Oracle Announces Fiscal 2021 First Quarter Financial Results

REDWOOD SHORES, Calif., Sept. 10, 2020 /PRNewswire/ -- Oracle Corporation (NYSE: ORCL) today announced fiscal 2021 Q1 results. Total quarterly revenues were up 2% year-over-year in USD and in constant currency to $9.4 billion compared to Q1 last year. Cloud services and license support revenues were up 2% in USD and in constant currency to $6.9 billion. Cloud license and on-premise license revenues were up 9% in USD and 8% in constant currency to $886 million.

Q1 GAAP operating income was up 12% to $3.2 billion and GAAP operating margin was 34%. Non-GAAP operating income was up 9% to $4.2 billion and non-GAAP operating margin was 45%. GAAP net income was up 5% to $2.3 billion, and non-GAAP net income was up 4% to $2.9 billion. GAAP earnings per share was up 16% to $0.72, while non-GAAP earnings per share was up 15% to $0.93.

Short-term deferred revenues were $9.9 billion. Operating cash flow was $13.1 billion during the trailing twelve months.

"Q1 was fantastic with total revenue beating guidance by more than $150 million, and non-GAAP earnings per share beating guidance by $0.07," said Oracle CEO, Safra Catz. "Our cloud applications businesses continued their rapid revenue growth with Fusion ERP up 33% and NetSuite ERP up 23%. We now have 7,300 Fusion ERP customers and 23,000 NetSuite ERP customers in the Oracle Cloud. Our infrastructure businesses are also growing rapidly as revenue from Zoom more than doubled from Q4 last year to Q1 in this year. I have a high level of confidence that our revenue will accelerate as we move on past COVID-19."

"I believe that the Oracle Cloud offers better Infrastructure-as-a-Service (IaaS) technology than any other cloud vendor," said Oracle Chairman and CTO, Larry Ellison. "The really good news here is that I'm not the only one who thinks that's true. Here is an approved quote from IDC."

"In the 2020 Industry CloudPath survey that IDC recently released where it surveyed 935 IaaS customers on their satisfaction with top IaaS vendors including Oracle, Amazon Web Services, Microsoft, IBM, Google Cloud . . . . Oracle IaaS (OCI) received the highest satisfaction score AND the biggest year-over-year score increase of all IaaS vendors. In addition, 86% of those surveyed said they expect their spend on Oracle IaaS (OCI) to increase in the future."

The board of directors 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 October 8, 2020, with a payment date of October 22, 2020.

A complete list of customers mentioned on the earnings conference call and more, which have purchased Oracle Cloud services, or went live on Oracle Cloud during the quarter will be available at www.oracle.com/customers/earnings.

Q1 Fiscal 2021 Earnings Conference Call and Webcast

Oracle will hold a conference call and webcast today to discuss these results at 2:00 p.m. Pacific. A live and replay webcast will be available on the Oracle Investor Relations website at http://www.oracle.com/investor. In addition, Oracle's Q1 results and 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: 3270019.

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 our future revenue acceleration and increased customer purchases, are "forward-looking statements" and are subject to material risks and uncertainties. Many factors could affect our current expectations and our actual results, and could cause actual results to differ materially. We presently consider the following to be among the important factors that could cause actual results to differ materially from expectations: (1) The COVID-19 pandemic has affected how we and our customers are operating our respective businesses, and the duration and extent to which this will impact our future results of operations and our overall financial performance remains uncertain. (2) Our success depends upon our ability to develop new products and services, integrate acquired products and services and enhance our existing products and services. (3) Our cloud strategy, including our Oracle Cloud Software-as-a-Service and Infrastructure-as-a-Service offerings, may adversely affect our revenues and profitability. (4) We might experience significant coding, manufacturing or configuration errors in our cloud, license and hardware offerings. (5) If the security measures for our products and services are compromised and as a result, our data, our customers' data or our IT systems are accessed improperly, made unavailable, or improperly modified, our products and services may be perceived as vulnerable, our brand and reputation could be damaged, the IT services we provide to our customers could be disrupted, and customers may stop using our products and services, all of which could reduce our revenue and earnings, increase our expenses and expose us to legal claims and regulatory actions. (6) Our business practices with respect to data could give rise to operational interruption, liabilities or reputational harm as a result of governmental regulation, legal requirements or industry standards relating to privacy and data protection. (7) Economic, political and market conditions can adversely affect our business, results of operations and financial condition, including our revenue growth and profitability, which in turn could adversely affect our stock price. (8) If we are unable to compete effectively, the results of operations and prospects for our business could be harmed. (9) Our international sales and operations subject us to additional risks that can adversely affect our operating results. (10) 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 September 10, 2020. Oracle undertakes no duty to update any statement in light of new information or future events.


