Oracle Reports GAAP EPS of $0.51; Non-GAAP EPS of $0.63
Cloud SAAS and PAAS Revenues Up 34% in U.S. Dollars and Up 39% in Constant Currency
/EINPresswire.com/ -- REDWOOD SHORES, CA -- (Marketwired) -- 12/16/15 -- Oracle Corporation (NYSE: ORCL) today announced fiscal 2016 Q2 results. The strengthening of the U.S. dollar compared to foreign currencies had a significant impact on results in the quarter. Total Revenues were $9.0 billion, down 6% in U.S. dollars and unchanged in constant currency. Cloud plus On-Premise Software Revenues were $7.0 billion, down 4% in U.S. dollars and up 2% in constant currency. Total Cloud Revenues were $649 million, up 26% in U.S. dollars and up 31% in constant currency. Cloud software as a service (SaaS) and platform as a service (PaaS) revenues were $484 million, up 34% in U.S. dollars and up 39% in constant currency. Cloud infrastructure as a service (IaaS) revenues were $165 million, up 7% in U.S. dollars and up 11% in constant currency. Total On-Premise Software Revenues were $6.4 billion, down 7% in U.S. dollars and unchanged in constant currency. Total Hardware Revenues were $1.1 billion, down 16% in U.S. dollars and down 10% in constant currency. Total Services Revenues were $861 million, down 8% in U.S. dollars and unchanged in constant currency.
Operating Income was $3.0 billion and Operating Margin was 33%. Non-GAAP Operating Income was $3.7 billion and non-GAAP Operating Margin was 41%. Net Income was $2.2 billion while non-GAAP Net Income was $2.7 billion. Earnings Per Share was $0.51, while non-GAAP Earnings Per Share was $0.63. Without the impact of the U.S. dollar strengthening compared to foreign currencies, Oracle's reported GAAP Earnings Per Share would have been 5 cents higher and non-GAAP Earnings Per Share would have been 6 cents higher.
Short-term deferred revenues were $7.0 billion, up 3% in U.S. dollars and up 9% in constant currency compared with a year ago. Operating cash flow on a trailing twelve-month basis was $12.9 billion.
"We're very pleased with our non-GAAP EPS of $0.63, beating the mid-point of guidance by 4 cents despite a stronger than expected currency headwind," said Oracle CEO, Safra Catz. "We grew our SaaS and PaaS revenue 38% in constant dollars this past quarter, and we expect that revenue growth rate to accelerate to nearly 50% in Q3 and close to 60% in Q4. This rapid increase in our cloud revenue will help drive our SaaS and PaaS cloud gross margins from 43% in Q2 to approaching 60% in Q4 and drive significant EPS growth in Q4."
"It was a very strong growth quarter for our cloud business, with SaaS and PaaS bookings up 75% in constant currency and billings up 68% in U.S. dollars," said Oracle CEO, Mark Hurd. "We did 100 Fusion HCM deals and over 300 Fusion ERP deals in the quarter. We now have more than 1,500 ERP customers in the cloud -- that's at least ten times more ERP customers than Workday."
"We are still on-target to sell and book more than $1.5 billion of new SaaS and PaaS business this fiscal year," said Oracle Executive Chairman and CTO Larry Ellison. "That is considerably more SaaS and PaaS new business than any other cloud services provider including salesforce.com."
The Board of Directors also declared a quarterly cash dividend of $0.15 per share of outstanding common stock. This dividend will be paid to stockholders of record as of the close of business on January 6, 2016, with a payment date of January 27, 2016.
Q2 Fiscal 2016 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 (816) 287-5563, Passcode: 425392. To access the live webcast of this event, please visit the Oracle Investor Relations website at http://www.oracle.com/investor. In addition, Oracle's Q2 results and Fiscal 2016 financial tables are available on the Oracle Investor Relations website.
A replay of the conference call will also be available by dialing (855) 859-2056 or (404) 537-3406, Pass Code: 1507329.
About Oracle
Oracle offers a comprehensive and fully integrated stack of cloud applications and platform services. For more information about Oracle (NYSE: 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 our expectations of future growth in our SaaS and PaaS gross margins, revenues, EPS and bookings; and the timing of such growth 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, geopolitical and market conditions, including the continued slow economic recovery in Europe, parts of the U.S. and other parts of the world, 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, fluctuations in currency exchange rates, delays in delivery of new products or releases or a decline in our renewal rates for contracts. (3) Our cloud computing strategy, including our Cloud SaaS, PaaS, IaaS and Database as a Service offerings, may not be successful. (4) 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, cloud software subscriptions or hardware systems products or purchase or renew support contracts. (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. (6) If the security measures for our software, hardware, services or Oracle Cloud offerings are compromised or subject to a successful cyber-attack, or if such offerings contain significant coding, manufacturing or configuration errors, we may experience reputational harm, legal claims and financial exposure. (7) 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. A detailed discussion of these factors and other risks that affect our business is contained in our U.S. Securities and Exchange Commission (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 16, 2015. Oracle undertakes no duty to update any statement in light of new information or future events.
