Oracle Announces Fiscal 2024 First Quarter Financial Results

Q1 GAAP Earnings per Share $0.86, Non-GAAP Earnings per Share $1.19Q1 Total Revenue $12.5 billion, up 9% in USD, up 8% in constant currencyQ1 Cloud Revenue (IaaS plus SaaS) $4.6 billion, up 30% in USD, up 29% in constant currencyQ1 Cloud Infrastructure (IaaS) Revenue $1.5 billion, up 66% in USD, up 64% in constant currencyQ1 Cloud Application (SaaS) Revenue $3.1 billion, up 17% in USD, up 17% in constant currencyQ1 Fusion Cloud ERP (SaaS) Revenue $0.8 billion, up 21% in USD, up 20% in constant currencyQ1 NetSuite Cloud ERP (SaaS) Revenue $0.7 billion, up 21% in USD, up 21% in constant currency

AUSTIN, Texas, Sept. 11, 2023 /PRNewswire/ — Oracle Corporation (NYSE: ORCL) today announced fiscal 2024 Q1 results. Total quarterly revenues were up 9% year-over-year in USD and up 8% in constant currency to $12.5 billion. Cloud services and license support revenues were up 13% in USD and up 12% in constant currency to $9.5 billion. Cloud license and on-premise license revenues were down 10% in USD and down 11% in constant currency to $0.8 billion.

Q1 GAAP operating income was $3.3 billion. Non-GAAP operating income was $5.1 billion, up 13% in USD and up 12% in constant currency. GAAP operating margin was 26%, and non-GAAP operating margin was 41%. GAAP net income was $2.4 billion. Non-GAAP net income was $3.4 billion, up 19% in USD and up 17% in constant currency. Q1 GAAP earnings per share was $0.86 while non-GAAP earnings per share was $1.19, up 16% in USD and up 14% in constant currency.

Short-term deferred revenues were $11.1 billion. Q1 operating cash flow was $7.0 billion, up 9%, and Q1 free cash flow was $5.7 billion, up 21%.

“Oracle Cloud Infrastructure revenue grew 66% in Q1, much faster than our hyperscale cloud infrastructure competitors,” said Oracle CEO, Safra Catz. “Total cloud services revenue, Infrastructure plus Applications, grew 30% to $4.6 billion in the quarter. Oracle Cloud Services plus License Support revenue now accounts for 77% of Oracle’s total revenue. This highly-predictable, highly-profitable recurring revenue stream—combined with continued expense discipline—drove 16% growth in non-GAAP earnings per share, 21% growth in free cash flow, and $7.0 billion in operating cash flow in the Q1.”

“Is Generative AI the most important new computer technology ever? Maybe!,” said Oracle Chairman and CTO, Larry Ellison. “Self-driving cars, molecular drug design, voice user interfaces—billions of dollars are being invested in AI. As of today, AI development companies have signed contracts to purchase more than $4 billion of capacity in Oracle’s Gen2 Cloud. That’s twice as much as we had booked at the end of Q4. The largest AI technology companies and the leading AI startups continue to expand their business with Oracle for one simple reason—Oracle’s RDMA interconnected NVIDIA Superclusters train AI models at twice the speed and less than half the cost of other clouds.”

The board of directors declared a quarterly cash dividend of $0.40 per share of outstanding common stock. This dividend will be paid to stockholders of record as of the close of business on October 12, 2023, with a payment date of October 26, 2023.

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/.

Earnings Conference Call and Webcast

Oracle 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 Oracle

Oracle 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.

Trademarks

Oracle, Java, MySQL and NetSuite are registered trademarks of Oracle Corporation. NetSuite was the first cloud company—ushering in the new era of cloud computing.

“Safe Harbor” Statement: Statements in this press release relating to the predictability and profitability of Oracle Cloud Services plus License Support revenue and the importance of Generative AI, are “forward-looking statements” and are subject to material risks and uncertainties. Risks and uncertainties that could affect our current expectations and our actual results, include, among others: our ability to develop new products and services, integrate acquired products and services and enhance our existing products and services; our management of complex cloud and hardware offerings, including the sourcing of technologies and technology components; significant coding, manufacturing or configuration errors in our offerings; risks associated with acquisitions; economic, political and market conditions; information technology system failures, privacy and data security concerns; cybersecurity breaches; unfavorable legal proceedings, government investigations, and complex and changing laws and regulations. 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’s Investor Relations Department at (650) 506-4073 or by clicking on SEC Filings on the Oracle Investor Relations website at www.oracle.com/investor/. All information set forth in this press release is current as of September 11, 2023. Oracle undertakes no duty to update any statement in light of new information or future events.

