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Financial News Details

Q2 FY18 GAAP EPS UP 8% TO $0.52 and NON-GAAP EPS UP 14% TO $0.70

December 14, 2017

Q2 FY18 Cloud Revenues Up 44% to $1.5 Billion and Total Revenues Up 6% to $9.6 Billion

REDWOOD SHORES, Calif., Dec. 14, 2017 /PRNewswire/ -- Oracle Corporation (NYSE: ORCL) today announced fiscal 2018 Q2 results. Total Revenues were up 6% to $9.6 billion, compared to Q2 last year. Cloud plus On-Premise Software Revenues were up 9% to $7.8 billion. Cloud Software as a Service (SaaS) revenues were up 55% to $1.1 billion. Cloud Platform as a Service (PaaS) plus Infrastructure as a Service (IaaS) revenues were up 21% to $396 million. Total Cloud Revenues were up 44% to $1.5 billion.

GAAP Operating Income was up 1% to $3.1 billion and GAAP Operating Margin was 32%. Non-GAAP Operating Income was up 10% to $4.2 billion and non-GAAP Operating Margin was 44%. GAAP Net Income was up 10% to $2.2 billion, while non-GAAP Net Income was up 16% to $3.0 billion. GAAP Earnings Per Share was up 8% to $0.52, while non-GAAP Earnings Per Share was up 14% to $0.70.

Short-term deferred revenues were up 9% to $8.1 billion. Operating cash flow on a trailing twelve-month basis was up 2% to $14.6 billion.

"Overall cloud revenue growth of 44% drove our quarterly revenue and earnings higher," said Oracle CEO, Safra Catz. "With non-GAAP Cloud SaaS Applications growth of 49% leading the way, Oracle delivered 14% non-GAAP earnings per share growth and 6% overall revenue growth. Our success in the quarter was based on the increasing scale and the gathering momentum in our cloud business. I expect the business to continue to grow and strengthen over the coming quarters."

"Our Fusion ERP and Fusion HCM SaaS applications suite revenues grew 65% in the quarter," said Oracle CEO, Mark Hurd. "We are now the clear market leader in enterprise back-office SaaS applications with over 5,000 Fusion customers. And we expect to extend our lead by selling around $2 billion in new enterprise SaaS application cloud subscriptions over the coming four quarters. That's more new SaaS sales than any of our competitors."

"Oracle will soon deliver the world's first autonomous "self-driving" database," said Oracle CTO, Larry Ellison. "The new artificially intelligent Oracle database is fully automated and requires no human labor for administration. If a security vulnerability is detected, the database immediately patches itself while running. No other system can do anything like this. Best of all, we guarantee the price of running the Oracle Autonomous Database in the Oracle Cloud is less than half the cost of running a database in the Amazon Cloud."

The Board of Directors increased the authorization for share repurchases by $12 billion. The Board of Directors also declared a quarterly cash dividend of $0.19 per share of outstanding common stock. This dividend will be paid to stockholders of record as of the close of business on January 10, 2018, with a payment date of January 24, 2018.

Q2 Fiscal 2018 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, please visit the Oracle Investor Relations website at http://www.oracle.com/investor. In addition, Oracle's Q2 results and Fiscal 2018 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, Passcode: 9396959.

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/investor 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 the growth of our cloud business, extension of our market position and sales in enterprise SaaS applications, and delivery of our new autonomous database, 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) Our cloud computing strategy, including our Oracle Cloud SaaS, PaaS, IaaS and data as a service offerings, may not be successful. (2) If we are unable to develop new or sufficiently differentiated products and services, or to enhance and improve our products and support services in a timely manner or to position and/or price our products and services to meet market demand, customers may not buy new software licenses, cloud software subscriptions or hardware systems products or purchase or renew support contracts. (3) If the security measures for our products and services are compromised or if our products and services contain significant coding, manufacturing or configuration errors, we may experience reputational harm, legal claims and reduced sales. (4) 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 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) Economic, geopolitical 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. (7) We have an active acquisition program and our acquisitions may not be successful, may involve unanticipated costs or other integration issues or may disrupt our existing operations. A detailed discussion of these factors and other risks that affect our business is contained in our U.S. Securities and Exchange Commission (SEC) filings, including our most recent reports on Form 10-K and Form 10-Q, particularly under the heading "Risk Factors." Copies of these filings are available online from the SEC or by contacting Oracle Corporation's Investor Relations Department at (650) 506-4073 or by clicking on SEC Filings on Oracle's Investor Relations website at http://www.oracle.com/investor. All information set forth in this press release is current as of December 14, 2017. Oracle undertakes no duty to update any statement in light of new information or future events.













