ORACLE CORPORATION REDWOOD SHORES, Calif., March 15, 2017 /PRNewswire/ -- Oracle Corporation (NYSE: ORCL) today announced fiscal 2017 Q3 results. Total Revenues were $9.2 billion, up 2% in U.S. dollars and up 3% in constant currency. Non-GAAP Total Revenues were $9.3 billion, up 3% in U.S. dollars and up 4% in constant currency. Cloud software as a service (SaaS) and platform as a service (PaaS) revenues were $1.0 billion, up 73% in U.S. dollars and up 74% in constant currency. Non-GAAP SaaS and PaaS revenues were $1.1 billion, up 85% in U.S. dollars and up 86% in constant currency. Total Cloud Revenues, including infrastructure as a service (IaaS), were $1.2 billion, up 62% in U.S. dollars and up 63% in constant currency. Total Cloud and On-Premise Software Revenues were $7.4 billion, up 4% in U.S. dollars and up 5% in constant currency.
Operating Income was $3.0 billion and Operating Margin was 32%. Non-GAAP Operating Income was $3.9 billion, up 3% in U.S. dollars and up 4% in constant currency, and non-GAAP Operating Margin was 43%. Net Income was $2.2 billion while non-GAAP Net Income was $2.9 billion, up 6% in U.S. dollars and up 7% in constant currency. Earnings Per Share was $0.53, while non-GAAP Earnings Per Share was $0.69, up 7% in U.S. dollars. Without the impact of the U.S. dollar strengthening compared to foreign currencies, Oracle's reported GAAP Earnings Per Share would have been 1 cent higher.
Short-term deferred revenues were $7.4 billion, up 7% in U.S. dollars and constant currency compared with a year ago. Operating cash flow on a trailing twelve-month basis was $13.5 billion.
"The hyper-growth we continue to experience in the cloud has rapidly driven both our SaaS and PaaS businesses to scale," said Oracle CEO, Safra Catz. "On an annualized non-GAAP basis, our total cloud business has reached the $5 billion mark, and our SaaS and PaaS businesses grew at the astonishing rate of 85% in Q3. That growth and the resulting scale enabled our SaaS and PaaS businesses to increase non-GAAP gross margins to 65%. Our new, large, fast growing, high-margin cloud businesses are driving Oracle's total revenue and earnings up and improving nearly every important non-GAAP business metric you care to inspect; total revenue is up, margins are up, operating income is up, net income is up, EPS is up. Take a look. Q3 was a very strong quarter."
"Over the last year, we sold more new SaaS and PaaS than Salesforce.com, and we're growing more than 3 times faster," said Oracle CEO, Mark Hurd. "If these trends continue, where we are selling more SaaS and PaaS in absolute dollars AND growing dramatically faster, it's just a matter of when we catch and pass Salesforce.com in total cloud revenue."
"Both our SaaS and PaaS businesses are doing great, but I'm even more excited about our second generation IaaS business," said Oracle Chairman and CTO, Larry Ellison. "Our new Gen2 IaaS is both faster and lower cost than Amazon Web Services. And now our biggest customers can run their largest and most demanding Oracle database workloads in the Oracle Cloud - something that is absolutely impossible to do in the Amazon Cloud."
Oracle also announced that its Board of Directors declared a quarterly cash dividend of $0.19 per share of outstanding common stock, reflecting a 27% increase over the current quarterly dividend of $0.15. Larry Ellison, Oracle's Chairman of the Board, Chief Technology Officer and largest stockholder, did not participate in the deliberation or the vote on this matter. This increased dividend will be paid to stockholders of record as of the close of business on April 12, 2017, with a payment date of April 26, 2017.
Q3 Fiscal 2017 Earnings Conference Call and Webcast
Oracle will hold a conference call and webcast today to discuss these results at 2:00 p.m. Pacific. You may listen to the call by dialing (816) 287-5563, Passcode: 425392. To access the live webcast, please visit the Oracle Investor Relations website at http://www.oracle.com/investor. In addition, Oracle's Q3 results and Fiscal 2017 financial tables are available on the Oracle Investor Relations website.
A replay of the conference call will also be available by dialing (855) 859-2056 or (404) 537-3406, Passcode: 83283985.
About Oracle
Oracle offers a comprehensive and fully integrated stack of cloud applications and platform services. For more information about Oracle (NYSE: ORCL), visit www.oracle.com/investor or contact Investor Relations at investor_us@oracle.com or (650) 506-4073.
Trademarks
Oracle and Java are registered trademarks of Oracle and/or its affiliates. Other names may be trademarks of their respective owners.