ORACLE CORPORATION

Q1 FISCAL 2024 FINANCIAL RESULTS

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

($ in millions, except per share data)

Three Months Ended August 31,

% Increase

(Decrease)

% of

(Decrease)

in Constant

2023

Revenues

2022

Revenues

in US $

Currency (1)

REVENUES

Cloud services and license support

$ 9,547

77 %

$ 8,417

73 %

13 %

12 %

Cloud license and on-premise license

809

6 %

904

8 %

(10 %)

(11 %)

Hardware

714

6 %

763

7 %

(6 %)

(8 %)

Services

1,383

11 %

1,361

12 %

2 %

1 %

Total revenues

12,453

100 %

11,445

100 %

9 %

8 %

OPERATING EXPENSES

Cloud services and license support

2,179

18 %

1,735

15 %

26 %

25 %

Hardware

219

2 %

249

2 %

(12 %)

(14 %)

Services

1,212

10 %

1,053

9 %

15 %

14 %

Sales and marketing

2,026

16 %

2,177

19 %

(7 %)

(8 %)

Research and development

2,216

18 %

2,093

19 %

6 %

General and administrative

393

3 %

411

4 %

(4 %)

(5 %)

Amortization of intangible assets

763

6 %

919

8 %

(17 %)

Acquisition related and other

0 %

(72 %)

Restructuring

138

1 %

144

1 %

(4 %)

(1 %)

Total operating expenses

9,157

74 %

8,822

77 %

4 %

3 %

OPERATING INCOME

3,296

26 %

2,623

23 %

26 %

23 %

Interest expense

(872)

(7 %)

(787)

(7 %)

11 %

Non-operating expenses, net

(49)

0 %

(180)

(1 %)

(73 %)

(74 %)

INCOME BEFORE INCOME TAXES

2,375

19 %

1,656

15 %

43 %

39 %

Benefit from (provision for) income taxes

0 %

(108)

(1 %)

NET INCOME

$ 2,420

19 %

$ 1,548

14 %

56 %

52 %

EARNINGS PER SHARE:

Basic

$ 0.89

$ 0.58

Diluted

$ 0.86

$ 0.56

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:

Basic

2,728

2,685

Diluted

2,823

2,747

(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 August 31, 2023 compared with the corresponding prior year period increased our total revenues by 1 percentage point, total operating expenses by 1 percentage point and operating income by 3 percentage points.

Not meaningful

ORACLE CORPORATION

Q1 FISCAL 2024 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)
in US $

% Increase
(Decrease) in
Constant Currency (2)

2023

2022

GAAP

Non-GAAP

GAAP

Non-GAAP

GAAP

Adj.

Non-GAAP

GAAP

Adj.

Non-GAAP

TOTAL REVENUES

$ 12,453

$ –

$ 12,453

$ 11,445

$ –

$ 11,445

9 %

8 %

TOTAL OPERATING EXPENSES

$ 9,157

$ (1,761)

$ 7,396

$ 8,822

$ (1,854)

$ 6,968

4 %

6 %

3 %

5 %

Stock-based compensation (3)

849

(849)

–

750

(750)

–

13 %

Amortization of intangible assets (4)

763

(763)

–

919

(919)

–

(17 %)

Acquisition related and other

(11)

–

(41)

–

(72 %)

Restructuring

138

(138)

–

144

(144)

–

(4 %)

(1 %)

OPERATING INCOME

$ 3,296

$ 1,761

$ 5,057

$ 2,623

$ 1,854

$ 4,477

26 %

13 %

23 %

12 %

OPERATING MARGIN %

26 %

41 %

23 %

39 %

355 bp.

150 bp.

327 bp.

140 bp.

INCOME TAX EFFECTS (5)

$ 45

$ (823)

$ (778)

$ (108)

$ (574)

$ (682)

14 %

13 %

NET INCOME

$ 2,420

$ 938

$ 3,358

$ 1,548

$ 1,280

$ 2,828

56 %

19 %

52 %

17 %

DILUTED EARNINGS PER SHARE

$ 0.86

$ 1.19

$ 0.56

$ 1.03

52 %

16 %

48 %

14 %

DILUTED WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING

2,823

–

2,823

2,747

–

2,747

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)

(3)

Stock-based compensation was included in the following GAAP operating expense categories:

Three Months Ended

August 31,
2023

August 31,
2022

GAAP

Adj.

Non-GAAP

GAAP

Adj.

