14% | ) | (10% | ) | ||||||||||||||||||||||||
CONSTANT CURRENCY GROWTH RATES (2) | ||||||||||||||||||||||||||||||||||||
Database & Middleware | 32% | 23% | 26% | 10% | 19% | 8% | 4% | 6% | ||||||||||||||||||||||||||||
Applications | 10% | 22% | 31% | 16% | 20% | 19% | (1% | ) | 7% | |||||||||||||||||||||||||||
New Software License Revenues | 25% | 23% | 27% | 12% | 19% | 11% | 3% | 6% | ||||||||||||||||||||||||||||
Hardware Systems Products Revenues | * | * | 274% | (11% | ) | 184% | (11% | ) | (14% | ) | (13% | ) | ||||||||||||||||||||||||
| (1) | The sum of the quarterly financial information may vary from year-to-date financial information due to rounding. |
| (2) | We compare the percent change in the results from one period to another period using constant currency disclosure. We present constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the exchange rates in effect on May 31, 2011 and 2010 for the fiscal 2012 and fiscal 2011 constant currency growth rate calculations presented, respectively, rather than the actual exchange rates in effect during the respective periods. |
| * | Not meaningful |
10
APPENDIX A
ORACLE CORPORATION
Q2 FISCAL 2012 FINANCIAL RESULTS
EXPLANATION OF NON-GAAP MEASURES
To supplement our financial results presented on a GAAP basis, we use the non-GAAP measures indicated in the tables, which exclude certain business combination accounting entries and expenses related to acquisitions, as well as other significant expenses including stock-based compensation, that we believe are helpful in understanding our past financial performance and our future results. Our non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. Our management regularly uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our business and make operating decisions. These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. Compensation of our executives is based in part on the performance of our business based on these non-GAAP measures. Our non-GAAP financial measures reflect adjustments based on the following items, as well as the related income tax effects:
| • | Software license updates and product support and hardware systems support deferred revenues: Business combination accounting rules require us to account for the fair values of software license updates and product support contracts and hardware systems support contracts assumed in connection with our acquisitions. Because these support contracts are typically one year in duration, our GAAP revenues for the one year period subsequent to our acquisition of a business do not reflect the full amount of support revenues on these assumed support contracts that would have otherwise been recorded by the acquired entity. The non-GAAP adjustment to our software license updates and product support revenues and hardware systems support revenues is intended to include, and thus reflect, the full amount of such revenues. We believe the adjustment to these support revenues is useful to investors as a measure of the ongoing performance of our business. We have historically experienced high renewal rates on our software license updates and product support contracts and our objective is to increase the renewal rates on acquired and new hardware systems support contracts; however, we cannot be certain that our customers will renew our software license updates and product support contracts or our hardware systems support contracts. |
| • | Stock-based compensation expenses: We have excluded the effect of stock-based compensation expenses from our non-GAAP operating expenses and net income measures. Although stock-based compensation is a key incentive offered to our employees, and we believe such compensation contributed to the revenues earned during the periods presented and also believe it will contribute to the generation of future period revenues, we continue to evaluate our business performance excluding stock-based compensation expenses. Stock-based compensation expenses will recur in future periods. |
| • | Amortization of intangible assets: We have excluded the effect of amortization of intangible assets from our non-GAAP operating expenses and net income measures. Amortization of intangible assets is inconsistent in amount and frequency and is significantly affected by the timing and size of our acquisitions. Investors should note that the use of intangible assets contributed to our revenues earned during the periods presented and will contribute to our future period revenues as well. Amortization of intangible assets will recur in future periods. |
| • | Acquisition related and other expenses; and restructuring expenses: We have excluded the effect of acquisition related and other expenses and the effect of restructuring expenses from our non-GAAP operating expenses and net income measures. We incurred significant expenses in connection with our acquisitions and also incurred certain other operating expenses or income, which we generally would not have otherwise incurred in the periods presented as a part of our continuing operations. Acquisition related and other expenses consist of personnel related costs for transitional employees, other acquired employee related costs, stock-based compensation expenses (in addition to the stock-based compensation expenses described above), integration related professional services, certain business combination adjustments including adjustments after the measurement period has ended and changes in fair value of contingent consideration payable, and certain other operating expenses, net. Substantially all of the stock-based compensation expenses included in acquisition related and other expenses resulted from unvested options assumed in acquisitions whose vesting was fully accelerated upon termination of the employees pursuant to the original terms of those options. Restructuring expenses consist of employee severance and other exit costs. We believe it is useful for investors to understand the effects of these items on our total operating expenses. Although acquisition related expenses and restructuring expenses generally diminish over time with respect to past acquisitions, we generally will incur these expenses in connection with any future acquisitions. |
11