Oracle Announces Fiscal 2023 Fourth Quarter and Fiscal Full Year Financial Results

ORACLE CORPORATION

Q4 FISCAL 2023 FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($ in millions, except per share data)

Three Months Ended May 31,

% Increase

% Increase

(Decrease)

% of 

% of 

(Decrease)

in Constant

2023

Revenues

2022

Revenues

in US $

Currency (1)

REVENUES

Cloud services and license support 

$             9,370

68 %

$             7,612

64 %

23 %

25 %

Cloud license and on-premise license

2,152

15 %

2,539

22 %

(15 %)

(14 %)

Hardware

850

6 %

856

7 %

(1 %)

1 %

Services

1,465

11 %

833

7 %

76 %

78 %

      Total revenues

13,837

100 %

11,840

100 %

17 %

18 %

OPERATING EXPENSES

Cloud services and license support 

2,157

16 %

1,435

12 %

50 %

52 %

Hardware

261

2 %

254

2 %

3 %

3 %

Services

1,312

9 %

707

6 %

86 %

88 %

Sales and marketing

2,289

17 %

2,238

19 %

2 %

4 %

Research and development 

2,226

16 %

1,965

17 %

13 %

14 %

General and administrative

400

3 %

364

3 %

10 %

11 %

Amortization of intangible assets

870

6 %

268

2 %

225 %

225 %

Acquisition related and other

51

0 %

6

0 %

825 %

825 %

Restructuring

131

1 %

100

1 %

29 %

14 %

      Total operating expenses 

9,697

70 %

7,337

62 %

32 %

33 %

OPERATING INCOME

4,140

30 %

4,503

38 %

(8 %)

(6 %)

Interest expense

(955)

(7 %)

(704)

(6 %)

36 %

36 %

Non-operating expenses, net

(76)

(1 %)

(175)

(1 %)

(57 %)

(57 %)

INCOME BEFORE INCOME TAXES

3,109

22 %

3,624

31 %

(14 %)

(12 %)

Benefit from (provision for) income taxes

210

2 %

(435)

(4 %)

*

*

NET INCOME

$             3,319

24 %

$             3,189

27 %

4 %

7 %

EARNINGS PER SHARE:

Basic

$               1.23

$               1.20

Diluted

$               1.19

$               1.16

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:

Basic

2,707

2,667

Diluted

2,796

2,742

(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, 2022, which was the last day of our prior fiscal year, rather than the
actual exchange rates in effect during the respective periods. Movements in international currencies relative to the United States dollar during the
three months ended May 31, 2023 compared with the corresponding prior year period decreased our total revenues by 1 percentage point, total
operating expenses by 1 percentage point and operating income by 2 percentage points.

*

ORACLE CORPORATION

Q4 FISCAL 2023 FINANCIAL RESULTS
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)
($ in millions, except per share data)
                                                                            

Three Months Ended May 31,

% Increase
(Decrease)
in US $

% Increase 
(Decrease)
 in Constant 
Currency (2)

2023

2023

2022

2022

GAAP

Non-GAAP

GAAP

Non-GAAP

GAAP

Adj.

Non-GAAP

GAAP

Adj.

Non-GAAP

TOTAL REVENUES

$   13,837

$            -

$   13,837

$   11,840

$            -

$   11,840

17 %

17 %

18 %

18 %

TOTAL OPERATING EXPENSES

$     9,697

$   (2,016)

$     7,681

$     7,337

$   (1,087)

$     6,250

32 %

23 %

33 %

24 %

     Stock-based compensation (3)

964

(964)

-

713

(713)

-

35 %

*

35 %

*

     Amortization of intangible assets (4)

870

(870)

-

268

(268)

-

225 %

*

225 %

*

     Acquisition related and other

51

(51)

-

6

(6)

-

825 %

*

825 %

*

     Restructuring

131

(131)

-

100

(100)

-

29 %

*

14 %

*

OPERATING INCOME

$     4,140

$     2,016

$     6,156

$     4,503

$     1,087

$     5,590

(8 %)

10 %

(6 %)

12 %

OPERATING MARGIN %

30 %

44 %

38 %

47 %

(811) bp.

(273) bp.

(775) bp.

(263) bp.

