Oracle Announces Fiscal 2024 Third Quarter Financial Results

ORACLE  CORPORATION

Q3 FISCAL 2024 FINANCIAL RESULTS

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS 

($ in millions, except per share data) 

% Increase

% Increase

(Decrease)

% of

February 28,

% of

(Decrease)

in Constant

Revenues

2023

Revenues

in US $

Currency (1)

REVENUES

Cloud services and license support

$           9,963

75 %

$           8,923

72 %

12 %

11 %

Cloud license and on-premise license

1,256

9 %

1,288

10 %

(3 %)

(3 %)

Hardware

754

6 %

811

7 %

(7 %)

(7 %)

Services

1,307

10 %

1,376

11 %

(5 %)

(5 %)

      Total revenues

13,280

100 %

12,398

100 %

7 %

7 %

OPERATING EXPENSES

Cloud services and license support

2,452

18 %

1,980

16 %

24 %

24 %

Hardware

217

2 %

244

2 %

(11 %)

(11 %)

Services

1,200

9 %

1,215

10 %

(1 %)

(1 %)

Sales and marketing

2,042

15 %

2,150

18 %

(5 %)

(6 %)

Research and development

2,248

17 %

2,146

17 %

5 %

5 %

General and administrative

377

3 %

402

3 %

(6 %)

(7 %)

Amortization of intangible assets

749

6 %

886

7 %

(15 %)

(15 %)

Acquisition related and other

155

1 %

37

0 %

317 %

317 %

Restructuring

90

1 %

78

1 %

15 %

14 %

      Total operating expenses

9,530

72 %

9,138

74 %

4 %

4 %

OPERATING INCOME

3,750

28 %

3,260

26 %

15 %

15 %

Interest expense

(876)

(6 %)

(908)

(7 %)

(3 %)

(3 %)

Non-operating expenses, net

(9)

0 %

(134)

(1 %)

(94 %)

(93 %)

INCOME BEFORE INCOME TAXES

2,865

22 %

2,218

18 %

29 %

29 %

Provision for income taxes

464

4 %

322

3 %

44 %

44 %

NET INCOME

$           2,401

18 %

$           1,896

15 %

27 %

26 %

EARNINGS PER SHARE:

Basic

$              0.87

$              0.70

Diluted

$              0.85

$              0.68

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:

Basic

2,748

2,698

Diluted

2,819

2,776

(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, 2023, 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 29, 2024 compared with the corresponding prior year period had no impact to our total revenues, total operating expenses and operating income.

ORACLE  CORPORATION

Q3 FISCAL 2024 FINANCIAL RESULTS

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

($ in millions, except per share data)

Three Months Ended

% Increase
(Decrease)
in US $

% Increase
(Decrease) in
Constant
Currency (2)

February 29,

February 29,

February 28,

February 28,

GAAP

Non-GAAP

GAAP

Non-GAAP

2024

2024

2023

2023

GAAP

Adj.

Non-GAAP

GAAP

Adj.

Non-GAAP

TOTAL REVENUES

$       13,280

$           -

$       13,280

$       12,398

$           -

$       12,398

7 %

7 %

7 %

7 %

TOTAL OPERATING EXPENSES

$         9,530

$   (2,042)

$         7,488

$         9,138

$   (1,925)

$         7,213

4 %

4 %

4 %

3 %

     Stock-based compensation (3)

1,048

(1,048)

-

924

(924)

-

13 %

*

13 %

*

     Amortization of intangible assets (4)

749

(749)

-

886

(886)

-

(15 %)

*

(15 %)

*

     Acquisition related and other

155

(155)

-

37

(37)

-

317 %

*

317 %

*

     Restructuring

90

(90)

-

78

(78)

-

15 %

*

14 %

*

OPERATING INCOME

$         3,750

$     2,042

$         5,792

$         3,260

$     1,925

$         5,185

15 %

12 %

15 %

12 %

OPERATING MARGIN %

28 %

44 %

26 %

42 %

194 bp.