ORACLE  CORPORATION






 Q2 FISCAL 2018 FINANCIAL RESULTS



CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS



($ in millions, except per share data)








Three Months Ended November 30,

% Increase

% Increase

(Decrease)










% of 


% of 

(Decrease)

in Constant






2017

Revenues

2016

Revenues

in US $

Currency (1)




REVENUES











Cloud software as a service

$  1,123

12%

$     725

8%

55%

53%





Cloud platform as a service and infrastructure as a service

396

4%

328

4%

21%

19%





Total cloud revenues

1,519

16%

1,053

12%

44%

43%





New software licenses 

1,353

14%

1,347

15%

0%

(2%)





Software license updates and product support

4,953

51%

4,777

53%

4%

2%





Total on-premise software revenues

6,306

65%

6,124

68%

3%

1%





Total cloud and on-premise software revenues

7,825

81%

7,177

80%

9%

7%





Hardware revenues

940

10%

1,014

11%

(7%)

(9%)





Services revenues

856

9%

844

9%

1%

0%





      Total revenues

9,621

100%

9,035

100%

6%

5%




OPERATING EXPENSES











Cloud software as a service

396

4%

316

3%

25%

23%





Cloud platform as a service and infrastructure as a service

241

3%

156

2%

55%

53%





Software license updates and product support

257

3%

242

3%

6%

5%





Hardware

351

4%

386

5%

(9%)

(11%)





Services

720

7%

697

8%

3%

1%





Sales and marketing

2,082

22%

1,960

21%

6%

4%





Research and development 

1,475

15%

1,510

17%

(2%)

(3%)





General and administrative

321

3%

303

3%

6%

5%





Amortization of intangible assets

400

4%

302

3%

33%

33%





Acquisition related and other

17

0%

40

0%

(58%)

(59%)





Restructuring

292

3%

86

1%

241%

227%





      Total operating expenses 

6,552

68%

5,998

66%

9%

8%




OPERATING INCOME 

3,069

32%

3,037

34%

1%

(1%)





Interest expense

(475)

(5%)

(451)

(5%)

5%

5%





Non-operating income, net 

273

3%

99

1%

176%

178%




INCOME BEFORE PROVISION FOR INCOME TAXES

2,867

30%

2,685

30%

7%

4%





Provision for income taxes

634

7%

653

7%

(3%)

(3%)




NET INCOME

$  2,233

23%

$  2,032

23%

10%

7%















EARNINGS PER SHARE:











Basic

$    0.54


$    0.50








Diluted

$    0.52


$    0.48







WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:











Basic

4,160


4,104








Diluted

4,283


4,195






























































(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, 2017, 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, 2017 compared with the corresponding prior year period increased our revenues by 1 percentage point, operating expenses by 1 percentage point and operating income by 2 percentage points.






























 





ORACLE  CORPORATION






 Q2 FISCAL 2018 FINANCIAL RESULTS



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



($ in millions, except per share data)








Three Months Ended November 30,

% Increase (Decrease)
in US $

% Increase (Decrease) in
Constant Currency (2) 





2017




2017



2016




2016


GAAP

Non-GAAP

GAAP

Non-GAAP






GAAP


Adj.


Non-GAAP



GAAP


Adj.


Non-GAAP



























TOTAL REVENUES

$  9,621


$         9


$              9,630



$  9,035


$     35


$              9,070


6%

6%

5%

4%




TOTAL CLOUD AND ON-PREMISE SOFTWARE REVENUES

7,825


9


7,834



7,177


35


7,212


9%

9%

7%

7%




TOTAL CLOUD REVENUES

1,519


9


1,528



1,053


34


1,087


44%

41%

43%

39%





Cloud software as a service

1,123


7


1,130



725


34


759


55%

49%

53%

47%





Cloud platform as a service and infrastructure as a service

396


2


398



328


-


328


21%

22%

19%

20%





Software license updates and product support 

4,953


-


4,953



4,777


1


4,778


4%

4%

2%

2%


























TOTAL OPERATING EXPENSES

$  6,552


$(1,122)


$              5,430



$  5,998


$  (735)


$              5,263


9%

3%

8%

2%





Cloud software as a service (4)

396


(11)


385



316


(6)


310


25%

24%

23%

22%





Cloud platform as a service and infrastructure as a service (4)

241


(2)


239



156


(1)


155


55%

54%

53%

52%





Sales and marketing (3)

2,082


(93)


1,989



1,960


(59)


1,901


6%

5%

4%

3%





Stock-based compensation (4)

307


(307)


-



241


(241)


-


27%

*

27%

*





Amortization of intangible assets (5)

400


(400)


-



302


(302)


-


33%

*

33%

*





Acquisition related and other

17


(17)


-



40


(40)


-


(58%)

*

(59%)

*





Restructuring

292


(292)


-



86


(86)


-


241%

*

227%

*




CLOUD SOFTWARE AS A SERVICE MARGIN %

65%




66%



56%




59%


841 bp.

682 bp.

857 bp.

699 bp.




