Q4 FY18 GAAP EPS UP 8% TO $0.82 and NON-GAAP EPS UP 11% TO $0.99
REDWOOD SHORES, Calif., June 19, 2018 /PRNewswire/ -- Oracle Corporation (NYSE: ORCL) today announced fiscal 2018 Q4 results and fiscal 2018 full year results. In Q4, Total Revenues were up 3% to $11.3 billion compared to Q4 last year. Q4 Cloud Services and License Support revenues were up 8% to $6.8 billion. Q4 Cloud License and On-Premise License revenues were down 5% to $2.5 billion.
Q4 GAAP Operating Income was up 8% to $4.4 billion, and GAAP Operating Margin was 39%. Q4 Non-GAAP Operating Income was up 6% to $5.3 billion, and non-GAAP Operating Margin was 47%. Q4 GAAP Net Income was $3.4 billion, and non-GAAP Net Income was $4.1 billion. Q4 GAAP Earnings Per Share was up 8% to $0.82, while non-GAAP Earnings Per Share was up 11% to $0.99.
At the end of Q4, short-term deferred revenues were up 2% to $8.4 billion, while Operating Cash Flow on a trailing twelve-month basis was up 9%, or $1.3 billion, to a record $15.4 billion.
For the full fiscal year 2018, Total Revenues were up 6% to $39.8 billion compared to fiscal 2017. FY18 Cloud Services and License Support revenues were up 10% to $26.3 billion. FY18 Cloud License and On-Premise License revenues were down 4% to $6.2 billion.
FY18 GAAP Operating Income was up 8% to $13.7 billion, and GAAP Operating Margin was 34%. FY18 Non-GAAP Operating Income was up 9% to $17.6 billion, and non-GAAP Operating Margin was 44%. FY18 GAAP Net Income was $3.8 billion, and non-GAAP Net Income was $13.2 billion. FY18 GAAP Earnings Per Share was $0.90, while Non-GAAP Earnings Per Share was $3.12.
"Last year, I forecast double-digit non-GAAP earnings per share growth for FY18 and we delivered 14% growth this year, largely driven by strong growth in our cloud businesses," said Oracle CEO, Safra Catz. "Looking ahead to FY19, I expect revenue growth will enable us to deliver double-digit non-GAAP earnings per share growth once again."
"We had a great fourth quarter with total revenues more than $200 million above our constant currency forecast," said Oracle CEO, Mark Hurd. "Our strategic Fusion ERP and HCM SaaS cloud applications suite revenues grew over 50% in the fourth quarter, and we expect continued strong growth from our Fusion SaaS suites throughout FY19."
"Some of our largest customers have now begun the process of moving their on-premise Oracle databases to the Oracle Cloud," said Oracle Chairman and CTO, Larry Ellison. "For example, AT&T is moving thousands of databases and tens of thousands of terabytes of data into the Oracle Cloud. We think that these large scale migrations of Oracle database to the cloud will drive our PaaS and IaaS businesses throughout FY19."
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 July 17, 2018, with a payment date of July 31, 2018.
Q4 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 of this event, please visit the Oracle Investor Relations website at http://www.oracle.com/investor. In addition, Oracle's Q4 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, Pass Code: 6866209.
About Oracle
Oracle offers a comprehensive and fully integrated stack of cloud applications and platform services. For more information about Oracle (NYSE: ORCL), visit www.oracle.com or contact Investor Relations at investor_us@oracle.com or (650) 506-4073.
Trademarks
Oracle and Java are registered trademarks of Oracle and/or its affiliates. Other names may be trademarks of their respective owners.
"Safe Harbor" Statement: Statements in this press release relating to Oracle's future plans, expectations, beliefs, intentions and prospects, including statements regarding our expectations for future growth in revenues, non-GAAP earnings per share and our Fusion SaaS suite of products, and our beliefs that large scale customer cloud migrations will drive our PaaS and IaaS businesses in FY19, 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) 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, enhance and improve our products and support services in a timely manner or position and price our products and services to meet demand, customers may not buy cloud licenses and on-premise licenses, cloud services or hardware 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) 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. (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) 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. (7) 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. 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 June 19, 2018. Oracle undertakes no duty to update any statement in light of new information or future events.