                                                                                                                                     
            
              ORACLE  CORPORATION




                                                                                                                               
            
              Q1 FISCAL 2021 FINANCIAL RESULTS


                                                                                                                       
            
              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


                                                                                                                            
            
              ($ in millions, except per share data)




                                                                                                                                                                                             Three Months Ended August 31,                                                  % Increase

                                                                                                                                                                                                                      
         
       % Increase                           (Decrease)





                                                                                                                                                                                     
         
         % of                      
      
             % of    
       
       (Decrease)                     in Constant


                                                                                                                                                                            2020                Revenues            2019               Revenues   
       
         in US $                      Currency (1)




     
     REVENUES


                                                    
      Cloud services and license support                                                                                                        $6,947              74%                 $6,805                  74%                               2%    2%


                                                    
      Cloud license and on-premise license                                                                                                         886               9%                    812                   9%                               9%    8%


                                                    
      Hardware                                                                                                                                     814               9%                    815                   9%                               0%    0%


                                                    
      Services                                                                                                                                     720               8%                    786                   8%                             (8%)  (8%)



                                                    
      
                    Total revenues                                                                                                            9,367             100%                  9,218                 100%                               2%    2%




     
     OPERATING EXPENSES


                                                    
      Cloud services and license support                                                                                                         1,011              11%                    982                  11%                               3%    3%


                                                    
      Hardware                                                                                                                                     246               2%                    272                   3%                             (9%)  (9%)


                                                    
      Services                                                                                                                                     623               7%                    703                   8%                            (11%) (11%)


                                                    
      Sales and marketing                                                                                                                        1,854              20%                  2,018                  22%                             (8%)  (8%)


                                                    
      Research and development                                                                                                                   1,589              17%                  1,557                  17%                               2%    3%


                                                    
      General and administrative                                                                                                                   295               3%                    292                   3%                               1%    2%


                                                    
      Amortization of intangible assets                                                                                                            345               4%                    414                   4%                            (17%) (17%)


                                                    
      Acquisition related and other                                                                                                                 19               0%                     25                   0%                            (23%) (22%)


                                                    
      Restructuring                                                                                                                                174               2%                     78                   1%                             123%  122%



                                                    
      
                    Total operating expenses                                                                                                  6,156              66%                  6,341                  69%                             (3%)  (3%)




     
     OPERATING INCOME                                                                                                                                                                        3,211              34%                  2,877                  31%                              12%   11%



                                                    
      Interest expense                                                                                                                           (614)            (6%)                  (494)                (5%)                              24%   24%


                                                    
      Non-operating (expenses) income, net                                                                                                         (2)              0%                     99                   1%                             102%   99%




     
     INCOME BEFORE PROVISION FOR INCOME TAXES                                                                                                                                                2,595              28%                  2,482                  27%                               5%    4%



                                                    
      Provision for income taxes                                                                                                                   344               4%                    345                   4%                               0%  (1%)




     
     NET INCOME                                                                                                                                                                             $2,251              24%                 $2,137                  23%                               5%    4%






     
     EARNINGS PER SHARE:


                                                    
      Basic                                                                                                                                      $0.74                                   $0.64


                                                    
      Diluted                                                                                                                                    $0.72                                   $0.63



     
     WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:


                                                    
      Basic                                                                                                                                      3,041                                   3,317


                                                    
      Diluted                                                                                                                                    3,107                                   3,410












                                       
            (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, 2020, 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 August 31, 2020 compared with the corresponding prior year period
                                                        increased our operating income by 1 percentage point.


