Q4 FY19 GAAP EPS UP 36% TO $1.07 and NON-GAAP EPS UP 23% TO $1.16
REDWOOD SHORES, Calif., June 19, 2019 /PRNewswire/ -- Oracle Corporation (NYSE: ORCL) today announced fiscal 2019 Q4 results and fiscal 2019 full year results. Total Quarterly Revenues were $11.1 billion, up 1% in USD and up 4% in constant currency compared to Q4 last year. Cloud Services and License Support revenues were $6.8 billion, while Cloud License and On-Premise License revenues were $2.5 billion. Total Cloud Services and License Support plus Cloud License and On-Premise License revenues were $9.3 billion, up 3% in USD and 6% in constant currency.
Q4 GAAP Operating Income was up 2% to $4.3 billion and GAAP operating margin was 38%. Non-GAAP Operating Income was up 4% to $5.3 billion and non-GAAP operating margin was 47%. GAAP Net Income was up 14% to $3.7 billion and non-GAAP Net Income was up 3% to $4.1 billion. GAAP Earnings Per Share was $1.07, while non-GAAP Earnings Per Share was $1.16.
Short-term deferred revenues were $8.4 billion. Operating cash flow for fiscal 2019 was $14.6 billion.
For fiscal 2019, Total Revenues were $39.5 billion, slightly higher in USD and up 3% in constant currency. Cloud Services and License Support revenues were $26.7 billion, while Cloud License and On-Premise License revenues were $5.9 billion. Total Cloud Services and License Support plus Cloud License and On-Premise revenues were $32.6 billion, up 2% in USD and 4% in constant currency.
Fiscal 2019 GAAP Operating Income was $13.5 billion, and GAAP operating margin was 34%. Non-GAAP Operating Income was $17.4 billion, and non-GAAP operating margin was 44%. GAAP Net Income was $11.1 billion, while non-GAAP Net Income was $13.1 billion. GAAP Earnings Per Share increased 251% to $2.97, while non-GAAP Earnings Per Share was up 16% to $3.52.
"In Q4, our non-GAAP operating income grew 7% in constant currency--which drove EPS well above the high end of my guidance," said Oracle CEO, Safra Catz. "Our high-margin Fusion and NetSuite cloud applications businesses are growing rapidly, while we downsize our low-margin legacy hardware business. The net result of this shift away from commodity hardware to cloud applications was a Q4 non-GAAP operating margin of 47%, the highest we've seen in five years."
"Our Fusion ERP and HCM cloud applications suite revenues grew 32% in FY19," said Oracle CEO, Mark Hurd. "Our NetSuite ERP cloud applications revenues also grew 32% this year. These strong results extend Oracle's already commanding lead in worldwide Cloud ERP. Our cloud applications businesses are growing faster than our competitors. That said, let me call your attention to the following approved statement from industry analyst IDC."
Per IDC's latest annual market share results, Oracle gained the most market share globally out of all Enterprise Applications SaaS vendors three years running -- in CY16, CY17 and CY18.
"We added over five thousand new Autonomous Database trials in Q4," said Oracle Chairman and CTO, Larry Ellison. "Our new Gen2 Cloud Infrastructure offers those customers a compelling array of advance technology features including our self-driving database that automatically encrypts all your data, backs itself up, tunes itself, upgrades itself, and patches itself when a security threat is detected. It does all of this autonomously--while running--without the need for any human intervention, and without the need for any downtime. No other cloud infrastructure provides anything close to these autonomous features."
The Board of Directors also declared a quarterly cash dividend of $0.24 per share of outstanding common stock. This dividend will be paid to stockholders of record as of the close of business on July 17, 2019, with a payment date of July 31, 2019.
Q4 Fiscal 2019 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 Q4 results and fiscal 2019 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: 9955119.