ORACLE CORPORATION
Q4 FISCAL 2018 FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($ in millions, except per share data)
Three Months Ended May 31, % Increase
% Increase (Decrease)
% of % of (Decrease) in Constant
2018 Revenues 2017 Revenues in US $ Currency (1)
---- -------- ---- -------- ------- -----------
REVENUES
Cloud services and license support $6,770 60% $6,258 58% 8% 6%
Cloud license and on-premise
license 2,483 22% 2,626 24% (5%) (6%)
Hardware 1,115 10% 1,114 10% 0% (2%)
Services 883 8% 894 8% (1%) (3%)
--- ---
Total revenues 11,251 100% 10,892 100% 3% 2%
------ ---- --- ----
OPERATING EXPENSES
Cloud services and license support 962 8% 835 8% 15% 14%
Hardware 462 4% 440 4% 5% 3%
Services 755 7% 728 7% 4% 2%
Sales and marketing 2,324 20% 2,313 21% 0% (1%)
Research and development 1,544 14% 1,609 15% (4%) (4%)
General and administrative 308 3% 317 3% (3%) (5%)
Amortization of intangible assets 415 4% 441 4% (6%) (6%)
Acquisition related and other 20 0% 18 0% 9% 8%
Restructuring 81 1% 118 1% (32%) (34%)
--- ---
Total operating expenses 6,871 61% 6,819 63% 1% 0%
----- --- --- ---
OPERATING INCOME 4,380 39% 4,073 37% 8% 5%
----- --- ----- ---
Interest expense (547) (5%) (481) (4%) 14% 14%
Non-operating income, net 308 3% 168 2% 83% 87%
--- ---
INCOME BEFORE PROVISION FOR INCOME
TAXES 4,141 37% 3,760 35% 10% 8%
----- -----
Provision for income taxes 733 7% 529 5% 39% 39%
--- --- --- ---
NET INCOME $3,408 30% $3,231 30% 5% 2%
====== === ====== ===
EARNINGS PER SHARE:
Basic $0.84 $0.78
Diluted $0.82 $0.76
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic 4,046 4,132
Diluted 4,149 4,248
(1) We compare the percent change in the results from one period to another period using
constant currency disclosure. We present constant currency information to provide a
framework for assessing how our underlying businesses performed excluding the
effect of foreign currency rate fluctuations. To present this information, current
and comparative prior period results for entities reporting in currencies other
than United States dollars are converted into United States dollars at the exchange
rates in effect on May 31, 2017, which was the last day of our prior fiscal year,
rather than the actual exchange rates in effect during the respective periods.
Movements in international currencies relative to the United States dollar during
the three months ended May 31, 2018 compared with the corresponding prior year
period increased our revenues by 1 percentage point, operating expenses by 1
percentage point and operating income by 3 percentage points.
ORACLE CORPORATION
Q4 FISCAL 2018 FINANCIAL RESULTS
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)
($ in millions, except per share data)
Three Months Ended May 31, % Increase (Decrease) % Increase (Decrease) in
in US $ Constant Currency (2)
------- --------------------
2018 2018 2017 2017 GAAP Non-GAAP GAAP Non-GAAP
---- -------- ---- --------
GAAP Adj. Non-GAAP GAAP Adj. Non-GAAP
---- ---- -------- ---- ---- --------
TOTAL REVENUES $11,251 $9 $11,260 $10,892 $50 $10,942 3% 3% 2% 1%
Cloud services and license support 6,770 9 6,779 6,258 50 6,308 8% 7% 6% 5%
TOTAL OPERATING EXPENSES $6,871 $(909) $5,962 $6,819 $(893) $5,926 1% 1% 0% (1%)
Sales and marketing (3) 2,324 (84) 2,240 2,313 (62) 2,251 0% 0% (1%) (2%)
Stock-based compensation (4) 309 (309) - 254 (254) - 22% * 22% *
Amortization of intangible assets
(5) 415 (415) - 441 (441) - (6%) * (6%) *
Acquisition related and other 20 (20) - 18 (18) - 9% * 8% *
Restructuring 81 (81) - 118 (118) - (32%) * (34%) *
OPERATING INCOME $4,380 $918 $5,298 $4,073 $943 $5,016 8% 6% 5% 4%
OPERATING MARGIN % 39% 47% 37% 46% 154 bp. 121 bp. 128 bp. 108 bp.