ORACLE CORPORATION
Q2 FISCAL 2016 FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($ in millions, except per share data)
Three Months Ended November 30, % Increase
-------------------------------- (Decrease)
in
% Increase Constant
% of % of (Decrease) Currency
2015 Revenues 2014 Revenues in US $ (1)
------ -------- ------ -------- ---------- ----------
REVENUES
Cloud software
as a service
and platform as
a service $ 484 5% $ 361 4% 34% 39%
Cloud
infrastructure
as a service 165 2% 155 1% 7% 11%
------ -------- ------ --------
Total cloud
revenues 649 7% 516 5% 26% 31%
------ -------- ------ --------
New software
licenses 1,677 19% 2,045 21% (18%) (12%)
Software license
updates and
product support 4,683 52% 4,768 50% (2%) 5%
------ -------- ------ --------
Total on-
premise
software
revenues 6,360 71% 6,813 71% (7%) 0%
------ -------- ------ --------
Total cloud
and on-
premise
software
revenues 7,009 78% 7,329 76% (4%) 2%
------ -------- ------ --------
Hardware
products 573 6% 717 8% (20%) (14%)
Hardware support 550 6% 617 6% (11%) (5%)
------ -------- ------ --------
Total hardware
revenues 1,123 12% 1,334 14% (16%) (10%)
------ -------- ------ --------
Total services
revenues 861 10% 935 10% (8%) 0%
------ -------- ------ --------
Total
revenues 8,993 100% 9,598 100% (6%) 0%
------ -------- ------ --------
OPERATING EXPENSES
Sales and
marketing 1,945 22% 1,897 20% 3% 10%
Cloud software
as a service
and platform as
a service 280 3% 165 2% 70% 79%
Cloud
infrastructure
as a service 91 1% 87 1% 5% 9%
Software license
updates and
product support 293 3% 296 3% (1%) 8%
Hardware
products 325 3% 369 4% (12%) (5%)
Hardware support 174 2% 218 2% (20%) (15%)
Services 690 8% 764 8% (10%) (3%)
Research and
development 1,444 16% 1,389 14% 4% 6%
General and
administrative 285 3% 272 3% 5% 10%
Amortization of
intangible
assets 423 5% 568 6% (26%) (26%)
Acquisition
related and
other (7) 0% (20) 0% 67% 69%
Restructuring 95 1% 51 0% 85% 104%
------ -------- ------ --------
Total
operating
expenses 6,038 67% 6,056 63% 0% 5%
------ -------- ------ --------
OPERATING INCOME 2,955 33% 3,542 37% (17%) (8%)
Interest expense (371) (4%) (282) (3%) 31% 31%
Non-operating
income, net 84 1% 9 0% 842% 1,135%
------ -------- ------ --------
INCOME BEFORE
PROVISION FOR
INCOME TAXES 2,668 30% 3,269 34% (18%) (9%)
------ -------- ------ --------
Provision for
income taxes 471 6% 767 8% (39%) (32%)
------ -------- ------ --------
NET INCOME $2,197 24% $2,502 26% (12%) (3%)
====== ======== ====== ========
EARNINGS PER
SHARE:
Basic $ 0.52 $ 0.57
Diluted $ 0.51 $ 0.56
WEIGHTED AVERAGE
COMMON SHARES
OUTSTANDING:
Basic 4,239 4,417
Diluted 4,316 4,505
(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, 2015, 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, 2015
compared with the corresponding prior year period decreased our revenues
by 6 percentage points, operating expenses by 5 percentage points and
operating income by 9 percentage points.
ORACLE CORPORATION
Q2 FISCAL 2016 FINANCIAL RESULTS
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)
($in millions, except per share data)
Three Months Ended November 30,
----------------------------------------------------
2015 2014
2015 Non- 2014 Non-
GAAP Adj. GAAP GAAP Adj. GAAP
------- ------- ------- ------- ------- -------
TOTAL REVENUES $ 8,993 $ 3 $ 8,996 $ 9,598 $ 10 $ 9,608
TOTAL CLOUD AND ON-
PREMISE SOFTWARE
REVENUES $ 7,009 $ 3 $ 7,012 $ 7,329 $ 8 $ 7,337
Cloud software as a
service and
platform as a
service 484 $ 3 487 361 3 364
Cloud infrastructure
as a service 165 - 165 155 - 155
New software
licenses 1,677 - 1,677 2,045 - 2,045
Software license
updates and product
support 4,683 - 4,683 4,768 5 4,773
TOTAL HARDWARE
REVENUES $ 1,123 $ - $ 1,123 $ 1,334 $ 2 $ 1,336
Hardware products 573 - 573 717 - 717
Hardware support 550 - 550 617 2 619
TOTAL OPERATING
EXPENSES $ 6,038 $ (765) $ 5,273 $ 6,056 $ (839) $ 5,217
Cloud software as a
service and
platform as a
service 280 (4) 276 165 (3) 162
Stock-based
compensation (3) 250 (250) - 237 (237) -
Amortization of
intangible assets
(4) 423 (423) - 568 (568) -
Acquisition related
and other (7) 7 - (20) 20 -
Restructuring 95 (95) - 51 (51) -
CLOUD SOFTWARE AS A
SERVICE AND PLATFORM
AS A SERVICE MARGIN % 42% 43% 54% 55%
OPERATING INCOME $ 2,955 $ 768 $ 3,723 $ 3,542 $ 849 $ 4,391
OPERATING MARGIN % 33% 41% 37% 46%
INCOME TAX EFFECTS (5) $ 471 $ 230 $ 701 $ 767 $ 234 $ 1,001
NET INCOME $ 2,197 $ 538 $ 2,735 $ 2,502 $ 615 $ 3,117
DILUTED EARNINGS PER
SHARE $ 0.51 $ 0.63 $ 0.56 $ 0.69
DILUTED WEIGHTED
AVERAGE COMMON SHARES
OUTSTANDING 4,316 - 4,316 4,505 - 4,505
% Increase
% Increase (Decrease) in
(Decrease) Constant Currency
in US $ (2)
-------------------- --------------------
GAAP Non-GAAP GAAP Non-GAAP
-------- -------- -------- --------
TOTAL REVENUES (6%) (6%) 0% 0%
TOTAL CLOUD AND ON-
PREMISE SOFTWARE
REVENUES (4%) (4%) 2% 2%
Cloud software as a
service and
platform as a
service 34% 34% 39% 38%
Cloud infrastructure
as a service 7% 7% 11% 11%
New software
licenses (18%) (18%) (12%) (12%)
Software license
updates and product
support (2%) (2%) 5% 5%
TOTAL HARDWARE
REVENUES (16%) (16%) (10%) (10%)
Hardware products (20%) (20%) (14%) (14%)
Hardware support (11%) (11%) (5%) (5%)
TOTAL OPERATING
EXPENSES 0% 1% 5% 7%
Cloud software as a
service and
platform as a
service 70% 70% 79% 79%
Stock-based
compensation (3) 5% * 5% *
Amortization of
intangible assets
(4) (26%) * (26%) *
Acquisition related
and other 67% * 69% *
Restructuring 85% * 104% *
CLOUD SOFTWARE AS A
SERVICE AND PLATFORM
AS A SERVICE MARGIN % (1,218) bp. (1,200) bp. (1,295) bp. (1,280) bp.
