Oracle Announces Fiscal 2022 Second Quarter Financial Results
- Total Revenue up 6% to $10.4 Billion
- Total Cloud Revenue (IaaS plus SaaS) up 22% to $2.7 Billion
- Fusion ERP cloud revenue up 35%, NetSuite ERP cloud revenue up 29%
AUSTIN, Texas, Dec. 9, 2021 /PRNewswire/ -- Oracle Corporation (NYSE: ORCL) today announced fiscal 2022 Q2 results. Total quarterly revenues were up 6% year-over-year to $10.4 billion. Cloud services and license support revenues were up 6% to $7.6 billion. Cloud license and on-premise license revenues were up 13% to $1.2 billion.
Oracle's Q2 GAAP results were adversely impacted by the payment of a judgment related to a ten year old dispute surrounding former CEO Mark Hurd's employment. That payment resulted in a Q2 GAAP operating loss of $824 million and a loss per share of $0.46. Q2 Non-GAAP operating income was up 6% to $4.9 billion and earnings per share was up 14% to $1.21.
Short-term deferred revenues were $7.9 billion. Operating cash flow was $10.3 billion during the trailing twelve months.
"Oracle's Q2 Non-GAAP earnings per share was up 14% to $1.21—beating guidance by $0.10," said Oracle CEO, Safra Catz. "Constant currency revenue beat guidance by $200 million. These strong results are being driven by the 22% growth of our infrastructure and applications cloud businesses which are approaching $11 billion in annualized revenue. We now have 8,500 Fusion ERP customers with revenue growing 35%, 28,400 NetSuite ERP customers with revenue growing 29%, and our Gen2 infrastructure businesses are growing even faster—and accelerating."
"Oracle's Autonomous Database and new MySQL Database with HeatWave are the world's two highest-performance databases," said Oracle Chairman and CTO, Larry Ellison. "Because of their extreme high-performance, both products present huge growth opportunities for our cloud infrastructure business. Oracle database on-premise customers are choosing our Autonomous Database as they move to the public cloud and our unique Cloud@Customer service. Amazon Aurora customers are discovering that moving to MySQL with HeatWave can increase their performance by more than ten-times—with a corresponding reduction in cost. These two databases will sustain Oracle's database market and technology leadership for years to come."
The board of directors increased the authorization for share repurchases by $10 billion. The board of directors also declared a quarterly cash dividend of $0.32 per share of outstanding common stock. This dividend will be paid to stockholders of record as of the close of business on January 7, 2022, with a payment date of January 19, 2022.
- A sample list of customers which purchased Oracle Cloud services during the quarter will be available at www.oracle.com/customers/earnings/.
- A list of recent technical innovations and announcements is available at www.oracle.com/news/.
- To learn what industry analysts have been saying about Oracle's products and services see www.oracle.com/corporate/analyst-reports.html.
Earnings Conference Call and Webcast
Oracle will hold a conference call and webcast today to discuss these results at 4:00 p.m. Central. A live and replay webcast will be available on the Oracle Investor Relations website at www.oracle.com/investor/.
About Oracle
Oracle offers integrated suites of applications plus secure, autonomous infrastructure in the Oracle Cloud. For more information about Oracle (NYSE: ORCL), please visit us at www.oracle.com.
Trademarks
Oracle, Java, and MySQL are registered trademarks of Oracle Corporation.