INCOME TAX EFFECTS (6) $733 $239 $972 $529 $412 $941 39% 3% 39% 1%
NET INCOME $3,408 $679 $4,087 $3,231 $531 $3,762 5% 9% 2% 7%
DILUTED EARNINGS PER SHARE $0.82 $0.99 $0.76 $0.89 8% 11% 5% 9%
DILUTED WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING 4,149 - 4,149 4,248 - 4,248 (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
May 31,
-------
2018 2017
---- ----
Stock-based
compensation (4) $(88) $(78)
Acquired deferred
sales commissions
amortization 4 16
Total non-GAAP
sales and
marketing
adjustments $(84) $(62)
=======================
(4) Stock-based compensation was included in the following GAAP operating expense categories:
Three Months Ended Three Months Ended
May 31, 2018 May 31, 2017
------------ ------------
GAAP Adj. Non-GAAP GAAP Adj. Non-GAAP
---- ---- -------- ---- ---- --------
Cloud services and
license support $21 $(21) $ - $14 $(14) $ -
Hardware 3 (3) - 3 (3) -
Services 11 (11) - 14 (14) -
Research and
development 228 (228) - 197 (197) -
General and
administrative 46 (46) - 26 (26) -
-----------
Subtotal 309 (309) - 254 (254) -
--------
Sales and
marketing 88 (88) - 78 (78) -
Acquisition
related and other - - - 2 (2) -
-----------------------
Total stock-based
compensation $397 $(397) $ - $334 $(334) $ -
============================
(5) Estimated future annual amortization expense related to intangible assets as of May 31, 2018 was as follows:
Fiscal 2019 $1,605
Fiscal 2020 1,400
Fiscal 2021 1,174
Fiscal 2022 966
Fiscal 2023 613
Thereafter 912
----------
Total intangible
assets, net $6,670
===========================
(6) Income tax effects were calculated reflecting an effective GAAP tax rate of 17.7% and 14.1% in the fourth quarter of fiscal 2018 and 2017, respectively, and an
effective non-GAAP tax rate of 19.2% and 20.0% in the fourth quarter of fiscal 2018 and 2017, respectively. The difference between our GAAP and non-GAAP tax
rates in the fourth quarter of fiscal 2018 was primarily due to adjustments in our estimates for the one-time effects the U.S. 2017 Tax Cuts and Jobs Act
(refer to Appendix A for additional information), net tax effects on stock-based compensation expense and acquisition related items, including the tax effects
of amortization of intangible assets. The difference between our GAAP and non-GAAP tax rates in the fourth quarter of fiscal 2017 was primarily due to the net
tax effects on stock-based compensation expense and acquisition related items, including the tax effects of amortization of intangible assets.