"Safe Harbor" Statement: Statements in this press release relating to Oracle's future plans, expectations, beliefs, intentions and prospects, including statements regarding our growth in SaaS, PaaS and total cloud revenue and expected future sales compared to competitors are all "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) Our cloud computing strategy, including our Oracle Cloud SaaS, PaaS, IaaS and data as a service offerings, may not be successful. (2) If we are unable to develop new or sufficiently differentiated products and services, or to enhance and improve our products and support services in a timely manner or to position and/or price our products and services to meet market demand, customers may not buy new software licenses, cloud software subscriptions or hardware systems products or purchase or renew support contracts. (3) If the security measures for our software, hardware, services or Oracle Cloud offerings are compromised or if such offerings contain significant coding, manufacturing or configuration errors, we may experience reputational harm, legal claims and financial exposure. (4) We may fail to achieve our financial forecasts due to such factors as delays or size reductions in transactions, fewer large transactions in a particular quarter, fluctuations in currency exchange rates, delays in delivery of new products or releases or a decline in our renewal rates for support contracts. (5) Our international sales and operations subject us to additional risks that can adversely affect our operating results, including risks relating to foreign currency gains and losses. (6) Economic, geopolitical and market conditions, including the continued slow economic recovery in the U.S. and other parts of the world, 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. (7) We have an active acquisition program and our acquisitions may not be successful, may involve unanticipated costs or other integration issues or may disrupt our existing operations. A detailed discussion of these factors and other risks that affect our business is contained in our U.S. Securities and Exchange Commission (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 http://www.oracle.com/investor. All information set forth in this press release is current as of March 15, 2017. Oracle undertakes no duty to update any statement in light of new information or future events.
ORACLE CORPORATION
Q3 FISCAL 2017 FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($ in millions, except per share data)
Three Months Ended % Increase
(Decrease)
% Increase
February 28, % of February 29, % of (Decrease) in Constant
2017 Revenues 2016 Revenues in US $ Currency (1)
---- -------- ---- -------- ------- -----------
REVENUES
Cloud software as a service and
platform as a service $1,011 11% $583 6% 73% 74%
Cloud infrastructure as a service 178 2% 152 2% 17% 19%
--- --- --- ---
Total cloud revenues 1,189 13% 735 8% 62% 63%
----- --- --- ---
New software licenses 1,414 15% 1,680 18% (16%) (15%)
Software license updates and
product support 4,762 52% 4,669 52% 2% 3%
----- --- --- ---
Total on-premise software revenues 6,176 67% 6,349 70% (3%) (2%)
----- --- --- ---
Total cloud and on-premise
software revenues 7,365 80% 7,084 78% 4% 5%
----- --- --- ---
Hardware products 520 6% 604 7% (14%) (13%)
Hardware support 508 5% 531 6% (4%) (3%)
--- --- --- ---
Total hardware revenues 1,028 11% 1,135 13% (9%) (9%)
----- --- --- ---
Total services revenues 812 9% 793 9% 2% 3%
--- --- --- ---
Total revenues 9,205 100% 9,012 100% 2% 3%
----- ---- --- ----
OPERATING EXPENSES
Sales and marketing 2,004 22% 1,903 21% 5% 6%
Cloud software as a service and
platform as a service 380 4% 292 3% 30% 32%
Cloud infrastructure as a service 125 1% 88 1% 43% 44%
Software license updates and
product support 270 3% 293 3% (8%) (8%)
Hardware products 290 3% 338 4% (14%) (14%)
Hardware support 147 2% 171 2% (14%) (14%)
Services 680 7% 657 7% 4% 4%
Research and development 1,521 17% 1,419 16% 7% 8%
General and administrative 241 3% 290 3% (17%) (15%)
Amortization of intangible assets 397 4% 408 5% (3%) (3%)
Acquisition related and other 30 0% 11 0% 187% 174%
Restructuring 161 2% 115 1% 39% 42%
--- --- --- ---
Total operating expenses 6,246 68% 5,985 66% 4% 5%
----- --- --- ---
OPERATING INCOME 2,959 32% 3,027 34% (2%) (1%)
Interest expense (450) (5%) (360) (4%) 25% 25%
Non-operating income, net 189 2% 65 0% 190% 187%
--- --- --- ---
INCOME BEFORE PROVISION FOR INCOME
TAXES 2,698 29% 2,732 30% (1%) 0%
----- --- ----- ---
Provision for income taxes 459 5% 590 6% (22%) (22%)
--- --- --- ---
NET INCOME $2,239 24% $2,142 24% 5% 6%
====== === ====== ===
EARNINGS PER SHARE:
Basic $0.55 $0.51
Diluted $0.53 $0.50
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic 4,107 4,182
Diluted 4,204 4,256
(1) We compare the percent change in the results from one period to another period using constant
currency disclosure. We present constant currency information to provide a framework for
assessing how our underlying businesses performed excluding the effect of foreign currency
rate fluctuations. To present this information, current and comparative prior period results
for entities reporting in currencies other than United States dollars are converted into
United States dollars at the exchange rates in effect on May 31, 2016, which was the last day
of our prior fiscal year, rather than the actual exchange rates in effect during the
respective periods. Movements in international currencies relative to the United States
dollar during the three months ended February 28, 2017 compared with the corresponding prior
year period decreased our revenues by 1 percentage point, operating expenses by 1 percentage
point and operating income by 1 percentage point.
