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Adobe Flex: Article

Oracle Earnings Up 15%

Total Revenues Up, New Software License Sales Up, Operating Margin Up, Operating Cash Flow Up

ORACLE CORPORATION Q2 FISCAL 2010 FINANCIAL RESULTS CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS ($ in millions, except per share data) % Increase % (Decrease) Three Months Ended November 30, Increase in -------------------------------------- (Decrease) Constant % of % of in Currency 2009 Revenues 2008 Revenues US $ (1) -------- -------- -------- -------- ------ ------ REVENUES New software licenses $ 1,653 28% $ 1,626 29% 2% (5%) Software license updates and product support 3,247 56% 2,850 51% 14% 9% -------- -------- -------- -------- Software Revenues 4,900 84% 4,476 80% 9% 4% -------- -------- -------- -------- Services 958 16% 1,131 20% (15%) (19%) -------- -------- -------- -------- Total Revenues 5,858 100% 5,607 100% 4% 0% -------- -------- -------- -------- OPERATING EXPENSES Sales and marketing 1,133 19% 1,146 20% (1%) (5%) Software license updates and product support 264 5% 257 5% 3% (1%) Cost of services 832 14% 939 17% (11%) (15%) Research and development 708 12% 651 12% 9% 7% General and administrative 183 3% 174 3% 5% 3% Amortization of intangible assets 436 8% 427 8% 2% 2% Acquisition related and other 10 0% 21 0% (52%) (49%) Restructuring 114 2% 17 0% 561% 504% -------- -------- -------- -------- Total Operating Expenses 3,680 63% 3,632 65% 1% (2%) -------- -------- -------- -------- OPERATING INCOME 2,178 37% 1,975 35% 10% 2% Interest expense (188) (3%) (157) (3%) 20% 20% Non-operating income, net 33 1% 8 0% 315% 264% -------- -------- -------- -------- INCOME BEFORE PROVISION FOR INCOME TAXES 2,023 35% 1,826 32% 11% 2% -------- -------- -------- -------- Provision for income taxes 565 10% 530 9% 7% (2%) -------- -------- -------- -------- NET INCOME $ 1,458 25% $ 1,296 23% 12% 3% ======== ======== ======== ======== EARNINGS PER SHARE: Basic $ 0.29 $ 0.25 Diluted $ 0.29 $ 0.25 WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: Basic 5,010 5,127 Diluted 5,064 5,187 (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 rate in effect on May 31, 2009, which was the last day of our prior fiscal year, rather than the actual exchange rates in effect during the respective periods. The United States dollar weakened relative to most major international currencies in the three months ended November 30, 2009 compared with the corresponding prior year period, increasing revenues by 4 percentage points, operating expenses by 3 percentage points and operating income by 8 percentage points. ORACLE CORPORATION Q2 FISCAL 2010 FINANCIAL RESULTS RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1) ($ in millions, except per share data) Three Months Ended November 30, ------------------------------------------------------ 2009 2009 2008 2008 GAAP Adj. Non-GAAP GAAP Adj. Non-GAAP ------- ------- -------- ------- ------- -------- TOTAL REVENUES (3) $ 5,858 $ 14 $ 5,872 $ 5,607 $ 80 $ 5,687 TOTAL SOFTWARE REVENUES (3) $ 4,900 $ 14 $ 4,914 $ 4,476 $ 80 $ 4,556 New software licenses 1,653 - 1,653 1,626 - 1,626 Software license updates and product support (3) 3,247 14 3,261 2,850 80 2,930 TOTAL OPERATING EXPENSES $ 3,680 $ (664) $ 3,016 $ 3,632 $ (554) $ 3,078 Stock-based compensation (4) 104 (104) - 89 (89) - Amortization of intangible assets (5) 436 (436) - 427 (427) - Acquisition related and other 10 (10) - 21 (21) - Restructuring 114 (114) - 17 (17) - OPERATING INCOME $ 2,178 $ 678 $ 2,856 $ 1,975 $ 634 $ 2,609 OPERATING MARGIN % 37% 49% 35% 46% INCOME TAX EFFECTS (6) $ 565 $ 175 $ 740 $ 530 $ 184 $ 714 NET INCOME $ 1,458 $ 503 $ 1,961 $ 1,296 $ 450 $ 1,746 DILUTED EARNINGS PER SHARE $ 0.29 $ 0.39 $ 0.25 $ 0.34 DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 5,064 - 5,064 5,187 - 5,187 % Increase (Decrease) in % Increase Constant Currency (Decrease) in US $ (2) ------------------ ------------------ GAAP Non-GAAP GAAP Non-GAAP -------- -------- -------- -------- TOTAL REVENUES (3) 4% 3% 0% (2%) TOTAL SOFTWARE REVENUES (3) 9% 8% 4% 3% New software licenses 2% 2% (5%) (5%) Software license updates and product support (3) 14% 11% 9% 7% TOTAL OPERATING EXPENSES 1% (2%) (2%) (6%) Stock-based compensation (4) 17% * 17% * Amortization of intangible assets (5) 2% * 2% * Acquisition related and other (52%) * (49%) * Restructuring 561% * 504% * OPERATING INCOME 10% 9% 2% 3% OPERATING MARGIN % 197 bp 277 bp 90 bp 214 bp INCOME TAX EFFECTS (6) 7% 4% (2%) (3%) NET INCOME 12% 12% 3% 5% DILUTED EARNINGS PER SHARE 15% 15% 6% 8% DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (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 rate in effect on May 31, 2009, which was the last day of our prior fiscal year, rather than the actual exchange rates in effect during the respective periods. (3) As of November 30, 2009, approximately $18 million and $14 million in estimated revenues related to assumed support contracts will not be recognized for the remainder of fiscal 2010 and fiscal 2011, respectively, due to business combination accounting rules. (4) Stock-based compensation is included in the following GAAP operating expense categories: Three Months Ended Three Months Ended November 30, 2009 November 30, 2008 -------------------------- -------------------------- GAAP Adj. Non-GAAP GAAP Adj. Non-GAAP ------- ------- -------- ------- ------- -------- Sales and marketing $ 20 $ (20) $ - $ 16 $ (16) $ - Software license updates and product support 4 (4) - 3 (3) - Cost of services 3 (3) - 3 (3) - Research and development 44 (44) - 45 (45) - General and administrative 33 (33) - 22 (22) - ------- ------- -------- ------- ------- -------- Subtotal 104 (104) - 89 (89) - ------- ------- -------- ------- ------- -------- Acquisition related and other - - - 6 (6) - ------- ------- -------- ------- ------- -------- Total stock-based compensation $ 104 $ (104) $ - $ 95 $ (95) $ - ======= ======= ======== ======= ======= ======== (5) Estimated future annual amortization expense related to intangible assets as of November 30, 2009 is as follows: Remainder of Fiscal 2010 $ 796 Fiscal 2011 1,416 Fiscal 2012 1,268 Fiscal 2013 1,117 Fiscal 2014 900 Fiscal 2015 706 Thereafter 381 ------- Total $ 6,584 ======= (6) Income tax effects were calculated reflecting an effective GAAP tax rate of 27.9% and 29.0% in the second quarter of fiscal 2010 and 2009, respectively, and an effective non-GAAP tax rate of 27.4% and 29.0% in the second quarter of fiscal 2010 and 2009, respectively. The differences between our GAAP and non-GAAP tax rates in the second quarter of fiscal 2010 were due to differences in jurisdictional tax rates and the related tax benefits attributable to our restructuring expenses in this period. * Not meaningful ORACLE CORPORATION Q2 FISCAL 2010 YEAR TO DATE FINANCIAL RESULTS CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS ($ in millions, except per share data) % Increase (Decrease) Six Months Ended November 30, % in ------------------------------------ Increase Constant % of % of (Decrease) Currency 2009 Revenues 2008 Revenues in US $ (1) ------- -------- ------- -------- -------- -------- REVENUES New software licenses $ 2,681 25% $ 2,863 26% (6%) (9%) Software license updates and product support 6,364 58% 5,785 53% 10% 10% ------- -------- ------- -------- Software Revenues 9,045 83% 8,648 79% 5% 4% ------- -------- ------- -------- Services 1,866 17% 2,290 21% (19%) (18%) ------- -------- ------- -------- Total Revenues 10,911 100% 10,938 100% 0% (1%) ------- -------- ------- -------- OPERATING EXPENSES Sales and marketing 2,093 19% 2,258 21% (7%) (7%) Software license updates and product support 490 4% 539 5% (9%) (9%) Cost of services 1,614 15% 1,965 18% (18%) (17%) Research and development 1,368 13% 1,360 12% 1% 1% General and administrative 383 4% 379 3% 1% 2% Amortization of intangible assets 867 8% 839 8% 3% 3% Acquisition related and other 16 0% 71 1% (77%) (75%) Restructuring 162 1% 31 0% 426% 414% ------- -------- ------- -------- Total Operating Expenses 6,993 64% 7,442 68% (6%) (6%) ------- -------- ------- -------- OPERATING INCOME 3,918 36% 3,496 32% 12% 10% Interest expense (368) (3%) (317) (3%) 16% 16% Non-operating income, net 35 0% 90 1% (62%) (60%) ------- -------- ------- -------- INCOME BEFORE PROVISION FOR INCOME TAXES 3,585 