"Safe Harbor" Statement: Statements in this press release relating to Oracle's future plans, expectations, beliefs, intentions and prospects, including statements regarding growth in our infrastructure and applications cloud businesses and our future database market and technology leadership, 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) The COVID-19 pandemic has affected how we and our customers are operating our respective businesses, and the duration and extent to which this will impact our future results of operations remains uncertain. (2) Our success depends upon our ability to develop new products and services, integrate acquired products and services and enhance our existing products and services. (3) Our cloud strategy, including our Oracle Cloud Software-as-a-Service and Infrastructure-as-a-Service offerings, may adversely affect our revenues and profitability. (4) We might experience significant coding, manufacturing or configuration errors in our cloud, license and hardware offerings. (5) If our security measures for our products and services are compromised and as a result, our data, our customers' data or our IT systems are accessed improperly, made unavailable, or improperly modified, our products and services may be perceived as vulnerable, our brand and reputation could be damaged, the IT services we provide to our customers could be disrupted, and customers may stop using our products and services, any of which could reduce our revenue and earnings, increase our expenses and expose us to legal claims and regulatory actions. (6) Our business practices with respect to data could give rise to operational interruption, liabilities or reputational harm as a result of governmental regulation, legal requirements or industry standards relating to privacy and data protection. (7) Economic, political and market conditions 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. (8) If we are unable to compete effectively, the results of operations and prospects for our business could be harmed. (9) Our international sales and operations subject us to additional risks that can adversely affect our operating results. (10) We are susceptible to third-party manufacturing and logistics delays, which could result in the loss of sales and customers. A detailed discussion of these factors and other risks that affect our business is contained in our SEC filings, including our most recent reports on Form 10-K and Form 10-Q, particularly under the heading "Risk Factors." Copies of these filings are available online from the SEC or by contacting Oracle Corporation's Investor Relations Department at (650) 506-4073 or by clicking on SEC Filings on Oracle's Investor Relations website at www.oracle.com/investor/. All information set forth in this press release is current as of December 9, 2021. Oracle undertakes no duty to update any statement in light of new information or future events.
ORACLE CORPORATION | |||||||||
Q2 FISCAL 2022 FINANCIAL RESULTS | |||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS ($ in millions, except per share data) | |||||||||
Three Months Ended | % Increase | ||||||||
% Increase | (Decrease) | ||||||||
% of | % of | (Decrease) | in Constant | ||||||
2021 | Revenues | 2020 | Revenues | in US $ | Currency (1) | ||||
REVENUES | |||||||||
Cloud services and license support | $ 7,554 | 73% | $ 7,112 | 72% | 6% | 6% | |||
Cloud license and on-premise license | 1,237 | 12% | 1,092 | 11% | 13% | 16% | |||
Hardware | 767 | 7% | 844 | 9% | (9%) | (8%) | |||
Services | 802 | 8% | 752 | 8% | 7% | 7% | |||
Total revenues | 10,360 | 100% | 9,800 | 100% | 6% | 6% | |||
OPERATING EXPENSES | |||||||||
Cloud services and license support | 1,259 | 12% | 1,064 | 11% | 18% | 19% | |||
Hardware | 229 | 2% | 244 | 2% | (6%) | (5%) | |||
Services | 671 | 7% | 631 | 6% | 6% | 7% | |||