ORACLE CORPORATION
Q3 FISCAL 2017 FINANCIAL RESULTS
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)
($ in millions, except per share data)
Three Months Ended % Increase (Decrease) % Increase (Decrease) in
in US $ Constant Currency (2)
------- --------------------
February 28, February 28, February 29, February 29, GAAP Non-GAAP GAAP Non-GAAP
2017 2017 2016 2016
GAAP Adj. Non-GAAP GAAP Adj. Non-GAAP
---- ---- -------- ---- ---- --------
TOTAL REVENUES $9,205 $69 $9,274 $9,012 $2 $9,014 2% 3% 3% 4%
TOTAL CLOUD AND ON-PREMISE SOFTWARE REVENUES $7,365 $69 $7,434 $7,084 $2 $7,086 4% 5% 5% 6%
Cloud software as a service and platform as a service 1,011 69 1,080 583 2 585 73% 85% 74% 86%
Cloud infrastructure as a service 178 - 178 152 - 152 17% 17% 19% 19%
New software licenses 1,414 - 1,414 1,680 - 1,680 (16%) (16%) (15%) (15%)
Software license updates and product support 4,762 - 4,762 4,669 - 4,669 2% 2% 3% 3%
TOTAL OPERATING EXPENSES $6,246 $(916) $5,330 $5,985 $(794) $5,191 4% 3% 5% 3%
Sales and marketing (3) 2,004 (75) 1,929 1,903 (57) 1,846 5% 4% 6% 5%
Cloud software as a service and platform as a service (4) 380 (6) 374 292 (4) 288 30% 30% 32% 31%
Stock-based compensation (4) 247 (247) - 199 (199) - 24% * 24% *
Amortization of intangible assets (5) 397 (397) - 408 (408) - (3%) * (3%) *
Acquisition related and other 30 (30) - 11 (11) - 187% * 174% *
Restructuring 161 (161) - 115 (115) - 39% * 42% *
CLOUD SOFTWARE AS A SERVICE AND PLATFORM AS A SERVICE MARGIN % 62% 65% 50% 51% 1,245 bp. 1,450 bp. 1,231 bp. 1,434 bp.
OPERATING INCOME $2,959 $985 $3,944 $3,027 $796 $3,823 (2%) 3% (1%) 4%
OPERATING MARGIN % 32% 43% 34% 42% (144) bp. 12 bp. (131) bp. 19 bp.
INCOME TAX EFFECTS (6) $459 $336 $795 $590 $207 $797 (22%) 0% (22%) 1%
NET INCOME $2,239 $649 $2,888 $2,142 $589 $2,731 5% 6% 6% 7%
DILUTED EARNINGS PER SHARE $0.53 $0.69 $0.50 $0.64 6% 7% 7% 8%
DILUTED WEIGHTED AVERAGE COMMON 4,204 - 4,204 4,256 - 4,256 (1%) (1%) (1%) (1%)
SHARES OUTSTANDING
(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, 2016, which was the last day of our prior fiscal year, rather than
the actual exchange rates in effect during the respective periods.
(3) Non-GAAP adjustments to sales and marketing expenses were as follows:
Three Months Ended
------------------
February 28, February 29,
2017 2016
---- ----
Stock-based compensation (4) $(96) $(57)
Acquired deferred sales commissions amortization 21 -
Total non-GAAP sales and marketing adjustments $(75) $(57)
(4) Stock-based compensation was included in the following GAAP operating expense categories:
Three Months Ended Three Months Ended
February 28, 2017 February 29, 2016
----------------- -----------------
GAAP Adj. Non-GAAP GAAP Adj. Non-GAAP
---- ---- -------- ---- ---- --------
Cloud infrastructure as a service $1 $(1) $ - $1 $(1) $ -
Software license updates and product support 6 (6) - 6 (6) -
Hardware products 2 (2) - 1 (1) -
Hardware support 1 (1) - 1 (1) -
Services 14 (14) - 7 (7) -
Research and development 191 (191) - 154 (154) -
General and administrative 32 (32) - 29 (29) -
Subtotal 247 (247) - 199 (199) -
Sales and marketing 96 (96) - 57 (57) -
Cloud software as a service and platform as a service 6 (6) - 4 (4) -
Acquisition related and other 22 (22) - - - -
Total stock-based compensation $371 $(371) $ - $260 $(260) $ -
(5) Estimated future annual amortization expense related to intangible assets as of February 28, 2017 was as follows:
Remainder of fiscal 2017 $402
Fiscal 2018 1,362
Fiscal 2019 1,248
Fiscal 2020 1,058
Fiscal 2021 883
Fiscal 2022 779
Thereafter 2,056
Total intangible assets, net $7,788
(6) Income tax effects were calculated reflecting an effective GAAP tax rate of 17.0% and 21.6% in the third quarter of fiscal 2017 and 2016, respectively, and an effective non-GAAP tax rate of 21.6%
and 22.6% in the third quarter of fiscal 2017 and 2016, respectively. The difference between our GAAP and non-GAAP tax rate in the third quarter of fiscal 2017 was primarily due to the net tax
effects on stock-based compensation expense and acquisition related items, including the tax effects of amortization of intangible assets. The difference between our GAAP and non-GAAP tax rate
in the third quarter of fiscal 2016 was primarily due to the net tax effects of acquisition related items, including the tax effects of amortization of intangible assets.