* Not meaningful
--- --------------
ORACLE CORPORATION
FISCAL 2018 YEAR TO DATE FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($ in millions, except per share data)
Year Ended May 31, % Increase
% Increase (Decrease)
% of % of (Decrease) in Constant
2018 Revenues 2017 Revenues in US $ Currency (1)
---- -------- ---- -------- ------- -----------
REVENUES
Cloud services and license support $26,254 66% $23,800 63% 10% 8%
Cloud license and on-premise
license 6,190 16% 6,418 17% (4%) (5%)
Hardware 3,993 10% 4,152 11% (4%) (6%)
Services 3,394 8% 3,358 9% 1% (1%)
--- ---
Total revenues 39,831 100% 37,728 100% 6% 3%
------ ---- --- ----
OPERATING EXPENSES
Cloud services and license support 3,612 10% 3,015 9% 20% 18%
Hardware 1,581 4% 1,653 4% (4%) (7%)
Services 2,888 7% 2,801 7% 3% 1%
Sales and marketing 8,431 21% 8,197 22% 3% 1%
Research and development 6,091 15% 6,159 16% (1%) (2%)
General and administrative 1,289 3% 1,176 3% 10% 8%
Amortization of intangible assets 1,620 4% 1,451 4% 12% 12%
Acquisition related and other 52 0% 103 0% (50%) (50%)
Restructuring 588 2% 463 1% 27% 22%
--- ---
Total operating expenses 26,152 66% 25,018 66% 5% 3%
------ --- --- ---
OPERATING INCOME 13,679 34% 12,710 34% 8% 5%
------ --- ------ ---
Interest expense (2,025) (5%) (1,798) (5%) 13% 13%
Non-operating income, net 1,237 3% 605 2% 105% 106%
--- ---
INCOME BEFORE PROVISION FOR INCOME
TAXES 12,891 32% 11,517 31% 12% 9%
------ ------
Provision for income taxes (2) 9,066 22% 2,182 6% 315% 315%
----- --- --- ---
NET INCOME $3,825 10% $9,335 25% (59%) (62%)
====== === ====== ===
EARNINGS PER SHARE:
Basic $0.93 $2.27
Diluted $0.90 $2.21
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic 4,121 4,115
Diluted 4,238 4,217
(1) We compare the percent change in the results from one period to another period using
constant currency disclosure. We present constant currency information to provide a
framework for assessing how our underlying businesses performed excluding the effect
of foreign currency rate fluctuations. To present this information, current and
comparative prior period results for entities reporting in currencies other than
United States dollars are converted into United States dollars at the exchange rates
in effect on May 31, 2017, which was the last day of our prior fiscal year, rather
than the actual exchange rates in effect during the respective periods. Movements in
international currencies relative to the United States dollar during the year ended
May 31, 2018 compared with the corresponding prior year period increased our revenues
by 3 percentage points, operating expenses by 2 percentage points and operating
income by 3 percentage points.
(2) Provision for income taxes for the year ended May 31, 2018 includes the impact of the
U.S. 2017 Tax Cuts and Jobs Act, which was signed into law during our fiscal 2018.
ORACLE CORPORATION
FISCAL 2018 YEAR TO DATE FINANCIAL RESULTS
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)
($ in millions, except per share data)
% Increase (Decrease) % Increase (Decrease) in
in US $ Constant Currency (2)
Year Ended May 31,
------------------
2018 2017 2017 GAAP Non-GAAP GAAP Non-GAAP
2018
Adj. Non-GAAP GAAP Adj. Non-GAAP
GAAP
----
TOTAL REVENUES $47 $39,878 $37,728 $171 $37,899 6% 5% 3% 3%
$39,831
Cloud services and license support 47 26,301 23,800 171 23,971 10% 10% 8% 7%
26,254
TOTAL OPERATING EXPENSES $(3,844) $22,308 $25,018 $(3,286) $21,732 5% 3% 3% 1%
$26,152
Sales and marketing (3) (339) 8,092 8,197 (260) 7,937 3% 2% 1% 0%
8,431
Stock-based compensation (4) (1,245) - 1,009 (1,009) - 23% * 23% *
1,245
Amortization of intangible assets (5) (1,620) - 1,451 (1,451) - 12% * 12% *
1,620
Acquisition related and other 52 (52) - 103 (103) - (50%) * (50%) *
Restructuring 588 (588) - 463 (463) - 27% * 22% *
OPERATING INCOME $3,891 $17,570 $12,710 $3,457 $16,167 8% 9% 5% 6%
$13,679
OPERATING MARGIN % 44% 34% 43% 65 bp. 140 bp. 38 bp. 126 bp.