Sales and marketing | 1,954 | 19% | 1,836 | 19% | 6% | 7% | |||
Research and development | 1,754 | 17% | 1,601 | 16% | 10% | 9% | |||
General and administrative | 319 | 3% | 324 | 3% | (2%) | (2%) | |||
Amortization of intangible assets | 299 | 3% | 345 | 4% | (13%) | (13%) | |||
Acquisition related and other (2) | 4,667 | 45% | 76 | 1% | * | * | |||
Restructuring | 32 | 0% | 96 | 1% | (67%) | (67%) | |||
Total operating expenses | 11,184 | 108% | 6,217 | 63% | 80% | 79% | |||
OPERATING (LOSS) INCOME | (824) | (8%) | 3,583 | 37% | * | * | |||
Interest expense | (679) | (6%) | (600) | (7%) | 13% | 13% | |||
Non-operating income (expenses), net | 7 | 0% | (11) | 0% | * | * | |||
(LOSS) INCOME BEFORE INCOME TAXES | (1,496) | (14%) | 2,972 | 30% | * | * | |||
Benefit from (provision for) income taxes | 249 | 2% | (530) | (5%) | * | * | |||
NET (LOSS) INCOME | $ (1,247) | (12%) | $ 2,442 | 25% | * | * | |||
(LOSS) EARNINGS PER SHARE: | |||||||||
Basic | $ (0.46) | $ 0.82 | |||||||
Diluted | $ (0.46) | $ 0.80 | |||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | |||||||||
Basic | 2,694 | 2,977 | |||||||
Diluted | 2,694 | 3,046 | |||||||
(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 November 30, 2021 compared with the corresponding prior year period increased our total operating expenses by 1 percentage point. | ||||||||
(2) | Acquisition related and other for the three months ended November 30, 2021 included the impact of litigation related charges totaling $4.7 billion. | ||||||||
* | Not meaningful | ||||||||
ORACLE CORPORATION | ||||||||||||||||||||||
Q2 FISCAL 2022 FINANCIAL RESULTS | ||||||||||||||||||||||
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1) | ||||||||||||||||||||||
($ in millions, except per share data) | ||||||||||||||||||||||
Three Months Ended | % Increase (Decrease) | % Increase (Decrease) in Constant Currency (2) | ||||||||||||||||||||
2021 | 2021 | 2020 | 2020 | GAAP | Non-GAAP | GAAP | Non-GAAP | |||||||||||||||
GAAP | Adj. | Non-GAAP | GAAP | Adj. | Non-GAAP | |||||||||||||||||
TOTAL REVENUES | $ 10,360 | $ - | $ 10,360 | $ 9,800 | $ - | $ 9,800 | 6% | 6% | 6% | 6% | ||||||||||||
TOTAL OPERATING EXPENSES | $ 11,184 | $ (5,679) | $ 5,505 | $ 6,217 | $ (1,005) | $ 5,212 | 80% | 6% | 79% | 6% | ||||||||||||
Stock-based compensation (3) | 681 | (681) | - | 488 | (488) | - | 39% | * | 39% | * | ||||||||||||
Amortization of intangible assets (4) | 299 | (299) | - | 345 | (345) | - | (13%) | * | (13%) | * | ||||||||||||
Acquisition related and other | 4,667 | (4,667) | - | 76 | (76) | - | * | * | * | * | ||||||||||||
Restructuring | 32 | (32) | - | 96 | (96) | - | (67%) | * | (67%) | * | ||||||||||||
OPERATING (LOSS) INCOME | $ (824) | $ 5,679 | $ 4,855 | $ 3,583 | $ 1,005 | $ 4,588 | * | 6% | * | 7% | ||||||||||||
OPERATING MARGIN % | (8%) | 47% | 37% | 47% | * | 5 bp. | * | 14 bp. | ||||||||||||||
INCOME TAX EFFECTS (5) | $ 249 | $ (1,052) | $ (803) | $ (530) | $ (212) | $ (742) | * | 8% | * | 9% | ||||||||||||
NET (LOSS) INCOME | $ (1,247) | $ 4,627 | $ 3,380 | $ 2,442 | $ 793 | $ 3,235 | * | 4% | * | 5% | ||||||||||||
DILUTED (LOSS) EARNINGS PER SHARE (6) | $ (0.46) | $ 1.21 | $ 0.80 | $ 1.06 | * | 14% | * | 15% | ||||||||||||||
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (6) | 2,694 | 91 | 2,785 | 3,046 | - | 3,046 | (12%) | (9%) | (12%) | (9%) | ||||||||||||
(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 | |||||||||||||||||||||
November 30, | November 30, | |||||||||||||||||||||
GAAP | Adj. | Non-GAAP | GAAP | Adj. | Non-GAAP | |||||||||||||||||
Cloud services and license support | $ 50 | $ (50) | $ - | $ 36 | $ (36) | $ - | ||||||||||||||||
Hardware | 4 | (4) | - | 3 | (3) | - | ||||||||||||||||
Services | 18 | (18) | - | 14 | (14) | - | ||||||||||||||||
Sales and marketing | 120 | (120) | - | 80 | (80) | - | ||||||||||||||||
