ORACLE  CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

($ in millions, except per share data)

Three Months Ended February 28,

% Increase

% Increase

(Decrease)

% of 

% of 

(Decrease)

in Constant

2022

Revenues

2021

Revenues

in US $

Currency (1)

REVENUES

Cloud services and license support 

$           7,637

73%

$           7,252

72%

5%

8%

Cloud license and on-premise license

1,289

12%

1,276

13%

1%

4%

Hardware

798

8%

820

8%

(3%)

1%

Services

789

7%

737

7%

7%

11%

      Total revenues

10,513

100%

10,085

100%

4%

7%

OPERATING EXPENSES

Cloud services and license support 

1,305

13%

1,064

11%

23%

25%

Hardware

244

2%

230

2%

6%

11%

Services

669

7%

621

6%

8%

11%

Sales and marketing

2,004

19%

1,915

19%

5%

7%

Research and development 

1,816

17%

1,621

16%

12%

13%

General and administrative

335

3%

330

3%

2%

3%

Amortization of intangible assets

279

3%

347

4%

(20%)

(19%)

Acquisition related and other

20

0%

13

0%

47%

54%

Restructuring

19

0%

66

1%

(71%)

(70%)

      Total operating expenses 

6,691

6,207

62%

8%

10%

OPERATING INCOME

36%

3,878

38%

(1%)

3%

Interest expense

(667)

(585)

(6%)

14%

14%

Non-operating expenses, net

(315)

(3%)

(17)

0%

*

*

2,840

3,276

32%

(13%)

(8%)

(Provision for) benefit from income taxes

1,745

18%

*

*

NET INCOME

$           2,319

22%

$           5,021

50%

(54%)

(51%)

EARNINGS PER SHARE:

Basic

$              0.87

$              1.72

Diluted

$              0.84

$              1.68

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:

Basic

2,670

2,913

Diluted

2,754

2,994

(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, 2021, 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 February 28, 2022 compared with the corresponding prior year period decreased our total revenues by 3 percentage points, total operating expenses by 2 percentage points and operating income by 4 percentage points.

*

Not meaningful

ORACLE  CORPORATION

Q3 FISCAL 2022 FINANCIAL RESULTS

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

($ in millions, except per share data)

Three Months Ended February 28,

2022

2021

2021

GAAP

GAAP

Non-GAAP

GAAP

Adj.

Non-GAAP

GAAP

Adj.

Non-GAAP

TOTAL REVENUES

$  10,513

$            -

$  10,513

$  10,085

$            1

$  10,086

4%

4%

7%

7%

     Cloud services and license support

7,637

-

7,637

7,252

1

7,253

5%

5%

8%

8%

TOTAL OPERATING EXPENSES

$     6,691

$      (992)

$     5,699

$     6,207

$      (905)

$     5,302

8%

8%

10%

10%

     Stock-based compensation (3)

674

(674)

-

479

(479)

-

41%

*

41%

*

     Amortization of intangible assets (4)

279

(279)

-

347

(347)

-

(20%)

*

(19%)

*

     Acquisition related and other

20

(20)

-

13

(13)

-

47%

*

54%

*

     Restructuring

19

(19)

-

66

(66)

-

(71%)

*

(70%)

*

OPERATING INCOME

$     3,822

$        992

$     4,814

$     3,878

$        906

$     4,784

(1%)

1%

3%

4%

OPERATING MARGIN %

36%

46%

38%

47%

(210) bp.

(165) bp.

(155) bp.

(132) bp.

INCOME TAX EFFECTS (5)

$      (521)

$       (209)

$      (730)

$     1,745

$   (2,442)

$      (697)

*

5%

*

9%

NET INCOME

$     2,319

$        783

$     3,102

$     5,021

$   (1,536)

$     3,485

(54%)

(11%)

(51%)

(7%)

DILUTED EARNINGS PER SHARE

$       0.84

$       1.13

$       1.68

$       1.16

(50%)

(3%)

(47%)

1%

DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING

2,754

-

2,754

2,994

-

2,994

(8%)

(8%)

(8%)

(8%)

(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, 2021, 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

February 28, 2022

February 28, 2021

GAAP

Adj.