OPERATING INCOME (17%) (15%) (8%) (8%)
OPERATING MARGIN % (405) bp. (431) bp. (307) bp. (385) bp.
INCOME TAX EFFECTS (5) (39%) (30%) (32%) (24%)
NET INCOME (12%) (12%) (3%) (5%)
DILUTED EARNINGS PER
SHARE (8%) (8%) 2% 0%
DILUTED WEIGHTED
AVERAGE COMMON SHARES
OUTSTANDING (4%) (4%) (4%) (4%)
(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, 2015, which was the last day of our prior
fiscal year, rather than the actual exchange rates in effect during the
respective periods.
(3) Stock-based compensation was included in the following GAAP operating
expense categories:
Three Months Ended Three Months Ended
November 30, 2015 November 30, 2014
----------------------- -----------------------
Non- Non-
GAAP Adj. GAAP GAAP Adj. GAAP
------- ------ ------- ------- ------ -------
Sales and marketing $ 55 $ (55) $ - $ 43 $ (43) $ -
Cloud infrastructure as a
service 1 (1) - 1 (1) -
Software license updates
and product support 6 (6) - 4 (4) -
Hardware products 2 (2) - 1 (1) -
Hardware support 1 (1) - 2 (2) -
Services 7 (7) - 9 (9) -
Research and development 151 (151) - 134 (134) -
General and
administrative 27 (27) - 43 (43) -
------- ------ ------- ------- ------ -------
Subtotal 250 (250) - 237 (237) -
Cloud software as a
service and platform as
a service 4 (4) - 3 (3) -
Acquisition related and
other - - - 1 (1) -
------- ------ ------- ------- ------ -------
Total stock-based
compensation $ 254 $ (254) $ - $ 241 $ (241) $ -
======= ====== ======= ======= ====== =======
(4) Estimated future annual amortization expense related to intangible
assets as of November 30, 2015 was as follows:
Remainder of Fiscal 2016 $ 757
Fiscal 2017 1,005
Fiscal 2018 858
Fiscal 2019 751
Fiscal 2020 608
Fiscal 2021 466
Thereafter 1,154
-------
Total intangible assets,
net $ 5,599
=======
(5) Income tax effects were calculated reflecting an effective GAAP tax rate
of 17.6% and 23.5% in the second quarter of fiscal 2016 and 2015,
respectively, and an effective non-GAAP tax rate of 20.4% and 24.3% in
the second quarter of fiscal 2016 and 2015, respectively. The
differences between our GAAP and non-GAAP tax rates in the second
quarter of fiscal 2016 and 2015 were primarily due to the net tax
effects of acquisition related items, including the tax effects of
amortization of intangible assets.