* Not meaningful
ORACLE CORPORATION
Q3 FISCAL 2017 YEAR TO DATE FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($ in millions, except per share data)
Nine Months Ended % Increase
-----------------
% Increase (Decrease)
February 28, % of February 29, % of (Decrease) in Constant
2017 Revenues 2016 Revenues in US $ Currency (1)
---- -------- ---- -------- ------- -----------
REVENUES
Cloud software as a service and
platform as a service $2,686 10% $1,517 6% 77% 79%
Cloud infrastructure as a service 525 2% 477 2% 10% 13%
--- --- --- ---
Total cloud revenues 3,211 12% 1,994 8% 61% 63%
----- --- --- ---
New software licenses 3,792 14% 4,509 17% (16%) (15%)
Software license updates and
product support 14,331 54% 14,048 53% 2% 3%
------ --- --- ---
Total on-premise software revenues 18,123 68% 18,557 70% (2%) (2%)
------ --- --- ---
Total cloud and on-premise
software revenues 21,334 80% 20,551 78% 4% 5%
------ --- --- ---
Hardware products 1,478 5% 1,746 7% (15%) (14%)
Hardware support 1,559 6% 1,639 6% (5%) (4%)
----- --- --- ---
Total hardware revenues 3,037 11% 3,385 13% (10%) (9%)
----- --- --- ---
Total services revenues 2,464 9% 2,517 9% (2%) (1%)
----- --- --- ---
Total revenues 26,835 100% 26,453 100% 1% 2%
------ ---- --- ----
OPERATING EXPENSES
Sales and marketing 5,883 22% 5,578 21% 5% 6%
Cloud software as a service and
platform as a service 1,060 4% 847 3% 25% 27%
Cloud infrastructure as a service 333 1% 268 1% 24% 26%
Software license updates and
product support 786 3% 877 3% (10%) (9%)
Hardware products 775 3% 967 4% (20%) (19%)
Hardware support 439 2% 526 2% (17%) (16%)
Services 2,073 8% 2,058 8% 1% 2%
Research and development 4,551 17% 4,253 16% 7% 8%
General and administrative 859 3% 832 3% 3% 5%
Amortization of intangible assets 1,010 4% 1,283 5% (21%) (21%)
Acquisition related and other 84 0% 35 0% 141% 144%
Restructuring 346 1% 293 1% 18% 21%
--- --- --- ---
Total operating expenses 18,199 68% 17,817 67% 2% 3%
------ --- --- ---
OPERATING INCOME 8,636 32% 8,636 33% 0% 1%
Interest expense (1,317) (5%) (1,105) (4%) 19% 19%
Non-operating income, net 437 2% 179 0% 144% 141%
--- --- --- ---
INCOME BEFORE PROVISION FOR INCOME
TAXES 7,756 29% 7,710 29% 1% 1%
----- --- ----- ---
Provision for income taxes 1,653 6% 1,623 6% 2% 2%
----- --- --- ---
NET INCOME $6,103 23% $6,087 23% 0% 1%
====== === ====== ===
EARNINGS PER SHARE:
Basic $1.49 $1.43
Diluted $1.45 $1.41
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic 4,110 4,246
Diluted 4,207 4,328
(1) We compare the percent change in the results from one period to another period using constant
currency disclosure. We present constant currency information to provide a framework for
assessing how our underlying businesses performed excluding the effect of foreign currency
rate fluctuations. To present this information, current and comparative prior period results
for entities reporting in currencies other than United States dollars are converted into
United States dollars at the exchange rates in effect on May 31, 2016, which was the last day
of our prior fiscal year, rather than the actual exchange rates in effect during the
respective periods. Movements in international currencies relative to the United States
dollar during the nine months ended February 28, 2017 compared with the corresponding prior
year period decreased our revenues by 1 percentage point, operating expenses by 1 percentage
point and operating income by 1 percentage point.
ORACLE CORPORATION
Q3 FISCAL 2017 YEAR TO DATE FINANCIAL RESULTS
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)
($ in millions, except per share data)
Nine Months Ended % Increase (Decrease) % Increase (Decrease) in
in US $ Constant Currency (2)
------- --------------------
February 28, February 28, February 29, February 29, GAAP Non-GAAP GAAP Non-GAAP
2017 2017 2016 2016
GAAP Adj. Non-GAAP GAAP Adj. Non-GAAP
---- ---- -------- ---- ---- --------
TOTAL REVENUES $26,835 $122 $26,957 $26,453 $8 $26,461 1% 2% 2% 3%
TOTAL CLOUD AND ON-PREMISE SOFTWARE REVENUES $21,334 $121 $21,455 $20,551 $7 $20,558 4% 4% 5% 5%
Cloud software as a service and platform as a service 2,686 120 2,806 1,517 6 1,523 77% 84% 79% 86%
Cloud infrastructure as a service 525 - 525 477 - 477 10% 10% 13% 13%
New software licenses 3,792 - 3,792 4,509 - 4,509 (16%) (16%) (15%) (15%)
Software license updates and product support 14,331 1 14,332 14,048 1 14,049 2% 2% 3% 3%
TOTAL HARDWARE REVENUES $3,037 $1 $3,038 $3,385 $1 $3,386 (10%) (10%) (9%) (9%)
Hardware products 1,478 - 1,478 1,746 - 1,746 (15%) (15%) (14%) (14%)
Hardware support 1,559 1 1,560 1,639 1 1,640 (5%) (5%) (4%) (4%)
TOTAL OPERATING EXPENSES $18,199 $(2,395) $15,804 $17,817 $(2,376) $15,441 2% 2% 3% 3%
Sales and marketing (3) 5,883 (199) 5,684 5,578 (163) 5,415 5% 5% 6% 6%
Stock-based compensation (4) 756 (756) - 602 (602) - 26% * 26% *
Amortization of intangible assets (5) 1,010 (1,010) - 1,283 (1,283) - (21%) * (21%) *
Acquisition related and other 84 (84) - 35 (35) - 141% * 144% *
Restructuring 346 (346) - 293 (293) - 18% * 21% *
OPERATING INCOME $8,636 $2,517 $11,153 $8,636 $2,384 $11,020 0% 1% 1% 2%
OPERATING MARGIN % 32% 41% 33% 42% (46) bp. (27) bp. (49) bp. (34) bp.
