Q2 FY20 GAAP EPS UP 14% TO $0.69 and NON-GAAP EPS UP 12% TO $0.90
REDWOOD SHORES, Calif., Dec. 12, 2019 /PRNewswire/ -- Oracle Corporation (NYSE: ORCL) today announced fiscal 2020 Q2 results. Total Revenues were $9.6 billion, up 1% in USD and in constant currency compared to Q2 last year. Cloud Services and License Support revenues were $6.8 billion, while Cloud License and On-Premise License revenues were $1.1 billion.
GAAP Operating Income was up 3% to $3.2 billion, and GAAP Operating Margin was 33%. Non-GAAP Operating Income was $4.0 billion, and non-GAAP Operating Margin was 42%. GAAP Net Income was $2.3 billion, and non-GAAP Net Income was $3.0 billion. GAAP Earnings Per Share was up 14% to $0.69, while non-GAAP Earnings Per Share was up 12% to $0.90.
Short-term deferred revenues were $8.1 billion. Operating Cash Flow was $13.8 billion during the trailing twelve months.
"We had another strong quarter in our Fusion and NetSuite cloud applications businesses with Fusion ERP revenues growing 37% and NetSuite ERP revenues growing 29%," said Oracle CEO, Safra Catz. "This consistent rapid growth in the now multibillion dollar ERP segment of our cloud applications business has enabled Oracle to deliver a double-digit EPS growth rate year-after-year. I fully expect we will do that again this year."
"It's still early days, but the Oracle Autonomous Database already has thousands of customers running in our Gen2 Public Cloud," said Oracle CTO, Larry Ellison. "Currently, our Autonomous Database running in our Public Cloud business is growing at a rate of over 100%. We expect that growth rate to increase dramatically as we release our Autonomous Database running on our Gen2 Cloud@Customer into our huge on-premise installed base over the next several months."
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 January 9, 2020, with a payment date of January 23, 2020.
Q2 Fiscal 2020 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 2020 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: 4597628.
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 earnings per share and our Autonomous Database business, 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 success depends upon our ability to develop new products and services, integrate acquired products and services and enhance our existing products and services. (2) Our cloud strategy, including our Oracle Software-as-a-Service and Infrastructure-as-a-Service offerings, may adversely affect our revenues and profitability. (3) We might experience significant coding, manufacturing or configuration errors in our cloud, license and hardware offerings. (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, the IT services we provide to our customers could be disrupted, and customers may stop using our products and services, all of which could reduce our revenue and earnings, increase our expenses and expose us to legal claims and regulatory actions. (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) Acquisitions present many risks and we may not achieve the financial and strategic goals that were contemplated at the time of a transaction. 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 December 12, 2019. Oracle undertakes no duty to update any statement in light of new information or future events.
ORACLE CORPORATION
Q2 FISCAL 2020 FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($ in millions, except per share data)
Three Months Ended
% Increase
November 30,
% Increase
(Decrease)
% of
% of
(Decrease)
in Constant
2019
Revenues 2018
Revenues
in US $
Currency (1)
REVENUES
Cloud services and license support $6,811 71% $6,637 69% 3% 4%
Cloud license and on-premise
license 1,126 12% 1,217 13% (7%)
(7%)
Hardware 871 9% 891 9% (2%)
(1%)
Services 806 8% 817 9% (1%) 0%
Total revenues 9,614 100% 9,562 100% 1% 1%
OPERATING EXPENSES
Cloud services and license support 1,022 11% 956 10% 7% 8%
Hardware 285 3% 332 4% (14%) (13%)
Services 741 8% 713 8% 4% 5%
Sales and marketing 2,068 22% 2,101 22% (2%)
(1%)
Research and development 1,531 16% 1,475 15% 4% 4%
General and administrative 323 3% 299 3% 8% 9%
Amortization of intangible assets 407 4% 424 5% (4%)
(4%)
Acquisition related and other 12 0% 18 0% (33%) (32%)
Restructuring 42 0% 143 1% (71%) (70%)
Total operating expenses 6,431 67% 6,461 68% 0% 0%
OPERATING INCOME 3,183 33% 3,101 32% 3% 4%
Interest expense (465) (5%) (519) (5%) (10%) (10%)
Non-operating income, net 92 1% 192 2% (52%) (52%)
INCOME BEFORE PROVISION FOR INCOME
TAXES 2,810 29% 2,774 29% 1% 3%
Provision for income taxes 499 5% 441 5% 13% 13%
NET INCOME $2,311 24% $2,333 24% (1%) 1%
EARNINGS PER SHARE:
Basic $0.71 $0.63
Diluted $0.69 $0.61
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic 3,245 3,720
Diluted 3,331 3,817
(1) We compare the percent change in the results from one period to another period using
constant currency disclosure. We present constant currency information to provide a
framework for assessing how our underlying businesses performed excluding the
effect of foreign currency rate fluctuations. To present this information, current
and comparative prior period results for entities reporting in currencies other
than United States dollars are converted into United States dollars at the exchange
rates in effect on May 31, 2019, which was the last day of our prior fiscal year,
rather than the actual exchange rates in effect during the respective periods.