179 bp.

194 bp.

183 bp.

INCOME TAX EFFECTS (5)

$            464

$        461

$            925

$            322

$        439

$            761

44 %

22 %

44 %

21 %

NET INCOME

$         2,401

$     1,581

$         3,982

$         1,896

$     1,486

$         3,382

27 %

18 %

26 %

18 %

DILUTED EARNINGS PER SHARE

$           0.85

$           1.41

$           0.68

$           1.22

25 %

16 %

24 %

16 %

DILUTED WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING

2,819

-

2,819

2,776

-

2,776

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, 2023, 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 29, 2024

February 28, 2023

GAAP

Adj.

Non-GAAP

GAAP

Adj.

Non-GAAP

     Cloud services and license support

$            138

$      (138)

$               -

$            114

$      (114)

$               -

     Hardware

6

(6)

-

5

(5)

-

     Services

45

(45)

-

39

(39)

-

     Sales and marketing

179

(179)

-

158

(158)

-

     Research and development

584

(584)

-

517

(517)

-

     General and administrative

96

(96)

-

91

(91)

-

           Total stock-based compensation

$         1,048

$   (1,048)

$               -

$            924

$      (924)

$               -

(4)

Estimated future annual amortization expense related to intangible assets as of February 29, 2024 was as follows:

     Remainder of fiscal 2024

$            739

     Fiscal 2025

2,303

     Fiscal 2026

1,639

     Fiscal 2027

672

     Fiscal 2028

635

     Fiscal 2029

561

     Thereafter

1,080

           Total intangible assets, net

$         7,629

(5)

Income tax effects were calculated reflecting an effective GAAP tax rate of 16.2% and 14.5% in the third quarter of fiscal 2024 and 2023, respectively, and an effective non-GAAP tax rate of 18.9% and 18.4% in the third quarter of fiscal 2024 and 2023, respectively. The difference in our GAAP and non-GAAP tax rates in each of the third quarter of fiscal 2024 and 2023 was primarily due to the net tax effects related to stock-based compensation expense; acquisition related and other items, including the tax effects on amortization of intangible assets; and restructuring expense, 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

Q3 FISCAL 2024 YEAR TO DATE FINANCIAL RESULTS

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS 

($ in millions, except per share data) 

% Increase

% Increase

(Decrease)

February 29,

% of

February 28,

% of

(Decrease)

in Constant

2024

Revenues

2023

Revenues

in US $

Currency (1)

REVENUES

Cloud services and license support

$         29,149

75 %

$         25,938

72 %

12 %

11 %

Cloud license and on-premise license

3,243

8 %

3,627

10 %

(11 %)

(11 %)

Hardware

2,224

6 %

2,424

7 %

(8 %)

(9 %)

Services

4,058

11 %

4,129

11 %

(2 %)

(2 %)

      Total revenues

38,674

100 %

36,118

100 %

7 %

6 %

OPERATING EXPENSES

Cloud services and license support

6,905

18 %

5,606

16 %

23 %

22 %

Hardware

649

2 %

780

2 %

(17 %)

(18 %)

Services

3,665

9 %

3,448

10 %

6 %

6 %

Sales and marketing

6,161

16 %

6,544

18 %

(6 %)

(7 %)

Research and development

6,689

17 %

6,397

18 %

5 %

4 %

General and administrative

1,146

3 %

1,179

3 %

(3 %)

(4 %)

Amortization of intangible assets

2,267

6 %

2,712

7 %

(16 %)

(16 %)

Acquisition related and other

214

0 %

140

0 %

53 %

52 %

Restructuring

311

1 %

359

1 %

(13 %)

(14 %)

      Total operating expenses

28,007

72 %

27,165

75 %

3 %

3 %

OPERATING INCOME

10,667

28 %

8,953

25 %

19 %

17 %

Interest expense

(2,636)

(7 %)