                                                                                                                                                                                                                                                                                                       
              
                ORACLE  CORPORATION




                                                                                                                                                                                                                                                                                                     
          
                Q1 FISCAL 2021 FINANCIAL RESULTS


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


                                                                                                                                                                                                                                                                                                   
         
                ($ in millions, except per share data)




                                                                                                                                                                                                                                                                                    
              
           Three Months Ended August 31,                                                                                     % Increase (Decrease)                      % Increase (Decrease) in
                                                                                                                                                                                                                                                                                                                                                                                                                     in US $                              Constant Currency (2)



                                                                                                                                                                                                                      2020                                                                                        2020                                                                    2019                                                                                        2019                             GAAP   
      
            Non-GAAP               GAAP   
     
     Non-GAAP



                                                                                                                                                                             
              
                GAAP                                   
              
                Adj.                                     Non-GAAP                                            
              
               GAAP         
       
          Adj.                                                           Non-GAAP






              
           TOTAL REVENUES                                                                                                              $9,367                                                                               $1                                         $9,368                                                                  $9,218                                   $2                                             $9,220                                                  2%              2%                     2%                 2%


                                                                           
           Cloud services and license support                                                                                                               6,947                                              1                                                     6,948                                              6,805                                                  2                                               6,807                                      2%                 2%             2%    2%





              
           TOTAL OPERATING EXPENSES                                                                                                    $6,156                                                                           $(966)                                        $5,190                                                                  $6,341                               $(963)                                            $5,378                                                (3%)            (4%)                   (3%)               (3%)


                                                                           
           Stock-based compensation (3)                                                                                                                       428                                          (428)                                                                                                        446                                              (446)                                                                                      (4%)      
            *              (4%)    
     *


                                                                           
           Amortization of intangible assets (4)                                                                                                              345                                          (345)                                                                                                        414                                              (414)                                                                                     (17%)      
            *             (17%)    
     *


                                                                           
           Acquisition related and other                                                                                                                       19                                           (19)                                                                                                         25                                               (25)                                                                                     (23%)      
            *             (22%)    
     *


                                                                           
           Restructuring                                                                                                                                      174                                          (174)                                                                                                         78                                               (78)                                                                                      123%      
            *              122%    
     *



              
           OPERATING INCOME                                                                                                            $3,211                                                                             $967                                         $4,178                                                                  $2,877                                 $965                                             $3,842                                                 12%              9%                    11%                 8%


    OPERATING MARGIN %                                                                                                                              34%                                                                                                                           45%                                                                    31%                                                                                   42%                                          
      307 bp.       
     293 bp.         
      283 bp.           
       268 bp.



              
           INCOME TAX EFFECTS (5)                                                                                                        $344                                                                             $336                                           $680                                                                    $345                                 $339                                               $684                                                  0%            (1%)                   (1%)               (1%)



              
           NET INCOME                                                                                                                  $2,251                                                                             $631                                         $2,882                                                                  $2,137                                 $626                                             $2,763                                                  5%              4%                     4%                 4%



              
           DILUTED EARNINGS PER SHARE                                                                                                   $0.72                                                                                                                          $0.93                                                                   $0.63                                                                                  $0.81                                                 16%             15%                    15%                14%



              
           DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING                                                                           3,107                                                                                                                          3,107                                                                   3,410                                                                                  3,410                                                (9%)            (9%)                   (9%)               (9%)






                                                           
              (1)    This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our
                                                                               consolidated financial statements prepared in accordance with GAAP. For a detailed explanation of the adjustments made to comparable GAAP measures, the reasons why management uses these measures, the usefulness
                                                                               of these measures and the material limitations on the usefulness of these measures, please see Appendix A.




                                                           
              (2)    We compare the percent change in the results from one period to another period using constant currency disclosure. We present constant currency information to provide a framework for assessing how our underlying
                                                                               businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United
                                                                               States dollars are converted into United States dollars at the exchange rates in effect on May 31, 2020, 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


                                                                                                                                                                                                                                          
              August 31, 2020                                                                                       
              August 31, 2019



                                                                                                                                                                                    
              GAAP                                                
              Adj.                               
         Non-GAAP                                                         
              GAAP                
       Adj.                                                     
              Non-GAAP



                                                                           
           Cloud services and license support                                                                                                                 $30                                          $(30)                                 
              $           -                                               $31                                              $(31)                                       
      $       -


                                                                           
           Hardware                                                                                                                                             3                                            (3)                                                                                                          3                                                (3)


                                                                           
           Services                                                                                                                                            12                                           (12)                                                                                                         14                                               (14)


                                                                           
           Sales and marketing                                                                                                                                 71                                           (71)                                                                                                         88                                               (88)