About Oracle
The Oracle Cloud offers a complete suite of integrated applications for Sales, Service, Marketing, Human Resources, Finance, Supply Chain and Manufacturing, plus Highly-Automated and Secure Generation 2 Infrastructure featuring the Oracle Autonomous Database. For more information about Oracle (NYSE:ORCL), visit us at 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 the growth of our high-margin cloud applications businesses, 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 strategy, including our Oracle Software as a Service and Infrastructure as a Service offerings, may not be successful. (2) If we are unable to develop new or sufficiently differentiated products and services, integrate acquired products and services, or enhance and improve our existing products and support services in a timely manner, or price our products and services to meet market demand, customers may not purchase or subscribe to our software, hardware or cloud offerings or renew software support, hardware support or cloud subscriptions contracts. (3) Enterprise customers rely on our cloud, license and hardware offerings and related services to run their businesses and significant coding, manufacturing or configuration errors in our cloud, license and hardware offerings and related services could expose us to product liability, performance and warranty claims, as well as cause significant harm to our brand and reputation, which could impact our future sales. (4) If the security measures for our products and services are compromised and as a result, 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 and we may experience legal claims and reduced sales. (5) 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 consumer privacy and data protection. (6) 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. (7) Our international sales and operations subject us to additional risks that can adversely affect our operating results. (8) We have a selective and 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 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, 2019. Oracle undertakes no duty to update any statement in light of new information or future events.
ORACLE CORPORATION
Q4 FISCAL 2019 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
2019
Revenues 2018
Revenues
in US $
Currency (1)
REVENUES
Cloud services and license support $6,799 61% $6,768 62% 0% 3%
Cloud license and on-premise
license 2,520 23% 2,247 20% 12% 15%
Hardware 994 9% 1,116 10% (11%)
(8%)
Services 823 7% 883 8% (7%)
(4%)
Total revenues 11,136 100% 11,014 100% 1% 4%
OPERATING EXPENSES
Cloud services and license support 975 9% 961 9% 1% 3%
Hardware 362 3% 461 4% (21%) (19%)
Services 726 7% 752 7% (3%) 0%
Sales and marketing 2,318 21% 2,315 21% 0% 3%
Research and development 1,562 14% 1,542 14% 1% 3%
General and administrative 329 3% 306 3% 8% 11%
Amortization of intangible assets 424 4% 415 4% 2% 2%
Acquisition related and other 15 0% 20 0% (23%) (21%)
Restructuring 168 1% 81 0% 108% 118%
Total operating expenses 6,879 62% 6,853 62% 0% 3%
OPERATING INCOME 4,257 38% 4,161 38% 2% 6%
Interest expense (525) (4%) (548) (5%) (4%)
(4%)
Non-operating income, net 134 1% 294 3% (54%) (54%)
INCOME BEFORE PROVISION FOR INCOME
TAXES 3,866 35% 3,907 36% (1%) 3%
Provision for income taxes 126 1% 631 6% (80%) (79%)
NET INCOME $3,740 34% $3,276 30% 14% 19%
EARNINGS PER SHARE:
Basic $1.10 $0.81
Diluted $1.07 $0.79
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic 3,389 4,046
Diluted 3,495 4,149
(1) We compare the percent change in the results from one period to another period using
constant currency disclosure. We present constant currency information to provide a
framework for assessing how our underlying businesses performed excluding the
effect of foreign currency rate fluctuations. To present this information, current
and comparative prior period results for entities reporting in currencies other
than United States dollars are converted into United States dollars at the exchange
rates in effect on May 31, 2018, which was the last day of our prior fiscal year,
rather than the actual exchange rates in effect during the respective periods.
Movements in international currencies relative to the United States dollar during
the three months ended May 31, 2019 compared with the corresponding prior year
period decreased our revenues by 3 percentage points, operating expenses by 3
percentage points and operating income by 4 percentage points.
ORACLE CORPORATION
Q4 FISCAL 2019 FINANCIAL RESULTS
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)
($ in millions, except per share data)
Three Months Ended May 31, % Increase (Decrease) % Increase (Decrease) in
in US $ Constant Currency (2)
2019 2019 2018 2018 GAAP
Non-GAAP GAAP Non-GAAP
GAAP
Adj.
Non-GAAP
GAAP Adj.