Research and development | 423 | (423) | - | 314 | (314) | - | ||||||||||||||||
General and administrative | 66 | (66) | - | 41 | (41) | - | ||||||||||||||||
Total stock-based compensation | $ 681 | $ (681) | $ - | $ 488 | $ (488) | $ - | ||||||||||||||||
(4) | Estimated future annual amortization expense related to intangible assets as of November 30, 2021 was as follows: | |||||||||||||||||||||
Remainder of fiscal 2022 | $ 534 | |||||||||||||||||||||
Fiscal 2023 | 716 | |||||||||||||||||||||
Fiscal 2024 | 473 | |||||||||||||||||||||
Fiscal 2025 | 124 | |||||||||||||||||||||
Fiscal 2026 | 24 | |||||||||||||||||||||
Fiscal 2027 | 6 | |||||||||||||||||||||
Thereafter | 4 | |||||||||||||||||||||
Total intangible assets, net | $ 1,881 | |||||||||||||||||||||
(5) | Income tax effects were calculated reflecting an effective GAAP tax rate of (16.6%) and 17.8% in the second quarter of fiscal 2022 and 2021, respectively, and an effective non-GAAP tax rate of 19.2% and 18.7% in the second quarter of fiscal 2022 and 2021, respectively. The difference in our GAAP and non-GAAP tax rates in the second quarter of fiscal 2022 was primarily due to the net tax effects related to stock-based compensation expense and acquisition related and other items, including the net tax effects for litigation related charges (refer to Appendix A for additional information), and the net tax effects on 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. The difference in our GAAP and non-GAAP tax rates in the second quarter of fiscal 2021 was primarily due to the net tax effects on stock-based compensation expense and acquisition related and other items, including the tax effects on amortization of intangible assets. | |||||||||||||||||||||
(6) | In the second quarter of fiscal 2022, GAAP diluted loss per share was calculated excluding the dilutive effects of 91 million shares related to employee stock plans as the effect would be anti-dilutive. | |||||||||||||||||||||
* | Not meaningful | |||||||||||||||||||||
ORACLE CORPORATION | ||||||||||
Q2 FISCAL 2022 YEAR TO DATE FINANCIAL RESULTS | ||||||||||
Six Months Ended | % Increase | |||||||||
% Increase | (Decrease) | |||||||||
% of | % of | (Decrease) | in Constant | |||||||
2021 | Revenues | 2020 | Revenues | in US $ | Currency(1) | |||||
REVENUES | ||||||||||
Cloud services and license support | $ 14,925 | 74% | $ 14,059 | 73% | 6% | 6% | ||||
Cloud license and on-premise license | 2,049 | 10% | 1,978 | 10% | 4% | 4% | ||||
Hardware | 1,530 | 8% | 1,658 | 9% | (8%) | (8%) | ||||
Services | 1,583 | 8% | 1,472 | 8% | 8% | 7% | ||||
Total revenues | 20,087 | 100% | 19,167 | 100% | 5% | 4% | ||||
OPERATING EXPENSES | ||||||||||
Cloud services and license support | 2,472 | 12% | 2,075 | 11% | 19% | 19% | ||||
Hardware | 474 | 2% | 490 | 3% | (3%) | (3%) | ||||
Services | 1,315 | 7% | 1,254 | 7% | 5% | 4% | ||||
Sales and marketing | 3,808 | 19% | 3,690 | 19% | 3% | 3% | ||||
Research and development | 3,438 | 17% | 3,190 | 17% | 8% | 7% | ||||
General and administrative | 618 | 3% | 619 | 3% | 0% | (1%) | ||||
Amortization of intangible assets | 603 | 3% | 690 | 4% | (13%) | (13%) | ||||
Acquisition related and other (2) | 4,687 | 24% | 95 | 0% | * | * | ||||
Restructuring | 70 | 0% | 270 | 1% | (74%) | (74%) | ||||
Total operating expenses | 17,485 | 87% | 12,373 | 65% | 41% | 40% | ||||
OPERATING INCOME | 2,602 | 13% | 6,794 | 35% | (62%) | (60%) | ||||
Interest expense | (1,384) | (7%) | (1,214) | (6%) | 14% | 14% | ||||
Non-operating expenses, net | (34) | 0% | (13) | 0% | 158% | 97% | ||||
INCOME BEFORE INCOME TAXES | 1,184 | 6% | 5,567 | 29% | (79%) | (76%) | ||||
Benefit from (provision for) income taxes | 25 | 0% | (874) | (5%) | * | * | ||||
NET INCOME | $ 1,209 | 6% | $ 4,693 | 24% | (74%) | (71%) | ||||
EARNINGS PER SHARE: | ||||||||||