Movements in international currencies relative to the United States dollar during
the three months ended November 30, 2019 compared with the corresponding prior year
period decreased our operating income by 1 percentage point.
ORACLE CORPORATION
Q2 FISCAL 2020 FINANCIAL RESULTS
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)
($ in millions, except per share data)
Three Months Ended November 30, % Increase % Increase
(Decrease) (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 $9,614 $1 $9,615 $9,562 $5 $9,567 1% 1% 1% 1%
Cloud services and license support 6,811 1 6,812 6,637 5 6,642 3% 3% 4% 3%
TOTAL OPERATING EXPENSES $6,431 $(858) $5,573 $6,461 $(981) $5,480 0% 2% 0% 2%
Stock-based compensation (3) 397 (397) 396 (396) 0%
* 0%
*
Amortization of intangible assets (4) 407 (407) 424 (424) (4%)
* (4%)
*
Acquisition related and other 12 (12) 18 (18) (33%)
* (32%)
*
Restructuring 42 (42) 143 (143) (71%)
* (70%)
*
OPERATING INCOME $3,183 $859 $4,042 $3,101 $986 $4,087 3% (1%) 4% 0%
OPERATING MARGIN % 33% 42% 32% 43%
68 bp.
(68) bp.
78 bp.
(63) bp.
INCOME TAX EFFECTS (5) $499 $189 $688 $441 $258 $699 13% (2%) 13% (1%)
NET INCOME $2,311 $670 $2,981 $2,333 $728 $3,061 (1%) (3%) 1% (2%)
DILUTED EARNINGS PER SHARE $0.69 $0.90 $0.61 $0.80 14% 12% 15% 13%
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 3,331 3,331 3,817 3,817 (13%) (13%) (13%) (13%)
(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, 2019,
which was the last day of our prior fiscal year, rather than the actual exchange rates in effect during the respective periods.
(3)
Stock-based compensation was included in the following GAAP operating expense categories:
Three Months Ended
Three Months Ended
November 30, 2019
November 30, 2018
GAAP
Adj.
Non-GAAP
GAAP
Adj.
Non-GAAP
Cloud services and license support $30 $(30)
$ - $24 $(24)
$ -
Hardware 3 (3) 2 (2)
Services 14 (14) 12 (12)
Sales and marketing 37 (37) 93 (93)
Research and development 272 (272) 222 (222)
General and administrative 41 (41) 43 (43)
Total stock-based compensation $397 $(397)
$ - $396 $(396)
$ -
(4)
Estimated future annual amortization expense related to intangible assets as of November 30, 2019 was as follows:
Remainder of fiscal 2020 $766
Fiscal 2021 1,347
Fiscal 2022 1,098
Fiscal 2023 675
Fiscal 2024 445
Fiscal 2025 126
Thereafter 35
Total intangible assets, net $4,492
(5) Income tax effects were calculated reflecting an effective GAAP tax rate of 17.7% and 15.9% in the second quarter of fiscal 2020 and 2019, respectively, and an effective non-
GAAP tax rate of 18.8% and 18.6% in the second quarter of fiscal 2020 and 2019, respectively.The difference in our GAAP and non-GAAP tax rates in the second quarter of fiscal
2020 and 2019 was primarily due to the net tax effects on stock-based compensation expense and acquisition related items, including the tax effects of amortization of
intangible assets.