Non-GAAP

GAAP

Adj.

Non-GAAP

     Cloud services and license support

$          55

$         (55)

$           -

$          33

$         (33)

$           -

     Hardware

4

(4)

-

2

(2)

-

     Services

17

(17)

-

15

(15)

-

     Sales and marketing

113

(113)

-

82

(82)

-

     Research and development

421

(421)

-

307

(307)

-

     General and administrative

64

(64)

-

40

(40)

-

           Total stock-based compensation

$      (674)

$           -

$        479

$      (479)

$           -

(4)

Estimated future annual amortization expense related to intangible assets as of February 28, 2022 was as follows:

     Remainder of fiscal 2022

$        267

     Fiscal 2023

744

     Fiscal 2024

501

     Fiscal 2025

142

     Fiscal 2026

24

     Fiscal 2027

6

     Thereafter

4

           Total intangible assets, net

$     1,688

(5)

Income tax effects were calculated reflecting an effective GAAP tax rate of 18.4% and (53.3%) in the third quarter of fiscal 2022 and 2021, respectively, and an effective non-GAAP tax rate of 19.0% and 16.7% in the third quarter of fiscal 2022 and 2021, respectively. The difference in our GAAP and non-GAAP tax rates in the third quarter of fiscal 2022 was primarily due to the net tax effects related to stock-based compensation expense and acquisition related and other items, including the tax effects on amortization of intangible assets, partially offset by the net deferred tax effects related to an income tax benefit that was recorded in the third quarter of fiscal 2021 due to the partial realignment of our legal entity structure. The difference in our GAAP and non-GAAP tax rates in the third quarter of fiscal 2021 was primarily due to a net tax benefit of $2.3 billion related to the partial realignment of our legal entity structure (refer to Appendix A for additional information), the net tax effects related to stock-based compensation expense, and the net tax effects related to acquisition related and other items, including the net tax effects on amortization of intangible assets.

ORACLE  CORPORATION

Q3 FISCAL 2022 YEAR TO DATE FINANCIAL RESULTS

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

($ in millions, except per share data)

Nine Months Ended February 28,

% Increase

(Decrease)

% of 

% of 

(Decrease)

in Constant

2022

Revenues

2021

Revenues

in US $

Currency (1)

REVENUES

Cloud services and license support 

$         22,562

74%

$         21,311

73%

6%

6%

Cloud license and on-premise license

3,339

11%

3,254

11%

3%

4%

Hardware 

2,328

7%

2,478

8%

(6%)

(5%)

Services

2,371

8%

2,209

8%

7%

8%

      Total revenues

30,600

100%

29,252

100%

5%

5%

OPERATING EXPENSES

Cloud services and license support 

3,778

12%

3,139

11%

20%

21%

Hardware

718

2%

719

2%

0%

1%

Services

1,984

7%

1,875

6%

6%

7%

Sales and marketing

5,811

19%

5,605

19%

4%

4%

Research and development 

5,254

17%

4,812

17%

9%

9%

General and administrative

953

3%

949

3%

0%

0%

Amortization of intangible assets

882

3%

1,037

4%

(15%)

(15%)

Acquisition related and other (2)

4,707

16%

107

1%

*

*

Restructuring

89

0%

337

1%

(74%)

(73%)

      Total operating expenses 

24,176

79%

18,580

64%

30%

30%

OPERATING INCOME 

6,424

21%

10,672

36%

(40%)

(38%)

Interest expense

(2,051)

(7%)

(1,799)

(6%)

14%

14%

Non-operating expenses, net

(348)

(1%)

(30)

0%

*

*

INCOME BEFORE INCOME TAXES

4,025

13%

8,843

30%

(54%)

(51%)

(Provision for) benefit from income taxes

(497)

(1%)

871

3%

*

*

NET INCOME 

$           3,528

$           9,714

33%

(64%)

(61%)

EARNINGS PER SHARE:

Basic

$              1.30

$              3.26

Diluted

$              1.26

$              3.19

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:

Basic

2,711

2,977

Diluted

2,800

3,049

(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, 2021, 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 nine months ended February 28, 2022 compared with the corresponding prior year period decreased our operating income by 2 percentage points. 