INCOME TAX EFFECTS (5)

$        210

$       (680)

$       (470)

$       (435)

$         (41)

$       (476)

*

(1 %)

*

0 %

NET INCOME

$     3,319

$     1,336

$     4,655

$     3,189

$     1,046

$     4,235

4 %

10 %

7 %

12 %

DILUTED EARNINGS PER SHARE

$       1.19

$       1.67

$       1.16

$       1.54

2 %

8 %

5 %

10 %

DILUTED WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING

2,796

-

2,796

2,742

-

2,742

2 %

2 %

2 %

2 %

(1)

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

(2)

We compare the percent change in the results from one period to another period using constant currency disclosure. We present constant currency information to provide a framework for assessing how our underlying businesses performed
excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the
exchange rates in effect on May 31, 2022, 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

May 31, 2023

May 31, 2022

GAAP

Adj.

Non-GAAP

GAAP

Adj.

Non-GAAP

     Cloud services and license support

$         117

$       (117)

$            -

$           60

$         (60)

$            -

     Hardware

5

(5)

-

4

(4)

-

     Services

38

(38)

-

18

(18)

-

     Sales and marketing

177

(177)

-

120

(120)

-

     Research and development

535

(535)

-

445

(445)

-

     General and administrative

92

(92)

-

66

(66)

-

           Total stock-based compensation

$         964

$       (964)

$            -

$         713

$       (713)

$            -

(4)

Estimated future annual amortization expense related to intangible assets as of May 31, 2023 was as follows:

     Fiscal 2024

$     2,994

     Fiscal 2025

2,283

     Fiscal 2026

1,620

     Fiscal 2027

664

     Fiscal 2028

635

     Thereafter

1,641

           Total intangible assets, net

$     9,837

(5)

Income tax effects were calculated reflecting an effective GAAP tax rate of (6.7%) and 12.0% in the fourth quarter of fiscal 2023 and 2022, respectively, and an effective non-GAAP tax rate of 9.2% and 10.1% in the fourth quarter of fiscal 2023 and
2022, respectively. The difference in our GAAP and non-GAAP tax rates in each of the fourth quarter of fiscal 2023 and 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 previously recorded due to the partial realignment of our legal entity structure.

*

Not meaningful

ORACLE CORPORATION

FISCAL 2023 YEAR TO DATE FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($ in millions, except per share data)

Year Ended May 31,

% Increase

% Increase

(Decrease)

% of

% of

(Decrease)

in Constant

2023

Revenues

2022

Revenues

in US $

Currency (1)

REVENUES

Cloud services and license support

$          35,307

71 %

$          30,174

71 %

17 %

21 %

Cloud license and on-premise license

5,779

12 %

5,878

14 %

(2 %)

2 %

Hardware

3,274

6 %

3,183

7 %

3 %

6 %

Services

5,594

11 %

3,205

8 %

75 %

81 %

      Total revenues

49,954

100 %

42,440

100 %

18 %

22 %

OPERATING EXPENSES

Cloud services and license support

7,763

16 %

5,213

12 %

49 %

52 %

Hardware

1,040

2 %

972

2 %

7 %

10 %

Services

4,761

10 %

2,692

6 %

77 %

83 %

Sales and marketing

8,833

18 %

8,047

19 %

10 %

13 %

Research and development

8,623

17 %

7,219

17 %

19 %

21 %

General and administrative

1,579

3 %

1,317

3 %

20 %

23 %

Amortization of intangible assets

3,582

7 %

1,150

3 %

212 %

212 %

Acquisition related and other (2)

190

0 %

4,713

11 %

(96 %)

(96 %)

Restructuring

490

1 %

191

1 %

157 %

151 %

      Total operating expenses

36,861

74 %

31,514

74 %

17 %

19 %

OPERATING INCOME

13,093

26 %

10,926

26 %

20 %

28 %

Interest expense

(3,505)

(7 %)

(2,755)

(7 %)

27 %

27 %

Non-operating expenses, net

(462)

(1 %)

(522)

(1 %)

(12 %)

(12 %)

INCOME BEFORE INCOME TAXES

9,126

7,649

18 %

19 %

32 %

Provision for income taxes

(623)

(1 %)

(932)

(2 %)

(33 %)

(26 %)

NET INCOME

$             8,503

17 %

$             6,717

16 %

27 %

40 %

EARNINGS PER SHARE:

Basic

$               3.15

$               2.49

Diluted

$               3.07

$               2.41

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:

Basic

2,696

2,700

Diluted

2,766

2,786

(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, 2022, which was the last day of our prior fiscal year, rather than the actual exchange rates in effect during the respective periods. Movements in
international currencies relative to the United States dollar during the year ended May 31, 2023 compared with the corresponding prior year period decreased our total revenues by 4 percentage points, total operating
expenses by 2 percentage points and operating income by 8 percentage points.