Basic | $ 0.44 | $ 1.56 | ||||||||
Diluted | $ 0.43 | $ 1.53 | ||||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | ||||||||||
Basic | 2,731 | 3,009 | ||||||||
Diluted | 2,823 | 3,076 | ||||||||
(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 six months ended November 30, 2021 compared with the corresponding prior year period increased our total revenues and total operating expenses, each by 1 percentage point, and decreased our operating income by 2 percentage points. | |||||||||
(2) | Acquisition related and other for the six months ended November 30, 2021 included the impact of litigation related charges totaling $4.7 billion. | |||||||||
* | Not meaningful | |||||||||
ORACLE CORPORATION | ||||||||||||||||||||||
Q2 FISCAL 2022 YEAR TO DATE FINANCIAL RESULTS | ||||||||||||||||||||||
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1) | ||||||||||||||||||||||
($ in millions, except per share data) | ||||||||||||||||||||||
Six Months Ended | % Increase (Decrease) | % Increase (Decrease) in Constant Currency (2) | ||||||||||||||||||||
2021 | 2021 | 2020 | 2020 | GAAP | Non-GAAP | GAAP | Non-GAAP | |||||||||||||||
GAAP | Adj. | Non-GAAP | GAAP | Adj. | Non-GAAP | |||||||||||||||||
TOTAL REVENUES | $ 20,087 | $ - | $ 20,087 | $ 19,167 | $ 1 | $ 19,168 | 5% | 5% | 4% | 4% | ||||||||||||
Cloud services and license support | 14,925 | - | 14,925 | 14,059 | 1 | 14,060 | 6% | 6% | 6% | 6% | ||||||||||||
TOTAL OPERATING EXPENSES | $ 17,485 | $ (6,586) | $ 10,899 | $ 12,373 | $ (1,971) | $ 10,402 | 41% | 5% | 40% | 4% | ||||||||||||
Stock-based compensation (3) | 1,226 | (1,226) | - | 916 | (916) | - | 34% | * | 34% | * | ||||||||||||
Amortization of intangible assets (4) | 603 | (603) | - | 690 | (690) | - | (13%) | * | (13%) | * | ||||||||||||
Acquisition related and other | 4,687 | (4,687) | - | 95 | (95) | - | * | * | * | * | ||||||||||||
Restructuring | 70 | (70) | - | 270 | (270) | - | (74%) | * | (74%) | * | ||||||||||||
OPERATING INCOME | $ 2,602 | $ 6,586 | $ 9,188 | $ 6,794 | $ 1,972 | $ 8,766 | (62%) | 5% | (60%) | 4% | ||||||||||||
OPERATING MARGIN % | 13% | 46% | 35% | 46% | * | 1 bp. | * | 0 bp. | ||||||||||||||
INCOME TAX EFFECTS (5) | $ 25 | $ (1,473) | $ ( 1,448) | $ (874) | $ (548) | $ (1,422) | * | 2% | * | 1% | ||||||||||||
NET INCOME | $ 1,209 | $ 5,113 | $ 6,322 | $ 4,693 | $ 1,424 | $ 6,117 | (74%) | 3% | (71%) | 3% | ||||||||||||
DILUTED EARNINGS PER SHARE | $ 0.43 | $ 2.24 | $ 1.53 | $ 1.99 | (72%) | 13% | (68%) | 12% | ||||||||||||||
DILUTED WEIGHTED AVERAGE COMMON | 2,823 | - | 2,823 | 3,076 | - | 3,076 | (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: | |||||||||||||||||||||
Six Months Ended | Six Months Ended | |||||||||||||||||||||
November 30, | November 30, | |||||||||||||||||||||
GAAP | Adj. | Non-GAAP | GAAP | Adj. | Non-GAAP | |||||||||||||||||
Cloud services and license support | $ 90 | $ (90) | $ - | $ 66 | $ (66) | $ - | ||||||||||||||||
Hardware | 7 | (7) | - | 6 | (6) | - | ||||||||||||||||
Services | 32 | (32) | - | 26 | (26) | - | ||||||||||||||||
Sales and marketing | 215 | (215) | - | 151 | (151) | - | ||||||||||||||||
Research and development | 767 | (767) | - | 590 | (590) | - | ||||||||||||||||
General and administrative | 115 | (115) | - | 77 | (77) | - | ||||||||||||||||
Total stock-based compensation | $ 1,226 | $ (1,226) | $ - | $ 916 | $ (916) | $ - | ||||||||||||||||
(4) | Estimated future annual amortization expense related to intangible assets as of November 30, 2021 was as follows: | |||||||||||||||||||||
Remainder of fiscal 2022 | $ 534 | |||||||||||||||||||||
Fiscal 2023 | 716 | |||||||||||||||||||||
Fiscal 2024 | 473 | |||||||||||||||||||||
Fiscal 2025 | 124 | |||||||||||||||||||||
Fiscal 2026 | 24 | |||||||||||||||||||||
Fiscal 2027 | 6 | |||||||||||||||||||||
Thereafter | 4 | |||||||||||||||||||||
