PR Newswire | Sep 13, 2021 04:05PM EDT

09/13 15:05 CDT

Oracle Announces Fiscal 2022 First Quarter Financial Results-- GAAP EPS up 19% to $0.86, Non-GAAP EPS up 11% to $1.03-- Fusion ERP cloud revenue up 32%, NetSuite ERP cloud revenue up 28%-- IaaS plus SaaS cloud revenue totaled $2.5 billion or 25% of quarterly revenue AUSTIN, Texas, Sept. 13, 2021

AUSTIN, Texas, Sept. 13, 2021 /PRNewswire/ -- Oracle Corporation (NYSE: ORCL) today announced fiscal 2022 Q1 results. Total quarterly revenues were up 4% year-over-year to $9.7 billion. Cloud services and license support revenues were up 6% to $7.4 billion. Cloud license and on-premise license revenues were down 8% to $813 million.

Q1 GAAP operating income was up 7% to $3.4 billion, and GAAP operating margin was 35%. Non-GAAP operating income was up 4% to $4.3 billion, and Non-GAAP operating margin was 45%. GAAP net income was up 9% to $2.5 billion, and GAAP earnings per share was up 19% to $0.86. Non-GAAP net income was up 2% to $2.9 billion, and Non-GAAP earnings per share was up 11% to $1.03.

Short-term deferred revenues were $10 billion. Operating cash flow was up 17% to $15.3 billion during the trailing twelve months.

"Q1 results were excellent as constant currency revenue beat guidance by $100 million with all revenue segments exceeding forecast, and Non-GAAP earnings per share beating guidance by $0.08," said Oracle CEO, Safra Catz. "Oracle's two new cloud businesses, IaaS and SaaS, are now over 25% of our total revenue with an annual run rate of $10 billion. Taken together, IaaS and SaaS are Oracle's fastest growing and highest margin new businesses. As these two cloud businesses continue to grow they will help expand our overall profit margins and push earnings per share higher."

"Last week, Cloud Wars published an article entitled 'Oracle Leapfrogs Google in Major Cloud Ranking' summarizing an upcoming Gartner Report that reviews the leading cloud infrastructure companies," said Oracle Chairman and CTO, Larry Ellison. "Please read the article and the Gartner Report for all the essential details. Oracle is delivering some truly innovative infrastructure services. Last quarter, we released the next generation of the world's most popular open source database, MySQL, which now includes the HeatWave in-memory query accelerator, and the AutoPilot management tools. Many customers measured our new MySQL cloud service to be much much faster, less expensive, and easier to use than SnowFlake, Aurora, RedShift and other commonly used cloud databases. In response to requests from some of those customers, we decided to make MySQL HeatWave available on other clouds in addition to the Oracle Cloud."

The board of directors declared a quarterly cash dividend of $0.32 per share of outstanding common stock. This dividend will be paid to stockholders of record as of the close of business on October 12, 2021, with a payment date of October 26, 2021.

* A sample list of customers which purchased Oracle Cloud services during the quarter will be available at www.oracle.com/customers/earnings/. * A list of recent technical innovations and announcements is available at www.oracle.com/news/. * To learn what industry analysts have been saying about Oracle's products and services see www.oracle.com/corporate/analyst-reports.html.

Earnings Conference Call and WebcastOracle will hold a conference call and webcast today to discuss these results at 4:00 p.m. Central. A live and replay webcast will be available on the Oracle Investor Relations website at www.oracle.com/investor/.

About OracleOracle offers integrated suites of applications plus secure, autonomous infrastructure in the Oracle Cloud. For more information about Oracle (NYSE: ORCL), please visit us at www.oracle.com.

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TrademarksOracle, Java, and MySQL are registered trademarks of Oracle Corporation.