(2)

Acquisition related and other for fiscal 2022 included the impact of litigation related charges totaling $4.7 billion.

Year Ended May 31,

% Increase
(Decrease)
in US $

% Increase (Decrease) in
Constant Currency (2)

2023

2023

2022

2022

GAAP

Non-GAAP

GAAP

Adj.

Non-GAAP

GAAP

Adj.

Non-GAAP

TOTAL REVENUES

$   49,954

$            -

$   49,954

$   42,440

$            -

$   42,440

18 %

18 %

22 %

22 %

TOTAL OPERATING EXPENSES

$   36,861

$   (7,809)

$   29,052

$   31,514

$   (8,667)

$   22,847

17 %

27 %

19 %

31 %

     Stock-based compensation (3)

3,547

(3,547)

-

2,613

(2,613)

-

36 %

*

36 %

*

     Amortization of intangible assets (4)

3,582

(3,582)

-

1,150

(1,150)

-

212 %

*

212 %

*

     Acquisition related and other

190

(190)

-

4,713

(4,713)

-

(96 %)

*

(96 %)

*

     Restructuring

490

(490)

-

191

(191)

-

157 %

*

151 %

*

OPERATING INCOME

$   13,093

$     7,809

$   20,902

$   10,926

$     8,667

$   19,593

20 %

7 %

28 %

11 %

OPERATING MARGIN %

26 %

42 %

26 %

46 %

46 bp.

(432) bp.

139 bp.

(397) bp.

INCOME TAX EFFECTS (5)

$       (623)

$    (2,136)

$    (2,759)

$       (932)

$    (1,723)

$    (2,655)

(33 %)

4 %

(26 %)

9 %

NET INCOME

$     8,503

$     5,673

$   14,176

$     6,717

$     6,944

$   13,661

27 %

4 %

40 %

9 %

DILUTED EARNINGS PER SHARE

$       3.07

$       5.12

$       2.41

$       4.90

27 %

4 %

41 %

10 %

2,766

-

2,766

2,786

-

2,786

(1 %)

(1 %)

(1 %)

(1 %)

(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, 2022, 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:

Year Ended

Year Ended

May 31, 2023

May 31, 2022

GAAP

Adj.

Non-GAAP

GAAP

Adj.

Non-GAAP

     Cloud services and license support

$         435

$       (435)

$            -

$         205

$       (205)

$            -

     Hardware

18

(18)

-

15

(15)

-

     Services

137

(137)

-

67

(67)

-

     Sales and marketing

611

(611)

-

448

(448)

-

     Research and development

1,983

(1,983)

-

1,633

(1,633)

-

     General and administrative

363

(363)

-

245

(245)

-

           Total stock-based compensation

$     3,547

$   (3,547)

$            -

$     2,613

$   (2,613)

$            -

(4)

Estimated future annual amortization expense related to intangible assets as of May 31, 2023 was as follows:

     Fiscal 2024

$     2,994

     Fiscal 2025

2,283

     Fiscal 2026

1,620

     Fiscal 2027

664

     Fiscal 2028

635

     Thereafter

1,641

           Total intangible assets, net

$     9,837

(5)

Income tax effects were calculated reflecting an effective GAAP tax rate of 6.8% and 12.2% in fiscal 2023 and 2022, respectively, and an effective non-GAAP tax rate of 16.3% in each of fiscal 2023 and 2022. The difference in our GAAP and
non-GAAP tax rates for fiscal 2023 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 previously recorded due to the partial realignment of our legal entity structure. The difference in our GAAP and non-GAAP tax rates for fiscal 2022 was primarily due to the
net tax effects related to stock-based compensation expense and acquisition related and other items, including the net tax effects for litigation related charges (refer to Appendix A for additional information), and the net tax effects on amortization
of intangible assets, partially offset by the net deferred tax effects related to an income tax benefit that was previously recorded due to the partial realignment of our legal entity structure.