*
Not meaningful
---
ORACLE CORPORATION
Q2 FISCAL 2020 YEAR TO DATE FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($ in millions, except per share data)
Six Months Ended November 30, % Increase
% Increase (Decrease)
% of
% of (Decrease) in Constant
2019 Revenues 2018 Revenues in US $ Currency (1)
REVENUES
Cloud services and license support $13,616 73% $13,246 71% 3% 4%
Cloud license and on-premise
license 1,937 10% 2,083 11% (7%) (6%)
Hardware 1,686 9% 1,796 9% (6%) (5%)
Services 1,593 8% 1,630 9% (2%) (1%)
Total revenues 18,832 100% 18,755 100% 0% 1%
OPERATING EXPENSES
Cloud services and license support 2,003 11% 1,870 10% 7% 8%
Hardware 557 3% 658 4% (15%) (14%)
Services 1,445 8% 1,428 8% 1% 2%
Sales and marketing 4,086 22% 4,140 22% (1%) 0%
Research and development 3,088 16% 3,039 16% 2% 2%
General and administrative 615 3% 619 3% (1%) 0%
Amortization of intangible assets 821 4% 858 5% (4%) (4%)
Acquisition related and other 37 0% 32 0% 16% 16%
Restructuring 120 1% 233 1% (48%) (47%)
Total operating expenses 12,772 68% 12,877 69% (1%) 0%
OPERATING INCOME 6,060 32% 5,878 31% 3% 5%
Interest expense (959) (5%) (1,048) (6%) (8%) (8%)
Non-operating income, net 191 1% 484 3% (60%) (60%)
INCOME BEFORE PROVISION FOR INCOME
TAXES 5,292 28% 5,314 28% 0% 1%
Provision for income taxes 844 4% 716 4% 18% 17%
NET INCOME $4,448 24% $4,598 24% (3%) (1%)
EARNINGS PER SHARE:
Basic $1.36 $1.21
Diluted $1.32 $1.18
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic 3,281 3,812
Diluted 3,370 3,908
(1) We compare the percent change in the results from one period to another period using
constant currency disclosure. We present constant currency information to provide a
framework for assessing how our underlying businesses performed excluding the effect
of foreign currency rate fluctuations. To present this information, current and
comparative prior period results for entities reporting in currencies other than
United States dollars are converted into United States dollars at the exchange rates
in effect on May 31, 2019, which was the last day of our prior fiscal year, rather
than the actual exchange rates in effect during the respective periods. Movements in
international currencies relative to the United States dollar during the six months
ended November 30, 2019 compared with the corresponding prior year period decreased
our revenues by 1 percentage point, operating expenses by 1 percentage point and
operating income by 2 percentage points.
ORACLE CORPORATION
Q2 FISCAL 2020 YEAR TO DATE FINANCIAL RESULTS
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)
($ in millions, except per share data)
Six Months Ended November 30, % Increase (Decrease) % 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 $18,832 $3 $18,835 $18,755 $13 $18,768 0% 0% 1% 1%
Cloud services and license support 13,616 3 13,619 13,246 13 13,259 3% 3% 4% 4%
TOTAL OPERATING EXPENSES $12,772 $(1,821) $10,951 $12,877 $(1,955) $10,922 (1%) 0% 0% 1%
Stock-based compensation (3) 843 (843) 832 (832) 1%
* 1%
*
Amortization of intangible assets (4) 821 (821) 858 (858) (4%)
* (4%)
*
Acquisition related and other 37 (37) 32 (32) 16%
* 16%
*
Restructuring 120 (120) 233 (233) (48%)
* (47%)
*
OPERATING INCOME $6,060 $1,824 $7,884 $5,878 $1,968 $7,846 3% 0% 5% 2%
OPERATING MARGIN % 32% 42% 31% 42%
83 bp.