"Safe Harbor" Statement:Statements in this press release relating to Oracle's future plans, expectations, beliefs, intentions and prospects, including statements regarding growth in our cloud businesses, profit margins and EPS, are "forward-looking statements" and are subject to material risks and uncertainties. Many factors could affect our current expectations and our actual results, and could cause actual results to differ materially. We presently consider the following to be among the important factors that could cause actual results to differ materially from expectations: (1) The COVID-19 pandemic has affected how we and our customers are operating our respective businesses, and the duration and extent to which this will impact our future results of operations remains uncertain. (2) Our success depends upon our ability to develop new products and services, integrate acquired products and services and enhance our existing products and services. (3) Our cloud strategy, including our Oracle Cloud Software-as-a-Service and Infrastructure-as-a-Service offerings, may adversely affect our revenues and profitability. (4) We might experience significant coding, manufacturing or configuration errors in our cloud, license and hardware offerings. (5) If our security measures for our products and services are compromised and as a result, our data, our customers' data or our IT systems are accessed improperly, made unavailable, or improperly modified, our products and services may be perceived as vulnerable, our brand and reputation could be damaged, the IT services we provide to our customers could be disrupted, and customers may stop using our products and services, any of which could reduce our revenue and earnings, increase our expenses and expose us to legal claims and regulatory actions. (6) Our business practices with respect to data could give rise to operational interruption, liabilities or reputational harm as a result of governmental regulation, legal requirements or industry standards relating to privacy and data protection. (7) Economic, political and market conditions can adversely affect our business, results of operations and financial condition, including our revenue growth and profitability, which in turn could adversely affect our stock price. (8) If we are unable to compete effectively, the results of operations and prospects for our business could be harmed. (9) Our international sales and operations subject us to additional risks that can adversely affect our operating results. (10) We are susceptible to third-party manufacturing and logistics delays, which could result in the loss of sales and customers. A detailed discussion of these factors and other risks that affect our business is contained in our SEC filings, including our most recent reports on Form 10-K and Form 10-Q, particularly under the heading "Risk Factors." Copies of these filings are available online from the SEC or by contacting Oracle Corporation's Investor Relations Department at (650) 506-4073 or by clicking on SEC Filings on Oracle's Investor Relations website at www.oracle.com/investor/. All information set forth in this press release is current as of September 13, 2021. Oracle undertakes no duty to update any statement in light of new information or future events.

ORACLE CORPORATION

Q1 FISCAL 2022 FINANCIAL RESULTS

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

($ in millions, except per share data)

% Increase Three Months Ended August 31, % Increase (Decrease)

% of % of (Decrease) in Constant

2021 Revenues 2020 Revenues in US $ Currency (1)

REVENUES

Cloud services and license support $ 7,371 76% $ 6,947 74% 6% 5%

Cloud license and on-premise license 813 8% 886 9% (8%) (9%)

Hardware 763 8% 814 9% (6%) (7%)

Services 781 8% 720 8% 8% 7%

Total revenues 9,728 100% 9,367 100% 4% 2%

OPERATING EXPENSES

Cloud services and license support 1,214 13% 1,011 11% 20% 19%

Hardware 245 2% 246 2% (1%) (2%)

Services 644 7% 623 7% 3% 2%

Sales and marketing 1,854 19% 1,854 20% 0% (1%)

Research and development 1,684 18% 1,589 17% 6% 5%

General and administrative 298 3% 295 3% 1% 0%

Amortization of intangible assets 303 3% 345 4% (12%) (12%)

Acquisition related and other 21 0% 19 0% 4% 4%

Restructuring 38 0% 174 2% (78%) (78%)

Total operating expenses 6,301 65% 6,156 66% 2% 1%

OPERATING INCOME 3,427 35% 3,211 34% 7% 5%

Interest expense (705) (7%) (614) (6%) 15% 15%

Non-operating expenses, net (41) (1%) (2) 0% * *

INCOME BEFORE PROVISION FOR INCOME TAXES 2,681 27% 2,595 28% 3% 1%

Provision for income taxes 224 2% 344 4% (35%) (36%)

NET INCOME $ 2,457 25% $ 2,251 24% 9% 7%

EARNINGS PER SHARE:

Basic $ 0.89 $ 0.74

Diluted $ 0.86 $ 0.72

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:

Basic 2,769 3,041

Diluted 2,861 3,107

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(1) 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 August 31, 2021 compared with the corresponding prior year period increased our revenues by 2 percentage points, operating expenses by 1 percentage point and operating income by 2 percentage points.