Non-GAAP

Cloud services and license support

$ 111

$ (111)

$ –

$ 91

$ (91)

$ –

Hardware

(5)

–

(4)

–

Services

(34)

–

(25)

–

Sales and marketing

135

(135)

–

124

(124)

–

Research and development

484

(484)

–

422

(422)

–

General and administrative

(80)

–

(84)

–

Total stock-based compensation

$ 849

$ (849)

$ –

$ 750

$ (750)

$ –

(4)

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

Remainder of fiscal 2024

$ 2,231

Fiscal 2025

2,283

Fiscal 2026

1,620

Fiscal 2027

664

Fiscal 2028

635

Fiscal 2029

561

Thereafter

1,080

Total intangible assets, net

$ 9,074

(5)

Income tax effects were calculated reflecting an effective GAAP tax rate of (1.9%) and 6.5% in the first quarter of fiscal 2024 and 2023, respectively, and an effective non-GAAP tax rate of 18.8% and 19.4% in the first quarter of fiscal 2024 and 2023, respectively. The difference in our GAAP and non-GAAP tax rates in each of the first quarter of fiscal 2024 and 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 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

Q1 FISCAL 2024 FINANCIAL RESULTS

CONDENSED CONSOLIDATED BALANCE SHEETS

($ in millions)

August 31,

May 31,

2023

ASSETS

Current Assets:

Cash and cash equivalents

$ 11,613

$ 9,765

Marketable securities

470

422

Trade receivables, net

6,519

6,915

Prepaid expenses and other current assets

3,564

3,902

Total Current Assets

22,166

21,004

Non-Current Assets:

Property, plant and equipment, net

17,644

17,069

Intangible assets, net

9,074

9,837

Goodwill, net

62,206

62,261

Deferred tax assets

12,243

12,226

Other non-current assets

13,329

11,987

Total Non-Current Assets

114,496

113,380

TOTAL ASSETS

$ 136,662

$ 134,384

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities:

Notes payable and other borrowings, current

$ 4,499

$ 4,061

Accounts payable

1,034

1,204

Accrued compensation and related benefits

1,818

2,053

Deferred revenues

11,120

8,970

Other current liabilities

6,886

6,802

Total Current Liabilities

25,357

23,090

Non-Current Liabilities:

Notes payable and other borrowings, non-current

84,442

86,420

Income taxes payable

11,201

11,077

Deferred tax liabilities

5,281

5,772

Other non-current liabilities

7,540

6,469

Total Non-Current Liabilities

108,464

109,738

Stockholders’ Equity

2,841

1,556

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$ 136,662

$ 134,384

ORACLE CORPORATION

Q1 FISCAL 2024 FINANCIAL RESULTS

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

($ in millions)

Three Months Ended August 31,

2023

2022

Cash Flows From Operating Activities:

Net income

$ 2,420

$ 1,548

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

Depreciation

712

547

Amortization of intangible assets

763

919

Deferred income taxes

(517)

(344)

Stock-based compensation

849

750

Other, net

169

156

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

Decrease in trade receivables, net

380

761

Decrease in prepaid expenses and other assets

269

Decrease in accounts payable and other liabilities

(457)

(166)

Increase in income taxes payable

145

Increase in deferred revenues

2,317

2,034

Net cash provided by operating activities

6,974

6,394

Cash Flows From Investing Activities:

Purchases of marketable securities and other investments

(333)

(57)

Proceeds from sales and maturities of marketable securities and other investments

138

Acquisitions, net of cash acquired

–

(27,798)

Capital expenditures

(1,314)

(1,719)

Net cash used for investing activities

(1,562)

(29,436)

Cash Flows From Financing Activities:

Payments for repurchases of common stock

(150)

(552)

Proceeds from issuances of common stock

308

515

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

(1,060)

(829)

Payments of dividends to stockholders

(1,091)

(860)

Repayments of commercial paper

(562)

–

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

–

20,046

Repayments of senior notes and other borrowings

(1,000)

(5,883)

Other, net

(127)

Net cash (used for) provided by financing activities

(3,528)

12,310

Effect of exchange rate changes on cash and cash equivalents

(36)

(203)

Net increase (decrease) in cash and cash equivalents

1,848

(10,935)

Cash and cash equivalents at beginning of period

9,765

21,383

Cash and cash equivalents at end of period

$ 11,613

$ 10,448

ORACLE CORPORATION

Q1 FISCAL 2024 FINANCIAL RESULTS

FREE CASH FLOW – TRAILING 4-QUARTERS (1)

($ in millions)

Fiscal 2023

Fiscal 2024

GAAP Operating Cash Flow

$ 10,542

$ 15,073

$ 15,503

$ 17,165

$ 17,745

Capital Expenditures

(5,168)

(6,678)

(8,205)

(8,695)

(8,290)

Free Cash Flow

$ 5,374

$ 8,395

$ 7,298

$ 8,470

$ 9,455

Operating Cash Flow % Growth over prior year

(31 %)

47 %

49 %

80 %

68 %

Free Cash Flow % Growth over prior year

(57 %)

18 %

11 %

68 %

76 %

GAAP Net Income

$ 5,808

$ 8,797

$ 8,373

$ 8,503

$ 9,375

Operating Cash Flow as a % of Net Income

182 %

171 %

185 %

202 %

189 %

Free Cash Flow as a % of Net Income

93 %

95 %

87 %

100 %

101 %

(1) To supplement our statements of cash flows presented on a GAAP basis, we use non-GAAP measures of cash flows on a trailing 4-quarter basis to analyze cash flow
generated from operations. We believe free cash flow is also useful as one of the bases for comparing our performance with our competitors. The presentation of non-GAAP
free cash flow is not meant to be considered in isolation or as an alternative to net income as an indicator of our performance, or as an alternative to cash flows from
operating activities as a measure of liquidity.

