Oracle Reports GAAP EPS of $0.50; Non-GAAP EPS of $0.64; Without the Effect of U.S. Dollar Strengthening Both Would Have Been 4 Cents Higher
Cloud SaaS and PaaS Revenues Up 57% in U.S. Dollars and Up 61% in Constant Currency
/EINPresswire.com/ -- REDWOOD SHORES, CA -- (Marketwired) -- 03/15/16 -- Oracle Corporation (NYSE: ORCL) today announced fiscal 2016 Q3 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 3% in U.S. dollars and up 1% in constant currency. Cloud plus On-Premise Software Revenues were $7.1 billion, down 1% in U.S. dollars and up 3% in constant currency. Cloud software as a service (SaaS) and platform as a service (PaaS) revenues were $583 million, up 57% in U.S. dollars and up 61% in constant currency. Cloud infrastructure as a service (IaaS) revenues were $152 million, down 2% in U.S. dollars and up 2% in constant currency. Total Cloud Revenues were $735 million, up 40% in U.S. dollars and up 44% in constant currency. Total On-Premise Software Revenues were $6.3 billion, down 4% in U.S. dollars and unchanged in constant currency. Total Hardware Revenues were $1.1 billion, down 13% in U.S. dollars and down 8% in constant currency. Total Services Revenues were $793 million, down 7% in U.S. dollars and down 2% in constant currency.
Operating Income was $3.0 billion and Operating Margin was 34%. Non-GAAP Operating Income was $3.8 billion and non-GAAP Operating Margin was 42%. Net Income was $2.1 billion while non-GAAP Net Income was $2.7 billion. Earnings Per Share was $0.50, while non-GAAP Earnings Per Share was $0.64. Without the impact of the U.S. dollar strengthening compared to foreign currencies, Oracle's reported GAAP and non-GAAP Earnings Per Share would have been 4 cents higher.
Short-term deferred revenues were $6.9 billion, up 7% in U.S. dollars and up 11% in constant currency compared with a year ago. Operating cash flow on a trailing twelve-month basis was $14.1 billion.
"Our Cloud SaaS and PaaS revenue growth rate accelerated to 61% in constant currency in Q3," said Oracle CEO, Safra Catz. "This dramatic revenue increase drove our non-GAAP SaaS and PaaS gross margins up to 51% in Q3 as compared with 43% in Q2. Our cloud business is now in a hyper-growth phase. Our gross margins are climbing toward our target of 80%. These two factors will ignite substantial EPS and cash flow growth over Oracle's next few quarters."
"Our SaaS and PaaS gross deferred revenue grew 96% in Q3 -- twice as fast as Workday and three times faster than Salesforce.com reported in their most recent quarters," said Oracle CEO, Mark Hurd. "Q3 SaaS and PaaS bookings were up 77% in constant currency. We added 942 new SaaS customers in the quarter, including several customers that switched from Workday HCM to Oracle Fusion HCM. We had more than 250 customers go live on Fusion SaaS HCM and Fusion ERP in Q3 alone. We now have over 11,000 SaaS customers with nearly 2,000 Fusion ERP customers -- ten times more ERP customers than Workday claims to have."
"In absolute dollar terms, Oracle is already selling more enterprise SaaS and PaaS new cloud revenue than any other company in the world -- including Salesforce.com," said Larry Ellison, Oracle Chairman and CTO. "We are growing much faster than Salesforce.com. We also have many more SaaS products than Salesforce.com. In some of our most important SaaS markets, such as ERP, HCM, Supply Chain and Manufacturing, Salesforce.com does not participate at all. By successfully competing in all of these markets, Oracle has the ability to sustain its high growth over a long period of time. That should make it easy for us to pass Salesforce.com and become the largest SaaS and PaaS cloud company in the world."
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 April 14, 2016, with a payment date of April 28, 2016.
Oracle also announced that its Board of Directors authorized the repurchase of up to an additional $10 billion of common stock under its existing share repurchase program in future quarters.
Q3 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 Q3 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: 67000932.
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 gross margins, EPS and cash flow; the timing of such growth; the growth of our cloud business generally; and the competitive landscape for enterprise cloud are all "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 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 March 15, 2016. Oracle undertakes no duty to update any statement in light of new information or future events.