* Not meaningful

ORACLE CORPORATION

Q1 FISCAL 2022 FINANCIAL RESULTS

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

($ in millions, except per share data)

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

2021 2021 2020 2020 GAAP Non-GAAP GAAP Non-GAAP GAAP Adj. Non-GAAP GAAP Adj. Non-GAAP

TOTAL REVENUES $ 9,728 $ - $ 9,728 $ 9,367 $ 1 $ 9,368 4% 4% 2% 2%

Cloud services and license support 7,371 - 7,371 6,947 1 6,948 6% 6% 5% 5%

TOTAL OPERATING EXPENSES $ 6,301 $ (907) $ 5,394 $ 6,156 $ (966) $ 5,190 2% 4% 1% 3%

Stock-based compensation (3) 545 (545) - 428 (428) - 28% * 28% *

Amortization of intangible assets (4) 303 (303) - 345 (345) - (12%) * (12%) *

Acquisition related and other 21 (21) - 19 (19) - 4% * 4% *

Restructuring 38 (38) - 174 (174) - (78%) * (78%) *

OPERATING INCOME $ 3,427 $ 907 $ 4,334 $ 3,211 $ 967 $ 4,178 7% 4% 5% 2%

OPERATING MARGIN % 35% 45% 34% 45% 95 bp. (5) bp. 74 bp. (18) bp.

INCOME TAX EFFECTS (5) $ 224 $ 420 $ 644 $ 344 $ 336 $ 680 (35%) (5%) (36%) (7%)

NET INCOME $ 2,457 $ 487 $ 2,944 $ 2,251 $ 631 $ 2,882 9% 2% 7% 0%

DILUTED EARNINGS PER SHARE $ 0.86 $ 1.03 $ 0.72 $ 0.93 19% 11% 16% 9%

DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 2,861 - 2,861 3,107 - 3,107 (8%) (8%) (8%) (8%)

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(1) 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.

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(2) 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

August 31, 2021 August 31, 2020

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

Cloud services and license support $ 40 $ (40) $ - $ 30 $ (30) $ -

Hardware 3 (3) - 3 (3) -

Services 14 (14) - 12 (12) -

Sales and marketing 95 (95) - 71 (71) -

Research and development 344 (344) - 276 (276) -

General and administrative 49 (49) - 36 (36) -

Total stock-based compensation $ 545 $ (545) $ - $ 428 $ (428) $ -

(4) Estimated future annual amortization expense related to intangible assets as of August 31, 2021 was as follows:

Remainder of fiscal 2022 $ 834

Fiscal 2023 716

Fiscal 2024 473

Fiscal 2025 124

Fiscal 2026 24

Fiscal 2027 6

Thereafter 4

Total intangible assets, net $ 2,181

Income tax effects were calculated reflecting an effective GAAP tax rate of 8.4% and 13.3% in the first quarter of fiscal 2022 and 2021, respectively, and an effective non-GAAP tax rate of 18.0% and 19.1% in the first quarter of fiscal 2022 and 2021, respectively. The difference in our GAAP and non-GAAP tax(5) rates in each of the first quarter of fiscal 2022 and 2021 was primarily due to the net tax effects on stock-based compensation expense and acquisition related items, including the tax effects of amortization of intangible assets, 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

Q1 FISCAL 2022 FINANCIAL RESULTS

CONDENSED CONSOLIDATED BALANCE SHEETS

($ in millions)

August 31, May 31,

2021 2021

ASSETS

Current Assets:

Cash and cash equivalents $ 23,059 $ 30,098

Marketable securities 16,251 16,456

Trade receivables, net 4,482 5,409

Prepaid expenses and other current assets 3,325 3,604

Total Current Assets 47,117 55,567

Non-Current Assets:

Property, plant and equipment, net 7,610 7,049

Intangible assets, net 2,181 2,430

Goodwill, net 43,862 43,935

Deferred tax assets 13,391 13,636

Other non-current assets 8,763 8,490

Total Non-Current Assets 75,807 75,540

TOTAL ASSETS $ 122,924 $ 131,107

LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY

Current Liabilities:

Notes payable, current $ 6,748 $ 8,250

Accounts payable 749 745

Accrued compensation and related benefits 1,470 2,017

Deferred revenues 10,011 8,775

Other current liabilities 4,093 4,377

Total Current Liabilities 23,071 24,164

Non-Current Liabilities:

Notes payable and other borrowings, non-current 75,970 75,995

Income taxes payable 12,315 12,345

Deferred tax liabilities 7,648 7,864

Other non-current liabilities 5,050 4,787

Total Non-Current Liabilities 100,983 100,991

Stockholders' (Deficit) Equity (1,130) 5,952

TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY $ 122,924 $ 131,107

ORACLE CORPORATION

Q1 FISCAL 2022 FINANCIAL RESULTS

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

($ in millions)