CLOUD PLATFORM AS A SERVICE AND INFRASTRUCTURE AS A SERVICE MARGIN %

39%




40%



52%




53%


(1,332) bp.

(1,274) bp.

(1,340) bp.

(1,282) bp.




OPERATING INCOME

$  3,069


$  1,131


$              4,200



$  3,037


$   770


$              3,807


1%

10%

(1%)

8%




OPERATING MARGIN %

32%




44%



34%




42%


(172) bp.

164 bp.

(189) bp.

155 bp.




INCOME TAX EFFECTS (6)

$     634


$     374


$              1,008



$     653


$   228


$                 881


(3%)

14%

(3%)

12%




NET INCOME 

$  2,233


$     757


$              2,990



$  2,032


$   542


$              2,574


10%

16%

7%

14%




DILUTED EARNINGS PER SHARE

$    0.52




$                0.70



$    0.48




$                0.61


8%

14%

4%

12%




DILUTED WEIGHTED AVERAGE COMMON

SHARES OUTSTANDING

4,283


-


4,283



4,195


-


4,195


2%

2%

2%

2%





























(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, 2017, which was the last day of our prior fiscal year, rather than the actual exchange rates in effect during the respective periods.







(3)

Non-GAAP adjustments to sales and marketing expenses were as follows:






Three Months Ended




















November 30,




















2017


2016



















     Stock-based compensation (4)

$       (98)


$       (68)



















     Acquired deferred sales commissions amortization

5


9



















         Total non-GAAP sales and marketing adjustments

$       (93)


$       (59)








































(4)

Stock-based compensation was included in the following GAAP operating expense categories:




























Three Months Ended



Three Months Ended











November 30, 2017



November 30, 2016











GAAP


Adj.


Non-GAAP



GAAP


Adj.


Non-GAAP










     Software license updates and product support

$          7


$         (7)


$                     -



$          6


$       (6)


$                     -










     Hardware

3


(3)


-



3


(3)


-










     Services

14


(14)


-



9


(9)


-










     Research and development

237


(237)


-



188


(188)


-










     General and administrative

46


(46)


-



35


(35)


-










           Subtotal

307


(307)


-



241


(241)


-










     Cloud software as a service

11


(11)


-



6


(6)


-










     Cloud platform as a service and infrastructure as a service  

2


(2)


-



1


(1)


-










     Sales and marketing

98


(98)


-



68


(68)


-










     Acquisition related and other

-


-


-



11


(11)


-










           Total stock-based compensation

$       418


$     (418)


$                     -



$       327


$   (327)


$                     -































(5)

Estimated future annual amortization expense related to intangible assets as of November 30, 2017 was as follows:





Remainder of fiscal 2018

$       781





















Fiscal 2019

1,411





















Fiscal 2020

1,210





















Fiscal 2021

1,023





















Fiscal 2022

918





















Fiscal 2023

567





















Thereafter

884





















Total intangible assets, net

$    6,794










































(6)

Income tax effects were calculated reflecting an effective GAAP tax rate of 22.1% and 24.3% in the second quarter of fiscal 2018 and 2017, respectively, and an effective non-GAAP tax rate of 25.2% and 25.5% in the second quarter of fiscal 2018 and 2017, respectively. The difference between our GAAP and non-GAAP tax rates in the second quarters of fiscal 2018 and 2017 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.







*

Not meaningful















































 













ORACLE  CORPORATION






Q2 FISCAL 2018 YEAR TO DATE FINANCIAL RESULTS



CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS



($ in millions, except per share data)








Six Months Ended November 30,


% Increase






% Increase

(Decrease)







% of 


% of 

(Decrease)

in Constant






2017

Revenues

2016

Revenues

in US $

Currency (1)




REVENUES











Cloud software as a service

$  2,189

12%

$  1,382

8%

58%

57%





Cloud platform as a service and infrastructure as a service

797

4%

639

3%

25%

23%





Total cloud revenues

2,986

16%

2,021

11%

48%

47%





New software licenses 

2,319

12%

2,377

13%

(2%)

(4%)





Software license updates and product support

9,904

53%

9,570

55%

3%

2%





Total on-premise software revenues

12,223

65%

11,947

68%

2%

1%





Total cloud and on-premise software revenues

15,209

81%

13,968

79%

9%

7%





Hardware revenues

1,884

10%

2,010

12%

(6%)

(8%)





Services revenues

1,716

9%

1,652

9%

4%

2%





      Total revenues

18,809

100%

17,630

100%

7%

5%




OPERATING EXPENSES











Cloud software as a service

770

4%

600

3%

29%

27%





Cloud platform as a service and infrastructure as a service

468

3%

288

2%

62%

60%





Software license updates and product support

515

3%

516

3%

0%

(1%)





Hardware

724

4%

776

5%

(7%)

(8%)