Non-GAAP
TOTAL REVENUES $11,136 $3 $11,139 $11,014 $9 $11,023 1% 1% 4% 4%
Cloud services and license support 6,799 3 6,802 6,768 9 6,777 0% 0% 3% 3%
TOTAL OPERATING EXPENSES $6,879 $(1,001) $5,878 $6,853 $(909) $5,944 0% (1%) 3% 1%
Sales and marketing (3) 2,318 (82) 2,236 2,315 (84) 2,231 0% 0% 3% 3%
Stock-based compensation (4) 312 (312) 309 (309) 1%
* 1%
*
Amortization of intangible assets (5) 424 (424) 415 (415) 2%
* 2%
*
Acquisition related and other 15 (15) 20 (20) (23%)
* (21%)
*
Restructuring 168 (168) 81 (81) 108%
* 118%
*
OPERATING INCOME $4,257 $1,004 $5,261 $4,161 $918 $5,079 2% 4% 6% 7%
OPERATING MARGIN % 38% 47% 38% 46%
45 bp.
115 bp.
79 bp.
132 bp.
INCOME TAX EFFECTS (6) $126 $673 $799 $631 $249 $880 (80%) (9%) (79%) (6%)
NET INCOME $3,740 $331 $4,071 $3,276 $669 $3,945 14% 3% 19% 7%
DILUTED EARNINGS PER SHARE $1.07 $1.16 $0.79 $0.95 36% 23% 41% 27%
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 3,495 3,495 4,149 4,149 (16%) (16%) (16%) (16%)
(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, 2018, 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,
2019 2018
Stock-based compensation (4) $(82) $(88)
Acquired deferred sales commissions amortization 4
Total non-GAAP sales and marketing adjustments $(82) $(84)
(4)
Stock-based compensation was included in the following GAAP operating expense categories:
Three Months Ended
Three Months Ended
May 31, 2019
May 31, 2018
GAAP
Adj.
Non-GAAP
GAAP
Adj.
Non-GAAP
Cloud services and license support $25 $(25)
$ - $21 $(21)
$ -
Hardware 3 (3) 3 (3)
Services 12 (12) 11 (11)
Research and development 231 (231) 228 (228)
General and administrative 41 (41) 46 (46)
Subtotal 312 (312) 309 (309)
Sales and marketing 82 (82) 88 (88)
Total stock-based compensation $394 $(394)
$ - $397 $(397)
$ -
(5)
Estimated future annual amortization expense related to intangible assets as of May 31, 2019 was as follows:
Fiscal 2020 $1,583
Fiscal 2021 1,339
Fiscal 2022 1,090
Fiscal 2023 668
Fiscal 2024 440
Thereafter 159
Total intangible assets, net $5,279
(6) Income tax effects were calculated reflecting an effective GAAP tax rate of 3.3% and 16.1% in the fourth quarter of fiscal 2019 and 2018, respectively, and an effective non-
GAAP tax rate of 16.4% and 18.2% in the fourth quarter of fiscal 2019 and 2018, respectively. The difference in our GAAP and non-GAAP tax rates in the fourth quarter of
fiscal 2019 was primarily due to a tax benefit arising from the increase of a deferred tax asset associated with a partial realignment of our legal structure; the net tax
effects on stock-based compensation expense; and acquisition related items, including the tax effects of amortization of intangible assets. The difference in our GAAP and
non-GAAP tax rates in the fourth quarter of fiscal 2018 was primarily due to adjustments in our estimates for the one-time effects of the U.S. Tax Cuts and Jobs Act (refer
to Appendix A for additional information), the net tax effects on stock-based compensation expense, and acquisition related items, including the tax effects o f
amortization of intangible assets.