Total intangible assets, net | $ 1,881 | |||||||||||||||||||||
(5) | Income tax effects were calculated reflecting an effective GAAP tax rate of (2.1%) and 15.7% in the first half of fiscal 2022 and 2021, respectively, and an effective non-GAAP tax rate of 18.6% and 18.9% in the first half of fiscal 2022 and 2021, respectively. The difference in our GAAP and non-GAAP tax rates in the first half of fiscal 2022 was primarily due to the net tax effects related to stock-based compensation expense and acquisition related and other items, including the net tax effects for litigation related charges (refer to Appendix A for additional information), and the net tax effects on 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. The difference in our GAAP and non-GAAP tax rates in the first half of fiscal 2021 was primarily due to the net tax effects on stock-based compensation expense and acquisition related and other items, including the tax effects on amortization of intangible assets. | |||||||||||||||||||||
* | Not meaningful | |||||||||||||||||||||
ORACLE CORPORATION | ||||||||
Q2 FISCAL 2022 FINANCIAL RESULTS | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
($ in millions) | ||||||||
November 30, | May 31, | |||||||
2021 | 2021 | |||||||
ASSETS | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ 17,938 | $ 30,098 | ||||||
Marketable securities | 4,900 | 16,456 | ||||||
Trade receivables, net | 4,462 | 5,409 | ||||||
Prepaid expenses and other current assets | 3,778 | 3,604 | ||||||
Total Current Assets | 31,078 | 55,567 | ||||||
Non-Current Assets: | ||||||||
Property, plant and equipment, net | 8,029 | 7,049 | ||||||
Intangible assets, net | 1,881 | 2,430 | ||||||
Goodwill, net | 43,842 | 43,935 | ||||||
Deferred tax assets | 13,265 | 13,636 | ||||||
Other non-current assets | 8,802 | 8,490 | ||||||
Total Non-Current Assets | 75,819 | 75,540 | ||||||
TOTAL ASSETS | $ 106,897 | $ 131,107 | ||||||
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY | ||||||||
Current Liabilities: | ||||||||
Notes payable, current | $ 4,998 | $ 8,250 | ||||||
Accounts payable | 1,034 | 745 | ||||||
Accrued compensation and related benefits | 1,503 | 2,017 | ||||||
Deferred revenues | 7,937 | 8,775 | ||||||
Other current liabilities | 3,409 | 4,377 | ||||||
Total Current Liabilities | 18,881 | 24,164 | ||||||
Non-Current Liabilities: | ||||||||
Notes payable and other borrowings, non-current | 73,433 | 75,995 | ||||||
Income taxes payable | 12,122 | 12,345 | ||||||
Deferred tax liabilities | 6,777 | 7,864 | ||||||
Other non-current liabilities | 5,342 | 4,787 | ||||||
Total Non-Current Liabilities | 97,674 | 100,991 | ||||||
Stockholders' (Deficit) Equity | (9,658) | 5,952 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY | $ 106,897 | $ 131,107 | ||||||
ORACLE CORPORATION | ||||||
Q2 FISCAL 2022 FINANCIAL RESULTS | ||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||
($ in millions) | ||||||
Six Months Ended | ||||||
2021 | 2020 | |||||
Cash Flows From Operating Activities: | ||||||
Net income | $ 1,209 | $ 4,693 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
Depreciation | 913 | 742 | ||||
Amortization of intangible assets | 603 | 690 | ||||
Deferred income taxes | (820) | (43) | ||||
Stock-based compensation | 1,226 | 916 | ||||
Other, net | (176) | 184 | ||||
Changes in operating assets and liabilities, net of effects from acquisitions: | ||||||
Decrease in trade receivables, net | 789 | 1,263 | ||||
Decrease in prepaid expenses and other assets | 263 | 545 | ||||
Decrease in accounts payable and other liabilities | (918) | (248) | ||||
Decrease in income taxes payable | (849) | (1,243) | ||||
Decrease in deferred revenues | (531) | (158) | ||||
Net cash provided by operating activities | 1,709 | 7,341 | ||||
Cash Flows From Investing Activities: | ||||||