Services

1,422

8%

1,393

8%

2%

0%





Sales and marketing

4,074

22%

3,879

22%

5%

4%





Research and development 

3,049

16%

3,030

17%

1%

0%





General and administrative

642

3%

618

4%

4%

3%





Amortization of intangible assets

811

4%

613

3%

32%

32%





Acquisition related and other

28

0%

54

0%

(48%)

(48%)





Restructuring

416

2%

185

1%

125%

118%





      Total operating expenses 

12,919

69%

11,952

68%

8%

7%




OPERATING INCOME 

5,890

31%

5,678

32%

4%

2%





Interest expense

(944)

(5%)

(867)

(5%)

9%

9%





Non-operating income, net 

505

3%

247

2%

104%

105%




INCOME BEFORE PROVISION FOR INCOME TAXES

5,451

29%

5,058

29%

8%

6%





Provision for income taxes

1,009

5%

1,194

7%

(15%)

(16%)




NET INCOME

$  4,442

24%

$  3,864

22%

15%

13%















EARNINGS PER SHARE:











Basic

$    1.07


$    0.94








Diluted

$    1.04


$    0.92







WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:











Basic

4,158


4,112








Diluted

4,283


4,208






























































(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, 2017, 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, 2017 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.






























 
























ORACLE  CORPORATION






Q2 FISCAL 2018 YEAR TO DATE FINANCIAL RESULTS



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



($ in millions, except per share data)








Six Months Ended November 30,

% Increase (Decrease)
in US $

% Increase (Decrease) in
Constant Currency (2) 





2017




2017



2016




2016


GAAP

Non-GAAP

GAAP

Non-GAAP






GAAP


Adj.


Non-GAAP



GAAP


Adj.


Non-GAAP



























TOTAL REVENUES

$ 18,809


$         34


$           18,843



$ 17,630


$        53


$           17,683


7%

7%

5%

5%




TOTAL CLOUD AND ON-PREMISE SOFTWARE REVENUES

15,209


34


15,243



13,968


53


14,021


9%

9%

7%

7%




TOTAL CLOUD REVENUES

2,986


34


3,020



2,021


52


2,073


48%

46%

47%

45%





Cloud software as a service

2,189


30


2,219



1,382


52


1,434


58%

55%

57%

54%





Cloud platform as a service and infrastructure as a service

797


4


801



639


-


639


25%

25%

23%

24%





Software license updates and product support

9,904


-


9,904



9,570


1


9,571


3%

3%

2%

2%


























TOTAL OPERATING EXPENSES

$ 12,919


$  (2,060)


$           10,859



$ 11,952


$ (1,478)


$           10,474


8%

4%

7%

2%





Cloud software as a service (4)

770


(20)


750



600


(11)


589


29%

28%

27%

26%





Cloud platform as a service and infrastructure as a service (4)

468


(4)


464



288


(2)


286


62%

62%

60%

60%





Sales and marketing (3)

4,074


(171)


3,903



3,879


(124)


3,755


5%

4%

4%

2%





Stock-based compensation (4)

610


(610)


-



489


(489)


-


25%

*

25%

*





Amortization of intangible assets (5)

811


(811)


-



613


(613)


-


32%

*

32%

*





Acquisition related and other

28


(28)


-



54


(54)


-


(48%)

*

(48%)

*





Restructuring

416


(416)


-



185


(185)


-


125%

*

118%

*




CLOUD SOFTWARE AS A SERVICE MARGIN %

65%




66%



57%




59%


812 bp.

718 bp.

825 bp.

732 bp.




CLOUD PLATFORM AS A SERVICE AND INFRASTRUCTURE AS A SERVICE MARGIN %

41%




42%



55%




55%


(1,360) bp.

(1,302) bp.

(1,366) bp

(1,307) bp.




OPERATING INCOME

$    5,890


$    2,094


$              7,984



$    5,678


$  1,531


$              7,209


4%

11%

2%

9%




OPERATING MARGIN %

31%




42%



32%




41%


(89) bp.

161 bp.

(100) bp.

157 bp.




INCOME TAX EFFECTS (6)

$    1,009


$       885


$              1,894



$    1,194


$     486


$              1,680


(15%)

13%

(16%)

11%




NET INCOME 

$    4,442


$    1,209


$              5,651



$    3,864


$  1,045


$              4,909


15%

15%

13%

13%




DILUTED EARNINGS PER SHARE

$      1.04




$                1.32



$      0.92




$                1.17


13%

13%

11%

11%




DILUTED WEIGHTED AVERAGE COMMON

SHARES OUTSTANDING

4,283


-


4,283



4,208


-


4,208


2%

2%

2%

2%
















































(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, 2017, which was the last day of our prior fiscal year, rather than the actual exchange rates in effect during the respective periods.


