*
Not meaningful
---
ORACLE CORPORATION
FISCAL 2019 YEAR TO DATE FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($ in millions, except per share data)
Year Ended May 31, % Increase % Increase
(Decrease)
% of
% of (Decrease) in Constant
2019 Revenues 2018 Revenues in US $ Currency (1)
REVENUES
Cloud services and license support $26,707 68% $26,222 66% 2% 4%
Cloud license and on-premise
license 5,855 15% 5,772 15% 1% 4%
Hardware 3,704 9% 3,994 10% (7%) (5%)
Services 3,240 8% 3,395 9% (5%) (2%)
Total revenues 39,506 100% 39,383 100% 0% 3%
OPERATING EXPENSES
Cloud services and license support 3,782 10% 3,606 9% 5% 7%
Hardware 1,360 4% 1,576 4% (14%) (11%)
Services 2,853 7% 2,878 7% (1%) 2%
Sales and marketing 8,509 22% 8,433 22% 1% 3%
Research and development 6,026 15% 6,084 15% (1%) 0%
General and administrative 1,265 3% 1,282 3% (1%) 1%
Amortization of intangible assets 1,689 4% 1,620 4% 4% 4%
Acquisition related and other 44 0% 52 0% (15%) (13%)
Restructuring 443 1% 588 2% (25%) (22%)
Total operating expenses 25,971 66% 26,119 66% (1%) 2%
OPERATING INCOME 13,535 34% 13,264 34% 2% 5%
Interest expense (2,082) (5%) (2,025) (5%) 3% 3%
Non-operating income, net 815 2% 1,185 3% (31%) (31%)
INCOME BEFORE PROVISION FOR INCOME
TAXES 12,268 31% 12,424 32% (1%) 2%
Provision for income taxes (2) 1,185 3% 8,837 23% (87%) (86%)
NET INCOME $11,083 28% $3,587 9% 209% 230%
EARNINGS PER SHARE:
Basic $3.05 $0.87
Diluted $2.97 $0.85
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic 3,634 4,121
Diluted 3,732 4,238
(1) We compare the percent change in the results from one period to another period using
constant currency disclosure. We present constant currency information to provide a
framework for assessing how our underlying businesses performed excluding the effect
of foreign currency rate fluctuations. To present this information, current and
comparative prior period results for entities reporting in currencies other than
United States dollars are converted into United States dollars at the exchange rates
in effect on May 31, 2018, which was the last day of our prior fiscal year, rather
than the actual exchange rates in effect during the respective periods. Movements in
international currencies relative to the United States dollar during the year ended
May 31, 2019 compared with the corresponding prior year period decreased our revenues
by 3 percentage points, operating expenses by 3 percentage points and operating
income by 3 percentage points.
(2) Provision for income taxes for the periods presented included the impacts of the U.S.
2017 Tax Cuts and Jobs Act, which was signed into law during our third quarter of
fiscal 2018, and for which additional discussion is included in Appendix A.
ORACLE CORPORATION
FISCAL 2019 YEAR TO DATE FINANCIAL RESULTS
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)
($ in millions, except per share data)
Year Ended May 31, % Increase (Decrease) % Increase (Decrease)
in US $ in Constant Currency
(2)
2019 2019 2018 2018 GAAP
Non-GAAP GAAP
Non-GAAP
GAAP
Adj. Non-GAAP
GAAP
Adj. Non-GAAP
TOTAL REVENUES $39,506 $20 $39,526 $39,383 $47 $39,430 0% 0% 3% 3%
Cloud services and license support 26,707 20 26,727 26,222 47 26,269 2% 2% 4% 4%
TOTAL OPERATING EXPENSES $25,971 $(3,829) $22,142 $26,119 $(3,844) $22,275 (1%) (1%) 2% 2%
Sales and marketing (3) 8,509 (360) 8,149 8,433 (339) 8,094 1% 1% 3% 3%
Stock-based compensation (4) 1,293 (1,293) 1,245 (1,245) 4%
* 4%
*
Amortization of intangible assets
(5) 1,689 (1,689) 1,620 (1,620) 4%
* 4%
*
Acquisition related and other 44 (44) 52 (52) (15%)
* (13%)
*
Restructuring 443 (443) 588 (588) (25%)
* (22%)
*
OPERATING INCOME $13,535 $3,849 $17,384 $13,264 $3,891 $17,155 2% 1% 5% 4%
OPERATING MARGIN % 34% 44% 34% 44%
58 bp.
47 bp.
82 bp.
53 bp.
INCOME TAX EFFECTS (6) $1,185 $1,795 $2,980 $8,837 $(5,439) $3,398 (87%) (12%) (86%) (10%)
NET INCOME $11,083 $2,054 $13,137 $3,587 $9,330 $12,917 209% 2% 230% 5%
DILUTED EARNINGS PER SHARE $2.97 $3.52 $0.85 $3.05 251% 16% 274% 19%
DILUTED WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 3,732 3,732 4,238 4,238 (12%) (12%) (12%) (12%)
(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, 2018, 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,
2019 2018
Stock-based compensation (4) $(360) $(361)
Acquired deferred sales commissions
amortization 22
Total non-GAAP sales and marketing
adjustments $(360) $(339)
(4)
Stock-based compensation was included in the following GAAP operating expense categories:
Year Ended
Year Ended
May 31, 2019
May 31, 2018
GAAP
Adj.