                                                                           
           Research and development                                                                                                                           276                                          (276)                                                                                                        271                                              (271)


                                                                           
           General and administrative                                                                                                                          36                                           (36)                                                                                                         39                                               (39)


                                                                           
                 Total stock-based compensation                                                                                                              $428                                         $(428)                                 
              $           -                                              $446                                             $(446)                                      
      $        -





                                                           
              (4) 
      Estimated future annual amortization expense related to intangible assets as of August 31, 2020 was as follows:


                                                                           
           Remainder of fiscal 2021                                                                                                                        $1,012


                                                                           
           Fiscal 2022                                                                                                                                      1,106


                                                                           
           Fiscal 2023                                                                                                                                        682


                                                                           
           Fiscal 2024                                                                                                                                        445


                                                                           
           Fiscal 2025                                                                                                                                        126


                                                                           
           Fiscal 2026                                                                                                                                         24


                                                                           
           Thereafter                                                                                                                                          10


                                                                           
                 Total intangible assets, net                                                                                                              $3,405





                                                           
              (5)    Income tax effects were calculated reflecting an effective GAAP tax rate of 13.3% and 13.9% in the first quarter of fiscal 2021 and 2020, respectively, and an effective non-GAAP tax rate of 19.1% and 19.8% in
                                                                               the first quarter of fiscal 2021 and 2020, respectively. The differences in our GAAP and non-GAAP tax rates in the periods presented were 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




                                           
              
                Q1 FISCAL 2021 FINANCIAL RESULTS


                                        
              
                CONDENSED CONSOLIDATED BALANCE SHEETS


                                                   
              
                ($ in millions)




                                                                                      August 31,      May 31,


                                                                                            2020          2020




     
     ASSETS



     
     Current Assets:


                 Cash and cash
                  equivalents                                                            $27,276                  $37,239


                 Marketable
                  securities                                                              15,003                    5,818


                 Trade
                  receivables,
                  net                                                                      4,576                    5,551


                 Prepaid expenses
                  and other
                  current assets                                                           3,084                    3,532



                              Total Current Assets                                        49,939                   52,140



     
     Non-Current Assets:


                    Property, plant
                     and equipment,
                     net                                                                   6,401                    6,244


                    Intangible
                     assets, net                                                           3,405                    3,738


                    Goodwill, net                                                         43,867                   43,769


                    Deferred tax
                     assets                                                                3,152                    3,252


                    Other non-
                     current assets                                                        6,782                    6,295



                              Total Non-Current Assets                                    63,607                   63,298




     
     TOTAL ASSETS                                                                  $113,546                 $115,438




     
     LIABILITIES AND EQUITY



     
     Current Liabilities:


                 Notes payable,
                  current                                                                 $2,997                   $2,371


                 Accounts payable                                                            534                      637


                 Accrued
                  compensation
                  and related
                  benefits                                                                 1,390                    1,453


                 Deferred
                  revenues                                                                 9,875                    8,002


                 Other current
                  liabilities                                                              3,952                    4,737



                              Total Current Liabilities                                   18,748                   17,200



     
     Non-Current Liabilities:


                 Notes payable
                  and other
                  borrowings,
                  non-current                                                             67,769                   69,226


                 Income taxes
                  payable                                                                 12,690                   12,463


                 Other non-
                  current
                  liabilities                                                              4,199                    3,832



                              Total Non-Current Liabilities                               84,658                   85,521



     
     Equity                                                                          10,140                   12,717



        TOTAL LIABILITIES AND EQUITY                                                  $113,546                 $115,438


                                               
              
                     
              
              
                ORACLE  CORPORATION




                                                            
              
                Q1 FISCAL 2021 FINANCIAL RESULTS


                                                     
              
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                                     
              
                ($ in millions)




                                                                                       Three Months Ended August 31,



                                                                                                                2020         2019




     
                Cash Flows From Operating Activities:



     Net income                                                                                              $2,251                 $2,137


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



     Depreciation                                                                                               356                    336


      Amortization of intangible assets                                                                          345                    414



     Deferred income taxes                                                                                      173                   (14)



     Stock-based compensation                                                                                   428                    446



     Other, net                                                                                                  78                     60


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


      Decrease in trade receivables, net                                                                       1,077                  1,313


      Decrease in prepaid expenses and other
       assets                                                                                                    380                    481