ORACLE CORPORATION
Q3 FISCAL 2016 FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($ in millions, except per share data)
Three Months Ended
---------------------------------- %
Increase
(Decrease)
% in
Increase Constant
February % of February % of (Decrease) Currency
29, 2016 Revenues 28, 2015 Revenues in US $ (1)
-------- ------- -------- ------- --------- ---------
REVENUES
Cloud software
as a service
and platform as
a service $ 583 6% $ 372 4% 57% 61%
Cloud
infrastructure
as a service 152 2% 155 2% (2%) 2%
-------- ------- -------- -------
Total cloud
revenues 735 8% 527 6% 40% 44%
-------- ------- -------- -------
New software
licenses 1,680 18% 1,982 21% (15%) (11%)
Software license
updates and
product support 4,669 52% 4,661 50% 0% 5%
-------- ------- -------- -------
Total on-
premise
software
revenues 6,349 70% 6,643 71% (4%) 0%
-------- ------- -------- -------
Total cloud
and on-
premise
software
revenues 7,084 78% 7,170 77% (1%) 3%
-------- ------- -------- -------
Hardware
products 604 7% 712 8% (15%) (10%)
Hardware support 531 6% 587 6% (10%) (5%)
-------- ------- -------- -------
Total
hardware
revenues 1,135 13% 1,299 14% (13%) (8%)
-------- ------- -------- -------
Total
services
revenues 793 9% 858 9% (7%) (2%)
-------- ------- -------- -------
Total
revenues 9,012 100% 9,327 100% (3%) 1%
-------- ------- -------- -------
OPERATING EXPENSES
Sales and
marketing 1,903 21% 1,839 20% 3% 8%
Cloud software
as a service
and platform as
a service 292 3% 203 2% 44% 48%
Cloud
infrastructure
as a service 88 1% 88 1% (1%) 2%
Software license
updates and
product support 293 3% 300 3% (2%) 2%
Hardware
products 338 4% 367 4% (8%) (1%)
Hardware support 171 2% 218 2% (21%) (17%)
Services 657 7% 724 8% (9%) (4%)
Research and
development 1,419 16% 1,370 15% 4% 5%
General and
administrative 290 3% 252 3% 15% 20%
Amortization of
intangible
assets 408 5% 527 6% (23%) (23%)
Acquisition
related and
other 11 0% 8 0% 38% 42%
Restructuring 115 1% 48 0% 141% 157%
-------- ------- -------- -------
Total
operating
expenses 5,985 66% 5,944 64% 1% 4%
-------- ------- -------- -------
OPERATING INCOME 3,027 34% 3,383 36% (11%) (5%)
Interest expense (360) (4%) (273) (2%) 32% 32%
Non-operating
income, net 65 0% 40 0% 62% 86%
-------- ------- -------- -------
INCOME BEFORE
PROVISION FOR
INCOME TAXES 2,732 30% 3,150 34% (13%) (7%)
-------- ------- -------- -------
Provision for
income taxes 590 6% 655 7% (10%) (3%)
-------- ------- -------- -------
NET INCOME $ 2,142 24% $ 2,495 27% (14%) (8%)
======== ======= ======== =======
EARNINGS PER
SHARE:
Basic $ 0.51 $ 0.57
Diluted $ 0.50 $ 0.56
WEIGHTED AVERAGE
COMMON SHARES
OUTSTANDING:
Basic 4,182 4,389
Diluted 4,256 4,494
(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 February 29, 2016
compared with the corresponding prior year period decreased our revenues
by 4 percentage points, operating expenses by 3 percentage points and
operating income by 6 percentage points.