(3)

Non-GAAP adjustments to sales and marketing expenses were as follows:
































Six Months Ended




















November 30,




















2017


2016



















     Stock-based compensation (4)

$       (187)


$       (133)



















     Acquired deferred sales commissions amortization

16


9



















           Total non-GAAP sales and marketing adjustments

$       (171)


$       (124)








































(4)

Stock-based compensation was included in the following GAAP operating expense categories:
































Six Months Ended



Six Months Ended











November 30, 2017



November 30, 2016











GAAP


Adj.


Non-GAAP



GAAP


Adj.


Non-GAAP










     Software license updates and product support

$          14


$         (14)


$                     -



$          12


$       (12)


$                     -










     Hardware

6


(6)


-



6


(6)


-










     Services

28


(28)


-



17


(17)


-










     Research and development

472


(472)


-



382


(382)


-










     General and administrative    

90


(90)


-



72


(72)


-










           Subtotal

610


(610)


-



489


(489)


-










     Cloud software as a service

20


(20)


-



11


(11)


-










     Cloud platform as a service and infrastructure as a service

4


(4)


-



2


(2)


-










     Sales and marketing

187


(187)


-



133


(133)


-










     Acquisition related and other

1


(1)


-



11


(11)


-










           Total stock-based compensation

$        822


$       (822)


$                     -



$        646


$      (646)


$                     -































(5)

Estimated future annual amortization expense related to intangible assets as of November 30, 2017 was as follows:





Remainder of fiscal 2018

$        781





















Fiscal 2019

1,411





















Fiscal 2020

1,210





















Fiscal 2021

1,023





















Fiscal 2022

918





















Fiscal 2023

567





















Thereafter

884





















Total intangible assets, net

$      6,794










































(6)

Income tax effects were calculated reflecting an effective GAAP tax rate of 18.5% and 23.6% in the first half of fiscal 2018 and 2017, respectively, and an effective non-GAAP tax rate of 25.1% and 25.5% in the first half of fiscal 2018 and 2017, respectively. The difference between our GAAP and non-GAAP tax rate in fiscal 2018 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.  The difference between our GAAP and non-GAAP tax rate in the first half of fiscal 2018 and 2017 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.


























*

Not meaningful















































 











ORACLE  CORPORATION






Q2 FISCAL 2018 FINANCIAL RESULTS



CONDENSED CONSOLIDATED BALANCE SHEETS



($ in millions)









November 30,

May 31,






2017

2017



ASSETS







Current Assets:








Cash and cash equivalents

$   21,310


$   21,784





Marketable securities

50,270


44,294





Trade receivables, net

3,798


5,300





Inventories

436


300





Prepaid expenses and other current assets

2,731


2,837






Total Current Assets

78,545


74,515




Non-Current Assets:








   Property, plant and equipment, net

5,868


5,315





   Intangible assets, net

6,794


7,679





   Goodwill, net

42,964


43,045





   Deferred tax assets

1,222


1,143





   Other assets

3,369


3,294






Total Non-Current Assets

60,217


60,476




TOTAL ASSETS

$ 138,762


$ 134,991




LIABILITIES AND EQUITY







Current Liabilities:








Notes payable and other borrowings, current 

$     2,499


$    9,797





Accounts payable

554


599





Accrued compensation and related benefits

1,500


1,966





Deferred revenues

8,076


8,233





Other current liabilities

2,865


3,583






Total Current Liabilities

15,494


24,178




Non-Current Liabilities:








Notes payable and other borrowings, non-current

58,170


48,112





Income taxes payable

6,082


5,681





Other non-current liabilities

2,716


2,774






Total Non-Current Liabilities

66,968


56,567




Equity

56,300


54,246




TOTAL LIABILITIES AND EQUITY

$ 138,762


$ 134,991





















 










     ORACLE  CORPORATION 






Q2 FISCAL 2018 FINANCIAL RESULTS



CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS



($ in millions)








Six Months Ended November 30,





2017

2016



Cash Flows From Operating Activities:







Net income

$  4,442


$   3,864




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







Depreciation

573


463




Amortization of intangible assets

811


613




Deferred income taxes

95


103




Stock-based compensation

822


646




Other, net

81


85




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







Decrease in trade receivables, net

1,529


1,680




Increase in inventories

(135)


(116)




Decrease in prepaid expenses and other assets

138


321




Decrease in accounts payable and other liabilities

(618)


(499)




Increase in income taxes payable

22


9




Decrease in deferred revenues

(344)


(208)




Net cash provided by operating activities

7,416


6,961




Cash Flows From Investing Activities:







Purchases of marketable securities and other investments

(18,022)


(10,090)




Proceeds from maturities and sales of marketable securities and other investments

11,566


6,080




Acquisitions, net of cash acquired


(9,854)




Capital expenditures

(1,072)


(1,056)




Net cash used for investing activities

(7,528)


(14,920)




Cash Flows From Financing Activities:







Payments for repurchases of common stock

(2,454)


(2,569)




Proceeds from issuances of common stock

1,353


746




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

(434)


(188)