33% 3,269 30% 10% 7% ------- -------- ------- -------- Provision for income taxes 1,003 9% 896 8% 12% 10% ------- -------- ------- -------- NET INCOME $ 2,582 24% $ 2,373 22% 9% 7% ======= ======== ======= ======== EARNINGS PER SHARE: Basic $ 0.52 $ 0.46 Diluted $ 0.51 $ 0.46 WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: Basic 5,010 5,140 Diluted 5,063 5,211 (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 rate in effect on May 31, 2009, which was the last day of our prior fiscal year, rather than the actual exchange rates in effect during the respective periods. The United States dollar slightly weakened relative to most major international currencies in the six months ended November 30, 2009 compared with the corresponding prior year period, increasing revenues by 1 percentage point and operating income by 2 percentage points. ORACLE CORPORATION Q2 FISCAL 2010 YEAR TO DATE FINANCIAL RESULTS RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1) ($ in millions, except per share data) Six Months Ended November 30, ---------------------------------------------------------- 2009 2009 2008 2008 GAAP Adj. Non-GAAP GAAP Adj. Non-GAAP -------- -------- -------- -------- -------- -------- TOTAL REVENUES (3) $ 10,911 $ 23 $ 10,934 $ 10,938 $ 171 $ 11,109 TOTAL SOFTWARE REVENUES (3) $ 9,045 $ 23 $ 9,068 $ 8,648 $ 171 $ 8,819 New software licenses 2,681 - 2,681 2,863 - 2,863 Software license updates and product support (3) 6,364 23 6,387 5,785 171 5,956 TOTAL OPERATING EXPENSES $ 6,993 $ (1,233) $ 5,760 $ 7,442 $ (1,116) $ 6,326 Stock-based compensation (4) 188 (188) - 175 (175) - Amortization of intangible assets (5) 867 (867) - 839 (839) - Acquisition related and other 16 (16) - 71 (71) - Restructuring 162 (162) - 31 (31) - OPERATING INCOME $ 3,918 $ 1,256 $ 5,174 $ 3,496 $ 1,287 $ 4,783 OPERATING MARGIN % 36% 47% 32% 43% INCOME TAX EFFECTS (6) $ 1,003 $ 337 $ 1,340 $ 896 $ 353 $ 1,249 NET INCOME $ 2,582 $ 919 $ 3,501 $ 2,373 $ 934 $ 3,307 DILUTED EARNINGS PER SHARE $ 0.51 $ 0.69 $ 0.46 $ 0.63 DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 5,063 - 5,063 5,211 - 5,211 % Increase (Decrease) in % Increase Constant Currency (Decrease) in US $ (2) ------------------ ------------------ GAAP Non-GAAP GAAP Non-GAAP -------- -------- -------- -------- TOTAL REVENUES (3) 0% (2%) (1%) (2%) TOTAL SOFTWARE REVENUES (3) 5% 3% 4% 2% New software licenses (6%) (6%) (9%) (9%) Software license updates and product support (3) 10% 7% 10% 7% TOTAL OPERATING EXPENSES (6%) (9%) (6%) (9%) Stock-based compensation (4) 7% * 7% * Amortization of intangible assets (5) 3% * 3% * Acquisition related and other (77%) * (75%) * Restructuring 426% * 414% * OPERATING INCOME 12% 8% 10% 6% OPERATING MARGIN % 395 bp 426 bp 341 bp 377 bp INCOME TAX EFFECTS (6) 12% 7% 10% 6% NET INCOME 9% 6% 7% 4% DILUTED EARNINGS PER SHARE 12% 9% 9% 7% DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (3%) (3%) (3%) (3%) (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 rate in effect on May 31, 2009, which was the last day of our prior fiscal year, rather than the actual exchange rates in effect during the respective periods. (3) As of November 30, 2009, approximately $18 million and $14 million in estimated revenues related to assumed support contracts will not be recognized for the remainder of fiscal 2010 and fiscal 2011, respectively, due to business combination accounting rules. (4) Stock-based compensation is included in the following GAAP operating expense categories: Six Months Ended Six Months Ended November 30, 2009 November 30, 2008 ---------------------------- ---------------------------- GAAP Adj. Non-GAAP GAAP Adj. Non-GAAP -------- -------- -------- -------- -------- -------- Sales and marketing $ 36 $ (36) $ - $ 35 $ (35) $ - Software license updates and product support 8 (8) - 6 (6) - Cost of services 6 (6) - 6 (6) - Research and development 76 (76) - 82 (82) - General and administrative 62 (62) - 46 (46) - -------- -------- -------- -------- -------- -------- Subtotal 188 (188) - 175 (175) - -------- -------- -------- -------- -------- -------- Acquisition related and other - - - 11 (11) - -------- -------- -------- -------- -------- -------- Total