ORACLE CORPORATION
Q3 FISCAL 2016 FINANCIAL RESULTS
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)
($ in millions, except per share data)
Three Months Ended
------------------------------------------------------
February February February February
29, 29, 28, 28,
2016 2016 2015 2015
GAAP Adj. Non-GAAP GAAP Adj. Non-GAAP
--------- ----- -------- --------- ----- --------
TOTAL REVENUES $ 9,012 $ 2 $ 9,014 $ 9,327 $ 7 $ 9,334
TOTAL CLOUD AND ON-
PREMISE SOFTWARE
REVENUES $ 7,084 $ 2 $ 7,086 $ 7,170 $ 6 $ 7,176
Cloud software as
a service and
platform as a
service 583 2 585 372 3 375
Cloud
infrastructure as
a service 152 - 152 155 - 155
New software
licenses 1,680 - 1,680 1,982 - 1,982
Software license
updates and
product support 4,669 - 4,669 4,661 3 4,664
TOTAL HARDWARE
REVENUES $ 1,135 $ - $ 1,135 $ 1,299 $ 1 $ 1,300
Hardware products 604 - 604 712 - 712
Hardware support 531 - 531 587 1 588
TOTAL OPERATING
EXPENSES $ 5,985 $(794) $ 5,191 $ 5,944 $(816) $ 5,128
Cloud software as
a service and
platform as a
service 292 (4) 288 203 (3) 200
Stock-based
compensation (3) 256 (256) - 230 (230) -
Amortization of
intangible assets
(4) 408 (408) - 527 (527) -
Acquisition
related and other 11 (11) - 8 (8) -
Restructuring 115 (115) - 48 (48) -
CLOUD SOFTWARE AS A
SERVICE AND
PLATFORM AS A
SERVICE MARGIN % 50% 51% 45% 47%
OPERATING INCOME $ 3,027 $ 796 $ 3,823 $ 3,383 $ 823 $ 4,206
OPERATING MARGIN % 34% 42% 36% 45%
INCOME TAX EFFECTS
(5) $ 590 $ 207 $ 797 $ 655 $ 247 $ 902
NET INCOME $ 2,142 $ 589 $ 2,731 $ 2,495 $ 576 $ 3,071
DILUTED EARNINGS PER
SHARE $ 0.50 $ 0.64 $ 0.56 $ 0.68
DILUTED WEIGHTED
AVERAGE COMMON
SHARES OUTSTANDING 4,256 - 4,256 4,494 - 4,494
% Increase (Decrease) % Increase (Decrease) in
in US $ Constant Currency (2)
----------------------- ------------------------
GAAP Non-GAAP GAAP Non-GAAP
---------- ---------- ---------- ----------
TOTAL REVENUES (3%) (3%) 1% 1%
TOTAL CLOUD AND ON-
PREMISE SOFTWARE
REVENUES (1%) (1%) 3% 3%
Cloud software as
a service and
platform as a
service 57% 56% 61% 60%
Cloud
infrastructure as
a service (2%) (2%) 2% 2%
New software
licenses (15%) (15%) (11%) (11%)
Software license
updates and
product support 0% 0% 5% 5%
TOTAL HARDWARE
REVENUES (13%) (13%) (8%) (8%)
Hardware products (15%) (15%) (10%) (10%)
Hardware support (10%) (10%) (5%) (5%)
TOTAL OPERATING
EXPENSES 1% 1% 4% 5%
Cloud software as
a service and
platform as a
service 44% 43% 48% 47%
Stock-based
compensation (3) 11% * 11% *
Amortization of
intangible assets
(4) (23%) * (23%) *
Acquisition
related and other 38% * 42% *
Restructuring 141% * 157% *
CLOUD SOFTWARE AS A
SERVICE AND
PLATFORM AS A
SERVICE MARGIN % 452 bp. 423 bp. 445 bp. 413 bp.
OPERATING INCOME (11%) (9%) (5%) (4%)
OPERATING MARGIN % (269) bp. (265) bp. (206) bp. (237) bp.
INCOME TAX EFFECTS
(5) (10%) (12%) (3%) (6%)
NET INCOME (14%) (11%) (8%) (6%)
DILUTED EARNINGS PER
SHARE (9%) (6%) (2%) 0%
DILUTED WEIGHTED
AVERAGE COMMON
SHARES OUTSTANDING (5%) (5%) (5%) (5%)
(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
February 29, 2016 February 28, 2015
-------------------------- --------------------------
GAAP Adj. Non-GAAP GAAP Adj. Non-GAAP
-------- ------- -------- -------- ------- --------
Sales and
marketing $ 57 $ (57) $ - $ 45 $ (45) $ -
Cloud
infrastructure as
a service 1 (1) - 1 (1) -
Software license
updates and
product support 6 (6) - 6 (6) -