INCOME TAX EFFECTS (6) $1,653 $823 $2,476 $1,623 $658 $2,281 2% 9% 2% 9%
NET INCOME $6,103 $1,694 $7,797 $6,087 $1,726 $7,813 0% 0% 1% 1%
DILUTED EARNINGS PER SHARE $1.45 $1.85 $1.41 $1.81 3% 3% 4% 3%
DILUTED WEIGHTED AVERAGE COMMON 4,207 - 4,207 4,328 - 4,328 (3%) (3%) (3%) (3%)
SHARES OUTSTANDING
(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, 2016, which was the last day of our prior fiscal year, rather than
the actual exchange rates in effect during the respective periods.
(3) Non-GAAP adjustments to sales and marketing expenses were as follows:
Nine Months Ended
-----------------
February 28, February 29,
2017 2016
---- ----
Stock-based compensation (4) $(228) $(163)
Acquired deferred sales commissions amortization 29 -
Total non-GAAP sales and marketing adjustments $(199) $(163)
(4) Stock-based compensation was included in the following GAAP operating expense categories:
Nine Months Ended Nine Months Ended
February 28, 2017 February 29, 2016
----------------- -----------------
GAAP Adj. Non-GAAP GAAP Adj. Non-GAAP
---- ---- -------- ---- ---- --------
Cloud software as a service and platform as a service $17 $(17) $ - $13 $(13) $ -
Cloud infrastructure as a service 3 (3) - 3 (3) -
Software license updates and product support 18 (18) - 18 (18) -
Hardware products 6 (6) - 4 (4) -
Hardware support 3 (3) - 4 (4) -
Services 31 (31) - 22 (22) -
Research and development 574 (574) - 452 (452) -
General and administrative 104 (104) - 86 (86) -
Subtotal 756 (756) - 602 (602) -
Sales and marketing 228 (228) - 163 (163) -
Acquisition related and other 33 (33) - 3 (3) -
Total stock-based compensation $1,017 $(1,017) $ - $768 $(768) $ -
(5) Estimated future annual amortization expense related to intangible assets as of February 28, 2017 was as follows:
Remainder of fiscal 2017 $402
Fiscal 2018 1,362
Fiscal 2019 1,248
Fiscal 2020 1,058
Fiscal 2021 883
Fiscal 2022 779
Thereafter 2,056
Total intangible assets, net $7,788
(6) Income tax effects were calculated reflecting an effective GAAP tax rate of 21.3% and 21.0% in the first nine months of fiscal 2017 and 2016, respectively, and an effective non-GAAP tax rate of
24.1% and 22.6% in the first nine months of fiscal 2017 and 2016, respectively. The difference between our GAAP and non-GAAP tax rate in the first nine months of fiscal 2017 was primarily due to
the net tax effects on stock-based compensation expense and acquisition related items, including the tax effects of amortization of intangible assets. The difference between our GAAP and non-
GAAP tax rate in the first nine months of fiscal 2016 was primarily due to the net tax effects of acquisition related items, including the tax effects of amortization of intangible assets.
* Not meaningful
ORACLE CORPORATION
Q3 FISCAL 2017 FINANCIAL RESULTS
CONDENSED CONSOLIDATED BALANCE SHEETS
($ in millions)
February 28, May 31,
2017 2016
---- ----
ASSETS
Current Assets:
Cash and cash
equivalents $19,748 $20,152
Marketable
securities 39,604 35,973
Trade
receivables,
net 3,721 5,385
Inventories 391 212
Prepaid expenses
and other
current assets 2,547 2,591
--------------
Total Current Assets 66,011 64,313
Non-Current Assets:
Property, plant
and equipment,
net 5,070 4,000
Intangible
assets, net 7,788 4,943
Goodwill, net 42,504 34,590
Deferred tax
assets 918 1,291
Other assets 3,091 3,043
------------
Total Non-Current Assets 59,371 47,867
------ ------
TOTAL ASSETS $125,382 $112,180
======== ========
LIABILITIES AND EQUITY
Current Liabilities:
Notes payable
and other
borrowings,
current $3,498 $3,750
Accounts payable 481 504
Accrued
compensation
and related
benefits 1,516 1,966
Deferred
revenues 7,388 7,655
Other current
liabilities 2,907 3,333
--------------
Total Current Liabilities 15,790 17,208
Non-Current Liabilities:
Notes payable
and other
borrowings,
non-current 50,469 40,105
Income taxes
payable 5,162 4,908
Other non-
current
liabilities 2,938 2,169
-----------
Total Non-Current Liabilities 58,569 47,182
Equity 51,023 47,790
------ ------
TOTAL LIABILITIES AND EQUITY $125,382 $112,180
======== ========
ORACLE CORPORATION