stock-based compensa- tion $ 188 $ (188) $ - $ 186 $ (186) $ - ======== ======== ======== ======== ======== ======== (5) Estimated future annual amortization expense related to intangible assets as of November 30, 2009 is as follows: Remainder of Fiscal 2010 $ 796 Fiscal 2011 1,416 Fiscal 2012 1,268 Fiscal 2013 1,117 Fiscal 2014 900 Fiscal 2015 706 Thereafter 381 ------- Total $ 6,584 ======= (6) Income tax effects were calculated reflecting an effective GAAP tax rate of 28.0% and 27.4% in the first half of fiscal 2010 and 2009, respectively, and an effective non-GAAP tax rate of 27.7% and 27.4% in the first half of fiscal 2010 and 2009, respectively. The differences between our GAAP and non-GAAP tax rates in the first half of fiscal 2010 were due to differences in jurisdictional tax rates and the related tax benefits attributable to our restructuring expenses in this period. * Not meaningful ORACLE CORPORATION Q2 FISCAL 2010 FINANCIAL RESULTS CONDENSED CONSOLIDATED BALANCE SHEETS ($ in millions) November 30, May 31, 2009 2009 ------------ ------------ ASSETS Current Assets: Cash and cash equivalents $ 14,919 $ 8,995 Marketable securities 5,865 3,629 Trade receivables, net 3,086 4,430 Deferred tax assets 703 661 Prepaid expenses and other current assets 662 866 ------------ ------------ Total Current Assets 25,235 18,581 Non-Current Assets: Property, net 1,956 1,922 Intangible assets, net 6,584 7,269 Goodwill 19,098 18,842 Other assets 960 802 ------------ ------------ Total Non-Current Assets 28,598 28,835 ------------ ------------ TOTAL ASSETS $ 53,833 $ 47,416 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Notes payable, current and other current borrowings $ 1,001 $ 1,001 Accounts payable 255 271 Accrued compensation and related benefits 1,129 1,409 Deferred revenues 4,395 4,592 Other current liabilities 1,754 1,876 ------------ ------------ Total Current Liabilities 8,534 9,149 Non-Current Liabilities: Notes payable and other non-current borrowings 13,751 9,237 Income taxes payable 2,592 2,423 Deferred tax liabilities 351 480 Other non-current liabilities 690 682 ------------ ------------ Total Non-Current Liabilities 17,384 12,822 Stockholders' Equity 27,915 25,445 ------------ ------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 53,833 $ 47,416 ============ ============ ORACLE CORPORATION Q2 FISCAL 2010 FINANCIAL RESULTS CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS ($ in millions) Six Months Ended November 30, --------------------- 2009 2008 --------- --------- Cash Flows From Operating Activities: Net income $ 2,582 $ 2,373 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 123 134 Amortization of intangible assets 867 839 Deferred income taxes (216) (151) Stock-based compensation 188 186 Tax benefits on the exercise of stock options 71 121 Excess tax benefits on the exercise of stock options (42) (79) Other, net 56 39 Changes in operating assets and liabilities, net of effects from acquisitions: Decrease in trade receivables, net 1,437 1,642 Decrease in prepaid expenses and other assets 235 388 Decrease in accounts payable and other liabilities (523) (1,022) Increase (decrease) in income taxes payable 59 (273) Decrease in deferred revenues (448) (207) --------- --------- Net cash provided by operating activities 4,389 3,990 --------- --------- Cash Flows From Investing Activities: Purchases of marketable securities and other investments (6,185) (5,105) Proceeds from maturities and sales of marketable securities and other investments 4,088 4,362 Acquisitions, net of cash acquired (392) (1,065) Capital expenditures (100) (399) --------- --------- Net cash used for investing activities (2,589) (2,207) --------- --------- Cash Flows From Financing Activities: Payments for repurchases of common stock (496) (2,344) Proceeds from issuances of common stock 371 371 Payment of dividends to stockholders (501) - Proceeds from borrowings, net of issuance costs 4,461 - Repayments of borrowings - (4) Excess tax benefits on the exercise of stock options 42 79 Distributions to noncontrolling interests (34) (30) --------- --------- Net cash provided by (used for) financing activities 3,843 (1,928) --------- --------- Effect of exchange rate changes on cash and cash equivalents 281 (764) --------- --------- Net increase (decrease) in cash and cash equivalents 5,924 (909) --------- --------- Cash and cash equivalents at beginning of period 8,995 8,262 --------- --------- Cash and cash equivalents at end of period $ 14,919 $ 7,353 ========= ========= ORACLE CORPORATION Q2 FISCAL 2010 FINANCIAL RESULTS FREE CASH FLOW - TRAILING 4-QUARTERS (1) ($ in millions) Fiscal 2009 ---------------------------------- Q1 Q2 Q3 Q4 ------- ------- ------- ------- GAAP Operating Cash Flow $ 7,941 $ 8,089 $ 8,542 $ 8,255 Capital Expenditures (2) (479) (486) (539) (529) ------- ------- ------- ------- Free Cash Flow $ 7,462 $ 7,603 $ 8,003 $ 7,726 ======= ======= ======= ======= % Growth over prior year 20% 15% 14% 8% ------- ------- ------- ------- GAAP Net Income $ 5,758 $ 5,750 $ 5,739 $ 5,593 Free Cash Flow as a % of Net Income 130% 132% 139% 138% Fiscal 2010 ---------------------------------- Q1 Q2 Q3 Q4 ------- ------- ------- ------- GAAP Operating Cash Flow $ 8,753 $ 8,654 Capital Expenditures (2) (261) (230) ------- ------- ------- ------- Free Cash Flow $ 8,492 $ 8,424 ======= ======= ======= ======= % Growth over prior year 14% 11% ------- ------- ------- ------- GAAP Net Income $ 5,640 $ 5,802 Free Cash Flow as a % of Net Income 151% 145% (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. (2) Represents capital expenditures as reported in cash flows from investing activities on our cash flow statements presented in accordance with GAAP. ORACLE CORPORATION Q2 FISCAL 2010 FINANCIAL RESULTS SUPPLEMENTAL ANALYSIS OF GAAP REVENUES AND HEADCOUNT (1) ($ in millions) Fiscal 2009 ------------------------------------------------ Q1 Q2 Q3 Q4 TOTAL -------- -------- -------- -------- -------- REVENUES New software licenses $ 1,237 $ 1,626 $ 1,516 $ 2,744 $ 7,123 Software license updates and product support 2,935 2,850 2,917 3,052 11,754 -------- -------- -------- -------- -------- Software Revenues 4,172 4,476 4,433 5,796 18,877 Consulting 865 842 758 782 3,247 On Demand 195 189 191 204 779 Education 99 100 71 79 349 -------- -------- -------- -------- -------- Services Revenues 1,159 1,131 1,020 1,065 4,375 -------- -------- -------- -------- -------- Total Revenues $ 5,331 $ 5,607 $ 5,453 $ 6,861 $ 23,252 ======== ======== ======== ======== ======== AS REPORTED REVENUE GROWTH RATES New software licenses 14% (3%) (6%) (13%) (5%) Software license updates and product support 23% 14% 11% 8% 14% Software Revenues 20% 8% 5% (3%) 6% Consulting 8% (4%) (10%) (18%) (7%) On Demand 23% 13% 10% 5% 12% Education (2%) (9%) (23%) (30%) (16%) Services Revenues 9% (2%) (8%) (16%) (5%) Total Revenues 18% 6% 2% (5%) 4% CONSTANT CURRENCY GROWTH RATES (2) New software licenses 10% 5% 3% (4%) 1% Software license updates and product support 18% 20% 20% 18% 19% Software Revenues 16% 14% 14% 6% 12% Consulting 5% 4% 0% (10%) (1%) On Demand 19% 19% 19% 15% 18% Education (6%) (3%) (16%) (23%) (12%) Services Revenues 6% 5% 2% (7%) 1% Total Revenues 14% 12% 11% 4% 10% GEOGRAPHIC REVENUES REVENUES Americas $ 2,687 $ 2,904 $ 2,846 $ 3,463 $ 11,900 Europe, Middle East & Africa 1,830 1,881 1,824 2,413 7,948 Asia Pacific 814 822 783 985 3,404 -------- -------- -------- -------- -------- Total Revenues $ 5,331 $ 5,607 $ 5,453 $ 6,861 $ 23,252 ======== ======== ======== ======== ======== HEADCOUNT GEOGRAPHIC AREA Americas 32,993 33,526 32,919 32,347 Europe, Middle East & Africa 17,096 17,184 17,348 17,129 Asia Pacific 35,099 35,947 36,321 36,086 -------- -------- -------- -------- -------- Total Company 85,188 86,657 86,588 85,562 ======== ======== ======== ======== ======== Fiscal 2010 ------------------------------------------------ Q1 Q2 Q3 Q4 TOTAL -------- -------- --------- --------- -------- REVENUES New software licenses $ 1,028 $ 1,653 $ 2,681 Software license updates and product support 3,117 3,247 6,364 -------- -------- --------- --------- -------- Software Revenues 4,145 4,900 9,045 Consulting 663 692 1,355 On Demand 180 188 368 Education 66 78 143 -------- -------- --------- --------- -------- Services Revenues 909 958 1,866 -------- -------- --------- --------- -------- Total