Hardware products 1 (1) - 1 (1) -
Hardware support 1 (1) - 2 (2) -
Services 7 (7) - 8 (8) -
Research and
development 154 (154) - 138 (138) -
General and
administrative 29 (29) - 29 (29) -
-------- ------- -------- -------- ------- --------
Subtotal 256 (256) - 230 (230) -
-------- ------- -------- -------- ------- --------
Cloud software as
a service and
platform as a
service 4 (4) - 3 (3) -
Acquisition
related and other - - - 1 (1) -
-------- ------- -------- -------- ------- --------
Total stock-
based
compensation $ 260 $ (260) $ - $ 234 $ (234) $ -
======== ======= ======== ======== ======= ========
(4) Estimated future annual amortization expense related to intangible
assets as of February 29, 2016 was as follows:
Remainder of
Fiscal 2016 $ 353
Fiscal 2017 1,016
Fiscal 2018 867
Fiscal 2019 760
Fiscal 2020 615
Fiscal 2021 470
Thereafter 1,168
--------
Total intangible
assets, net $ 5,249
========
(5) Income tax effects were calculated reflecting an effective GAAP tax rate
of 21.6% and 20.8% in the third quarter of fiscal 2016 and 2015,
respectively, and an effective non-GAAP tax rate of 22.6% and 22.7% in
the third quarter of fiscal 2016 and 2015, respectively. The
differences between our GAAP and non-GAAP tax rates in the third
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
Q3 FISCAL 2016 YEAR TO DATE FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($ in millions, except per share data)
Nine Months Ended
------------------------------------ %
Increase
% (Decrease)
Increase in
(Decrease) Constant
February % of February % of in Currency
29, 2016 Revenues 28, 2015 Revenues US $ (1)
-------- -------- -------- -------- ------- -------
REVENUES
Cloud software as
a service and
platform as a
service $ 1,517 6% $ 1,069 4% 42% 46%
Cloud
infrastructure as
a service 477 2% 448 2% 7% 12%
-------- -------- -------- --------
Total cloud
revenues 1,994 8% 1,517 6% 31% 36%
-------- -------- -------- --------
New software
licenses 4,509 17% 5,397 19% (16%) (11%)
Software license
updates and
product support 14,048 53% 14,161 51% (1%) 6%
-------- -------- -------- --------
Total on-premise
software
revenues 18,557 70% 19,558 70% (5%) 1%
-------- -------- -------- --------
Total cloud
and on-
premise
software
revenues 20,551 78% 21,075 76% (2%) 4%
-------- -------- -------- --------
Hardware products 1,746 7% 2,007 7% (13%) (6%)
Hardware support 1,639 6% 1,791 7% (8%) (2%)
-------- -------- -------- --------
Total hardware
revenues 3,385 13% 3,798 14% (11%) (4%)
-------- -------- -------- --------
Total services
revenues 2,517 9% 2,647 10% (5%) 2%
-------- -------- -------- --------
Total
revenues 26,453 100% 27,520 100% (4%) 2%
-------- -------- -------- --------
OPERATING EXPENSES
Sales and
marketing 5,578 21% 5,443 20% 2% 9%
Cloud software as
a service and
platform as a
service 847 3% 517 2% 64% 70%
Cloud
infrastructure as
a service 268 1% 254 1% 5% 10%
Software license
updates and
product support 877 3% 867 3% 1% 8%
Hardware products 967 4% 1,034 4% (6%) 1%
Hardware support 526 2% 628 2% (16%) (11%)
Services 2,058 8% 2,179 8% (6%) 2%
Research and
development 4,253 16% 4,088 15% 4% 6%
General and
administrative 832 3% 799 3% 4% 9%
Amortization of
intangible assets 1,283 5% 1,642 6% (22%) (22%)
Acquisition
related and other 35 0% 12 0% 201% 226%
Restructuring 293 1% 168 0% 74% 100%
-------- -------- -------- --------