34%
INCOME TAX EFFECTS (6) $(5,528) $3,538 $2,182 $1,233 $3,415 315% 4% 315% 1%
$9,066
NET INCOME $9,419 $13,244 $9,335 $2,224 $11,559 (59%) 15% (62%) 12%
$3,825
DILUTED EARNINGS PER SHARE $3.12 $2.21 $2.74 (59%) 14% (63%) 11%
$0.90
DILUTED WEIGHTED AVERAGE COMMON - 4,238 4,217 - 4,217 1% 1% 1% 1%
SHARES OUTSTANDING
4,238
(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:
Year Ended
May 31,
-------
2017
2018
----
Stock-based compensation (4) $(306)
$(361)
Acquired deferred sales commissions
amortization 46
22
---
Total non-GAAP sales and marketing
adjustments $(260)
$(339)
=====
(4) Stock-based compensation was included in the following GAAP operating expense categories:
Year Ended
Year Ended
May 31, 2017
May 31, 2018
------------
Adj. Non-GAAP GAAP Adj. Non-GAAP
GAAP
----
Cloud services and license support $(82) $ - $54 $(54) $ -
$82
Hardware (10) - 11 (11) -
10
Services (52) - 44 (44) -
52
Research and development (921) - 770 (770) -
921
General and administrative (180) - 130 (130) -
180
---
Subtotal (1,245) - 1,009 (1,009) -
1,245
-----
Sales and marketing (361) - 306 (306) -
361
Acquisition related and other (1) - 35 (35) -
1
---
Total stock-based compensation $(1,607) $ - $1,350 $(1,350) $ -
$1,607
======
(5) Estimated future annual amortization expense related to intangible assets as of May 31, 2018 was as follows:
Fiscal 2019
$1,605
Fiscal 2020
1,400
Fiscal 2021
1,174
Fiscal 2022
966
Fiscal 2023
613
Thereafter
912
---
Total intangible assets, net
$6,670
======
(6) Income tax effects were calculated reflecting an effective GAAP tax rate of 70.3% and 18.9% in fiscal 2018 and 2017, respectively, and an effective non-GAAP tax rate of 21.1% and
22.8% in fiscal 2018 and 2017, respectively. The difference between our GAAP and non-GAAP tax rates in fiscal 2018 was primarily due to the impact of the U.S. 2017 Tax Cuts and
Jobs Act (refer to Appendix A for additional information). The difference between our GAAP and non-GAAP tax rates in fiscal 2017 was primarily due to the net tax effects on stock-
based compensation expense and acquisition related items, including the tax effects of amortization of intangible assets.
* Not meaningful
ORACLE CORPORATION
FISCAL 2018 FINANCIAL RESULTS
CONDENSED CONSOLIDATED BALANCE SHEETS
($ in millions)
May 31, May 31,
2018 2017
---- ----
ASSETS
Current Assets:
Cash and cash
equivalents $21,620 $21,784
Marketable
securities 45,641 44,294
Trade
receivables,
net 5,279 5,300
Prepaid expenses
and other
current assets 3,424 3,137
-----------
Total Current Assets 75,964 74,515
Non-Current Assets:
Property, plant
and equipment,
net 5,897 5,315
Intangible
assets, net 6,670 7,679
Goodwill, net 43,755 43,045
Deferred tax
assets 1,491 1,143
Other non-
current assets 3,487 3,294
-----------
Total Non-Current Assets 61,300 60,476
------ ------
TOTAL ASSETS $137,264 $134,991
======== ========
LIABILITIES AND EQUITY
Current Liabilities:
Notes payable
and other
borrowings,
current $4,491 $9,797
Accounts payable 529 599
Accrued
compensation
and related
benefits 1,789 1,966
Deferred
revenues 8,429 8,233
Other current
liabilities 3,957 3,583
-----------
Total Current Liabilities 19,195 24,178
Non-Current Liabilities:
Notes payable
and other
borrowings,
non-current 56,128 48,112
Income taxes
payable 13,422 5,681
Other non-
current
liabilities 2,295 2,774
-----------