Revenues $ 5,054 $ 5,858 $ 10,911 ======== ======== ========= ========= ======== AS REPORTED REVENUE GROWTH RATES New software licenses (17%) 2% (6%) Software license updates and product support 6% 14% 10% Software Revenues (1%) 9% 5% Consulting (23%) (18%) (21%) On Demand (8%) (1%) (4%) Education (34%) (22%) (28%) Services Revenues (22%) (15%) (19%) Total Revenues (5%) 4% 0% CONSTANT CURRENCY GROWTH RATES (2) New software licenses (14%) (5%) (9%) Software license updates and product support 11% 9% 10% Software Revenues 4% 4% 4% Consulting (19%) (22%) (21%) On Demand (3%) (4%) (4%) Education (30%) (26%) (28%) Services Revenues (18%) (19%) (18%) Total Revenues (1%) 0% (1%) GEOGRAPHIC REVENUES REVENUES Americas $ 2,671 $ 2,979 $ 5,650 Europe, Middle East & Africa 1,642 1,976 3,618 Asia Pacific 741 903 1,643 -------- -------- --------- --------- -------- Total Revenues $ 5,054 $ 5,858 $ 10,911 ======== ======== ========= ========= ======== HEADCOUNT GEOGRAPHIC AREA Americas 32,034 31,849 Europe, Middle East & Africa 16,839 16,491 Asia Pacific 35,766 35,026 -------- -------- --------- --------- -------- Total Company 84,639 83,366 ======== ======== ========= ========= ======== (1) The sum of the quarterly financial information may vary from year-to-date financial information 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, 2009 and 2008 for the fiscal 2010 and fiscal 2009 constant currency growth rate calculations presented, respectively, rather than the actual exchange rates in effect during the respective periods. ORACLE CORPORATION Q2 FISCAL 2010 FINANCIAL RESULTS SUPPLEMENTAL TOTAL SOFTWARE PRODUCT REVENUE ANALYSIS (1) ($ in millions) Fiscal 2009 ------------------------------------------------ Q1 Q2 Q3 Q4 TOTAL -------- -------- -------- -------- -------- DATABASE & MIDDLEWARE REVENUES New software licenses $ 906 $ 1,157 $ 1,120 $ 1,939 $ 5,123 Software license updates and product support 1,892 1,835 1,914 2,008 7,649 -------- -------- -------- -------- -------- Software Revenues $ 2,798 $ 2,992 $ 3,034 $ 3,947 $ 12,772 ======== ======== ======== ======== ======== AS REPORTED GROWTH RATES New software licenses 27% 4% (4%) (10%) 0% Software license updates and product support 26% 17% 16% 12% 18% Software Revenues 27% 12% 8% 0% 10% CONSTANT CURRENCY GROWTH RATES (2) New software licenses 23% 12% 6% (1%) 7% Software license updates and product support 22% 24% 25% 23% 23% Software Revenues 22% 19% 17% 10% 16% APPLICATIONS REVENUES New software licenses $ 331 $ 469 $ 396 $ 805 $ 2,000 Software license updates and product support 1,043 1,015 1,003 1,044 4,105 -------- -------- -------- -------- -------- Software Revenues $ 1,374 $ 1,484 $ 1,399 $ 1,849 $ 6,105 ======== ======== ======== ======== ======== AS REPORTED GROWTH RATES New software licenses (12%) (15%) (12%) (19%) (16%) Software license updates and product support 18% 9% 3% 0% 7% Software Revenues 9% 0% (2%) (9%) (2%) CONSTANT CURRENCY GROWTH RATES (2) New software licenses (14%) (9%) (4%) (11%) (10%) Software license updates and product support 13% 15% 11% 9% 12% Software Revenues 5% 6% 7% (1%) 4% Fiscal 2010 ------------------------------------------------ Q1 Q2 Q3 Q4 TOTAL -------- -------- --------- --------- -------- DATABASE & MIDDLEWARE REVENUES New software licenses $ 711 $ 1,175 $ 1,886 Software license updates and product support 2,065 2,131 4,196 -------- -------- --------- --------- -------- Software Revenues $ 2,776 $ 3,306 $ 6,082 ======== ======== ========= ========= ======== AS REPORTED GROWTH RATES New software licenses (22%) 1% (9%) Software license updates and product support 9% 16% 13% Software Revenues (1%) 10% 5% CONSTANT CURRENCY GROWTH RATES (2) New software licenses (19%) (5%) (11%) Software license updates and product support 14% 12% 13% Software Revenues 4% 5% 4% APPLICATIONS REVENUES New software licenses $ 317 $ 478 $ 795 Software license updates and product support 1,052 1,116 2,168 -------- -------- --------- --------- -------- Software Revenues $ 1,369 $ 1,594 $ 2,963 ======== ======== ========= ========= ======== AS REPORTED GROWTH RATES New software licenses (4%) 2% (1%) Software license updates and product support 