Total
operating
expenses 17,817 67% 17,631 64% 1% 6%
-------- -------- -------- --------
OPERATING INCOME 8,636 33% 9,889 36% (13%) (4%)
Interest expense (1,105) (4%) (817) (3%) 35% 35%
Non-operating
income, net 179 0% 65 0% 174% 228%
-------- -------- -------- --------
INCOME BEFORE
PROVISION FOR
INCOME TAXES 7,710 29% 9,137 33% (16%) (6%)
-------- -------- -------- --------
Provision for
income taxes 1,623 6% 1,956 7% (17%) (8%)
-------- -------- -------- --------
NET INCOME $ 6,087 23% $ 7,181 26% (15%) (6%)
======== ======== ======== ========
EARNINGS PER SHARE:
Basic $ 1.43 $ 1.63
Diluted $ 1.41 $ 1.59
WEIGHTED AVERAGE
COMMON SHARES
OUTSTANDING:
Basic 4,246 4,419
Diluted 4,328 4,516
(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 nine months ended February 29, 2016
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
Q3 FISCAL 2016 YEAR TO DATE FINANCIAL RESULTS
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)
($ in millions, except per share data)
Nine Months Ended
--------------------------------------------------------
February February February February
29, 29, 28, 28,
2016 2016 2015 2015
GAAP Adj. Non-GAAP GAAP Adj. Non-GAAP
-------- ------- -------- -------- ------- --------
TOTAL REVENUES $ 26,453 $ 8 $ 26,461 $ 27,520 $ 21 $ 27,541
TOTAL CLOUD AND
ON-PREMISE
SOFTWARE
REVENUES $ 20,551 $ 7 $ 20,558 $ 21,075 $ 18 $ 21,093
Cloud software
as a service
and platform
as a service 1,517 6 1,523 1,069 9 1,078
Cloud
infrastructure
as a service 477 - 477 448 - 448
New software
licenses 4,509 - 4,509 5,397 - 5,397
Software
license
updates and
product
support 14,048 1 14,049 14,161 9 14,170
TOTAL HARDWARE
REVENUES $ 3,385 $ 1 $ 3,386 $ 3,798 $ 3 $ 3,801
Hardware
products 1,746 - 1,746 2,007 - 2,007
Hardware
support 1,639 1 1,640 1,791 3 1,794
TOTAL OPERATING
EXPENSES $ 17,817 $(2,376) $ 15,441 $ 17,631 $(2,506) $ 15,125
Stock-based
compensation
(3) 765 (765) - 684 (684) -
Amortization of
intangible
assets (4) 1,283 (1,283) - 1,642 (1,642) -
Acquisition
related and
other 35 (35) - 12 (12) -
Restructuring 293 (293) - 168 (168) -
OPERATING INCOME $ 8,636 $ 2,384 $ 11,020 $ 9,889 $ 2,527 $ 12,416
OPERATING MARGIN
% 33% 42% 36% 45%
INCOME TAX
EFFECTS (5) $ 1,623 $ 658 $ 2,281 $ 1,956 $ 715 $ 2,671
NET INCOME $ 6,087 $ 1,726 $ 7,813 $ 7,181 $ 1,812 $ 8,993
DILUTED EARNINGS
PER SHARE $ 1.41 $ 1.81 $ 1.59 $ 1.99
DILUTED WEIGHTED
AVERAGE COMMON
SHARES
OUTSTANDING 4,328 - 4,328 4,516 - 4,516
% Increase (Decrease) % Increase (Decrease) in
in US $ Constant Currency (2)
----------------------- ------------------------
GAAP Non-GAAP GAAP Non-GAAP
---------- ---------- ---------- ----------
TOTAL REVENUES (4%) (4%) 2% 2%
TOTAL CLOUD AND
ON-PREMISE
SOFTWARE
REVENUES (2%) (3%) 4% 4%
Cloud software
as a service
and platform
as a service 42% 41% 46% 46%
Cloud
infrastructure
as a service 7% 7% 12% 12%
New software
licenses (16%) (16%) (11%) (11%)
Software
license
updates and
product
support (1%) (1%) 6% 6%
TOTAL HARDWARE
REVENUES (11%) (11%) (4%) (4%)
Hardware
products (13%) (13%) (6%) (6%)
Hardware
support (8%) (9%) (2%) (2%)
TOTAL OPERATING
EXPENSES 1% 2% 6% 8%
Stock-based
compensation
(3) 12% * 12% *
Amortization of
intangible
assets (4) (22%) * (22%) *
Acquisition
related and
other 201% * 226% *
Restructuring 74% * 100% *
OPERATING INCOME (13%) (11%) (4%) (4%)
OPERATING MARGIN
% (329) bp. (344) bp. (228) bp. (293) bp.