Payments of dividends to stockholders

(1,579)


(1,232)




Proceeds from borrowings, net of issuance costs

9,945


13,932




Repayments of borrowings

(7,300)


(3,750)




Distributions to noncontrolling interests

(34)


(200)




Net cash (used for) provided by financing activities

(503)


6,739




Effect of exchange rate changes on cash and cash equivalents

141


(340)




Net decrease in cash and cash equivalents

(474)


(1,560)




Cash and cash equivalents at beginning of period

21,784


20,152




Cash and cash equivalents at end of period

$21,310


$ 18,592



















 




























 ORACLE  CORPORATION 



 Q2 FISCAL 2018 FINANCIAL RESULTS 



 FREE CASH FLOW - TRAILING 4-QUARTERS (1) 



 ($ in millions) 


















 Fiscal 2017 

 Fiscal 2018 






 Q1 

 Q2 

 Q3 

 Q4 

 Q1 

 Q2 

 Q3 

 Q4 
















GAAP Operating Cash Flow

$ 13,679

$ 14,249

$ 13,453

$ 14,126

$ 14,817

$ 14,581



















Capital Expenditures

(1,042)

(1,604)

(1,676)

(2,021)

(2,195)

(2,037)



















Free Cash Flow

$ 12,637

$ 12,645

$ 11,777

$ 12,105

$ 12,622

$ 12,544



















% Growth over prior year

5%

10%

(7%)

(3%)

0%

(1%)
































GAAP Net Income

$   8,986

$   8,820

$   8,917

$  9,335

$   9,713

$   9,914



















Free Cash Flow as a % of Net Income

141%

143%

132%

130%

130%

127%
































(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 2018 FINANCIAL RESULTS 



 SUPPLEMENTAL ANALYSIS OF GAAP REVENUES (1) 



 ($ in millions) 







 Fiscal 2017 

 Fiscal 2018 



 Q1 

 Q2 

 Q3 

 Q4 

 TOTAL 

 Q1 

 Q2 

 Q3 

 Q4 

 TOTAL 





REVENUES















 Cloud software as a service  

$    657

$    725

$             865

$      964

$   3,211

$ 1,067

$ 1,123



$   2,189





 Cloud platform as a service and infrastructure as a service 

312

328

324

397

1,360

400

396



797






Total cloud revenues

969

1,053

1,189

1,361

4,571

1,467

1,519



2,986





 New software licenses 

1,030

1,347

1,414

2,626

6,418

966

1,353



2,319





 Software license updates and product support 

4,792

4,777

4,762

4,897

19,229

4,951

4,953



9,904






Total on-premise software revenues

5,822

6,124

6,176

7,523

25,647

5,917

6,306



12,223






 Total cloud and on-premise software revenues 

6,791

7,177

7,365

8,884

30,218

7,384

7,825



15,209






















 Total hardware revenues 

996

1,014

1,028

1,114

4,152

943

940



1,884






















 Total services revenues 

808

844

812

894

3,358

860

856



1,716






















 Total revenues 

$ 8,595

$ 9,035

$          9,205

$ 10,892

$ 37,728

$ 9,187

$ 9,621



$ 18,809





















AS REPORTED REVENUE GROWTH RATES 















 Cloud software as a service  

50%

57%

64%

67%

61%

62%

55%



58%





 Cloud platform as a service and infrastructure as a service 

80%

75%

55%

40%

60%

28%

21%



25%






Total cloud revenues

59%

62%

62%

58%

60%

51%

44%



48%





 New software licenses 

(11%)

(20%)

(16%)

(5%)

(12%)

(6%)

0%



(2%)





 Software license updates and product support 

2%

2%

2%

2%

2%

3%

4%



3%






Total on-premise software revenues

0%

(4%)

(3%)

(1%)

(2%)

2%

3%



2%






 Total cloud and on-premise software revenues 

5%

2%

4%

5%

4%

9%

9%



9%






















 Total hardware revenues 

(12%)

(10%)

(9%)

(13%)

(11%)

(5%)

(7%)



(6%)






















 Total services revenues 

(6%)

(2%)

2%

3%

(1%)

6%

1%



4%






















 Total revenues 

2%

0%

2%

3%

2%

7%

6%



7%





















CONSTANT CURRENCY GROWTH RATES (2)















 Cloud software as a service  

52%

59%

65%

69%

62%

62%

53%



57%





 Cloud platform as a service and infrastructure as a service 

84%

78%

57%

42%

62%

27%

19%



23%






Total cloud revenues

61%

64%

63%

60%

62%

51%

43%



47%





 New software licenses 

(10%)

(19%)

(15%)

(4%)

(11%)

(7%)

(2%)



(4%)





 Software license updates and product support 

3%

3%

3%

3%

3%

2%

2%



2%






Total on-premise software revenues

1%

(3%)

(2%)

0%

(1%)

1%

1%



1%






 Total cloud and on-premise software revenues 

6%

3%

5%

6%

5%

8%

7%



7%






















 Total hardware revenues 

(11%)

(9%)

(9%)

(12%)

(10%)

(6%)

(9%)



(8%)






















 Total services revenues 

(5%)

0%

3%

4%

1%

5%

0%



2%






















 Total revenues 

3%

1%

3%

4%

3%

6%

5%



5%





































(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, 2017 and 2016 for the fiscal 2018 and fiscal 2017 constant currency growth rate calculations presented, respectively, rather than the actual exchange rates in effect during the respective periods.



