Non-GAAP
GAAP
Adj.
Non-GAAP
Cloud services and license support $99 $(99)
$ - $82 $(82)
$ -
Hardware 10 (10) 10 (10)
Services 49 (49) 52 (52)
Research and development 963 (963) 921 (921)
General and administrative 172 (172) 180 (180)
Subtotal 1,293 (1,293) 1,245 (1,245)
Sales and marketing 360 (360) 361 (361)
Acquisition related and other 1 (1)
Total stock-based compensation $1,653 $(1,653)
$ - $1,607 $(1,607)
$ -
(5)
Estimated future annual amortization expense related to intangible assets as of May 31, 2019 was as follows:
Fiscal 2020 $1,583
Fiscal 2021 1,339
Fiscal 2022 1,090
Fiscal 2023 668
Fiscal 2024 440
Thereafter 159
Total intangible assets, net $5,279
(6) Income tax effects were calculated reflecting an effective GAAP tax rate of 9.7% and 71.1% in fiscal 2019 and 2018, respectively, and an effective non-GAAP
tax rate of 18.5% and 20.8% in fiscal 2019 and 2018, respectively. The difference in our GAAP and non-GAAP tax rates in fiscal 2019 was primarily due to
the impacts of the U.S. Tax Cuts and Jobs Act of 2017 (refer to Appendix A for additional information); a tax benefit arising from the increase of a
deferred tax asset associated with a partial realignment of our legal structure; the net tax effects on stock-based compensation expense; and acquisition
related items, including the tax effects of amortization of intangible assets. The difference in our GAAP and non-GAAP tax rates in fiscal 2018 was
primarily due to adjustments in our estimates for the one-time effects of the U.S. Tax Cuts and Jobs Act.
*
Not meaningful
ORACLE CORPORATION
FISCAL 2019 FINANCIAL RESULTS
CONDENSED CONSOLIDATED BALANCE SHEETS
($ in millions)
May 31, May 31,
2019 2018
ASSETS
Current Assets:
Cash and cash
equivalents $20,514 $21,620
Marketable
securities 17,313 45,641
Trade
receivables,
net 5,134 5,136
Prepaid expenses
and other
current assets 3,425 3,762
Total Current Assets 46,386 76,159
Non-Current Assets:
Property, plant
and equipment,
net 6,252 5,897
Intangible
assets, net 5,279 6,670
Goodwill, net 43,779 43,755
Deferred tax
assets 2,696 1,395
Other non-
current assets 4,317 3,975
Total Non-Current Assets 62,323 61,692
TOTAL ASSETS $108,709 $137,851
LIABILITIES AND EQUITY
Current Liabilities:
Notes payable
and other
borrowings,
current $4,494 $4,491
Accounts payable 580 529
Accrued
compensation
and related
benefits 1,628 1,806
Deferred
revenues 8,374 8,341
Other current
liabilities 3,554 3,957
Total Current Liabilities 18,630 19,124
Non-Current Liabilities:
Notes payable
and other
borrowings,
non-current 51,673 56,128
Income taxes
payable 13,295 13,429
Other non-
current
liabilities 2,748 2,297
Total Non-Current Liabilities 67,716 71,854
Equity 22,363 46,873
TOTAL LIABILITIES AND EQUITY $108,709 $137,851
ORACLE CORPORATION
FISCAL 2019 FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in millions)
Year Ended May 31,
2019 2018
Cash Flows From Operating Activities:
Net income $11,083 $3,587
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation 1,230 1,165
Amortization of intangible assets 1,689 1,620
Deferred income taxes (1,191) (847)
Stock-based compensation 1,653 1,607
Other, net 157 (27)
Changes in operating assets and liabilities, net of effects from
acquisitions:
(Increase) decrease in trade
receivables, net (82) 413
Decrease (increase) in prepaid expenses
and other assets 261 (258)
Decrease in accounts payable and other