INCOME TAX
EFFECTS (5) (17%) (15%) (8%) (7%)
NET INCOME (15%) (13%) (6%) (6%)
DILUTED EARNINGS
PER SHARE (12%) (9%) (2%) (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:
Nine Months Ended Nine Months Ended
February 29, 2016 February 28, 2015
-------------------------- --------------------------
GAAP Adj. Non-GAAP GAAP Adj. Non-GAAP
-------- ------- -------- -------- ------- --------
Sales and
marketing $ 163 $ (163) $ - $ 131 $ (131) $ -
Cloud software as
a service and
platform as a
service 13 (13) - 8 (8) -
Cloud
infrastructure as
a service 3 (3) - 3 (3) -
Software license
updates and
product support 18 (18) - 15 (15) -
Hardware products 4 (4) - 4 (4) -
Hardware support 4 (4) - 4 (4) -
Services 22 (22) - 23 (23) -
Research and
development 452 (452) - 380 (380) -
General and
administrative 86 (86) - 116 (116) -
-------- ------- -------- -------- ------- --------
Subtotal 765 (765) - 684 (684) -
-------- ------- -------- -------- ------- --------
Acquisition
related and other 3 (3) - 5 (5) -
-------- ------- -------- -------- ------- --------
Total stock-
based
compensation $ 768 $ (768) $ - $ 689 $ (689) $ -
======== ======= ======== ======== ======= ========
(4) Estimated future annual amortization expense related to intangible
assets as of February 29, 2016 was as follows:
Remainder of
Fiscal 2016 $ 353
Fiscal 2017 1,016
Fiscal 2018 867
Fiscal 2019 760
Fiscal 2020 615
Fiscal 2021 470
Thereafter 1,168
--------
Total intangible
assets, net $ 5,249
========
(5) Income tax effects were calculated reflecting an effective GAAP tax rate
of 21.0% and 21.4% in the first nine months of fiscal 2016 and 2015,
respectively, and an effective non-GAAP tax rate of 22.6% and 22.9% in
the first nine months of fiscal 2016 and 2015, respectively. The
differences between our GAAP and non-GAAP tax rates in the first nine
months 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
Q3 FISCAL 2016 FINANCIAL RESULTS
CONDENSED CONSOLIDATED BALANCE SHEETS
($ in millions)
February 29, May 31,
2016 2015
-------------- --------------
ASSETS
Current Assets:
Cash and cash equivalents $ 15,583 $ 21,716
Marketable securities 35,184 32,652
Trade receivables, net 3,844 5,618
Inventories 212 314
Prepaid expenses and other current assets 2,246 2,220
-------------- --------------
Total Current Assets 57,069 62,520
Non-Current Assets:
Property, plant and equipment, net 4,011 3,686
Intangible assets, net 5,249 6,406
Goodwill, net 34,284 34,087
Deferred tax assets 1,382 1,458
Other assets 2,899 2,746
-------------- --------------
Total Non-Current Assets 47,825 48,383
-------------- --------------
TOTAL ASSETS $ 104,894 $ 110,903
============== ==============
LIABILITIES AND EQUITY
Current Liabilities:
Notes payable, current $ - $ 1,999
Accounts payable 410 806
Accrued compensation and related benefits 1,536 1,839
Deferred revenues 6,912 7,245
Other current liabilities 2,967 3,317
-------------- --------------
Total Current Liabilities 11,825 15,206
Non-Current Liabilities:
Notes payable, non-current 40,106 39,959
Income taxes payable 4,418 4,386
Other non-current liabilities 2,209 2,254
-------------- --------------
Total Non-Current Liabilities 46,733 46,599
Equity 46,336 49,098
-------------- --------------
TOTAL LIABILITIES AND EQUITY $ 104,894 $ 110,903
============== ==============
ORACLE CORPORATION
Q3 FISCAL 2016 FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in millions)
Nine Months Ended
----------------------------
February 29, February 28,
2016 2015
------------- -------------
Cash Flows From Operating Activities:
Net income $ 6,087 $ 7,181
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 643 502
Amortization of intangible assets 1,283 1,642
Deferred income taxes (143) (486)
Stock-based compensation 768 689
Tax benefits on the exercise of stock
options and vesting of restricted stock-
based awards 188 284
Excess tax benefits on the exercise of
stock options and vesting of restricted
stock-based awards (61) (167)
Other, net 116 126
Changes in operating assets and
liabilities, net of effects from