5 bp.
98 bp.
11 bp.
INCOME TAX EFFECTS (5) $844 $528 $1,372 $716 $656 $1,372 18% 0% 17% 1%
NET INCOME $4,448 $1,296 $5,744 $4,598 $1,312 $5,910 (3%) (3%) (1%) (2%)
DILUTED EARNINGS PER SHARE $1.32 $1.70 $1.18 $1.51 12% 13% 14% 14%
DILUTED WEIGHTED AVERAGE COMMON 3,370 3,370 3,908 3,908 (14%) (14%) (14%) (14%)
SHARES OUTSTANDING
(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, 2019, which was the last day of
our prior fiscal year, rather than the actual exchange rates in effect during the respective periods.
(3)
Stock-based compensation was included in the following GAAP operating expense categories:
Six Months Ended
Six Months Ended
November 30, 2019
November 30, 2018
GAAP
Adj.
Non-GAAP
GAAP
Adj.
Non-GAAP
Cloud services and license support $61 $(61)
$ - $48 $(48)
$ -
Hardware 6 (6) 5 (5)
Services 28 (28) 25 (25)
Sales and marketing 125 (125) 188 (188)
Research and development 543 (543) 479 (479)
General and administrative 80 (80) 87 (87)
Total stock-based compensation $843 $(843)
$ - $832 $(832)
$ -
(4)
Estimated future annual amortization expense related to intangible assets as of November 30, 2019 was as follows:
Remainder of fiscal 2020 $766
Fiscal 2021 1,347
Fiscal 2022 1,098
Fiscal 2023 675
Fiscal 2024 445
Fiscal 2025 126
Thereafter 35
Total intangible assets, net $4,492
(5) Income tax effects were calculated reflecting an effective GAAP tax rate of 16.0% and 13.5% in the first half of fiscal 2020 and 2019, respectively, and an effective non-GAAP tax rate of
19.3% and 18.8% in the first half of fiscal 2020 and 2019, respectively. The difference between our GAAP and non-GAAP tax rates in the first half of fiscal 2020 was primarily due to the
net tax effects on stock-based compensation expense and acquisition related items, including the tax effects of amortization of intangible assets. The difference between our GAAP and
non-GAAP tax rates in the first half of fiscal 2019 was primarily due to adjustments in our estimates for the one-time effects of the U.S. Tax Cuts and Jobs Act of 2017 (refer to
Appendix A for additional information), the net tax effects on stock-based compensation expense, and acquisition related items, including the tax effects of amortization of intangible
assets.
*
Not meaningful
ORACLE CORPORATION
Q2 FISCAL 2020 FINANCIAL RESULTS
CONDENSED CONSOLIDATED BALANCE SHEETS
($ in millions)
November 30, May 31,
2019 2019
ASSETS
Current Assets:
Cash and cash
equivalents $24,540 $20,514
Marketable
securities 2,904 17,313
Trade
receivables,
net 4,050 5,134
Prepaid expenses
and other
current assets 3,046 3,425
Total Current Assets 34,540 46,386
Non-Current Assets:
Property, plant
and equipment,
net 6,270 6,252
Intangible
assets, net 4,492 5,279
Goodwill, net 43,810 43,779
Deferred tax
assets 2,751 2,696
Other non-
current assets 6,580 4,317
Total Non-Current Assets 63,903 62,323
TOTAL ASSETS $98,443 $108,709
LIABILITIES AND EQUITY
Current Liabilities:
Notes payable,
current $999 $4,494
Accounts payable 534 580
Accrued
compensation
and related
benefits 1,312 1,628
Deferred
revenues 8,087 8,374
Other current
liabilities 3,660 3,554
Total Current Liabilities 14,592 18,630
Non-Current Liabilities:
Notes payable