*

Not meaningful

ORACLE CORPORATION

FISCAL 2023 FINANCIAL RESULTS

CONDENSED CONSOLIDATED BALANCE SHEETS

($ in millions)

May 31,

2023

2022

ASSETS

Current Assets:

Cash and cash equivalents

$                9,765

$              21,383

Marketable securities

422

519

Trade receivables, net

6,915

5,953

Prepaid expenses and other current assets

3,902

3,778

Total Current Assets

21,004

31,633

Non-Current Assets:

   Property, plant and equipment, net

17,069

9,716

   Intangible assets, net

9,837

1,440

   Goodwill, net

62,261

43,811

   Deferred tax assets

12,226

12,782

   Other non-current assets

11,987

9,915

Total Non-Current Assets

113,380

77,664

TOTAL ASSETS

$            134,384

$            109,297

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current Liabilities:

Notes payable and other borrowings, current

$                4,061

$                3,749

Accounts payable

1,204

1,317

Accrued compensation and related benefits

2,053

1,944

Deferred revenues

8,970

8,357

Other current liabilities

6,802

4,144

Total Current Liabilities

23,090

19,511

Non-Current Liabilities:

Notes payable and other borrowings, non-current

86,420

72,110

Income taxes payable

11,077

12,210

Deferred tax liabilities

5,772

6,031

Other non-current liabilities

6,469

5,203

Total Non-Current Liabilities

109,738

95,554

Stockholders' Equity (Deficit)

1,556

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)               

$            134,384

$            109,297

ORACLE CORPORATION 

FISCAL 2023 FINANCIAL RESULTS

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

($ in millions)

2023

2022

Cash Flows From Operating Activities:

Net income

$        8,503

$        6,717

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

Depreciation

2,526

1,972

Amortization of intangible assets

3,582

1,150

Deferred income taxes

(2,167)

(1,146)

Stock-based compensation

3,547

2,613

Other, net

661

220

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

Increase in trade receivables, net

(151)

(874)

Decrease in prepaid expenses and other assets

317

11

Decrease in accounts payable and other liabilities

(281)

(733)

Decrease in income taxes payable

(153)

(398)

Increase in deferred revenues

781

7

Net cash provided by operating activities

17,165

9,539

Cash Flows From Investing Activities:

Purchases of marketable securities and other investments

(1,181)

(10,272)

Proceeds from sales and maturities of marketable securities and other investments

1,113

26,151

Acquisitions, net of cash acquired

(27,721)

(148)

Capital expenditures

(8,695)

(4,511)

Net cash (used for) provided by investing activities

(36,484)

11,220

Cash Flows From Financing Activities:

Payments for repurchases of common stock

(1,300)

(16,248)

Proceeds from issuances of common stock

1,192

482

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

(1,203)

(1,093)

Payments of dividends to stockholders

(3,668)

(3,457)

Proceeds from issuances of commercial paper, net of repayments

500

-

Proceeds from issuances of senior notes and other borrowings, net of issuance costs           

33,494

-

Repayments of senior notes and other borrowings

(21,050)

(8,250)

Other, net

(55)

(560)

Net cash provided by (used for) financing activities

7,910

(29,126)

Effect of exchange rate changes on cash and cash equivalents

(209)

(348)

Net decrease in cash and cash equivalents

(11,618)

(8,715)

Cash and cash equivalents at beginning of period

21,383

30,098

Cash and cash equivalents at end of period

$        9,765

$      21,383

ORACLE CORPORATION

 FISCAL 2023 FINANCIAL RESULTS

 FREE CASH FLOW - TRAILING 4-QUARTERS (1)

 ($ in millions)

 Q2

 Q3

 Q4

 Q1

 Q2

 Q3

 Q4

GAAP Operating Cash Flow

$            15,325

$            10,255

$            10,396

$              9,539

$            10,542

$            15,073

$            15,503

$            17,165

Capital Expenditures

(2,761)

(3,118)

(3,805)

(5,168)

(6,678)

(8,205)

(8,695)

Free Cash Flow

$            12,564

$              7,137

$              6,591

$              5,028

$              5,374

$              8,395

$              7,298

$              8,470

Operating Cash Flow % Growth over prior year

17 %

(27 %)

(29 %)

(40 %)

(31 %)

47 %

49 %

80 %

Free Cash Flow % Growth over prior year

9 %

(41 %)

(49 %)

(63 %)

(57 %)

18 %

11 %

68 %