liabilities (102) (260)
(Decrease) increase in income taxes
payable (453) 8,150
Increase in deferred revenues 306 236
Net cash provided by operating
activities 14,551 15,386
Cash Flows From Investing Activities:
Purchases of marketable securities and
other investments (1,400) (25,282)
Proceeds from maturities of marketable
securities and other investments 12,681 20,372
Proceeds from sales of marketable
securities 17,299 2,745
Acquisitions, net of cash acquired (363) (1,724)
Capital expenditures (1,660) (1,736)
Net cash provided by (used for)
investing activities 26,557 (5,625)
Cash Flows From Financing Activities:
Payments for repurchases of common stock (36,140) (11,347)
Proceeds from issuances of common stock 2,155 2,402
Shares repurchased for tax withholdings
upon vesting of restricted stock-based
awards (503) (506)
Payments of dividends to stockholders (2,932) (3,140)
Proceeds from borrowings, net of
issuance costs - 12,443
Repayments of borrowings (4,500) (9,800)
Other, net (136) (34)
Net cash used for financing activities (42,056) (9,982)
Effect of exchange rate changes on cash
and cash equivalents (158) 57
Net decrease in cash and cash
equivalents (1,106) (164)
Cash and cash equivalents at beginning
of period 21,620 21,784
Cash and cash equivalents at end of
period $20,514 $21,620
ORACLE CORPORATION
FISCAL 2019 FINANCIAL RESULTS
FREE CASH FLOW - TRAILING 4-QUARTERS (1)
($ in millions)
Fiscal 2018
Fiscal 2019
Q1
Q2
Q3
Q4
Q1
Q2
Q3 Q4
GAAP Operating Cash Flow $14,817 $14,581 $15,192 $15,386 $15,542 $15,238 $14,789 $14,551
Capital Expenditures (2,195) (2,037) (1,883) (1,736) (1,646) (1,468) (1,625) (1,660)
Free Cash Flow $12,622 $12,544 $13,309 $13,650 $13,896 $13,770 $13,164 $12,891
% Growth over prior year 0% (1%) 13% 13% 10% 10% (1%) (6%)
GAAP Net Income $9,745 $9,932 $3,643 $3,587 $3,708 $3,827 $10,619 $11,083
Free Cash Flow as a % of
Net Income 130% 126% 365% 381% 375% 360% 124% 116%
(1) To supplement our statements of cash flows presented on a GAAP basis, we use non-GAAP measures of cash
flows on a trailing 4-quarter basis to analyze cash flow generated from operations. We believe free
cash flow is also useful as one of the bases for comparing our performance with our competitors. The
presentation of non-GAAP free cash flow is not meant to be considered in isolation or as an
alternative to net income as an indicator of our performance, or as an alternative to cash flows from
operating activities as a measure of liquidity.
ORACLE CORPORATION
FISCAL 2019 FINANCIAL RESULTS
SUPPLEMENTAL ANALYSIS OF GAAP REVENUES (1)
($ in millions)
Fiscal 2018
Fiscal 2019
---
Q1 Q2 Q3
Q4
TOTAL
Q1 Q2 Q3
Q4
TOTAL
---
REVENUES BY
OFFERINGS
Cloud services
and license
support $6,407 $6,461 $6,587 $6,768 $26,222 $6,609 $6,637 $6,662 $6,799 $26,707
Cloud license
and on-
premise
license 894 1,331 1,299 2,247 5,772 867 1,217 1,251 2,520 5,855
Hardware 943 941 994 1,116 3,994 904 891 915 994 3,704
Services 860 856 796 883 3,395 813 817 786 823 3,240
Total revenues $9,104 $9,589 $9,676 $11,014 $39,383 $9,193 $9,562 $9,614 $11,136 $39,506
AS REPORTED
REVENUE GROWTH
RATES
Cloud services
and license
support 11% 11% 11% 8% 10% 3% 3% 1% 0% 2%
Cloud license
and on-
premise
license (13%) (1%) (9%) (18%) (12%) (3%) (9%) (4%) 12% 1%
Hardware (5%) (7%) (3%) 0% (4%) (4%) (5%) (8%) (11%) (7%)
Services 6% 1% (2%) (1%) 1% (5%) (5%) (1%) (7%) (5%)
