Oracle Announces Fiscal 2022 First Quarter Financial Results

ORACLE  CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended August 31,

% Increase

(Decrease)

% of 

(Decrease)

in Constant

Revenues

Revenues

in US $

Currency (1)

REVENUES

Cloud services and license support 

$             7,371

76%

$             6,947

74%

6%

5%

Cloud license and on-premise license

813

8%

886

9%

(9%)

Hardware

763

8%

814

9%

(6%)

(7%)

Services

781

8%

720

8%

8%

7%

      Total revenues

9,728

100%

9,367

100%

4%

2%

OPERATING EXPENSES

Cloud services and license support 

1,214

13%

1,011

11%

20%

19%

Hardware

245

2%

246

2%

(1%)

(2%)

Services

644

7%

623

7%

3%

2%

Sales and marketing

1,854

19%

1,854

20%

0%

(1%)

Research and development 

1,684

18%

1,589

17%

6%

5%

General and administrative

298

3%

295

3%

1%

0%

Amortization of intangible assets

303

3%

345

4%

(12%)

(12%)

Acquisition related and other

21

0%

19

0%

4%

4%

Restructuring

38

0%

174

2%

(78%)

(78%)

      Total operating expenses 

6,301

6,156

66%

2%

1%

OPERATING INCOME 

35%

3,211

34%

7%

5%

Interest expense

(705)

(614)

(6%)

15%

15%

Non-operating expenses, net

(41)

(1%)

(2)

0%

*

*

INCOME BEFORE PROVISION FOR INCOME TAXES

2,681

2,595

28%

3%

1%

Provision for income taxes

224

2%

344

4%

(35%)

(36%)

NET INCOME 

$             2,457

25%

$             2,251

24%

9%

7%

EARNINGS PER SHARE:

Basic

$                0.89

$                0.74

Diluted

$                0.86

$                0.72

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:

Basic

2,769

3,041

Diluted

2,861

3,107

(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, 2021, 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 August 31,
2021 compared with the corresponding prior year period increased our revenues by 2 percentage points, operating expenses by 1 percentage point and
operating income by 2 percentage points.

Not meaningful

ORACLE  CORPORATION

RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1) 

($ in millions, except per share data)

Three Months Ended August 31,

2021

2021

2020

2020

GAAP

Non-GAAP

GAAP

Adj.

Non-GAAP

GAAP

Adj.

Non-GAAP

TOTAL REVENUES

$     9,728

$             -

$     9,728

$     9,367

$              1

$     9,368

4%

4%

2%

2%

     Cloud services and license support

7,371

-

7,371

6,947

1

6,948

6%

6%

5%

5%

TOTAL OPERATING EXPENSES

$     6,301

$       (907)

$     5,394

$     6,156

$       (966)

$     5,190

2%

4%

1%

3%

     Stock-based compensation (3)

545

(545)

-

428

(428)

-

28%

*

28%

*

     Amortization of intangible assets (4)

303

(303)

-

345

(345)

-

(12%)

*

(12%)

*

     Acquisition related and other

21

(21)

-

19

(19)

-

4%

*

4%

*

     Restructuring

38

(38)

-

174

(174)

-

(78%)

*

(78%)

*

OPERATING INCOME

$     3,427

$         907

$     4,334

$     3,211

$         967

$     4,178

7%

4%

5%

2%

OPERATING MARGIN %

35%

45%

34%

45%

95 bp.

(5) bp.

74 bp.

(18) bp.

INCOME TAX EFFECTS (5)

$         224

$         420

$         644

$         344

$         336

$         680

(35%)

(5%)

(36%)

(7%)

NET INCOME 

$     2,457

$         487

$     2,944

$     2,251

$         631

$     2,882

9%

2%

7%

0%

DILUTED EARNINGS PER SHARE

$        0.86

$        1.03

$        0.72

$        0.93

19%

11%

16%

9%

DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 

2,861

-

2,861

3,107

-

3,107

(8%)

(8%)

(8%)

(8%)

(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, 2021, 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

August 31, 2021

August 31, 2020

GAAP

Adj.

Non-GAAP

GAAP

Adj.