ORACLE CORPORATION

Q1 FISCAL 2024 FINANCIAL RESULTS

SUPPLEMENTAL ANALYSIS OF GAAP REVENUES (1)

($ in millions)

Fiscal 2023

Fiscal 2024

TOTAL

REVENUES BY OFFERINGS

Cloud services

$ 3,579

$ 3,813

$ 4,053

$ 4,437

$ 15,881

$ 4,635

License support

4,838

4,785

4,870

4,933

19,426

4,912

Cloud services and license support

8,417

8,598

8,923

9,370

35,307

9,547

Cloud license and on-premise license

904

1,435

1,288

2,152

5,779

809

Hardware

763

850

811

850

3,274

714

Services

1,361

1,392

1,376

1,465

5,594

1,383

Total revenues

$ 11,445

$ 12,275

$ 12,398

$ 13,837

$ 49,954

$ 12,453

AS REPORTED REVENUE GROWTH RATES

Cloud services

45 %

43 %

45 %

54 %

47 %

30 %

License support

(1 %)

(2 %)

0 %

4 %

0 %

2 %

Cloud services and license support

14 %

17 %

23 %

17 %

13 %

Cloud license and on-premise license

11 %

16 %

0 %

(15 %)

(2 %)

(10 %)

Hardware

0 %

11 %

2 %

(1 %)

3 %

(6 %)

Services

74 %

76 %

75 %

2 %

Total revenues

18 %

17 %

18 %

9 %

CONSTANT CURRENCY REVENUE GROWTH RATES (2)

Cloud services

50 %

48 %

55 %

50 %

29 %

License support

4 %

3 %

6 %

4 %

0 %

Cloud services and license support

20 %

25 %

21 %

12 %

Cloud license and on-premise license

19 %

23 %

4 %

(14 %)

2 %

(11 %)

Hardware

5 %

16 %

4 %

1 %

6 %

(8 %)

Services

84 %

83 %

80 %

78 %

81 %

1 %

Total revenues

23 %

25 %

21 %

18 %

22 %

8 %

CLOUD SERVICES AND LICENSE SUPPORT REVENUES

BY ECOSYSTEM

Applications cloud services and license support

$ 4,016

$ 4,080

$ 4,166

$ 4,390

$ 16,651

$ 4,471

Infrastructure cloud services and license support

4,401

4,518

4,757

4,980

18,656

5,076

Total cloud services and license support revenues

$ 8,417

$ 8,598

$ 8,923

$ 9,370

$ 35,307

$ 9,547

AS REPORTED REVENUE GROWTH RATES

Applications cloud services and license support

32 %

30 %

31 %

36 %

32 %

11 %

Infrastructure cloud services and license support

2 %

3 %

7 %

14 %

6 %

15 %

Total cloud services and license support revenues

14 %

17 %

23 %

17 %

13 %

CONSTANT CURRENCY REVENUE GROWTH RATES (2)

Applications cloud services and license support

37 %

35 %

33 %

37 %

35 %

11 %

Infrastructure cloud services and license support

7 %

9 %

10 %

15 %

10 %

14 %

Total cloud services and license support revenues

20 %

25 %

21 %

12 %

GEOGRAPHIC REVENUES

Americas

$ 7,192

$ 7,786

$ 7,671

$ 8,577

$ 31,226

$ 7,841

Europe/Middle East/Africa

2,691

2,895

3,067

3,457

12,109

3,005

Asia Pacific

1,562

1,594

1,660

1,803

6,619

1,607

Total revenues

$ 11,445

$ 12,275

$ 12,398

$ 13,837

$ 49,954

$ 12,453

(1) The sum of the quarterly information presented may vary from the year-to-date information presented 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, 2023 and 2022 for the fiscal 2024 and fiscal 2023 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 2024 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:

Stock-based compensation expenses: We have excluded the effect of stock-based compensation expenses from our non-GAAP operating expenses, income tax effects 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, income tax effects 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, income tax effects 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 consisted of personnel related costs for transitional and certain other employees, certain business combination adjustments including certain adjustments after the measurement period has ended, and certain other operating items, net. Restructuring expenses consisted 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 may diminish over time with respect to past acquisitions and/or strategic initiatives, we generally will incur certain of these expenses in connection with any future acquisitions and/or strategic initiatives.

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SOURCE Oracle