      Decrease in accounts payable and other
       liabilities                                                                                             (294)                 (813)


      Decrease in income taxes payable                                                                         (586)                 (121)



     Increase in deferred revenues                                                                            1,745                  1,761


                   Net cash provided by operating
                    activities                                                                                 5,953                  6,000




     
                Cash Flows From Investing Activities:


      Purchases of marketable securities and
       other investments                                                                                    (10,678)                 (216)


      Proceeds from maturities of marketable
       securities and other investments                                                                        1,459                    879


      Proceeds from sales of marketable
       securities                                                                                                  -                12,111


      Acquisitions, net of cash acquired                                                                           -                   (2)



     Capital expenditures                                                                                     (436)                 (386)


                   Net cash (used for) provided by
                    investing activities                                                                     (9,655)                12,386




     
                Cash Flows From Financing Activities:


      Payments for repurchases of common stock                                                               (4,945)               (5,005)


      Proceeds from issuances of common stock                                                                    567                    316


      Shares repurchased for tax withholdings
       upon vesting of restricted stock-based
       awards                                                                                                  (478)                 (514)


      Payments of dividends to stockholders                                                                    (730)                 (795)



     Repayments of borrowings                                                                               (1,000)               (1,750)



     Other, net                                                                                                  93                   (54)


                   Net cash used for financing activities                                                    (6,493)               (7,802)



                   Effect of exchange rate changes on cash
                    and cash equivalents                                                                         232                   (15)



                   Net (decrease) increase in cash and cash
                    equivalents                                                                              (9,963)                10,569


                   Cash and cash equivalents at beginning
                    of period                                                                                 37,239                 20,514



                   Cash and cash equivalents at end of
                    period                                                                                   $27,276                $31,083




                                                                                                                                
              
                ORACLE  CORPORATION


                                                                                                                         
              
                 Q1 FISCAL 2021 FINANCIAL RESULTS


                                                                                                                     
              
                 FREE CASH FLOW - TRAILING 4-QUARTERS (1)


                                                                                                                                  
              
                 ($ in millions)




                           
           
                 Fiscal 2020                                  Fiscal 2021



                             
              
                 Q1                 
              
                 Q2                  
              
                 Q3                  
              
            Q4           
     
       Q1            Q2 Q3 Q4





     GAAP Operating Cash
      Flow                                              $13,829                                      $13,796                                       $13,947                                  $13,139             $13,092




     Capital Expenditures                               (1,663)                                     (1,591)                                      (1,544)                                 (1,564)            (1,614)





     Free Cash Flow                                     $12,166                                      $12,205                                       $12,403                                  $11,575             $11,478





     % Growth over prior
      year                                     
              (12%)                            
              (11%)                              
              (6%)                             
         (10%)        
          (6%)






     GAAP Net Income                                    $10,955                                      $10,933                                       $10,759                                  $10,135             $10,249




     Free Cash Flow as a %
      of Net Income                                        111%                                        112%                                         115%                                    114%               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


                                                                                                                                                                     
              
                 Q1 FISCAL 2021 FINANCIAL RESULTS


                                                                                                                                                                
              
                 SUPPLEMENTAL ANALYSIS OF GAAP REVENUES (1)


                                                                                                                                                                             
              
                 ($ in millions)




                                                                                                   
              
                Fiscal 2020                                   
              
                Fiscal 2021





                                                                                                          
              
                 Q1     
              
                 Q2           
              
                 Q3    
              
              Q4        TOTAL              
       
     Q1         Q2 Q3 Q4          TOTAL



                                  REVENUES BY OFFERINGS



       Cloud services and
        license support                                                                     $6,805                                 $6,811                           $6,930                                 $6,845                      $27,392                 $6,947                         $6,947


       Cloud license and on-
        premise license                                                                        812                                  1,126                            1,231                                  1,959                        5,127                    886                            886


     
     Hardware                                                                                815                                    871                              857                                    901                        3,443                    814                            814


     
     Services                                                                                786                                    806                              778                                    735                        3,106                    720                            720




                                                                     
     Total revenues                                           $9,218                           $9,614                                 $9,796                      $10,440       $39,068                 $9,367                           $9,367





                   AS REPORTED REVENUE
                    GROWTH RATES


       Cloud services and
        license support                                                                         3%                                    3%                              4%                                    1%                          3%                    2%                            2%