Q3 FISCAL 2017 FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in millions)
Nine Months Ended
-----------------
February 28, February 29,
2017 2016
---- ----
Cash Flows From Operating Activities:
Net income $6,103 $6,087
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 722 643
Amortization of intangible assets 1,010 1,283
Deferred income taxes 111 (143)
Stock-based compensation 1,017 768
Tax benefits on the vesting of restricted
stock-based awards and exercise of stock
options 378 188
Other, net 96 116
Changes in operating assets and liabilities, net of effects from acquisitions:
Decrease in trade receivables, net 1,673 1,746
(Increase) decrease in inventories (178) 87
Decrease in prepaid expenses and other
assets 308 95
Decrease in accounts payable and other
liabilities (862) (890)
Decrease in income taxes payable (388) (112)
(Decrease) increase in deferred revenues (330) 24
---- ---
Net cash provided by operating activities 9,660 9,892
----- -----
Cash Flows From Investing Activities:
Purchases of marketable securities and
other investments (15,571) (21,549)
Proceeds from maturities and sales of
marketable securities and other
investments 11,825 18,845
Acquisitions, net of cash acquired (10,406) (313)
Capital expenditures (1,496) (1,009)
------ ------
Net cash used for investing activities (15,648) (4,026)
------- ------
Cash Flows From Financing Activities:
Payments for repurchases of common stock (3,067) (8,467)
Proceeds from issuances of common stock 1,309 802
Shares repurchased for tax withholdings
upon vesting of restricted stock-based
awards (237) (82)
Payments of dividends to stockholders (1,844) (1,918)
Proceeds from borrowings, net of issuance
costs 13,932 -
Repayments of borrowings (4,094) (2,000)
Distributions to noncontrolling interests (200) (85)
---- ---
Net cash provided by (used for) financing
activities 5,799 (11,750)
----- -------
Effect of exchange rate changes on cash
and cash equivalents (215) (249)
---- ----
Net decrease in cash and cash equivalents (404) (6,133)
---- ------
Cash and cash equivalents at beginning of
period 20,152 21,716
------ ------
Cash and cash equivalents at end of period $19,748 $15,583
======= =======
ORACLE CORPORATION
Q3 FISCAL 2017 FINANCIAL RESULTS
FREE CASH FLOW - TRAILING 4-QUARTERS (1)
($ in millions)
Fiscal 2016 Fiscal 2017
----------- -----------
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
--- --- --- ---
GAAP Operating Cash Flow $13,682 $13,113 $14,252 $13,685 $13,679 $14,249 $13,453
Capital Expenditures (1,636) (1,606) (1,606) (1,189) (1,042) (1,604) (1,676)
------ ------ ------ ------ ------ ------ ------
Free Cash Flow $12,046 $11,507 $12,646 $12,496 $12,637 $12,645 $11,777
======= ======= ======= ======= ======= ======= =======
% Growth over prior year (20%) (22%) (8%) (5%) 5% 10% (7%)
GAAP Net Income $9,501 $9,198 $8,844 $8,901 $8,986 $8,820 $8,917
Free Cash Flow as a % of
Net Income 127% 125% 143% 140% 141% 143% 132%
(1) To supplement our statements of cash flows presented on a GAAP basis, we use non-
GAAP measures of cash flows on a trailing 4-quarter basis to analyze cash flow
generated from operations. We believe free cash flow is also useful as one of the
bases for comparing our performance with our competitors. The presentation of non-
GAAP free cash flow is not meant to be considered in isolation or as an alternative
to net income as an indicator of our performance, or as an alternative to cash flows
from operating activities as a measure of liquidity.
ORACLE CORPORATION
Q3 FISCAL 2017 FINANCIAL RESULTS
SUPPLEMENTAL ANALYSIS OF GAAP REVENUES AND HEADCOUNT (1)
($ in millions)
Fiscal 2016 Fiscal 2017
----------- -----------
Q1 Q2 Q3 Q4 TOTAL Q1 Q2 Q3 Q4 TOTAL
-- --- --- --- ----- --- --- --- --- -----
REVENUES
--------
Cloud software as a
service and
platform as a
service $451 $484 $583 $690 $2,207 $798 $878 $1,011 $2,686
Cloud
infrastructure as
a service 160 165 152 169 646 171 175 178 525
---------- --- --- --- --- --- --- ---
Total cloud revenues 611 649 735 859 2,853 969 1,053 1,189 3,211
New software
licenses 1,151 1,677 1,680 2,766 7,276 1,030 1,347 1,414 3,792
Software license