Total Non-Current Liabilities 71,845 56,567
Equity 46,224 54,246
------ ------
TOTAL LIABILITIES AND EQUITY $137,264 $134,991
======== ========
ORACLE CORPORATION
FISCAL 2018 FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in millions)
Year Ended May 31,
------------------
2018 2017
---- ----
Cash Flows From Operating Activities:
Net income $3,825 $9,335
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation 1,165 1,000
Amortization of intangible assets 1,620 1,451
Deferred income taxes (611) (486)
Stock-based compensation 1,607 1,350
Other, net (26) 123
Changes in operating assets and liabilities, net of effects from
acquisitions:
Decrease in trade receivables, net 29 147
Increase in prepaid expenses and other
assets (276) (24)
Decrease in accounts payable and other
liabilities (264) (37)
Increase in income taxes payable 8,143 732
Increase in deferred revenues 174 535
Net cash provided by operating
activities 15,386 14,126
------ ------
Cash Flows From Investing Activities:
Purchases of marketable securities and
other investments (25,282) (25,867)
Proceeds from maturities and sales of
marketable securities and other
investments 23,117 17,615
Acquisitions, net of cash acquired (1,724) (11,221)
Capital expenditures (1,736) (2,021)
Net cash used for investing activities (5,625) (21,494)
------ -------
Cash Flows From Financing Activities:
Payments for repurchases of common stock (11,347) (3,561)
Proceeds from issuances of common stock 2,402 2,181
Shares repurchased for tax withholdings
upon vesting of restricted stock-based
awards (506) (283)
Payments of dividends to stockholders (3,140) (2,631)
Proceeds from borrowings, net of
issuance costs 12,443 17,732
Repayments of borrowings (9,800) (4,094)
Distributions to noncontrolling
interests (34) (258)
Net cash (used for) provided by
financing activities (9,982) 9,086
------ -----
Effect of exchange rate changes on cash
and cash equivalents 57 (86)
--- ---
Net (decrease) increase in cash and cash
equivalents (164) 1,632
Cash and cash equivalents at beginning
of period 21,784 20,152
------ ------
Cash and cash equivalents at end of
period $21,620 $21,784
======= =======
ORACLE CORPORATION
FISCAL 2018 FINANCIAL RESULTS
FREE CASH FLOW - TRAILING 4-QUARTERS (1)
($ 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 $15,192 $15,386
Capital Expenditures (1,042) (1,604) (1,676) (2,021) (2,195) (2,037) (1,883) (1,736)
------ ------ ------ ------ ------ ------ ------ ------
Free Cash Flow $12,637 $12,645 $11,777 $12,105 $12,622 $12,544 $13,309 $13,650
======= ======= ======= ======= ======= ======= ======= =======
% Growth over prior
year 5% 10% (7%) (3%) 0% (1%) 13% 13%
GAAP Net Income $8,986 $8,820 $8,917 $9,335 $9,713 $9,914 $3,650 $3,825
Free Cash Flow as a %
of Net Income 141% 143% 132% 130% 130% 127% 365% 357%
(1) To supplement our statements of cash flows presented on a GAAP basis, we use non-GAAP measures
of cash flows on a trailing 4-quarter basis to analyze cash flow generated from operations. We
believe free cash flow is also useful as one of the bases for comparing our performance with
our competitors. The presentation of non-GAAP free cash flow is not meant to be considered in
isolation or as an alternative to net income as an indicator of our performance, or as an
alternative to cash flows from operating activities as a measure of liquidity.