1% 10% 5% Software Revenues 0% 7% 4% CONSTANT CURRENCY GROWTH RATES (2) New software licenses 0% (3%) (2%) Software license updates and product support 6% 6% 6% Software Revenues 4% 3% 3% (1) The sum of the quarterly financial information may vary from year-to-date financial information 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, 2009 and 2008 for the fiscal 2010 and fiscal 2009 constant currency growth rate calculations presented, respectively, rather than the actual exchange rates in effect during the respective periods. ORACLE CORPORATION Q2 FISCAL 2010 FINANCIAL RESULTS SUPPLEMENTAL GEOGRAPHIC NEW SOFTWARE LICENSE REVENUE ANALYSIS (1) ($ in millions) Fiscal 2009 ------------------------------------------------ Q1 Q2 Q3 Q4 TOTAL -------- -------- -------- -------- -------- AMERICAS Database & Middleware $ 354 $ 471 $ 449 $ 840 $ 2,114 Applications 182 280 224 416 1,102 -------- -------- -------- -------- -------- New Software License Revenues $ 536 $ 751 $ 673 $ 1,256 $ 3,216 ======== ======== ======== ======== ======== AS REPORTED GROWTH RATES Database & Middleware 18% 5% (7%) (9%) (2%) Applications (9%) (9%) (11%) (25%) (16%) New Software License Revenues 7% 0% (9%) (15%) (7%) CONSTANT CURRENCY GROWTH RATES (2) Database & Middleware 17% 10% (1%) (6%) 2% Applications (10%) (6%) (8%) (22%) (14%) New Software License Revenues 6% 3% (4%) (12%) (4%) EUROPE / MIDDLE EAST / AFRICA Database & Middleware $ 326 $ 431 $ 446 $ 759 $ 1,962 Applications 94 126 125 282 627 -------- -------- -------- -------- -------- New Software License Revenues $ 420 $ 557 $ 571 $ 1,041 $ 2,589 ======== ======== ======== ======== ======== AS REPORTED GROWTH RATES Database & Middleware 28% 2% 0% (14%) (2%) Applications (23%) (28%) (12%) (11%) (17%) New Software License Revenues 11% (7%) (3%) (13%) (6%) CONSTANT CURRENCY GROWTH RATES (2) Database & Middleware 20% 16% 15% 1% 10% Applications (26%) (16%) 2% 5% (6%) New Software License Revenues 5% 7% 12% 2% 6% ASIA PACIFIC Database & Middleware $ 226 $ 255 $ 225 $ 340 $ 1,047 Applications 55 63 47 107 271 -------- -------- -------- -------- -------- New Software License Revenues $ 281 $ 318 $ 272 $ 447 $ 1,318 ======== ======== ======== ======== ======== AS REPORTED GROWTH RATES Database & Middleware 45% 4% (3%) (1%) 7% Applications 1% (13%) (18%) (11%) (11%) New Software License Revenues 34% 0% (6%) (3%) 3% CONSTANT CURRENCY GROWTH RATES (2) Database & Middleware 38% 8% 1% 5% 11% Applications (1%) (2%) (2%) (4%) (3%) New Software License Revenues 28% 5% 1% 3% 7% TOTAL COMPANY Database & Middleware $ 906 $ 1,157 $ 1,120 $ 1,939 $ 5,123 Applications 331 469 396 805 2,000 -------- -------- -------- -------- -------- New Software License Revenues $ 1,237 $ 1,626 $ 1,516 $ 2,744 $ 7,123 ======== ======== ======== ======== ======== AS REPORTED GROWTH RATES Database & Middleware 27% 4% (4%) (10%) 0% Applications (12%) (15%) (12%) (19%) (16%) New Software License Revenues 14% (3%) (6%) (13%) (5%) CONSTANT CURRENCY GROWTH RATES (2) Database & Middleware 23% 12% 6% (1%) 7% Applications (14%) (9%) (4%) (11%) (10%) New Software License Revenues 10% 5% 3% (4%) 1% Fiscal 2010 ------------------------------------------------ Q1 Q2 Q3 Q4 TOTAL -------- -------- --------- -------- -------- AMERICAS Database & Middleware $ 310 $ 492 $ 802 Applications 185 286 472 -------- -------- --------- -------- -------- New Software License Revenues $ 495 $ 778 $ 1,274 ======== ======== ========= ======== ======== AS REPORTED GROWTH RATES Database & Middleware (12%) 4% (3%) Applications 2% 2% 2% New Software License Revenues (7%) 4% (1%) CONSTANT CURRENCY GROWTH RATES (2) Database & Middleware (11%) 2% (3%) Applications 6% 1% 2% New Software License Revenues (5%) 1% (1%) EUROPE / MIDDLE EAST / AFRICA Database & Middleware $ 224 $ 429 $ 653 Applications 90 119 209 -------- -------- --------- -------- -------- New Software License Revenues $ 314 $ 548 $ 862 ======== ======== ========= ======== ======== AS REPORTED GROWTH RATES Database & Middleware (31%) (1%) (14%) Applications (5%) (6%) (5%) New Software License Revenues (25%) (2%) (12%) CONSTANT CURRENCY GROWTH RATES (2) Database & Middleware (26%) (10%) (16%) Applications 