       Cloud license and on-
        premise license                                                                       (6%)                                  (7%)                            (2%)                                 (22%)                       (12%)                    9%                            9%


     
     Hardware                                                                              (10%)                                  (2%)                            (6%)                                  (9%)                        (7%)                    0%                            0%


     
     Services                                                                               (3%)                                  (1%)                            (1%)                                 (11%)                        (4%)                  (8%)                          (8%)




                                                                     
     Total revenues                                               0%                              1%                                    2%                        (6%)         (1%)                    2%                              2%




                   CONSTANT CURRENCY REVENUE
                    GROWTH RATES (2)


       Cloud services and
        license support                                                                         4%                                    4%                              5%                                    3%                          4%                    2%                            2%


       Cloud license and on-
        premise license                                                                       (6%)                                  (7%)                              0%                                 (21%)                       (11%)                    8%                            8%


     
     Hardware                                                                               (9%)                                  (1%)                            (5%)                                  (7%)                        (6%)                    0%                            0%


     
     Services                                                                               (2%)                                    0%                              0%                                  (8%)                        (3%)                  (8%)                          (8%)




                                                                     
     Total revenues                                               2%                              1%                                    3%                        (4%)           0%                    2%                              2%




                                  CLOUD SERVICES AND LICENSE SUPPORT
                                   REVENUES



                                  BY ECOSYSTEM



       Applications cloud
        services and license
        support                                                                             $2,704                                 $2,753                           $2,809                                 $2,749                      $11,015                 $2,816                         $2,816


       Infrastructure cloud
        services and license
        support                                                                              4,101                                  4,058                            4,121                                  4,096                       16,377                  4,131                          4,131


                                                                       Total cloud services and
                                                                          license support revenues                                $6,805                           $6,811                                 $6,930                       $6,845       $27,392                 $6,947                           $6,947





                   AS REPORTED REVENUE
                    GROWTH RATES


       Applications cloud
        services and license
        support                                                                                 5%                                    5%                              6%                                    1%                          4%                    4%                            4%


       Infrastructure cloud
        services and license
        support                                                                                 2%                                    1%                              2%                                    0%                          1%                    1%                            1%


                                                                       Total cloud services and
                                                                          license support revenues                                    3%                              3%                                    4%                          1%           3%                    2%                              2%




                   CONSTANT CURRENCY REVENUE
                    GROWTH RATES (2)


       Applications cloud
        services and license
        support                                                                                 6%                                    6%                              7%                                    3%                          5%                    4%                            4%


       Infrastructure cloud
        services and license
        support                                                                                 3%                                    2%                              4%                                    3%                          3%                    1%                            1%


                                                                       Total cloud services and
                                                                          license support revenues                                    4%                              4%                                    5%                          3%           4%                    2%                              2%




                                  GEOGRAPHIC REVENUES



     
     Americas                                                                                                                   $5,150                           $5,304                                 $5,363                       $5,746       $21,563                 $5,068                           $5,068


     
     Europe/Middle East/Africa                                                                                                   2,553                            2,695                                  2,835                        2,952        11,035                  2,738                            2,738


     
     Asia Pacific                                                                                                                1,515                            1,615                                  1,598                        1,742         6,470                  1,561                            1,561


                                                                     
     Total revenues                                           $9,218                           $9,614                                 $9,796                      $10,440       $39,068                 $9,367                           $9,367







                                                                 (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, 2020 and 2019 for the fiscal 2021
                                                                         and fiscal 2020 constant currency growth rate calculations presented, respectively, rather than the actual
                                                                         exchange rates in effect during the respective periods.

APPENDIX A

ORACLE CORPORATION
Q1 FISCAL 2021 FINANCIAL RESULTS
EXPLANATION OF NON-GAAP MEASURES

To supplement our financial results presented on a GAAP basis, we use the non-GAAP measures indicated in the tables, which exclude certain business combination accounting entries and expenses related to acquisitions, as well as other significant expenses including stock-based compensation, that we believe are helpful in understanding our past financial performance and our future results. Our non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. Our management regularly uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our business and make operating decisions. These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. Compensation of our executives is based in part on the performance of our business based on these non-GAAP measures. Our non-GAAP financial measures reflect adjustments based on the following items, as well as the related income tax effects:

    --  Cloud services and license support revenues: Business combination
        accounting rules 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, 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.

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SOURCE Oracle Corporation