Non-GAAP

     Cloud services and license support

$           40

$          (40)

$             -

$           30

$          (30)

$             -

     Hardware

3

(3)

-

3

(3)

-

     Services

14

(14)

-

12

(12)

-

     Sales and marketing

95

(95)

-

71

(71)

-

     Research and development

344

(344)

-

276

(276)

-

     General and administrative

49

(49)

-

36

(36)

-

           Total stock-based compensation

$         545

$       (545)

$             -

$         428

$       (428)

$             -

(4)

Estimated future annual amortization expense related to intangible assets as of August 31, 2021 was as follows:

     Remainder of fiscal 2022

$         834

     Fiscal 2023

716

     Fiscal 2024

473

     Fiscal 2025

124

     Fiscal 2026

24

     Fiscal 2027

6

     Thereafter

4

           Total intangible assets, net

$     2,181

(5)

Income tax effects were calculated reflecting an effective GAAP tax rate of 8.4% and 13.3% in the first quarter of fiscal 2022 and 2021, respectively, and an effective non-GAAP tax rate of 18.0% and 19.1% in the first quarter of fiscal 2022 and 2021, respectively. The difference in our GAAP and non-GAAP tax rates in each of the first quarter of fiscal 2022 and 2021 was primarily due to the net tax effects on stock-based compensation expense and acquisition related items, including the tax effects of amortization of intangible assets, partially offset by the net deferred tax effects related to an income tax benefit that was previously recorded due to the partial realignment of our legal entity structure.

ORACLE  CORPORATION

Q1 FISCAL 2022 FINANCIAL RESULTS

CONDENSED CONSOLIDATED BALANCE SHEETS

($ in millions)

August 31,

2021

2021

ASSETS

Current Assets:

Cash and cash equivalents

$              23,059

$              30,098

Marketable securities

16,251

16,456

Trade receivables, net

4,482

5,409

Prepaid expenses and other current assets

3,325

3,604

Total Current Assets

Non-Current Assets:

   Property, plant and equipment, net

7,610

7,049

   Intangible assets, net

2,181

2,430

   Goodwill, net

43,862

43,935

   Deferred tax assets

13,391

13,636

   Other non-current assets

8,763

8,490

Total Non-Current Assets

75,807

75,540

TOTAL ASSETS

$            131,107

LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY

Current Liabilities:

Notes payable, current 

$                6,748

$                8,250

Accounts payable

749

745

Accrued compensation and related benefits

1,470

2,017

Deferred revenues

10,011

8,775

Other current liabilities

4,093

4,377

Total Current Liabilities

23,071

24,164

Non-Current Liabilities:

Notes payable and other borrowings, non-current

75,970

75,995

Income taxes payable

12,315

12,345

Deferred tax liabilities

7,648

7,864

Other non-current liabilities

5,050

4,787

Total Non-Current Liabilities

100,983

100,991

Stockholders' (Deficit) Equity

5,952

TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY

$            122,924

$            131,107

     ORACLE  CORPORATION 

Q1 FISCAL 2022 FINANCIAL RESULTS

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

($ in millions)

Three Months Ended August 31,

2021

2020

Cash Flows From Operating Activities:

Net income 

$             2,457

$              2,251

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation

454

356

Amortization of intangible assets

303

345

Deferred income taxes

(15)

173

Stock-based compensation

545

428

Other, net

(27)

78

Changes in operating assets and liabilities, net of effects from acquisitions:

Decrease in trade receivables, net

852

1,077

Decrease in prepaid expenses and other assets

270

380

Decrease in accounts payable and other liabilities

(713)

(294)

Decrease in income taxes payable

(221)

(586)

Increase in deferred revenues

1,486

1,745

Net cash provided by operating activities

5,953

Cash Flows From Investing Activities:

Purchases of marketable securities and other investments

(7,671)

(10,678)

Proceeds from sales and maturities of marketable securities and other investments

8,002

1,459

Acquisitions, net of cash acquired

(50)

-

Capital expenditures

(1,062)

(436)

Net cash used for investing activities

(781)

(9,655)

Cash Flows From Financing Activities:

Payments for repurchases of common stock

(7,995)

(4,945)

Proceeds from issuances of common stock

148

567

Shares repurchased for tax withholdings upon vesting of restricted stock-based awards

(820)

(478)

Payments of dividends to stockholders

(887)

(730)

Repayments of borrowings

(1,500)

(1,000)

Other, net

(414)

93

Net cash used for financing activities

(11,468)

(6,493)

Effect of exchange rate changes on cash and cash equivalents

232

Net decrease in cash and cash equivalents

(7,039)

(9,963)