(2)

Acquisition related and other for the nine months ended February 28, 2022 included the impact of litigation related charges totaling $4.7 billion.

*

Not meaningful

ORACLE  CORPORATION

Q3 FISCAL 2022 YEAR TO DATE FINANCIAL RESULTS

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

($ in millions, except per share data)

Nine Months Ended February 28,

% Increase
(Decrease)
in Constant
Currency (2) 

2022

2022

2021

2021

GAAP

Non-GAAP

GAAP

Adj.

Non-GAAP

GAAP

Adj.

Non-GAAP

TOTAL REVENUES

$  30,600

$           -

$  30,600

$  29,252

$            2

$  29,254

5%

5%

5%

5%

Cloud services and license support

22,562

-

22,562

21,311

2

21,313

6%

6%

6%

6%

TOTAL OPERATING EXPENSES

$  24,176

$   (7,578)

$  16,598

$  18,580

$   (2,876)

$  15,704

30%

6%

30%

6%

Stock-based compensation (3)

1,900

(1,900)

-

1,395

(1,395)

-

36%

*

36%

*

Amortization of intangible assets (4)

882

(882)

-

1,037

(1,037)

-

(15%)

*

(15%)

*

Acquisition related and other

4,707

(4,707)

-

107

(107)

-

*

*

*

*

Restructuring

89

(89)

-

337

(337)

-

(74%)

*

(73%)

*

OPERATING INCOME

$     6,424

$     7,578

$  14,002

$  10,672

$     2,878

$  13,550

(40%)

3%

(38%)

4%

OPERATING MARGIN %

21%

46%

36%

46%

*

(56) bp.

*

(45) bp.

INCOME TAX EFFECTS (5)

$      (497)

$   (1,680)

$   (2,177)

$        871

$   (2,990)

$   (2,119)

*

3%

*

4%

NET INCOME 

$     3,528

$     5,898

$     9,426

$     9,714

$      (112)

$     9,602

(64%)

(2%)

(61%)

(1%)

DILUTED EARNINGS PER SHARE

$       1.26

$       3.37

$       3.19

$       3.15

(60%)

7%

(58%)

8%

DILUTED WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING

2,800

-

2,800

3,049

-

3,049

(8%)

(8%)

(8%)

(8%)

(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, 2021, 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:

Nine Months Ended

Nine Months Ended

February 28, 2022

February 28, 2021

GAAP

Adj.

Non-GAAP

GAAP

Adj.

Non-GAAP

     Cloud services and license support

$        145

$      (145)

$           -

$          99

$         (99)

$           -

     Hardware

11

(11)

-

8

(8)

-

     Services

49

(49)

-

41

(41)

-

     Sales and marketing

328

(328)

-

233

(233)

-

     Research and development

1,188

(1,188)

-

897

(897)

-

     General and administrative

179

(179)

-

117

(117)

-

           Total stock-based compensation

$     1,900

$   (1,900)

$           -

$     1,395

$   (1,395)

$           -

(4)

Estimated future annual amortization expense related to intangible assets as of February 28, 2022 was as follows:

     Remainder of fiscal 2022

$        267

     Fiscal 2023

744

     Fiscal 2024

501

     Fiscal 2025

142

     Fiscal 2026

24

     Fiscal 2027

6

     Thereafter

4

           Total intangible assets, net

$     1,688

(5)