updates and
product support 4,696 4,683 4,669 4,814 18,861 4,792 4,777 4,762 14,331
---------- ----- ----- ----- ----- ------ ----- -----
Total on-premise software
revenues 5,847 6,360 6,349 7,580 26,137 5,822 6,124 6,176 18,123
----- ----- ----- ----- ------ ----- ----- ----- ------
Total cloud and on-premise
software revenues 6,458 7,009 7,084 8,439 28,990 6,791 7,177 7,365 21,334
Hardware products 570 573 604 725 2,471 462 497 520 1,478
Hardware support 558 550 531 558 2,197 534 517 508 1,559
---------- --- --- --- --- ----- --- ---
Total hardware revenues 1,128 1,123 1,135 1,283 4,668 996 1,014 1,028 3,037
Total services revenues 862 861 793 872 3,389 808 844 812 2,464
Total revenues $8,448 $8,993 $9,012 $10,594 $37,047 $8,595 $9,035 $9,205 $26,835
====== ====== ====== ======= ======= ====== ====== ====== =======
AS REPORTED REVENUE
GROWTH RATES
Cloud software as a
service and
platform as a
service 34% 34% 57% 66% 49% 77% 81% 73% 77%
Cloud
infrastructure as
a service 16% 7% (2%) 5% 6% 7% 6% 17% 10%
Total cloud revenues 29% 26% 40% 49% 36% 59% 62% 62% 61%
New software
licenses (16%) (18%) (15%) (12%) (15%) (11%) (20%) (16%) (16%)
Software license
updates and
product support (1%) (2%) 0% 3% 0% 2% 2% 2% 2%
Total on-premise software
revenues (4%) (7%) (4%) (3%) (5%) 0% (4%) (3%) (2%)
Total cloud and on-premise
software revenues (2%) (4%) (1%) 0% (2%) 5% 2% 4% 4%
Hardware products (1%) (20%) (15%) (11%) (13%) (19%) (13%) (14%) (15%)
Hardware support (5%) (11%) (10%) (5%) (8%) (4%) (6%) (4%) (5%)
Total hardware revenues (3%) (16%) (13%) (9%) (10%) (12%) (10%) (9%) (10%)
Total services revenues 1% (8%) (7%) (3%) (4%) (6%) (2%) 2% (2%)
Total revenues (2%) (6%) (3%) (1%) (3%) 2% 0% 2% 1%
CONSTANT CURRENCY
GROWTH RATES (2)
Cloud software as a
service and
platform as a
service 38% 39% 61% 68% 52% 79% 83% 74% 79%
Cloud
infrastructure as
a service 23% 11% 2% 8% 11% 10% 9% 19% 13%
Total cloud revenues 34% 31% 44% 51% 40% 61% 64% 63% 63%
New software
licenses (9%) (12%) (11%) (10%) (11%) (10%) (19%) (15%) (15%)
Software license
updates and
product support 8% 5% 5% 4% 5% 3% 3% 3% 3%
Total on-premise software
revenues 4% 0% 0% (2%) 0% 1% (3%) (2%) (2%)
Total cloud and on-premise
software revenues 6% 2% 3% 2% 3% 6% 3% 5% 5%
Hardware products 9% (14%) (10%) (10%) (7%) (18%) (12%) (13%) (14%)
Hardware support 4% (5%) (5%) (4%) (3%) (3%) (5%) (3%) (4%)
Total hardware revenues 6% (10%) (8%) (7%) (5%) (11%) (9%) (9%) (9%)
Total services revenues 10% 0% (2%) (1%) 2% (5%) 0% 3% (1%)
Total revenues 7% 0% 1% 0% 2% 3% 1% 3% 2%
GEOGRAPHIC REVENUES
-------------------
REVENUES
Americas $4,716 $4,960 $4,942 $5,847 $20,466 $4,817 $4,935 $5,219 $14,971
Europe, Middle East
& Africa 2,456 2,645 2,661 3,120 10,881 2,413 2,558 2,558 7,529
Asia Pacific 1,276 1,388 1,409 1,627 5,700 1,365 1,542 1,428 4,335
Total revenues $8,448 $8,993 $9,012 $10,594 $37,047 $8,595 $9,035 $9,205 $26,835
====== ====== ====== ======= ======= ====== ====== ====== =======
HEADCOUNT
---------
GEOGRAPHIC AREA
Americas 59,901 59,999 60,437 60,329 61,221 63,251 62,613
Europe, Middle East
& Africa 27,030 27,541 27,275 27,061 26,895 27,922 27,809
Asia Pacific 48,139 48,620 48,694 48,872 49,234 50,509 50,481
Total company 135,070 136,160 136,406 136,262 137,350 141,682 140,903
======= ======= ======= ======= ======= ======= =======
(1) The sum of the quarterly information presented may vary from the year-to-date information presented due to rounding.
(2) We compare the percent change in the results from one period to another period using constant currency disclosure. We
present constant currency information to provide a framework for assessing how our underlying businesses performed
excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior
period results for entities reporting in currencies other than United States dollars are converted into United States
dollars at the exchange rates in effect on May 31, 2016 and 2015 for the fiscal 2017 and fiscal 2016 constant currency
growth rate calculations presented, respectively, rather than the actual exchange rates in effect during the respective
periods.