and other
borrowings,
non-current 50,670 51,673
Income taxes
payable 13,042 13,295
Other non-
current
liabilities 3,954 2,748
Total Non-Current Liabilities 67,666 67,716
Equity 16,185 22,363
TOTAL LIABILITIES AND EQUITY $98,443 $108,709
ORACLE CORPORATION
Q2 FISCAL 2020 FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in millions)
Six Months Ended November 30,
2019 2018
Cash Flows From Operating Activities:
Net income $4,448 $4,598
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation 677 566
Amortization of intangible assets 821 858
Deferred income taxes (263) (228)
Stock-based compensation 843 832
Other, net 117 118
Changes in operating assets and liabilities, net of effects from
acquisitions:
Decrease in trade receivables, net 1,079 1,116
Decrease in prepaid expenses and other
assets 638 327
Decrease in accounts payable and other
liabilities (916) (364)
Decrease in income taxes payable (613) (679)
(Decrease) increase in deferred revenues (318) 124
Net cash provided by operating
activities 6,513 7,268
Cash Flows From Investing Activities:
Purchases of marketable securities and
other investments (314) (1,278)
Proceeds from maturities of marketable
securities and other investments 2,204 6,737
Proceeds from sales of marketable
securities 12,575 1,110
Acquisitions, net of cash acquired (111) (313)
Capital expenditures (735) (804)
Net cash provided by investing
activities 13,619 5,452
Cash Flows From Financing Activities:
Payments for repurchases of common stock (9,996) (19,924)
Proceeds from issuances of common stock 617 1,018
Shares repurchased for tax withholdings
upon vesting of restricted stock-based
awards (559) (417)
Payments of dividends to stockholders (1,562) (1,456)
Repayments of borrowings (4,500) (2,500)
Other, net (96) (77)
Net cash used for financing activities (16,096) (23,356)
Effect of exchange rate changes on cash
and cash equivalents (10) (160)
Net increase (decrease) in cash and cash
equivalents 4,026 (10,796)
Cash and cash equivalents at beginning
of period 20,514 21,620
Cash and cash equivalents at end of
period $24,540 $10,824
ORACLE CORPORATION
Q2 FISCAL 2020 FINANCIAL RESULTS
FREE CASH FLOW - TRAILING 4-QUARTERS (1)
($ in millions)
Fiscal 2019 Fiscal 2020
Q1
Q2
Q3
Q4
Q1
Q2 Q3 Q4
GAAP Operating Cash
Flow $15,542 $15,238 $14,789 $14,551 $13,829 $13,796
Capital Expenditures (1,646) (1,468) (1,625) (1,660) (1,663) (1,591)
Free Cash Flow $13,896 $13,770 $13,164 $12,891 $12,166 $12,205
% Growth over prior
year 10% 10% (1%) (6%) (12%) (11%)
GAAP Net Income $3,708 $3,827 $10,619 $11,083 $10,955 $10,933
Free Cash Flow as a %
of Net Income 375% 360% 124% 116% 111% 112%
(1) To supplement our statements of cash flows presented on a GAAP basis, we use non-
GAAP measures of cash flows on a trailing 4-quarter basis to analyze cash flow
generated from operations. We believe free cash flow is also useful as one of the
bases for comparing our performance with our competitors. The presentation of non-
GAAP free cash flow is not meant to be considered in isolation or as an alternative
to net income as an indicator of our performance, or as an alternative to cash
flows from operating activities as a measure of liquidity.