acquisitions:
Decrease in trade receivables, net 1,746 1,867
Decrease (increase) in inventories 87 (78)
Decrease in prepaid expenses and other
assets 95 362
Decrease in accounts payable and other
liabilities (890) (1,204)
Decrease in income taxes payable (112) (369)
Increase (decrease) in deferred revenues 24 (296)
------------- -------------
Net cash provided by operating
activities 9,831 10,053
------------- -------------
Cash Flows From Investing Activities:
Purchases of marketable securities and other
investments (21,549) (23,339)
Proceeds from maturities and sales of
marketable securities and other investments 18,845 15,042
Acquisitions, net of cash acquired (313) (6,232)
Capital expenditures (1,009) (794)
------------- -------------
Net cash used for investing activities (4,026) (15,323)
------------- -------------
Cash Flows From Financing Activities:
Payments for repurchases of common stock (8,467) (6,079)
Proceeds from issuances of common stock 802 1,456
Shares repurchased for tax withholdings upon
vesting of restricted stock-based awards (82) (11)
Payments of dividends to stockholders (1,918) (1,600)
Proceeds from borrowings, net of issuance
costs - 9,945
Repayments of borrowings (2,000) (1,500)
Excess tax benefits on the exercise of stock
options and vesting of restricted stock-
based awards 61 167
Distributions to noncontrolling interests (85) (196)
------------- -------------
Net cash (used for) provided by
financing activities (11,689) 2,182
------------- -------------
Effect of exchange rate changes on cash and
cash equivalents (249) (980)
------------- -------------
Net decrease in cash and cash equivalents (6,133) (4,068)
------------- -------------
Cash and cash equivalents at beginning of
period 21,716 17,769
------------- -------------
Cash and cash equivalents at end of period $ 15,583 $ 13,701
============= =============
ORACLE CORPORATION
Q3 FISCAL 2016 FINANCIAL RESULTS
FREE CASH FLOW - TRAILING 4-QUARTERS (1)
($ in millions)
Fiscal 2015
-----------------------------------------
Q1 Q2 Q3 Q4
--------- --------- -------- --------
GAAP Operating Cash Flow $ 15,357 $ 15,273 $ 14,509 $ 14,336
Capital Expenditures (628) (727) (948) (1,391)
--------- --------- -------- --------
Free Cash Flow $ 14,729 $ 14,546 $ 13,561 $ 12,945
========= ========= ======== ========
% Growth over prior year 4% 0% (6)% (10)%
--------- --------- -------- --------
GAAP Net Income $ 10,948 $ 10,896 $ 10,827 $ 9,938
Free Cash Flow as a % of Net
Income 135% 133% 125% 130%
--------- --------- -------- --------
Fiscal 2016
-----------------------------------------
Q1 Q2 Q3 Q4
-------- -------- -------- --------
GAAP Operating Cash Flow $ 13,464 $ 12,903 $ 14,114
Capital Expenditures (1,636) (1,606) (1,606)
-------- -------- -------- --------
Free Cash Flow $ 11,828 $ 11,297 $ 12,508
======== ======== ======== ========
% Growth over prior year (20)% (22)% (8)%
-------- -------- -------- --------
GAAP Net Income $ 9,501 $ 9,198 $ 8,844
Free Cash Flow as a % of Net
Income 124% 123% 141%
-------- -------- -------- --------
(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
Q3 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 $ 583 $ 1,517
Cloud
infrastructure as
a service 160 165 152 477
-------- -------- -------- ---- --------
Total cloud
revenues 611 649 735 1,994
New software
licenses 1,151 1,677 1,680 4,509
Software license
updates and
product support 4,696 4,683 4,669 14,048
-------- -------- -------- ---- --------
Total on-premise
software
revenues 5,847 6,360 6,349 18,557
-------- -------- -------- ---- --------
Total cloud and
on-premise
software
revenues 6,458 7,009 7,084 20,551
Hardware products 570 573 604 1,746
Hardware support 558 550 531 1,639
-------- -------- -------- ---- --------
Total hardware
revenues 1,128 1,123 1,135 3,385
Total services
revenues 862 861 793 2,517
-------- -------- -------- ---- --------
Total revenues $ 8,448 $ 8,993 $ 9,012 $ 26,453
======== ======== ======== ==== ========
AS REPORTED REVENUE
GROWTH RATES
Cloud software as a
service and
platform as a