ORACLE CORPORATION
Q3 FISCAL 2017 FINANCIAL RESULTS
SUPPLEMENTAL GEOGRAPHIC REVENUES ANALYSIS (1)
($ in millions)
Fiscal 2016 Fiscal 2017
----------- -----------
Q1 Q2 Q3 Q4 TOTAL Q1 Q2 Q3 Q4 TOTAL
--- --- --- --- ----- --- --- --- --- -----
AMERICAS
--------
Total cloud
and on-
premise
software
revenues $3,684 $3,927 $3,964 $4,771 $16,346 $3,876 $4,000 $4,280 $12,156
============ ====== ====== ====== ====== ======= ====== ======
Total
hardware
revenues $589 $595 $571 $650 $2,404 $526 $510 $511 $1,547
========== ==== ==== ==== ==== ====== ==== ====
AS REPORTED
GROWTH
RATES
Total cloud
and on-
premise
software
revenues 2% (3%) (1%) (3%) (2%) 5% 2% 8% 5%
Total
hardware
revenues 1% (17%) (17%) (14%) (12%) (11%) (14%) (11%) (12%)
CONSTANT
CURRENCY
GROWTH
RATES (2)
Total cloud
and on-
premise
software
revenues 6% 0% 1% (2%) 1% 6% 2% 7% 5%
Total
hardware
revenues 6% (14%) (13%) (11%) (9%) (10%) (14%) (11%) (12%)
EUROPE /
MIDDLE EAST
/AFRICA
------------
Total cloud
and on-
premise
software
revenues $1,873 $2,066 $2,069 $2,462 $8,471 $1,903 $2,008 $2,019 $5,931
============ ====== ====== ====== ====== ====== ====== ======
Total
hardware
revenues $330 $316 $349 $382 $1,377 $275 $294 $300 $868
========== ==== ==== ==== ==== ====== ==== ====
AS REPORTED
GROWTH
RATES
Total cloud
and on-
premise
software
revenues (6%) (8%) (5%) 4% (3%) 2% (3%) (2%) (1%)
Total
hardware
revenues (2%) (17%) (8%) (10%) (9%) (17%) (7%) (14%) (13%)
CONSTANT
CURRENCY
GROWTH
RATES (2)
Total cloud
and on-
premise
software
revenues 7% 3% 2% 5% 4% 7% 2% 2% 3%
Total
hardware
revenues 14% (6%) (1%) (8%) (1%) (13%) (2%) (10%) (8%)
ASIA PACIFIC
------------
Total cloud
and on-
premise
software
revenues $901 $1,016 $1,051 $1,206 $4,173 $1,012 $1,169 $1,066 $3,247
============ ==== ====== ====== ====== ====== ====== ======
Total
hardware
revenues $209 $212 $215 $251 $887 $195 $210 $217 $622
========== ==== ==== ==== ==== ==== ==== ====
AS REPORTED
GROWTH
RATES
Total cloud
and on-
premise
software
revenues (7%) (3%) 7% 9% 2% 12% 15% 2% 9%
Total
hardware
revenues (14%) (11%) (8%) 8% (7%) (7%) (1%) 1% (2%)
CONSTANT
CURRENCY
GROWTH
RATES (2)
Total cloud
and on-
premise
software
revenues 7% 6% 13% 11% 9% 8% 11% 0% 6%
Total
hardware
revenues (3%) (3%) (3%) 9% 0% (9%) (3%) 0% (4%)
TOTAL
COMPANY
--------
Total cloud
and on-
premise
software
revenues $6,458 $7,009 $7,084 $8,439 $28,990 $6,791 $7,177 $7,365 $21,334
============ ====== ====== ====== ====== ======= ====== ======
Total
hardware
revenues $1,128 $1,123 $1,135 $1,283 $4,668 $996 $1,014 $1,028 $3,037
========== ====== ====== ====== ====== ====== ==== ======
AS REPORTED
GROWTH
RATES
Total cloud
and on-
premise
software
revenues (2%) (4%) (1%) 0% (2%) 5% 2% 4% 4%
Total
hardware
revenues (3%) (16%) (13%) (9%) (10%) (12%) (10%) (9%) (10%)
CONSTANT
CURRENCY
GROWTH
RATES (2)
Total cloud
and on-
premise
software
revenues 6% 2% 3% 2% 3% 6% 3% 5% 5%
Total
hardware
revenues 6% (10%) (8%) (7%) (5%) (11%) (9%) (9%) (9%)
(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, 2016 and 2015 for the fiscal 2017 and fiscal 2016 constant currency growth rate calculations
presented, respectively, rather than the actual exchange rates in effect during the respective periods.
APPENDIX A
ORACLE CORPORATION
Q3 FISCAL 2017 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:
-- Cloud software as a service and platform as a service, software license updates and product support and hardware support deferred revenues: Business combination accounting rules require us to account for the fair values of cloud software as a service and platform as a service contracts, software license updates and product support contracts and hardware support contracts assumed in connection with our acquisitions. Because these contracts are generally one year in duration, our GAAP revenues generally for the one year period subsequent to our acquisition of a business do not reflect the full amount of revenues on these assumed cloud and support contracts that would have otherwise been recorded by the acquired entity. The non-GAAP adjustment to our cloud software as a service and platform as a service revenues, software license updates and product support revenues and hardware support revenues is intended to include, and thus reflect, the full amount of such revenues. We believe the adjustment to these revenues is useful to investors as a measure of the ongoing performance of our business. We have historically experienced high renewal rates on our software license updates and product support contracts and our objective is to increase the renewal rates on acquired and new cloud software as a service and platform as a service and hardware support contracts; however, we cannot be certain that our customers will renew our cloud software as a service and platform as a service contracts, software license updates and product support contracts or our hardware support contracts.
-- Deferred sales commissions amortization: Certain acquired companies capitalized sales commissions associated with subscription agreements and amortized these amounts over the related contractual terms. Business combination accounting rules generally require us to eliminate these capitalized sales commissions balances as of the acquisition date and our post-combination GAAP sales and marketing expenses generally do not reflect the amortization of these deferred sales commissions balances. The non-GAAP adjustment to increase our sales and marketing expenses is intended to include, and thus reflect, the full amount of amortization related to such balances as though the acquired companies operated independently in the periods presented. We believe this adjustment to sales and marketing expenses is useful to investors as a measure of the ongoing performance of our business. This non-GAAP adjustment commenced in the second fiscal quarter of fiscal 2017 as a result of our acquisition of NetSuite. Such adjustment was not material in prior 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 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 including adjustments after the measurement period has ended and certain other operating items, 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 generally diminish over time with respect to past acquisitions, we generally will incur these expenses in connection with any future acquisitions.
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/q3-fy17-gaap-eps-up-6-to-053-and-non-gaap-eps-up-7-to-069-300424316.html
SOURCE Oracle Corporation