(2,550)

(7 %)

3 %

3 %

Non-operating expenses, net

(72)

0 %

(386)

(2 %)

(81 %)

(82 %)

INCOME BEFORE INCOME TAXES

7,959

21 %

6,017

16 %

32 %

29 %

Provision for income taxes

636

2 %

833

2 %

(24 %)

(25 %)

NET INCOME

$           7,323

19 %

$           5,184

14 %

41 %

38 %

EARNINGS PER SHARE:

Basic

$              2.67

$              1.93

Diluted

$              2.60

$              1.88

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:

Basic

2,741

2,692

Diluted

2,820

2,757

(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, 2023, 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 29, 2024 compared with the corresponding prior year period increased our total revenues by 1 percentage point and operating income by 2 percentage points.

ORACLE  CORPORATION

Q3 FISCAL 2024 YEAR TO DATE FINANCIAL RESULTS

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

($ in millions, except per share data)

Nine Months Ended

% Increase
(Decrease)
in US $

% Increase
(Decrease)
in Constant
Currency (2)

February 29,

February 29,

February 28,

February 28,

GAAP

Non-GAAP

GAAP

Non-GAAP

2024

2024

2023

2023

GAAP 

Adj.

Non-GAAP

GAAP 

Adj.

Non-GAAP 

TOTAL REVENUES

$       38,674

$           -

$       38,674

$       36,118

$           -

$       36,118

7 %

7 %

6 %

6 %

TOTAL OPERATING EXPENSES

$       28,007

$   (5,719)

$       22,288

$       27,165

$   (5,794)

$       21,371

3 %

4 %

3 %

4 %

     Stock-based compensation (3)

2,927

(2,927)

-

2,583

(2,583)

-

13 %

*

13 %

*

     Amortization of intangible assets (4)

2,267

(2,267)

-

2,712

(2,712)

-

(16 %)

*

(16 %)

*

     Acquisition related and other

214

(214)

-

140

(140)

-

53 %

*

52 %

*

     Restructuring

311

(311)

-

359

(359)

-

(13 %)

*

(14 %)

*

OPERATING INCOME

$       10,667

$     5,719

$       16,386

$         8,953

$     5,794

$       14,747

19 %

11 %

17 %

10 %

OPERATING MARGIN %

28 %

42 %

25 %

41 %

279 bp.

154 bp.

260 bp.

147 bp.

INCOME TAX EFFECTS (5)

$            636

$     1,939

$         2,575

$            833

$     1,457

$         2,290

(24 %)

12 %

(25 %)

11 %

NET INCOME

$         7,323

$     3,780

$       11,103

$         5,184

$     4,337

$         9,521

41 %

17 %

38 %

15 %

DILUTED EARNINGS PER SHARE

$           2.60

$           3.94

$           1.88

$           3.45

38 %

14 %

35 %

13 %

DILUTED WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING

2,820

-

2,820

2,757

-

2,757

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, 2023, 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 29, 2024

February 28, 2023

GAAP

Adj.

Non-GAAP

GAAP

Adj.

Non-GAAP

     Cloud services and license support

$            386

$      (386)

$               -

$            319

$      (319)

$               -

     Hardware

17

(17)

-

13

(13)

-

     Services

123

(123)

-

99

(99)

-

     Sales and marketing

488

(488)

-

433

(433)

-

     Research and development

1,642

(1,642)

-

1,448

(1,448)

-

     General and administrative

271

(271)

-

271

(271)

-

           Total stock-based compensation

$         2,927

$   (2,927)

$               -

$         2,583

$   (2,583)

$               -

(4)

Estimated future annual amortization expense related to intangible assets as of February 29, 2024 was as follows:

     Remainder of fiscal 2024

$            739

     Fiscal 2025

2,303

     Fiscal 2026

1,639

     Fiscal 2027

672

     Fiscal 2028

635

     Fiscal 2029

561

     Thereafter

1,080

           Total intangible assets, net

$         7,629

(5)