service 34% 34% 57% 42%
Cloud
infrastructure as
a service 16% 7% (2%) 7%
Total cloud
revenues 29% 26% 40% 31%
New software
licenses (16%) (18%) (15%) (16%)
Software license
updates and
product support (1%) (2%) 0% (1%)
Total on-premise
software
revenues (4%) (7%) (4%) (5%)
Total cloud and
on-premise
software
revenues (2%) (4%) (1%) (2%)
Hardware products (1%) (20%) (15%) (13%)
Hardware support (5%) (11%) (10%) (8%)
Total hardware
revenues (3%) (16%) (13%) (11%)
Total services
revenues 1% (8%) (7%) (5%)
Total
revenues (2%) (6%) (3%) (4%)
CONSTANT CURRENCY
GROWTH RATES (2)
Cloud software as a
service and
platform as a
service 38% 39% 61% 46%
Cloud
infrastructure as
a service 23% 11% 2% 12%
Total cloud
revenues 34% 31% 44% 36%
New software
licenses (9%) (12%) (11%) (11%)
Software license
updates and
product support 8% 5% 5% 6%
Total on-premise
software
revenues 4% 0% 0% 1%
Total cloud and
on-premise
software
revenues 6% 2% 3% 4%
Hardware products 9% (14%) (10%) (6%)
Hardware support 4% (5%) (5%) (2%)
Total hardware
revenues 6% (10%) (8%) (4%)
Total services
revenues 10% 0% (2%) 2%
Total revenues 7% 0% 1% 2%
-------- -------- -------- ---- --------
GEOGRAPHIC REVENUES
REVENUES
Americas $ 4,716 $ 4,960 $ 4,942 $ 14,620
Europe, Middle East
& Africa 2,456 2,645 2,661 7,761
Asia Pacific 1,276 1,388 1,409 4,072
-------- -------- -------- ---- --------
Total revenues $ 8,448 $ 8,993 $ 9,012 $ 26,453
======== ======== ======== ==== ========
-------- -------- -------- ---- --------
HEADCOUNT
GEOGRAPHIC AREA
Americas 59,901 59,999 60,437
Europe, Middle East
& Africa 27,030 27,541 27,275
Asia Pacific 48,139 48,620 48,694
-------- -------- -------- ---- --------
Total company 135,070 136,160 136,406
======== ======== ======== ==== ========
-------- -------- -------- ---- --------
(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
Q3 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 $ 3,964 $11,576
======= ======= ======= ==== =======
Total hardware revenues $ 589 $ 595 $ 571 $ 1,755
======= ======= ======= ==== =======
AS REPORTED GROWTH RATES
Total cloud and on-
premise software
revenues 2% (3%) (1%) (1%)
Total hardware revenues 1% (17%) (17%) (12%)
CONSTANT CURRENCY GROWTH
RATES (2)
Total cloud and on-
premise software
revenues 6% 0% 1% 2%
Total hardware revenues 6% (14%) (13%) (8%)
------- ------- ------- ---- -------
EUROPE / MIDDLE EAST /
AFRICA
Total cloud and on-
premise software
revenues $ 1,873 $ 2,066 $ 2,069 $ 6,008
======= ======= ======= ==== =======
Total hardware revenues $ 330 $ 316 $ 349 $ 995
======= ======= ======= ==== =======
AS REPORTED GROWTH RATES
Total cloud and on-
premise software
revenues (6%) (8%) (5%) (6%)
Total hardware revenues (2%) (17%) (8%) (9%)
CONSTANT CURRENCY GROWTH
RATES (2)
Total cloud and on-
premise software
revenues 7% 3% 2% 4%
Total hardware revenues 14% (6%) (1%) 2%
------- ------- ------- ---- -------
ASIA PACIFIC
Total cloud and on-
premise software
revenues $ 901 $ 1,016 $ 1,051 $ 2,967
======= ======= ======= ==== =======
Total hardware revenues $ 209 $ 212 $ 215 $ 635
======= ======= ======= ==== =======
AS REPORTED GROWTH RATES
Total cloud and on-
premise software
revenues (7%) (3%) 7% (1%)
Total hardware revenues (14%) (11%) (8%) (11%)
CONSTANT CURRENCY GROWTH
RATES (2)
Total cloud and on-
premise software
revenues 7% 6% 13% 9%
Total hardware revenues (3%) (3%) (3%) (3%)
------- ------- ------- ---- -------
TOTAL COMPANY
Total cloud and on-
premise software
revenues $ 6,458 $ 7,009 $ 7,084 $20,551
======= ======= ======= ==== =======
Total hardware revenues $ 1,128 $ 1,123 $ 1,135 $ 3,385
======= ======= ======= ==== =======
AS REPORTED GROWTH RATES
Total cloud and on-
premise software
revenues (2%) (4%) (1%) (2%)
Total hardware revenues (3%) (16%) (13%) (11%)
CONSTANT CURRENCY GROWTH
RATES (2)
Total cloud and on-
premise software
revenues 6% 2% 3% 4%
Total hardware revenues 6% (10%) (8%) (4%)
------- ------- ------- ---- -------
(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
Q3 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