 


















 ORACLE  CORPORATION 



 Q2 FISCAL 2018 FINANCIAL RESULTS 



 SUPPLEMENTAL GEOGRAPHIC GAAP REVENUES ANALYSIS (1) 



 ($ in millions) 









 Fiscal 2017 

 Fiscal 2018 







 Q1 

 Q2 

 Q3 

 Q4 

 TOTAL 

 Q1 

 Q2 

 Q3 

 Q4 

 TOTAL 





















AMERICAS















 Total cloud and on-premise software revenues 

$  3,876

$  4,000

$  4,280

$  5,076

$    17,231

$  4,256

$  4,414



$      8,670





 Total hardware revenues 

$    526

$     510

$     511

$     542

$      2,089

$    485

$    482



$        968





















AS REPORTED GROWTH RATES 















 Total cloud and on-premise software revenues 

5%

2%

8%

6%

5%

10%

10%



10%





 Total hardware revenues 

(11%)

(14%)

(11%)

(17%)

(13%)

(8%)

(5%)



(7%)





















CONSTANT CURRENCY GROWTH RATES (2) 















 Total cloud and on-premise software revenues 

6%

2%

7%

6%

5%

9%

10%



10%





 Total hardware revenues 

(10%)

(14%)

(11%)

(17%)

(13%)

(8%)

(6%)



(7%)





































EUROPE / MIDDLE EAST / AFRICA















 Total cloud and on-premise software revenues 

$  1,903

$  2,008

$  2,019

$  2,489

$      8,419

$  2,019

$  2,259



$      4,278





 Total hardware revenues 

$    275

$     294

$     300

$     352

$      1,221

$    271

$    272



$        543





















AS REPORTED GROWTH RATES 















 Total cloud and on-premise software revenues 

2%

(3%)

(2%)

1%

(1%)

6%

12%



9%





 Total hardware revenues 

(17%)

(7%)

(14%)

(8%)

(11%)

(1%)

(8%)



(5%)





















CONSTANT CURRENCY GROWTH RATES (2)















 Total cloud and on-premise software revenues 

7%

2%

2%

5%

4%

3%

7%



5%





 Total hardware revenues 

(13%)

(2%)

(10%)

(4%)

(7%)

(4%)

(12%)



(8%)





































ASIA PACIFIC















 Total cloud and on-premise software revenues 

$  1,012

$  1,169

$  1,066

$  1,319

$      4,568

$  1,109

$  1,152



$      2,261





 Total hardware revenues 

$    195

$     210

$     217

$     220

$        842

$    187

$    186



$        373





















AS REPORTED GROWTH RATES 















 Total cloud and on-premise software revenues 

12%

15%

2%

9%

9%

10%

(1%)



4%





 Total hardware revenues 

(7%)

(1%)

1%

(12%)

(5%)

(4%)

(11%)



(8%)





















CONSTANT CURRENCY GROWTH RATES (2)















 Total cloud and on-premise software revenues 

8%

11%

0%

9%

7%

10%

(2%)



4%





 Total hardware revenues 

(9%)

(3%)

0%

(12%)

(6%)

(4%)

(12%)



(8%)





































TOTAL COMPANY















 Total cloud and on-premise software revenues 

$  6,791

$  7,177

$  7,365

$  8,884

$    30,218

$  7,384

$  7,825



$    15,209





 Total hardware revenues 

$    996

$  1,014

$  1,028

$  1,114

$      4,152

$    943

$    940



$      1,884





















AS REPORTED GROWTH RATES 















 Total cloud and on-premise software revenues 

5%

2%

4%

5%

4%

9%

9%



9%





 Total hardware revenues 

(12%)

(10%)

(9%)

(13%)

(11%)

(5%)

(7%)



(6%)





















CONSTANT CURRENCY GROWTH RATES (2)















 Total cloud and on-premise software revenues 

6%

3%

5%

6%

5%

8%

7%



7%





 Total hardware revenues 

(11%)

(9%)

(9%)

(12%)

(10%)

(6%)

(9%)



(8%)





































(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, 2017 and 2016 for the fiscal 2018 and fiscal 2017 constant currency growth rate calculations presented, respectively, rather than the actual exchange rates in effect during the respective periods.



