* Not meaningful
ORACLE CORPORATION
Q2 FISCAL 2016 YEAR TO DATE FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($ in millions, except per share data)
%
Six Months Ended November 30, Increase
---------------------------------- (Decrease)
% in
Increase Constant
% of % of (Decrease) Currency
2015 Revenues 2014 Revenues in US $ (1)
------- -------- ------- -------- --------- ---------
REVENUES
Cloud software
as a service
and platform as
a service $ 934 5% $ 698 4% 34% 39%
Cloud
infrastructure
as a service 325 2% 293 1% 11% 17%
------- -------- ------- --------
Total cloud
revenues 1,259 7% 991 5% 27% 32%
------- -------- ------- --------
New software
licenses 2,829 16% 3,415 19% (17%) (11%)
Software license
updates and
product support 9,379 54% 9,499 52% (1%) 6%
------- -------- ------- --------
Total on-
premise
software
revenues 12,208 70% 12,914 71% (5%) 2%
------- -------- ------- --------
Total cloud
and on-
premise
software
revenues 13,467 77% 13,905 76% (3%) 4%
------- -------- ------- --------
Hardware
products 1,142 7% 1,295 7% (12%) (4%)
Hardware support 1,108 6% 1,204 7% (8%) (1%)
------- -------- ------- --------
Total hardware
revenues 2,250 13% 2,499 14% (10%) (2%)
------- -------- ------- --------
Total services
revenues 1,724 10% 1,790 10% (4%) 5%
------- -------- ------- --------
Total
revenues 17,441 100% 18,194 100% (4%) 3%
------- -------- ------- --------
OPERATING EXPENSES
Sales and
marketing 3,675 21% 3,603 20% 2% 10%
Cloud software
as a service
and platform as
a service 555 3% 314 2% 77% 85%
Cloud
infrastructure
as a service 180 1% 166 1% 8% 14%
Software license
updates and
product support 584 4% 568 3% 3% 12%
Hardware
products 628 4% 667 4% (6%) 3%
Hardware support 355 2% 410 2% (14%) (7%)
Services 1,401 8% 1,455 8% (4%) 4%
Research and
development 2,834 16% 2,718 15% 4% 7%
General and
administrative 542 3% 547 3% (1%) 4%
Amortization of
intangible
assets 875 5% 1,116 6% (22%) (22%)
Acquisition
related and
other 25 0% 4 0% 505% 661%
Restructuring 178 1% 120 0% 48% 74%
------- -------- ------- --------
Total
operating
expenses 11,832 68% 11,688 64% 1% 7%
------- -------- ------- --------
OPERATING INCOME 5,609 32% 6,506 36% (14%) (4%)
Interest expense (745) (4%) (544) (3%) 37% 37%
Non-operating
income, net 114 1% 25 0% 355% 529%
------- -------- ------- --------
INCOME BEFORE
PROVISION FOR
INCOME TAXES 4,978 29% 5,987 33% (17%) (6%)
------- -------- ------- --------
Provision for
income taxes 1,033 6% 1,302 7% (21%) (10%)
------- -------- ------- --------
NET INCOME $ 3,945 23% $ 4,685 26% (16%) (5%)
======= ======== ======= ========
EARNINGS PER
SHARE:
Basic $ 0.92 $ 1.06
Diluted $ 0.90 $ 1.04
WEIGHTED AVERAGE
COMMON SHARES
OUTSTANDING:
Basic 4,278 4,434
Diluted 4,364 4,527
(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, 2015, 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, 2015
compared with the corresponding prior year period decreased our revenues
by 7 percentage points, operating expenses by 6 percentage points and
operating income by 10 percentage points.
ORACLE CORPORATION
Q2 FISCAL 2016 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,
----------------------------------------------------
2015 2014
2015 Non- 2014 Non-
GAAP Adj. GAAP GAAP Adj. GAAP
------- ------- ------- ------- ------- -------
TOTAL REVENUES $17,441 $ 6 $17,447 $18,194 $ 13 $18,207
TOTAL CLOUD AND ON-
PREMISE SOFTWARE
REVENUES $13,467 $ 5 $13,472 $13,905 $ 11 $13,916
Cloud software as a
service and
platform as a
service 934 4 938 698 5 703
Cloud
infrastructure as
a service 325 - 325 293 - 293
New software
licenses 2,829 - 2,829 3,415 - 3,415
Software license
updates and
product support 9,379 1 9,380 9,499 6 9,505
TOTAL HARDWARE
REVENUES $ 2,250 $ 1 $ 2,251 $ 2,499 $ 2 $ 2,501
Hardware products 1,142 - 1,142 1,295 - 1,295
Hardware support 1,108 1 1,109 1,204 2 1,206
TOTAL OPERATING
EXPENSES $11,832 $(1,582) $10,250 $11,688 $(1,691) $ 9,997
Stock-based
compensation (3) 504 (504) - 451 (451) -
Amortization of
intangible assets
(4) 875 (875) - 1,116 (1,116) -
Acquisition related
and other 25 (25) - 4 (4) -
Restructuring 178 (178) - 120 (120) -
OPERATING INCOME $ 5,609 $ 1,588 $ 7,197 $ 6,506 $ 1,704 $ 8,210
OPERATING MARGIN % 32% 41% 36% 45%
INCOME TAX EFFECTS
(5) $ 1,033 $ 451 $ 1,484 $ 1,302 $ 467 $ 1,769
NET INCOME $ 3,945 $ 1,137 $ 5,082 $ 4,685 $ 1,237 $ 5,922
DILUTED EARNINGS PER
SHARE $ 0.90 $ 1.16 $ 1.04 $ 1.31
DILUTED WEIGHTED
AVERAGE COMMON
SHARES OUTSTANDING 4,364 - 4,364 4,527 - 4,527
% Increase (Decrease)
% Increase (Decrease) in Constant Currency
in US $ (2)
---------------------- ----------------------
GAAP Non-GAAP GAAP Non-GAAP
--------- --------- --------- ---------
TOTAL REVENUES (4%) (4%) 3% 3%
TOTAL CLOUD AND ON-
PREMISE SOFTWARE
REVENUES (3%) (3%) 4% 4%
Cloud software as a
service and
platform as a
service 34% 34% 39% 38%
Cloud
infrastructure as
a service 11% 11% 17% 17%
New software
licenses (17%) (17%) (11%) (11%)
Software license
updates and
product support (1%) (1%) 6% 6%
TOTAL HARDWARE
REVENUES (10%) (10%) (2%) (3%)
Hardware products (12%) (12%) (4%) (4%)
Hardware support (8%) (8%) (1%) (1%)
TOTAL OPERATING
EXPENSES 1% 3% 7% 9%
Stock-based
compensation (3) 12% * 12% *
Amortization of
intangible assets
(4) (22%) * (22%) *
Acquisition related
and other 505% * 661% *
Restructuring 48% * 74% *
OPERATING INCOME (14%) (12%) (4%) (4%)
OPERATING MARGIN % (360) bp. (384) bp. (239) bp. (322) bp.