ORACLE CORPORATION
Q2 FISCAL 2020 FINANCIAL RESULTS
SUPPLEMENTAL ANALYSIS OF GAAP REVENUES (1)
($ in millions)
Fiscal 2019 Fiscal 2020
Q1 Q2
Q3
Q4 TOTAL Q1 Q2 Q3 Q4 TOTAL
REVENUES BY OFFERINGS
Cloud services and
license support $6,609 $6,637 $6,662 $6,799 $26,707 $6,805 $6,811 $13,616
Cloud license and on-
premise license 867 1,217 1,251 2,520 5,855 812 1,126 1,937
Hardware 904 891 915 994 3,704 815 871 1,686
Services 813 817 786 823 3,240 786 806 1,593
Total revenues $9,193 $9,562 $9,614 $11,136 $39,506 $9,218 $9,614 $18,832
AS REPORTED REVENUE
GROWTH RATES
Cloud services and
license support 3% 3% 1% 0% 2% 3% 3% 3%
Cloud license and on-
premise license (3%) (9%) (4%) 12% 1% (6%) (7%) (7%)
Hardware (4%) (5%) (8%) (11%) (7%) (10%) (2%) (6%)
Services (5%) (5%) (1%) (7%) (5%) (3%) (1%) (2%)
Total revenues 1% 0% (1%) 1% 0% 0% 1% 0%
CONSTANT CURRENCY GROWTH
RATES (2)
Cloud services and
license support 4% 5% 4% 3% 4% 4% 4% 4%
Cloud license and on-
premise license 0% (6%) 0% 15% 4% (6%) (7%) (6%)
Hardware (3%) (3%) (4%) (8%) (5%) (9%) (1%) (5%)
Services (4%) (2%) 3% (4%) (2%) (2%) 0% (1%)
Total revenues 2% 2% 3% 4% 3% 2% 1% 1%
CLOUD AND LICENSE REVENUES BY
ECOSYSTEM (3)
Applications revenues $2,761 $2,808 $2,841 $3,081 $11,491 $2,821 $2,909 $5,730
Infrastructure revenues 4,715 5,046 5,072 6,238 21,071 4,796 5,028 9,823
Total cloud and license
revenues $7,476 $7,854 $7,913 $9,319 $32,562 $7,617 $7,937 $15,553
AS REPORTED REVENUE
GROWTH RATES
Applications revenues 6% 5% 5% 2% 4% 2% 4% 3%
Infrastructure revenues 1% (2%) (2%) 4% 0% 2% 0% 1%
Total cloud and license
revenues 2% 1% 0% 3% 2% 2% 1% 1%
CONSTANT CURRENCY GROWTH
RATES (2)
Applications revenues 7% 7% 7% 4% 6% 3% 4% 4%
Infrastructure revenues 2% 1% 2% 7% 3% 3% 1% 2%
Total cloud and license
revenues 4% 3% 3% 6% 4% 3% 2% 3%
GEOGRAPHIC REVENUES
Americas $5,161 $5,243 $5,266 $6,184 $21,856 $5,150 $5,304 $10,454
Europe/Middle East/Africa 2,576 2,782 2,781 3,132 11,270 2,553 2,695 5,248
Asia Pacific 1,456 1,537 1,567 1,820 6,380 1,515 1,615 3,130
Total revenues $9,193 $9,562 $9,614 $11,136 $39,506 $9,218 $9,614 $18,832
(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, 2019 and 2018 for the fiscal 2020 and fiscal 2019 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
Q2 FISCAL 2020 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.
-- Stock-based compensation expenses: We have excluded the effect of
stock-based compensation expenses from our non-GAAP operating expenses
and net income measures. Although stock-based compensation is a key
incentive offered to our employees, and we believe such compensation
contributed to the revenues earned during the periods presented and also
believe it will contribute to the generation of future period revenues,
we continue to evaluate our business performance excluding stock-based
compensation expenses. Stock-based compensation expenses will recur in
future periods.
-- Amortization of intangible assets: We have excluded the effect of
amortization of intangible assets from our non-GAAP operating expenses
and net income measures. Amortization of intangible assets is
inconsistent in amount and frequency and is significantly affected by
the timing and size of our acquisitions. Investors should note that the
use of intangible assets contributed to our revenues earned during the
periods presented and will contribute to our future period revenues as
well. Amortization of intangible assets will recur in future periods.
-- Acquisition related and other expenses; and restructuring expenses: We
have excluded the effect of acquisition related and other expenses and
the effect of restructuring expenses from our non-GAAP operating
expenses and net income measures. We incurred expenses in connection
with our acquisitions and also incurred certain other operating expenses
or income, which we generally would not have otherwise incurred in the
periods presented as a part of our continuing operations. Acquisition
related and other expenses primarily consist of personnel related costs
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 the first half of fiscal 2019, we recorded a benefit of $153 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 have excluded the impacts of this
benefit from our non-GAAP income taxes and net income measures for the
first half of fiscal 2019. We believe making these adjustments provides
insight to our operating performance and comparability.
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SOURCE Oracle