Purchases of marketable securities and other investments | (9,631) | (15,578) | ||||
Proceeds from sales and maturities of marketable securities and other investments | 21,617 | 10,779 | ||||
Acquisitions, net of cash acquired | (50) | - | ||||
Capital expenditures | (1,987) | (1,004) | ||||
Net cash provided by (used for) investing activities | 9,949 | (5,803) | ||||
Cash Flows From Financing Activities: | ||||||
Payments for repurchases of common stock | (15,001) | (8,962) | ||||
Proceeds from issuances of common stock | 305 | 772 | ||||
Shares repurchased for tax withholdings upon vesting of restricted stock-based awards | (890) | (520) | ||||
Payments of dividends to stockholders | (1,748) | (1,447) | ||||
Repayments of borrowings | (5,750) | (1,000) | ||||
Other, net | (437) | 110 | ||||
Net cash used for financing activities | (23,521) | (11,047) | ||||
Effect of exchange rate changes on cash and cash equivalents | (297) | 271 | ||||
Net decrease in cash and cash equivalents | (12,160) | (9,238) | ||||
Cash and cash equivalents at beginning of period | 30,098 | 37,239 | ||||
Cash and cash equivalents at end of period | $ 17,938 | $ 28,001 | ||||
ORACLE CORPORATION | |||||||||||
Q2 FISCAL 2022 FINANCIAL RESULTS | |||||||||||
FREE CASH FLOW - TRAILING 4-QUARTERS (1) | |||||||||||
($ in millions) | |||||||||||
Fiscal 2021 | Fiscal 2022 | ||||||||||
Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | ||||
GAAP Operating Cash Flow | $ 13,092 | $ 13,967 | $ 14,659 | $ 15,887 | $ 15,325 | $ 10,255 | |||||
Capital Expenditures | (1,614) | (1,833) | (1,851) | (2,135) | (2,761) | (3,118) | |||||
Free Cash Flow | $ 11,478 | $ 12,134 | $ 12,808 | $ 13,752 | $ 12,564 | $ 7,137 | |||||
% Growth over prior year | (6%) | (1%) | 3% | 19% | 9% | (41%) | |||||
GAAP Net Income | $ 10,249 | $ 10,380 | $ 12,830 | $ 13,746 | $ 13,952 | $ 10,262 | |||||
Free Cash Flow as a % of Net Income | 112% | 117% | 100% | 100% | 90% | 70% | |||||
(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 2022 FINANCIAL RESULTS | ||||||||||||||||
SUPPLEMENTAL ANALYSIS OF GAAP REVENUES (1) | ||||||||||||||||
($ in millions) | ||||||||||||||||
Fiscal 2021 | Fiscal 2022 | |||||||||||||||
Q1 | Q2 | Q3 | Q4 | TOTAL | Q1 | Q2 | Q3 | Q4 | TOTAL | |||||||
REVENUES BY OFFERINGS | ||||||||||||||||
Cloud services and license support | $ 6,947 | $ 7,112 | $ 7,252 | $ 7,389 | $ 28,700 | $ 7,371 | $ 7,554 | $ 14,925 | ||||||||
Cloud license and on-premise license | 886 | 1,092 | 1,276 | 2,144 | 5,399 | 813 | 1,237 | 2,049 | ||||||||
Hardware | 814 | 844 | 820 | 882 | 3,359 | 763 | 767 | 1,530 | ||||||||
Services | 720 | 752 | 737 | 812 | 3,021 | 781 | 802 | 1,583 | ||||||||
Total revenues | $ 9,367 | $ 9,800 | $ 10,085 | $ 11,227 | $ 40,479 | $ 9,728 | $ 10,360 | $ 20,087 | ||||||||
AS REPORTED REVENUE GROWTH RATES | ||||||||||||||||
Cloud services and license support | 2% | 4% | 5% | 8% | 5% | 6% | 6% | 6% | ||||||||
Cloud license and on-premise license | 9% | (3%) | 4% | 9% | 5% | (8%) | 13% | 4% | ||||||||
Hardware | 0% | (3%) | (4%) | (2%) | (2%) | (6%) | (9%) | (8%) | ||||||||
Services | (8%) | (7%) | (5%) | 11% | (3%) | 8% | 7% | 8% | ||||||||
Total revenues | 2% | 2% | 3% | 8% | 4% | 4% | 6% | 5% | ||||||||
CONSTANT CURRENCY REVENUE GROWTH RATES (2) | ||||||||||||||||
Cloud services and license support | 2% | 4% | 2% | 4% | 3% | 5% | 6% | 6% | ||||||||
Cloud license and on-premise license | 8% | (5%) | 0% | 5% | 2% | (9%) | 16% | 4% | ||||||||
Hardware | 0% | (3%) | (6%) | (6%) | (4%) | (7%) | (8%) | (8%) | ||||||||
Services | (8%) | (8%) | (8%) | 6% | (5%) | 7% | 7% | 7% | ||||||||
Total revenues | 2% | 1% | 0% | 4% | 2% | 2% | 6% | 4% | ||||||||
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 | $ 3,149 | $ 6,190 | ||||||||
Infrastructure cloud services and license support | 4,131 | 4,211 | 4,300 | 4,346 | 16,988 | 4,330 | 4,405 | 8,735 | ||||||||