 


















 ORACLE  CORPORATION 



 Q2 FISCAL 2018 FINANCIAL RESULTS 



 SUPPLEMENTAL TOTAL CLOUD AND ON-PREMISE SOFTWARE GAAP REVENUES ANALYSIS (1) 



 ($ in millions) 









 Fiscal 2017 

 Fiscal 2018 






 Q1 

 Q2 

 Q3 

 Q4 

 TOTAL 

 Q1 

 Q2 

 Q3 

 Q4 

 TOTAL 





















APPLICATIONS REVENUES















 Cloud software as a service 

$    657

$    725

$    865

$    964

$   3,211

$ 1,067

$ 1,123



$ 2,189





 On-premise software revenues 

1,584

1,610

1,632

1,898

6,724

1,579

1,554



3,134





    Total cloud and on-premise software revenues 

$ 2,241

$ 2,335

$ 2,497

$ 2,862

$   9,935

$ 2,646

$ 2,677



$ 5,323





















AS REPORTED GROWTH RATES 















 Cloud software as a service 

50%

57%

64%

67%

61%

62%

55%



58%





 On-premise software revenues 

(5%)

(11%)

(8%)

(10%)

(8%)

0%

(3%)



(2%)





    Total cloud and on-premise software revenues 

6%

3%

9%

7%

6%

18%

15%



16%





















CONSTANT CURRENCY GROWTH RATES (2) 















 Cloud software as a service 

52%

59%

65%

69%

62%

62%

53%



57%





 On-premise software revenues 

(4%)

(9%)

(7%)

(9%)

(7%)

(1%)

(5%)



(3%)





    Total cloud and on-premise software revenues 

8%

5%

9%

8%

8%

17%

13%



15%





































PLATFORM AND INFRASTRUCTURE REVENUES















 Cloud platform as a service and infrastructure as a service 

$    312

$    328

$    324

$    397

$   1,360

$    400

$    396



$    797





 On-premise software revenues 

4,238

4,514

4,544

5,625

18,923

4,338

4,752



9,089





    Total cloud and on-premise software revenues 

$ 4,550

$ 4,842

$ 4,868

$ 6,022

$  20,283

$ 4,738

$ 5,148



$ 9,886





















AS REPORTED GROWTH RATES 















 Cloud platform as a service and infrastructure as a service 

80%

75%

55%

40%

60%

28%

21%



25%





 On-premise software revenues 

1%

(1%)

(1%)

3%

1%

2%

5%



4%





    Total cloud and on-premise software revenues 

5%

2%

2%

5%

3%

4%

6%



5%





















CONSTANT CURRENCY GROWTH RATES (2) 















 Cloud platform as a service and infrastructure as a service 

84%

78%

57%

42%

62%

27%

19%



23%





 On-premise software revenues 

2%

(1%)

0%

4%

1%

1%

3%



2%





    Total cloud and on-premise software revenues 

5%

2%

2%

6%

4%

3%

4%



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, 2017 and 2016 for the fiscal 2018 and fiscal 2017 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 2018 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, cloud platform as a service and infrastructure as a service, and software license updates and product support deferred revenues: Business combination accounting rules require us to account for the fair values of cloud-based service contracts and software license updates and product 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 revenues, cloud platform as a service and infrastructure as a service revenues, and software license updates and product support revenues is 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. 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-based service contracts; however, we cannot be certain that our customers will renew our cloud-based contracts or software license updates and product support contracts.

Deferred sales commissions amortization: Certain acquired companies capitalized sales commissions associated with subscription agreements and amortized these amounts over the related contractual terms.  Business combination accounting rules generally require us to eliminate these capitalized sales commissions balances as of the acquisition date and our post-combination GAAP sales and marketing expenses generally do not reflect the amortization of these deferred sales commissions balances. The non-GAAP adjustment to increase our sales and marketing expenses is intended to include, and thus reflect, the full amount of amortization related to such balances as though the acquired companies operated independently in the periods presented. We believe this adjustment to sales and marketing expenses is useful to investors as a measure of the ongoing performance of our business. The presentation of this non-GAAP adjustment commenced in the second fiscal quarter of fiscal 2017 as a result of our acquisition of NetSuite.  Such adjustment was not material in prior 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 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 stock awards assumed in acquisitions whose vesting was fully accelerated upon termination of the employees pursuant to the original terms of those stock awards. 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 and/or strategic initiatives, we generally will incur these expenses in connection with any future acquisitions and/or strategic initiatives.

 

Cision View original content:http://www.prnewswire.com/news-releases/q2-fy18-gaap-eps-up-8-to-052-and-non-gaap-eps-up-14-to-070-300571692.html

SOURCE Oracle Corporation

Ken Bond, Oracle Investor Relations, 1.650.607.0349, ken.bond@oracle.com; Deborah Hellinger, Oracle Corporate Communications, 1.212.508.7935, deborah.hellinger@oracle.com

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