ORACLE CORPORATION
FISCAL 2018 FINANCIAL RESULTS
SUPPLEMENTAL ANALYSIS OF GAAP REVENUES (1)
($ in millions)
Fiscal 2017 Fiscal 2018
----------- -----------
Q1 Q2 Q3 Q4 TOTAL Q1 Q2 Q3 Q4 TOTAL
-- --- --- --- ----- --- --- --- --- -----
REVENUES BY OFFERINGS
---------------------
Cloud services and
license support $5,761 $5,830 $5,951 $6,258 $23,800 $6,418 $6,472 $6,593 $6,770 $26,254
Cloud license and on-
premise license 1,030 1,347 1,414 2,626 6,418 966 1,353 1,388 2,483 6,190
Hardware 996 1,014 1,028 1,114 4,152 943 940 994 1,115 3,993
Services 808 844 812 894 3,358 860 856 796 883 3,394
$8,595 $9,035 $9,205 $10,892 $37,728 $9,187 $9,621 $9,771 $11,251 $39,831
Total revenues
==============
AS REPORTED REVENUE
GROWTH RATES
Cloud services and
license support 9% 9% 10% 10% 10% 11% 11% 11% 8% 10%
Cloud license and on-
premise license (11%) (20%) (16%) (5%) (12%) (6%) 0% (2%) (5%) (4%)
Hardware (12%) (10%) (9%) (13%) (11%) (5%) (7%) (3%) 0% (4%)
Services (6%) (2%) 2% 3% (1%) 6% 1% (2%) (1%) 1%
2% 0% 2% 3% 2% 7% 6% 6% 3% 6%
Total revenues
CONSTANT CURRENCY
GROWTH RATES (2)
Cloud services and
license support 10% 10% 11% 12% 11% 10% 9% 7% 6% 8%
Cloud license and on-
premise license (10%) (19%) (15%) (4%) (11%) (7%) (2%) (6%) (6%) (5%)
Hardware (11%) (9%) (9%) (12%) (10%) (6%) (9%) (7%) (2%) (6%)
Services (5%) 0% 3% 4% 1% 5% 0% (6%) (3%) (1%)
3% 1% 3% 4% 3% 6% 5% 2% 2% 3%
Total revenues
CLOUD AND LICENSE REVENUES BY
ECOSYSTEM
------------------------------
Applications revenues $2,241 $2,335 $2,497 $2,862 $9,935 $2,646 $2,677 $2,722 $3,026 $11,071
Platform and
Infrastructure
revenues 4,550 4,842 4,868 6,022 20,283 4,738 5,148 5,259 6,227 21,373
$6,791 $7,177 $7,365 $8,884 $30,218 $7,384 $7,825 $7,981 $9,253 $32,444
Total cloud and
license revenues
===================
AS REPORTED REVENUE
GROWTH RATES
Applications revenues 6% 3% 9% 7% 6% 18% 15% 9% 6% 11%
Platform and
Infrastructure
revenues 5% 2% 2% 5% 3% 4% 6% 8% 3% 5%
5% 2% 4% 5% 4% 9% 9% 8% 4% 7%
Total cloud and
license revenues
CONSTANT CURRENCY
GROWTH RATES (2)
Applications revenues 8% 5% 9% 8% 8% 17% 13% 6% 4% 10%
Platform and
Infrastructure
revenues 5% 2% 2% 6% 4% 3% 4% 3% 2% 3%
6% 3% 5% 6% 5% 8% 7% 4% 2% 5%
Total cloud and
license revenues
GEOGRAPHIC REVENUES
-------------------
Americas $4,817 $4,936 $5,219 $6,065 $21,038 $5,173 $5,306 $5,339 $6,269 $22,088
Europe/Middle East/Africa 2,413 2,557 2,558 3,102 10,630 2,539 2,802 2,887 3,182 11,410
Asia Pacific 1,365 1,542 1,428 1,725 6,060 1,475 1,513 1,545 1,800 6,333
$8,595 $9,035 $9,205 $10,892 $37,728 $9,187 $9,621 $9,771 $11,251 $39,831
Total revenues
==============
(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
Q4 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 related to each of the below items except for the impact of the U.S. 2017 Tax Cuts and Jobs Act:
-- Cloud services and license support revenues: Business combination
accounting rules require 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 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.
-- 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 primarily consist of
personnel related costs and stock-based compensation expenses for
transitional and certain other employees, integration related
professional services, certain business combination adjustments
including adjustments after the measurement period has ended and certain
other operating items, net. 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 these expenses in
connection with any future acquisitions and/or strategic initiatives.
-- Impact of the U.S. 2017 Tax Cuts and Jobs Act: The U.S. 2017 Tax Cuts
and Jobs Act (the Act) was signed into law on December 22, 2017. For the
three months and year ended May 31, 2018, we recorded a charge of $88
million and $7 billion, respectively, related to our preliminary
assessment of the one-time effects of the Act, including the one-time
transition tax on certain foreign subsidiary earnings and the
remeasurement of net deferred income tax balances affected by the Act.
We have excluded the impacts of this charge from our non-GAAP income
taxes and net income measures for the three months and the fiscal year
ended May 31, 2018. We believe making these adjustments provides insight
to our operating performance and comparability to past operating
results.
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SOURCE Oracle