INCOME TAX EFFECTS
(5) (21%) (16%) (10%) (8%)
NET INCOME (16%) (14%) (5%) (6%)
DILUTED EARNINGS PER
SHARE (13%) (11%) (1%) (2%)
DILUTED WEIGHTED
AVERAGE COMMON
SHARES OUTSTANDING (4%) (4%) (4%) (4%)
(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, 2015, which was the last day of our prior
fiscal year, rather than the actual exchange rates in effect during the
respective periods.
(3) Stock-based compensation was included in the following GAAP operating
expense categories:
Six Months Ended Six Months Ended
November 30, 2015 November 30, 2014
----------------------- -----------------------
Non- Non-
GAAP Adj. GAAP GAAP Adj. GAAP
------- ------ ------- ------- ------ -------
Sales and marketing $ 107 $ (107) $ - $ 86 $ (86) $ -
Cloud software as a
service and platform as
a service 8 (8) - 5 (5) -
Cloud infrastructure as a
service 2 (2) - 2 (2) -
Software license updates
and product support 12 (12) - 9 (9) -
Hardware products 3 (3) - 3 (3) -
Hardware support 3 (3) - 3 (3) -
Services 14 (14) - 14 (14) -
Research and development 298 (298) - 242 (242) -
General and
administrative 57 (57) - 87 (87) -
------- ------ ------- ------- ------ -------
Subtotal 504 (504) - 451 (451) -
------- ------ ------- ------- ------ -------
Acquisition related and
other 3 (3) - 4 (4) -
------- ------ ------- ------- ------ -------
Total stock-based
compensation $ 507 $ (507) $ - $ 455 $ (455) $ -
======= ====== ======= ======= ====== =======
(4) Estimated future annual amortization expense related to intangible
assets as of November 30, 2015 was as follows:
Remainder of Fiscal 2016 $ 757
Fiscal 2017 1,005
Fiscal 2018 858
Fiscal 2019 751
Fiscal 2020 608
Fiscal 2021 466
Thereafter 1,154
-------
Total intangible assets,
net $ 5,599
=======
(5) Income tax effects were calculated reflecting an effective GAAP tax rate
of 20.8% and 21.7% in the first half of fiscal 2016 and 2015,
respectively, and an effective non-GAAP tax rate of 22.6% and 23.0% in
the first half of fiscal 2016 and 2015, respectively. The differences
between our GAAP and non-GAAP tax rates in the first half of fiscal 2016
and 2015 were primarily due to the net tax effects of acquisition
related items, including the tax effects of amortization of intangible
assets.
* Not meaningful
ORACLE CORPORATION
Q2 FISCAL 2016 FINANCIAL RESULTS
CONDENSED CONSOLIDATED BALANCE SHEETS
($ in millions)
November 30, May 31,
2015 2015
------------- -------------
ASSETS
Current Assets:
Cash and cash equivalents $ 17,411 $ 21,716
Marketable securities 34,924 32,652
Trade receivables, net 3,956 5,618
Inventories 238 314
Prepaid expenses and other current assets 2,089 2,220
------------- -------------
Total Current Assets 58,618 62,520
Non-Current Assets:
Property, plant and equipment, net 3,855 3,686
Intangible assets, net 5,599 6,406
Goodwill, net 34,171 34,087
Deferred tax assets 1,341 1,458
Other assets 2,899 2,746
------------- -------------
Total Non-Current Assets 47,865 48,383
------------- -------------
TOTAL ASSETS $ 106,483 $ 110,903
============= =============
LIABILITIES AND EQUITY
Current Liabilities:
Notes payable, current $ 2,000 $ 1,999
Accounts payable 415 806
Accrued compensation and related benefits 1,597 1,839
Deferred revenues 6,998 7,245
Other current liabilities 2,744 3,317
------------- -------------
Total Current Liabilities 13,754 15,206
Non-Current Liabilities:
Notes payable, non-current 39,940 39,959
Income taxes payable 4,273 4,386
Other non-current liabilities 2,184 2,254
------------- -------------
Total Non-Current Liabilities 46,397 46,599
Equity 46,332 49,098
------------- -------------
TOTAL LIABILITIES AND EQUITY $ 106,483 $ 110,903
============= =============
ORACLE CORPORATION
Q2 FISCAL 2016 FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in millions)
Six Months Ended
November 30,
--------------------------
2015 2014
------------ ------------
Cash Flows From Operating Activities:
Net income $ 3,945 $ 4,685
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 429 324
Amortization of intangible assets 875 1,116
Deferred income taxes (83) (321)
Stock-based compensation 507 455
Tax benefits on the exercise of stock
options and vesting of restricted stock-
based awards 147 136
Excess tax benefits on the exercise of stock
options and vesting of restricted stock-
based awards (40) (74)
Other, net 77 103
Changes in operating assets and liabilities,
net of effects from acquisitions:
Decrease in trade receivables, net 1,614 1,813
Decrease in inventories 61 14
Decrease in prepaid expenses and other
assets 139 439
Decrease in accounts payable and other
liabilities (960) (861)
(Decrease) increase in income taxes
payable (367) 191
Increase (decrease) in deferred revenues 13 (230)
------------ ------------
Net cash provided by operating
activities 6,357 7,790
------------ ------------
Cash Flows From Investing Activities:
Purchases of marketable securities and other
investments (17,638) (17,514)
Proceeds from maturities and sales of
marketable securities and other investments 15,088 10,153
Acquisitions, net of cash acquired (147) (5,122)
Capital expenditures (641) (426)
------------ ------------
Net cash used for investing activities (3,338) (12,909)
------------ ------------
Cash Flows From Financing Activities:
Payments for repurchases of common stock (6,258) (4,087)
Proceeds from issuances of common stock 640 907
Shares repurchased for tax withholdings upon
vesting of restricted stock-based awards (77) (7)
Payments of dividends to stockholders (1,286) (1,070)
Proceeds from borrowings, net of issuance
costs - 9,945
Repayments of borrowings - (1,500)
Excess tax benefits on the exercise of stock
options and vesting of restricted stock-based
awards 40 74
Distributions to noncontrolling interests (85) (196)
------------ ------------
Net cash (used for) provided by
financing activities (7,026) 4,066
------------ ------------
Effect of exchange rate changes on cash and cash
equivalents (298) (563)
------------ ------------
Net decrease in cash and cash equivalents (4,305) (1,616)
------------ ------------
Cash and cash equivalents at beginning of period 21,716 17,769
------------ ------------
Cash and cash equivalents at end of period $ 17,411 $ 16,153
============ ============
ORACLE CORPORATION
Q2 FISCAL 2016 FINANCIAL RESULTS
FREE CASH FLOW - TRAILING 4-QUARTERS (1)
($ in millions)
Fiscal 2015 Fiscal 2016
----------------------------------- -------------------------
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
------- ------- ------- ------- ------- ------- -- --
GAAP
Operating
Cash Flow $15,357 $15,273 $14,509 $14,336 $13,464 $12,903
Capital
Expenditures (628) (727) (948) (1,391) (1,636) (1,606)
------- ------- ------- ------- ------- ------- -- --
Free Cash
Flow $14,729 $14,546 $13,561 $12,945 $11,828 $11,297
======= ======= ======= ======= ======= ======= == ==
% Growth over
prior year 4% 0% (6)% (10)% (20)% (22)%
------- ------- ------- ------- ------- ------- -- --
GAAP Net
Income $10,948 $10,896 $10,827 $ 9,938 $ 9,501 $ 9,198
Free Cash
Flow as a %
of Net
Income 135% 133% 125% 130% 124% 123%
(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.
ORACLE CORPORATION
Q2 FISCAL 2016 FINANCIAL RESULTS
SUPPLEMENTAL ANALYSIS OF GAAP REVENUES AND HEADCOUNT (1)
($in millions)
Fiscal 2015
------------------------------------------------
Q1 Q2 Q3 Q4 TOTAL
-------- -------- -------- -------- --------
REVENUES
Cloud software as a
service and platform
as a service $ 337 $ 361 $ 372 $ 416 $ 1,485
Cloud infrastructure as
a service 138 155 155 160 608
-------- -------- -------- -------- --------
Total cloud revenues 475 516 527 576 2,093
New software licenses 1,370 2,045 1,982 3,138 8,535
Software license
updates and product
support 4,731 4,768 4,661 4,686 18,847
-------- -------- -------- -------- --------
Total on-premise
software revenues 6,101 6,813 6,643 7,824 27,382
-------- -------- -------- -------- --------
Total cloud and on-
premise software
revenues 6,576 7,329 7,170 8,400 29,475
Hardware products 578 717 712 818 2,825
Hardware support 587 617 587 589 2,380
-------- -------- -------- -------- --------
Total hardware
revenues 1,165 1,334 1,299 1,407 5,205
Total services
revenues 855 935 858 899 3,546
-------- -------- -------- -------- --------
Total revenues $ 8,596 $ 9,598 $ 9,327 $ 10,706 $ 38,226
======== ======== ======== ======== ========
AS REPORTED REVENUE
GROWTH RATES
Cloud software as a
service and platform
as a service 32% 39% 30% 29% 32%
Cloud infrastructure as
a service 26% 60% 28% 25% 33%
Total cloud revenues 31% 45% 29% 28% 33%
New software licenses (2%) (4%) (7%) (17%) (9%)
Software license
updates and product
support 7% 6% 2% 0% 4%
Total on-premise
software revenues 5% 3% (1%) (8%) (1%)
Total cloud and on-
premise software
revenues 6% 5% 1% (6%) 1%
Hardware products (14%) 0% (2%) (6%) (5%)
Hardware support (1%) 1% (2%) (1%) (1%)
Total hardware
revenues (8%) 1% (2%) (4%) (3%)
Total services
revenues (7%) (3%) (3%) (4%) (4%)
Total revenues 3% 3% 0% (5%) 0%
CONSTANT CURRENCY GROWTH
RATES (2)
Cloud software as a
service and platform
as a service 32% 41% 34% 35% 35%
Cloud infrastructure as
a service 25% 62% 32% 31% 36%
Total cloud revenues 30% 47% 33% 34% 36%
New software licenses (2%) 0% 0% (10%) (4%)
Software license
updates and product
support 6% 9% 8% 8% 8%
Total on-premise
software revenues 4% 6% 6% 0% 4%
Total cloud and on-
premise software
revenues 6% 8% 7% 2% 5%
Hardware products (14%) 4% 6% 3% 0%
Hardware support (2%) 5% 4% 7% 4%
Total hardware
revenues (8%) 4% 5% 5% 2%
Total services
revenues (8%) 1% 3% 5% 0%
Total revenues 2% 7% 6% 3% 4%
GEOGRAPHIC REVENUES
REVENUES
Americas $ 4,620 $ 5,221 $ 5,134 $ 6,133 $ 21,107
Europe, Middle East &