Total cloud services and license support revenues | $ 6,947 | $ 7,112 | $ 7,252 | $ 7,389 | $ 28,700 | $ 7,371 | $ 7,554 | $ 14,925 | ||||||||
AS REPORTED REVENUE GROWTH RATES | ||||||||||||||||
Applications cloud services and license support | 4% | 5% | 5% | 11% | 6% | 8% | 9% | 8% | ||||||||
Infrastructure cloud services and license support | 1% | 4% | 4% | 6% | 4% | 5% | 5% | 5% | ||||||||
Total cloud services and license support revenues | 2% | 4% | 5% | 8% | 5% | 6% | 6% | 6% | ||||||||
CONSTANT CURRENCY REVENUE GROWTH RATES (2) | ||||||||||||||||
Applications cloud services and license support | 4% | 5% | 3% | 7% | 5% | 7% | 8% | 7% | ||||||||
Infrastructure cloud services and license support | 1% | 3% | 2% | 2% | 2% | 3% | 5% | 4% | ||||||||
Total cloud services and license support revenues | 2% | 4% | 2% | 4% | 3% | 5% | 6% | 6% | ||||||||
GEOGRAPHIC REVENUES | ||||||||||||||||
Americas | $ 5,068 | $ 5,259 | $ 5,424 | $ 6,076 | $ 21,828 | $ 5,321 | $ 5,736 | $ 11,056 | ||||||||
Europe/Middle East/Africa | 2,738 | 2,852 | 2,981 | 3,324 | 11,894 | 2,784 | 2,953 | 5,737 | ||||||||
Asia Pacific | 1,561 | 1,689 | 1,680 | 1,827 | 6,757 | 1,623 | 1,671 | 3,294 | ||||||||
Total revenues | $ 9,367 | $ 9,800 | $ 10,085 | $ 11,227 | $ 40,479 | $ 9,728 | $ 10,360 | $ 20,087 | ||||||||
(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. | |||||||||||||||
APPENDIX A | ||
ORACLE CORPORATION | ||
Q2 FISCAL 2022 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 services and license support revenues: Business combination accounting rules as applicable to acquisitions closed prior to fiscal 2022 required us to account for the fair values of cloud services and license support contracts assumed in connection with our acquisitions. The non-GAAP adjustments to our cloud services and license support revenues for certain of the fiscal 2021 periods presented are intended to include, and thus reflect, the full amount of such revenues. We believe the adjustments to these revenues are useful to investors as a measure of the ongoing performance of our business as we generally expect to experience high renewal rates for these contracts at their stated values during the post combination periods. | |
• | 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 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 for the three and six months ended November 30, 2021 substantially consisted of litigation related charges totaling $4.7 billion that we generally do not expect to recur, and also consisted of personnel related costs for transitional and certain other employees, certain business combination adjustments including adjustments after the measurement period has ended and certain other operating items, net. We consider the $4.7 billion of litigation related charges to be outside our ordinary course of business based on the following considerations: (i) the unprecedented nature of the litigation related charges including the nature and size of the damages awarded; (ii) the dissimilarity of this litigation and related charges to recurring litigation of which we are a party in our normal business course for which any and all such charges are included in our GAAP operating results and non-GAAP measures; (iii) the complexity of the case; (iv) the counterparty involved; and (v) our expectation that litigation related charges of this nature will not recur in future periods; amongst other factors. 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 and other expenses and restructuring expenses generally diminish over time with respect to past acquisitions and/or strategic initiatives, we generally will incur certain of these expenses in connection with any future acquisitions and/or strategic initiatives. | |
SOURCE Oracle
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