Three Months Ended August 31,

2021 2020

Cash Flows From Operating Activities:

Net income $ 2,457 $ 2,251

Adjustments to reconcile net income to net cash provided by operatingactivities:

Depreciation 454 356

Amortization of intangible assets 303 345

Deferred income taxes (15) 173

Stock-based compensation 545 428

Other, net (27) 78

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

Decrease in trade receivables, net 852 1,077

Decrease in prepaid expenses and other assets 270 380

Decrease in accounts payable and other liabilities (713) (294)

Decrease in income taxes payable (221) (586)

Increase in deferred revenues 1,486 1,745

Net cash provided by operating activities 5,391 5,953

Cash Flows From Investing Activities:

Purchases of marketable securities and other investments (7,671) (10,678)

Proceeds from sales and maturities of marketable securities and other 8,002 1,459investments

Acquisitions, net of cash acquired (50) -

Capital expenditures (1,062) (436)

Net cash used for investing activities (781) (9,655)

Cash Flows From Financing Activities:

Payments for repurchases of common stock (7,995) (4,945)

Proceeds from issuances of common stock 148 567

Shares repurchased for tax withholdings upon vesting of restricted stock-based (820) (478)awards

Payments of dividends to stockholders (887) (730)

Repayments of borrowings (1,500) (1,000)

Other, net (414) 93

Net cash used for financing activities (11,468) (6,493)

Effect of exchange rate changes on cash and cash equivalents (181) 232

Net decrease in cash and cash equivalents (7,039) (9,963)

Cash and cash equivalents at beginning of period 30,098 37,239

Cash and cash equivalents at end of period $ 23,059 $ 27,276

ORACLE CORPORATION

Q1 FISCAL 2022 FINANCIAL RESULTS

FREE CASH FLOW - TRAILING 4-QUARTERS (1)

($ in millions)

Fiscal 2021 Fiscal 2022

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

GAAP Operating Cash Flow $ 13,092 $ 13,967 $ 14,659 $ 15,887 $ 15,325

Capital Expenditures (1,614) (1,833) (1,851) (2,135) (2,761)

Free Cash Flow $ 11,478 $ 12,134 $ 12,808 $ 13,752 $ 12,564

% Growth over prior year (6%) (1%) 3% 19% 9%

GAAP Net Income $ 10,249 $ 10,380 $ 12,830 $ 13,746 $ 13,952

Free Cash Flow as a % of Net Income 112% 117% 100% 100% 90%

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(1) comparing our performance with our competitors. The presentation of non-GAAP free cash flow is not meant to be considered in isolation or as an alternative to net income as an indicator of our performance, or as an alternative to cash flows from operating activities as a measure of liquidity.

ORACLE CORPORATION

Q1 FISCAL 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

REVENUES BY OFFERINGS

Cloud services and license support $ 6,947 $ 7,112 $ 7,252 $ 7,389 $ 28,700 $ 7,371 $ 7,371

Cloud license and on-premise license 886 1,092 1,276 2,144 5,399 813 813

Hardware 814 844 820 882 3,359 763 763

Services 720 752 737 812 3,021 781 781

Total revenues $ 9,367 $ 9,800 $ 10,085 $ 11,227 $ 40,479 $ 9,728 $ 9,728

AS REPORTED REVENUE GROWTH RATES

Cloud services and license support 2% 4% 5% 8% 5% 6% 6%

Cloud license and on-premise license 9% (3%) 4% 9% 5% (8%) (8%)

Hardware 0% (3%) (4%) (2%) (2%) (6%) (6%)

Services (8%) (7%) (5%) 11% (3%) 8% 8%

Total revenues 2% 2% 3% 8% 4% 4% 4%

CONSTANT CURRENCY REVENUE GROWTH RATES (2)

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

Cloud license and on-premise license 8% (5%) 0% 5% 2% (9%) (9%)

Hardware 0% (3%) (6%) (6%) (4%) (7%) (7%)

Services (8%) (8%) (8%) 6% (5%) 7% 7%

Total revenues 2% 1% 0% 4% 2% 2% 2%

CLOUD SERVICES AND LICENSE SUPPORT REVENUES

BY ECOSYSTEM

Applications cloud services and license support $ 2,816 $ 2,901 $ 2,952 $ 3,043 $ 11,712 $ 3,041 $ 3,041

Infrastructure cloud services and license support 4,131 4,211 4,300 4,346 16,988 4,330 4,330