Africa 2,589 2,911 2,813 3,067 11,380
Asia Pacific 1,387 1,466 1,380 1,506 5,739
-------- -------- -------- -------- --------
Total revenues $ 8,596 $ 9,598 $ 9,327 $ 10,706 $ 38,226
======== ======== ======== ======== ========
HEADCOUNT
GEOGRAPHIC AREA
Americas 54,073 57,243 58,117 58,415
Europe, Middle East &
Africa 23,349 26,997 26,989 26,988
Asia Pacific 45,496 46,312 46,456 46,962
-------- -------- -------- -------- --------
Total company 122,918 130,552 131,562 132,365
======== ======== ======== ======== ========
Fiscal 2016
----------------------------------
Q1 Q2 Q3 Q4 TOTAL
-------- -------- -- -- --------
REVENUES
Cloud software as a
service and platform
as a service $ 451 $ 484 $ 934
Cloud infrastructure as
a service 160 165 325
-------- -------- -- -- --------
Total cloud revenues 611 649 1,259
New software licenses 1,151 1,677 2,829
Software license
updates and product
support 4,696 4,683 9,379
-------- -------- -- -- --------
Total on-premise
software revenues 5,847 6,360 12,208
-------- -------- -- -- --------
Total cloud and on-
premise software
revenues 6,458 7,009 13,467
Hardware products 570 573 1,142
Hardware support 558 550 1,108
-------- -------- -- -- --------
Total hardware
revenues 1,128 1,123 2,250
Total services
revenues 862 861 1,724
-------- -------- -- -- --------
Total revenues $ 8,448 $ 8,993 $ 17,441
======== ======== == == ========
AS REPORTED REVENUE
GROWTH RATES
Cloud software as a
service and platform
as a service 34% 34% 34%
Cloud infrastructure as
a service 16% 7% 11%
Total cloud revenues 29% 26% 27%
New software licenses (16%) (18%) (17%)
Software license
updates and product
support (1%) (2%) (1%)
Total on-premise
software revenues (4%) (7%) (5%)
Total cloud and on-
premise software
revenues (2%) (4%) (3%)
Hardware products (1%) (20%) (12%)
Hardware support (5%) (11%) (8%)
Total hardware
revenues (3%) (16%) (10%)
Total services
revenues 1% (8%) (4%)
Total revenues (2%) (6%) (4%)
CONSTANT CURRENCY GROWTH
RATES (2)
Cloud software as a
service and platform
as a service 38% 39% 39%
Cloud infrastructure as
a service 23% 11% 17%
Total cloud revenues 34% 31% 32%
New software licenses (9%) (12%) (11%)
Software license
updates and product
support 8% 5% 6%
Total on-premise
software revenues 4% 0% 2%
Total cloud and on-
premise software
revenues 6% 2% 4%
Hardware products 9% (14%) (4%)
Hardware support 4% (5%) (1%)
Total hardware
revenues 6% (10%) (2%)
Total services
revenues 10% 0% 5%
Total revenues 7% 0% 3%
GEOGRAPHIC REVENUES
REVENUES
Americas $ 4,716 $ 4,960 $ 9,677
Europe, Middle East &
Africa 2,456 2,645 5,101
Asia Pacific 1,276 1,388 2,663
-------- -------- -- -- --------
Total revenues $ 8,448 $ 8,993 $ 17,441
======== ======== == == ========
HEADCOUNT
GEOGRAPHIC AREA
Americas 59,901 59,999
Europe, Middle East &
Africa 27,030 27,541
Asia Pacific 48,139 48,620
-------- -------- -- -- --------
Total company 135,070 136,160
======== ======== == == ========
(1) The sum of the quarterly information presented may vary from the year-
to-date information presented 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, 2015 and 2014 for the fiscal 2016 and fiscal
2015 constant currency growth rate calculations presented, respectively,
rather than the actual exchange rates in effect during the respective
periods.
ORACLE CORPORATION
Q2 FISCAL 2016 FINANCIAL RESULTS
SUPPLEMENTAL GEOGRAPHIC REVENUES ANALYSIS (1)
($in millions)
Fiscal 2015
----------------------------------------------------
Q1 Q2 Q3 Q4 TOTAL
-------- -------- -------- -------- --------
AMERICAS
Total cloud and on-
premise software
revenues $ 3,614 $ 4,044 $ 4,021 $ 4,926 $ 16,604
======== ======== ======== ======== ========
Total hardware
revenues $ 583 $ 716 $ 686 $ 751 $ 2,737
======== ======== ======== ======== ========
AS REPORTED GROWTH
RATES
Total cloud and on-
premise software
revenues 5% 6% 5% 6% 6%
Total hardware
revenues (9%) 3% 5% 1% 0%
CONSTANT CURRENCY
GROWTH RATES (2)
Total cloud and on-
premise software
revenues 6% 8% 7% 9% 7%
Total hardware
revenues (8%) 5% 7% 4% 2%
EUROPE / MIDDLE EAST
/ AFRICA
Total cloud and on-
premise software
revenues $ 1,992 $ 2,234 $ 2,169 $ 2,369 $ 8,764
======== ======== ======== ======== ========
Total hardware
revenues $ 338 $ 380 $ 379 $ 423 $ 1,519
======== ======== ======== ======== ========
AS REPORTED GROWTH
RATES
Total cloud and on-
premise software
revenues 10% 4% (3%) (22%) (5%)
Total hardware
revenues (6%) 2% (6%) (4%) (3%)
CONSTANT CURRENCY
GROWTH RATES (2)
Total cloud and on-
premise software
revenues 7% 9% 9% (8%) 3%
Total hardware
revenues (7%) 8% 8% 15% 6%
ASIA PACIFIC
Total cloud and on-
premise software
revenues $ 970 $ 1,051 $ 980 $ 1,105 $ 4,107
======== ======== ======== ======== ========
Total hardware
revenues $ 244 $ 238 $ 234 $ 233 $ 949
======== ======== ======== ======== ========
AS REPORTED GROWTH
RATES