Income tax effects were calculated reflecting an effective GAAP tax rate of 12.3% and (9.8%) in the first nine months of fiscal 2022 and 2021, respectively, and an effective non-GAAP tax rate of 18.8% and 18.1% in the first nine months of fiscal 2022 and 2021, respectively. The difference in our GAAP and non-GAAP tax rates in the first nine months of fiscal 2022 was primarily due to the net tax effects related to stock-based compensation expense, acquisition related and other items, including the net tax effects for litigation related charges (refer to Appendix A for additional information), and the tax effects on amortization of intangible assets, partially offset by the net deferred tax effects related to an income tax benefit that was recorded in the first nine months of fiscal 2021 due to the partial realignment of our legal entity structure. The difference in our GAAP and non-GAAP tax rates for the first nine months of fiscal 2021 was primarily due to a net tax benefit of $2.3 billion related to the partial realignment of our legal entity structure (refer to Appendix A for additional information), the net tax effects on stock-based compensation expense, and the net tax effects related to acquisition related and other items, including the net tax effects on amortization of intangible assets.

*

Not meaningful

ORACLE  CORPORATION

Q3 FISCAL 2022 FINANCIAL RESULTS

CONDENSED CONSOLIDATED BALANCE SHEETS

($ in millions)

February 28,

2022

2021

ASSETS

Current Assets:

Cash and cash equivalents

$               22,682

Marketable securities

707

16,456

Trade receivables, net

4,588

5,409

Prepaid expenses and other current assets

3,698

3,604

Total Current Assets

Non-Current Assets:

   Property, plant and equipment, net

8,609

7,049

   Intangible assets, net

1,688

2,430

   Goodwill, net

43,833

43,935

   Deferred tax assets

13,109

13,636

   Other non-current assets

9,730

8,490

Total Non-Current Assets

76,969

75,540

TOTAL ASSETS

$            131,107

LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY

Current Liabilities:

Notes payable, current 

$                 6,248

$                 8,250

Accounts payable

1,124

745

Accrued compensation and related benefits

1,626

2,017

Deferred revenues

7,871

8,775

Other current liabilities

3,964

4,377

Total Current Liabilities

20,833

24,164

Non-Current Liabilities:

Notes payable and other borrowings, non-current

72,165

75,995

Income taxes payable

12,168

12,345

Deferred tax liabilities

6,462

7,864

Other non-current liabilities

5,227

4,787

Total Non-Current Liabilities

96,022

100,991

Stockholders' (Deficit) Equity

5,952

TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY

$            108,644

$            131,107

ORACLE  CORPORATION 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

($ in millions)

Nine Months Ended February 28,

2022

2021

Cash Flows From Operating Activities:

Net income 

$        3,528

$        9,714

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

Depreciation

1,409

1,127

Amortization of intangible assets

882

1,037

Deferred income taxes

(983)

(2,475)

Stock-based compensation

1,900

1,395

Other, net

82

227

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

Decrease in trade receivables, net

652

1,089

Decrease in prepaid expenses and other assets

71

609

Decrease in accounts payable and other liabilities

(683)

(247)

Decrease in income taxes payable

(661)

(1,181)

Decrease in deferred revenues

(643)

(250)

Net cash provided by operating activities

11,045

Cash Flows From Investing Activities:

Purchases of marketable securities and other investments

(10,134)

(26,775)

Proceeds from sales and maturities of marketable securities and other investments

25,735

19,035

Acquisitions, net of cash acquired

(132)

(29)

Capital expenditures

(3,088)

(1,418)

Net cash provided by (used for) investing activities

12,381

(9,187)

Cash Flows From Financing Activities:

Payments for repurchases of common stock

(15,654)

(12,958)

Proceeds from issuances of common stock

357

915

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

(1,011)

(597)

Payments of dividends to stockholders

(2,603)

(2,146)

Repayments of borrowings

(5,750)

(2,631)

Other, net

(439)

241

Net cash used for financing activities

(25,100)

(17,176)

Effect of exchange rate changes on cash and cash equivalents

400

Net decrease in cash and cash equivalents

(7,416)

(14,918)