Total cloud services and license support revenues $ 6,947 $ 7,112 $ 7,252 $ 7,389 $ 28,700 $ 7,371 $ 7,371

AS REPORTED REVENUE GROWTH RATES

Applications cloud services and license support 4% 5% 5% 11% 6% 8% 8%

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

Total cloud services and license support revenues 2% 4% 5% 8% 5% 6% 6%

CONSTANT CURRENCY REVENUE GROWTH RATES (2)

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

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

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

GEOGRAPHIC REVENUES

Americas $ 5,068 $ 5,259 $ 5,424 $ 6,076 $ 21,828 $ 5,321 $ 5,321

Europe/Middle East/Africa 2,738 2,852 2,981 3,324 11,894 2,784 2,784

Asia Pacific 1,561 1,689 1,680 1,827 6,757 1,623 1,623

Total revenues $ 9,367 $ 9,800 $ 10,085 $ 11,227 $ 40,479 $ 9,728 $ 9,728

(1) The sum of the quarterly information presented may vary from the year-to-date information presented due to rounding.

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(2) 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 and 2020 for the fiscal 2022 and fiscal 2021 constant currency growth rate calculations presented, respectively, rather than the actual exchange rates in effect during the respective periods.

APPENDIX A

ORACLE CORPORATION

Q1 FISCAL 2022 FINANCIAL RESULTS

EXPLANATION OF NON-GAAP MEASURES

To supplement our financial results presented on a GAAP basis, we use thenon-GAAP measures indicated in the tables, which exclude certain businesscombination accounting entries and expenses related to acquisitions, as well asother significant expenses including stock-based compensation, that we believeare helpful in understanding our past financial performance and our futureresults. Our non-GAAP financial measures are not meant to be considered inisolation or as a substitute for comparable GAAP measures and should be readonly in conjunction with our consolidated financial statements prepared inaccordance with GAAP. Our management regularly uses our supplemental non-GAAPfinancial measures internally to understand, manage and evaluate our businessand make operating decisions. These non-GAAP measures are among the primaryfactors management uses in planning for and forecasting future periods.Compensation of our executives is based in part on the performance of ourbusiness based on these non-GAAP measures. Our non-GAAP financial measuresreflect adjustments based on the following items, as well as the related incometax effects:

* Cloud services and license support revenues: Business combination accounting rules require us to account for the fair values of cloud services and license support contracts assumed in connection with our acquisitions. The non-GAAP adjustments to our cloud services and license support revenues are intended to include, and thus reflect, the full amount of such revenues. We believe the adjustments to these revenues are useful to investors as a measure of the ongoing performance of our business as we generally expect to experience high renewal rates for these contracts at their stated values during the post combination periods.

* Stock-based compensation expenses: We have excluded the effect of stock-based compensation expenses from our non-GAAP operating expenses and net income measures. Although stock-based compensation is a key incentive offered to our employees, and we believe such compensation contributed to the revenues earned during the periods presented and also believe it will contribute to the generation of future period revenues, we continue to evaluate our business performance excluding stock-based compensation expenses. Stock-based compensation expenses will recur in future periods.

* Amortization of intangible assets: We have excluded the effect of amortization of intangible assets from our non-GAAP operating expenses and net income measures. Amortization of intangible assets is inconsistent in amount and frequency and is significantly affected by the timing and size of our acquisitions. Investors should note that the use of intangible assets contributed to our revenues earned during the periods presented and will contribute to our future period revenues as well. Amortization of intangible assets will recur in future periods.

* Acquisition related and other expenses; and restructuring expenses: We have excluded the effect of acquisition related and other expenses and the effect of restructuring expenses from our non-GAAP operating expenses and net income measures. We incurred expenses in connection with our acquisitions and also incurred certain other operating expenses or income, which we generally would not have otherwise incurred in the periods presented as a part of our continuing operations. Acquisition related and other expenses primarily consist of personnel related costs for transitional and certain other employees, certain business combination adjustments including adjustments after the measurement period has ended and certain other operating items, net. Restructuring expenses consist of employee severance and other exit costs. We believe it is useful for investors to understand the effects of these items on our total operating expenses. Although acquisition related and other expenses and restructuring expenses generally diminish over time with respect to past acquisitions and /or strategic initiatives, we generally will incur these expenses in connection with any future acquisitions and/or strategic initiatives.

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SOURCE Oracle