Total cloud and on-
premise software
revenues 3% 2% (3%) (10%) (3%)
Total hardware
revenues (8%) (7%) (12%) (16%) (11%)
CONSTANT CURRENCY
GROWTH RATES (2)
Total cloud and on-
premise software
revenues 2% 7% 4% (1%) 3%
Total hardware
revenues (8%) (3%) (6%) (8%) (6%)
TOTAL COMPANY
Total cloud and on-
premise software
revenues $ 6,576 $ 7,329 $ 7,170 $ 8,400 $ 29,475
======== ======== ======== ======== ========
Total hardware
revenues $ 1,165 $ 1,334 $ 1,299 $ 1,407 $ 5,205
======== ======== ======== ======== ========
AS REPORTED GROWTH
RATES
Total cloud and on-
premise software
revenues 6% 5% 1% (6%) 1%
Total hardware
revenues (8%) 1% (2%) (4%) (3%)
CONSTANT CURRENCY
GROWTH RATES (2)
Total cloud and on-
premise software
revenues 6% 8% 7% 2% 5%
Total hardware
revenues (8%) 4% 5% 5% 2%
Fiscal 2016
------------------------------------
Q1 Q2 Q3 Q4 TOTAL
-------- -------- -- -- --------
AMERICAS
Total cloud and on-
premise software
revenues $ 3,684 $ 3,927 $ 7,611
======== ======== == == ========
Total hardware
revenues $ 589 $ 595 $ 1,184
======== ======== == == ========
AS REPORTED GROWTH
RATES
Total cloud and on-
premise software
revenues 2% (3%) (1%)
Total hardware
revenues 1% (17%) (9%)
CONSTANT CURRENCY
GROWTH RATES (2)
Total cloud and on-
premise software
revenues 6% 0% 3%
Total hardware
revenues 6% (14%) (5%)
EUROPE / MIDDLE EAST
/ AFRICA
Total cloud and on-
premise software
revenues $ 1,873 $ 2,066 $ 3,940
======== ======== == == ========
Total hardware
revenues $ 330 $ 316 $ 646
======== ======== == == ========
AS REPORTED GROWTH
RATES
Total cloud and on-
premise software
revenues (6%) (8%) (7%)
Total hardware
revenues (2%) (17%) (10%)
CONSTANT CURRENCY
GROWTH RATES (2)
Total cloud and on-
premise software
revenues 7% 3% 5%
Total hardware
revenues 14% (6%) 3%
ASIA PACIFIC
Total cloud and on-
premise software
revenues $ 901 $ 1,016 $ 1,916
======== ======== == == ========
Total hardware
revenues $ 209 $ 212 $ 420
======== ======== == == ========
AS REPORTED GROWTH
RATES
Total cloud and on-
premise software
revenues (7%) (3%) (5%)
Total hardware
revenues (14%) (11%) (13%)
CONSTANT CURRENCY
GROWTH RATES (2)
Total cloud and on-
premise software
revenues 7% 6% 6%
Total hardware
revenues (3%) (3%) (3%)
TOTAL COMPANY
Total cloud and on-
premise software
revenues $ 6,458 $ 7,009 $ 13,467
======== ======== == == ========
Total hardware
revenues $ 1,128 $ 1,123 $ 2,250
======== ======== == == ========
AS REPORTED GROWTH
RATES
Total cloud and on-
premise software
revenues (2%) (4%) (3%)
Total hardware
revenues (3%) (16%) (10%)
CONSTANT CURRENCY
GROWTH RATES (2)
Total cloud and on-
premise software
revenues 6% 2% 4%
Total hardware
revenues 6% (10%) (2%)
(1) The sum of the quarterly information presented may vary from the year-
to-date information presented 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, 2015 and 2014 for the fiscal 2016 and fiscal
2015 constant currency growth rate calculations presented, respectively,
rather than the actual exchange rates in effect during the respective
periods.
APPENDIX A
ORACLE CORPORATION
Q2 FISCAL 2016 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:
- Cloud software as a service and platform as a service, software license updates and product support and hardware support deferred revenues: Business combination accounting rules require us to account for the fair values of cloud software as a service and platform as a service contracts, software license updates and product support contracts and hardware support contracts assumed in connection with our acquisitions. Because these contracts are generally one year in duration, our GAAP revenues generally for the one year period subsequent to our acquisition of a business do not reflect the full amount of revenues on these assumed cloud and support contracts that would have otherwise been recorded by the acquired entity. The non-GAAP adjustment to our cloud software as a service and platform as a service revenues, software license updates and product support revenues and hardware support revenues is intended to include, and thus reflect, the full amount of such revenues. We believe the adjustment to these 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 cloud software as a service and platform as a service and hardware support contracts; however, we cannot be certain that our customers will renew our cloud software as a service and platform as a service contracts, software license updates and product support contracts or our hardware 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 certain other operating items, 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.
Contact:
Ken Bond
Oracle Investor Relations
1.650.607.0349
Email Contact
Deborah Hellinger
Oracle Corporate Communications
1.212.508.7935
Email Contact
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