Income tax effects were calculated reflecting an effective GAAP tax rate of 8.0% and 13.8% in the first nine months of fiscal 2024 and 2023, respectively, and an effective non-GAAP tax rate of 18.8% and 19.4% in the first nine months of fiscal 2024 and 2023, respectively. The difference in our GAAP and non-GAAP tax rates in each of the first nine months of fiscal 2024 and 2023 was primarily due to the net tax effects related to stock-based compensation expense; acquisition related and other items, including the tax effects on amortization of intangible assets; and restructuring expense, 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

Q3 FISCAL 2024 FINANCIAL RESULTS

CONDENSED CONSOLIDATED BALANCE SHEETS

($ in millions)

May 31,

2023

ASSETS

Current Assets:

Cash and cash equivalents

$                 9,481

$                 9,765

Marketable securities

423

422

Trade receivables, net

7,297

6,915

Prepaid expenses and other current assets

3,862

3,902

     Total Current Assets

21,063

21,004

Non-Current Assets:

   Property, plant and equipment, net

19,117

17,069

   Intangible assets, net

7,629

9,837

   Goodwill, net

62,222

62,261

   Deferred tax assets

12,688

12,226

   Other non-current assets

14,363

11,987

     Total Non-Current Assets

116,019

113,380

TOTAL ASSETS

$            137,082

$            134,384

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:

Notes payable and other borrowings, current

$                 5,510

$                 4,061

Accounts payable

1,658

1,204

Accrued compensation and related benefits

1,796

2,053

Deferred revenues

8,931

8,970

Other current liabilities

6,990

6,802

     Total Current Liabilities

24,885

23,090

Non-Current Liabilities:

Notes payable and other borrowings, non-current

82,470

86,420

Income taxes payable

10,451

11,077

Deferred tax liabilities

4,483

5,772

Other non-current liabilities

8,611

6,469

     Total Non-Current Liabilities

106,015

109,738

Stockholders' Equity

6,182

1,556

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$            137,082

$            134,384

     ORACLE  CORPORATION

Q3 FISCAL 2024 FINANCIAL RESULTS

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 

($ in millions) 

Nine Months Ended

February 29,
 2024

February 28,
 2023

Cash Flows From Operating Activities:

Net income

$        7,323

$        5,184

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

Depreciation

2,318

1,810

Amortization of intangible assets

2,267

2,712

Deferred income taxes

(1,755)

(1,253)

Stock-based compensation

2,927

2,583

Other, net

631

487

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

(Increase) decrease in trade receivables, net

(409)

460

Decrease in prepaid expenses and other assets

457

515

Decrease in accounts payable and other liabilities

(682)

(783)

Decrease in income taxes payable

(788)

(453)

Increase in deferred revenues

303

256

Net cash provided by operating activities

12,592

11,518

Cash Flows From Investing Activities:

Purchases of marketable securities and other investments

(674)

(921)

Proceeds from sales and maturities of marketable securities and other investments

207

552

Acquisitions, net of cash acquired

(59)

(27,721)

Capital expenditures

(4,068)

(6,782)

Net cash used for investing activities

(4,594)

(34,872)

Cash Flows From Financing Activities:

Payments for repurchases of common stock

(1,050)

(1,150)

Proceeds from issuances of common stock

454

759

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

(1,865)

(1,040)

Payments of dividends to stockholders

(3,289)

(2,586)

Proceeds from issuances of commercial paper, net of repayments

936

1,874

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

-

33,494

Repayments of senior notes and other borrowings

(3,500)

(21,050)

Other, net

34

49

Net cash (used for) provided by financing activities

(8,280)

10,350

Effect of exchange rate changes on cash and cash equivalents

(2)

(160)

Net decrease in cash and cash equivalents

(284)

(13,164)

Cash and cash equivalents at beginning of period

9,765

21,383

Cash and cash equivalents at end of period