3% (14%) (8%) New Software License Revenues (20%) (11%) (14%) ASIA PACIFIC Database & Middleware $ 177 $ 254 $ 431 Applications 42 73 114 -------- -------- --------- -------- -------- New Software License Revenues $ 219 $ 327 $ 545 ======== ======== ========= ======== ======== AS REPORTED GROWTH RATES Database & Middleware (22%) 0% (10%) Applications (24%) 17% (2%) New Software License Revenues (22%) 3% (9%) CONSTANT CURRENCY GROWTH RATES (2) Database & Middleware (22%) (10%) (16%) Applications (23%) 2% (9%) New Software License Revenues (22%) (8%) (15%) TOTAL COMPANY Database & Middleware $ 711 $ 1,175 $ 1,886 Applications 317 478 795 -------- -------- --------- -------- -------- New Software License Revenues $ 1,028 $ 1,653 $ 2,681 ======== ======== ========= ======== ======== AS REPORTED GROWTH RATES Database & Middleware (22%) 1% (9%) Applications (4%) 2% (1%) New Software License Revenues (17%) 2% (6%) CONSTANT CURRENCY GROWTH RATES (2) Database & Middleware (19%) (5%) (11%) Applications 0% (3%) (2%) New Software License Revenues (14%) (5%) (9%) (1) The sum of the quarterly financial information may vary from year-to-date financial information 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, 2009 and 2008 for the fiscal 2010 and fiscal 2009 constant currency growth rate calculations presented, respectively, rather than the actual exchange rates in effect during the respective periods. APPENDIX A ORACLE CORPORATION Q2 FISCAL 2010 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:

  • Support deferred revenue: Business combination accounting rules require us to account for the fair value of support contracts assumed in connection with our acquisitions. Because these are typically one-year contracts, our GAAP revenues for the one year period subsequent to our acquisition of a business do not reflect the full amount of software license updates and product support revenues on assumed support contracts that would have otherwise been recorded by the acquired entity. The non-GAAP adjustment is intended to reflect the full amount of such revenues. We believe this adjustment is useful to investors as a measure of the ongoing performance of our business because we have historically experienced high renewal rates on support contracts, although we cannot be certain that customers will renew these contracts.

  • 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 revenues earned during the periods presented and will contribute to future period revenues as well. Amortization of intangible assets will recur in future periods.

  • Acquisition related and other expenses, and restructuring expenses: We incurred significant 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 consist of personnel related costs for transitional employees, other acquired employee related costs, stock-based compensation expenses (in addition to the stock-based compensation expenses described above), integration related professional services, certain business combination adjustments after the measurement period or purchase price allocation period has ended and certain other operating expenses, net. Substantially all of the stock-based compensation expenses included in acquisition related and other expenses resulted from unvested options assumed in acquisitions whose vesting was fully accelerated upon termination of the employees pursuant to the original terms of those options. 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 expenses and restructuring expenses are not recurring with respect to past acquisitions, we generally will incur these expenses in connection with any future acquisitions.

 

Contact:
Ken Bond
Oracle Investor Relations
1.650.607.0349
Email Contact

Karen Tillman
Oracle Corporate Communications
1.650.607.0326
Email Contact

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Salvatore Genovese is a Cloud Computing consultant and an i-technology blogger based in Rome, Italy. He occasionally blogs about SOA, start-ups, mergers and acquisitions, open source and bleeding-edge technologies, companies, and personalities. Sal can be reached at hamilton(at)sys-con.com.

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