Total revenues 6% 6% 5% 0% 4% 1% 0% (1%) 1% 0%
CONSTANT
CURRENCY
GROWTH RATES
(2)
Cloud services
and license
support 10% 9% 7% 6% 8% 4% 5% 4% 3% 4%
Cloud license
and on-
premise
license (14%) (3%) (13%) (18%) (13%) 0% (6%) 0% 15% 4%
Hardware (6%) (9%) (7%) (2%) (6%) (3%) (3%) (4%) (8%) (5%)
Services 6% 0% (6%) (3%) (1%) (4%) (2%) 3% (4%) (2%)
Total revenues 5% 5% 1% (1%) 2% 2% 2% 3% 4% 3%
CLOUD AND
LICENSE
REVENUES BY
ECOSYSTEM (3)
Applications
revenues $2,616 $2,668 $2,717 $3,022 $11,023 $2,761 $2,808 $2,841 $3,081 $11,491
Infrastructure
revenues 4,685 5,124 5,169 5,993 20,971 4,715 5,046 5,072 6,238 21,071
Total cloud and
license
revenues $7,301 $7,792 $7,886 $9,015 $31,994 $7,476 $7,854 $7,913 $9,319 $32,562
AS REPORTED
REVENUE GROWTH
RATES
Applications
revenues 17% 15% 9% 5% 11% 6% 5% 5% 2% 4%
Infrastructure
revenues 3% 6% 6% (2%) 3% 1% (2%) (2%) 4% 0%
Total cloud and
license
revenues 7% 9% 7% 1% 6% 2% 1% 0% 3% 2%
CONSTANT
CURRENCY
GROWTH RATES
(2)
Applications
revenues 17% 13% 7% 4% 10% 7% 7% 7% 4% 6%
Infrastructure
revenues 1% 4% 1% (3%) 1% 2% 1% 2% 7% 3%
Total cloud and
license
revenues 7% 7% 3% (1%) 4% 4% 3% 3% 6% 4%
GEOGRAPHIC
REVENUES
Americas $5,098 $5,281 $5,253 $6,016 $21,648 $5,161 $5,243 $5,266 $6,184 $21,856
Europe/Middle
East/Africa 2,535 2,796 2,881 3,197 11,409 2,576 2,782 2,781 3,132 11,270
Asia Pacific 1,471 1,512 1,542 1,801 6,326 1,456 1,537 1,567 1,820 6,380
Total revenues $9,104 $9,589 $9,676 $11,014 $39,383 $9,193 $9,562 $9,614 $11,136 $39,506
(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, 2018 and 2017 for the fiscal 2019 and fiscal 2018 constant currency growth rate calculations
presented, respectively, rather than the actual exchange rates in effect during the respective periods.
(3) Applications ecosystem revenues represent the sum of applications related cloud services and license support revenues; and
applications related license revenues. Infrastructure ecosystem revenues represent the sum of infrastructure related cloud
services and license support revenues; and infrastructure related license revenues.
APPENDIX A
ORACLE CORPORATION
Q4 FISCAL 2019 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. Tax Cuts and Jobs Act of 2017:
-- 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.
-- 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. Tax Cuts and Jobs Act of 2017: The U.S. Tax Cuts and
Jobs Act of 2017 (the Tax Act) was signed into law on December 22, 2017.
For fiscal 2019, we recorded a net benefit of $389 million related to
adjustments in our estimates of the one-time effects of the Tax Act,
including the one-time transition tax on certain foreign subsidiary
earnings and the remeasurement of net deferred income tax balances
affected by the Tax Act. We recorded a provisional net charge of $6.9
billion during fiscal 2018 related to our preliminary assessment of the
one-time effects of the Tax Act, including the one-time transition tax
on certain foreign subsidiary earnings and the remeasurement of net
deferred income tax balances affected by the Tax Act. We have excluded
the impacts of these items from our non-GAAP income taxes and net income
measures for fiscal 2019 and 2018. We believe making these adjustments
provides insight to our operating performance and comparability to past
operating results.
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SOURCE Oracle