Cash and cash equivalents at beginning of period

30,098

37,239

Cash and cash equivalents at end of period

 ORACLE  CORPORATION 

 Q1 FISCAL 2022 FINANCIAL RESULTS 

 FREE CASH FLOW - TRAILING 4-QUARTERS (1) 

 ($ in millions) 

 Fiscal 2021 

 Fiscal 2022 

 Q3 

 Q4 

 Q1 

 Q2 

 Q3 

GAAP Operating Cash Flow

$            13,092

$            13,967

$            14,659

$            15,887

$            15,325

Capital Expenditures

(1,833)

(1,851)

(2,761)

Free Cash Flow

$            12,134

$            12,808

$            13,752

$            12,564

% Growth over prior year

(1%)

3%

19%

9%

GAAP Net Income

$            10,249

$            10,380

$            12,830

$            13,746

$            13,952

Free Cash Flow as a % of Net Income

112%

117%

100%

100%

90%

(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 

 Q1 FISCAL 2022 FINANCIAL RESULTS 

 SUPPLEMENTAL ANALYSIS OF GAAP REVENUES (1) 

 ($ in millions) 

 Fiscal 2021 

 Fiscal 2022 

 Q2 

 Q4 

 TOTAL 

 Q1 

 Q2 

 Q3 

 Q4 

 TOTAL 

$      6,947

$      7,112

$      7,252

$      7,389

$    28,700

$      7,371

$       7,371

 Cloud license and on-premise license 

886

1,092

1,276

2,144

5,399

813

813

 Hardware 

814

844

820

882

3,359

763

763

 Services  

720

752

737

812

3,021

781

781

                 Total revenues 

$      9,367

$      9,800

$    10,085

$    11,227

$    40,479

$      9,728

$       9,728

AS REPORTED REVENUE GROWTH RATES 

 Cloud services and license support 

2%

4%

5%

8%

5%

6%

6%

 Cloud license and on-premise license 

9%

(3%)

4%

9%

5%

(8%)

(8%)

 Hardware  

0%

(3%)

(4%)

(2%)

(2%)

(6%)

(6%)

 Services  

(8%)

(7%)

(5%)

11%

(3%)

8%

8%

                 Total revenues 

2%

2%

3%

8%

4%

4%

4%

CONSTANT CURRENCY REVENUE GROWTH RATES (2)

 Cloud services and license support  

2%

4%

2%

4%

3%

5%

5%

 Cloud license and on-premise license 

8%

(5%)

0%

5%

2%

(9%)

(9%)

 Hardware  

0%

(3%)

(6%)

(6%)

(4%)

(7%)

(7%)

 Services  

(8%)

(8%)

(8%)

6%

(5%)

7%

7%

                 Total revenues 

1%

0%

4%

2%

2%

2%

CLOUD SERVICES AND LICENSE SUPPORT REVENUES

BY ECOSYSTEM

 Applications cloud services and license support 

$      2,816

$      2,901

$      2,952

$      3,043

$    11,712

$      3,041

$       3,041

 Infrastructure cloud services and license support 

4,131

4,211

4,300

4,346

16,988

4,330

4,330

 Total cloud services and license support revenues 

$      6,947

$      7,112

$      7,252

$      7,389

$    28,700

$      7,371

$       7,371

AS REPORTED REVENUE GROWTH RATES 

 Applications cloud services and license support 

4%

5%

5%

11%

6%

8%

8%

 Infrastructure cloud services and license support 

1%

4%

4%

6%

4%

5%

5%

 Total cloud services and license support revenues 

2%

4%

5%

8%

5%

6%

6%

CONSTANT CURRENCY REVENUE GROWTH RATES (2)

 Applications cloud services and license support 

4%

5%

3%

7%

5%

7%

7%

 Infrastructure cloud services and license support 

1%

3%

2%

2%

2%

3%

3%

 Total cloud services and license support revenues 

2%

4%

2%

4%

3%

5%

5%

$      5,068

$      5,259

$      5,424

$      6,076

$    21,828

$      5,321

$       5,321

 Europe/Middle East/Africa 

2,738

2,852

2,981

3,324

11,894

2,784

2,784

 Asia Pacific 

1,689

1,680

1,827

6,757

1,623

1,623

                 Total revenues 

$      9,367

$      9,800

$    10,085

$    11,227

$    40,479

$      9,728

$       9,728

(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, 2021 and 2020 for the fiscal 2022 and fiscal 2021 constant currency growth rate calculations presented, respectively, rather than the actual exchange rates in effect during the respective periods.