Cash and cash equivalents at beginning of period

30,098

37,239

Cash and cash equivalents at end of period

$      22,682

$      22,321

 ORACLE  CORPORATION 

 Q3 FISCAL 2022 FINANCIAL RESULTS 

 FREE CASH FLOW - TRAILING 4-QUARTERS (1) 

 ($ in millions) 

 Fiscal 2021 

 Fiscal 2022

 Q2 

 Q3 

 Q4 

 Q1 

 Q3 

 Q4 

GAAP Operating Cash Flow

$            13,092

$            13,967

$            14,659

$            15,887

$            15,325

$            10,255

$            10,396

Capital Expenditures

(1,833)

(1,851)

(2,761)

(3,118)

(3,805)

Free Cash Flow

$            12,134

$            12,808

$            13,752

$            12,564

$               7,137

$               6,591

% Growth over prior year

3%

19%

9%

(41%)

(49%)

GAAP Net Income

$            10,249

$            10,380

$            12,830

$            13,746

$            13,952

$            10,262

$               7,560

Free Cash Flow as a % of Net Income

112%

117%

100%

100%

90%

70%

87%

(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 

 Q3 FISCAL 2022 FINANCIAL RESULTS 

 SUPPLEMENTAL ANALYSIS OF GAAP REVENUES (1) 

 ($ in millions) 

Fiscal 2021

Fiscal 2022 

 Q1 

 Q2 

 Q3 

 Q4 

 TOTAL 

 Q1 

 Q2 

 Q3 

 Q4 

 TOTAL 

$    6,947

$    7,112

$    7,252

$    7,389

$   28,700

$    7,371

$    7,554

$    7,637

$   22,562

 Cloud license and on-premise license 

886

1,092

1,276

2,144

5,399

813

1,237

1,289

3,339

 Hardware 

814

844

820

882

3,359

763

767

798

2,328

 Services  

720

752

737

812

3,021

781

802

789

2,371

Total revenues 

$    9,367

$    9,800

$  10,085

$  11,227

$   40,479

$    9,728

$  10,360

$  10,513

$   30,600

AS REPORTED REVENUE GROWTH RATES 

 Cloud services and license support 

2%

4%

5%

8%

5%

6%

6%

5%

6%

 Cloud license and on-premise license 

9%

(3%)

4%

9%

5%

(8%)

13%

1%

3%

 Hardware  

0%

(3%)

(4%)

(2%)

(2%)

(6%)

(9%)

(3%)

(6%)

 Services  

(8%)

(7%)

(5%)

11%

(3%)

8%

7%

7%

7%

Total revenues 

2%

2%

3%

8%

4%

4%

6%

4%

5%

CONSTANT CURRENCY REVENUE GROWTH RATES (2)

 Cloud services and license support  

2%

4%

2%

4%

3%

5%

6%

8%

6%

 Cloud license and on-premise license 

8%

(5%)

0%

5%

2%

(9%)

16%

4%

4%

 Hardware  

0%

(3%)

(6%)

(6%)

(4%)

(7%)

(8%)

1%

(5%)

 Services  

(8%)

(8%)

(8%)

6%

(5%)

7%

7%

11%

8%

Total revenues 

2%

1%

0%

4%

2%

2%

6%

7%

5%

BY ECOSYSTEM

 Applications cloud services and license support 

$    2,816

$    2,901

$    2,952

$    3,043

$   11,712

$    3,041

$    3,149

$    3,187

$      9,377

 Infrastructure cloud services and license support 

4,131

4,211

4,300

4,346

16,988

4,330

4,405

4,450

13,185

Total cloud services and license support revenues 

$    6,947

$    7,112

$    7,252

$    7,389

$   28,700

$    7,371

$    7,554

$    7,637

$   22,562

AS REPORTED REVENUE GROWTH RATES 

 Applications cloud services and license support 

4%

5%

5%

11%

6%

8%

9%

8%

8%

 Infrastructure cloud services and license support 

1%

4%

4%

6%