Earnings Press Releases
Oracle Corporation Reports Profits Up 46 Percent in Record Second Quarter
Total Revenue Tops $2 Billion; EPS, $0.28
Total Revenue Tops $2 Billion; EPS, $0.28
REDWOOD SHORES, Calif., Dec. 10, 1998 -- Oracle Corporation
(Nasdaq: ORCL) today announced record second quarter results for the period
ended November 30, 1998. Revenues for the second quarter increased 27 percent
(28 percent in local currencies) to $2.1 billion from $1.6 billion in the same
period last year. Net income for the period increased 46 percent to
$274 million, or $0.28 per share, compared to net income of $187 million, or
$0.19 per share, in the same period last year.
Revenue from Oracle's two businesses, database and applications, totaled
$8.0 billion in the last four quarters. The database business, including
database, tools and related services, grew 25 percent to $1.5 billion in
revenues for the quarter and $5.8 billion for the last four quarters,
continuing its position as the largest database business in the world.
Revenues from the applications business and related services grew 35 percent
to $578 million in revenues for the second fiscal quarter and $2.1 billion for
the last four quarters, continuing Oracle's position as the second largest
applications business in the world.
Product related revenues (license and support) in the second quarter grew
by 25 percent versus the same period last year, led by strong growth in
database products. Oracle's Education and Consulting services revenue
increased 34 percent during the quarter, indicating continued strong demand
for both businesses.
Oracle reported continued strong growth in Americas and EMEA (Europe,
Middle East and Africa) and significant improvement in Asia Pacific. Americas
revenue was up 30 percent (31 percent in local currencies) in the second
quarter versus the same period last year. EMEA was up 31 percent (29 percent
in local currencies), versus the same period last year. Asia Pacific was up
7 percent in reported dollars (up 14 percent in local currencies) versus the
same period last year, reflecting modest improvement in both economic
conditions and currency impact in Asia Pacific.
"Our database revenue growth accelerated as Oracle has become the database
of choice for Internet commerce," said Lawrence J. Ellison, Chairman and Chief
Executive Officer. "Nine of the top ten business-to-business e-commerce web
sites use the Oracle database. Ten of the top ten consumer e-commerce web
sites use the Oracle database. Virtually every big web site in the world uses
Oracle because of Oracle's ability to handle large numbers of users and huge
amounts of data reliably, securely and economically."
"Release 11 of our applications, the only enterprise applications that are
100% accessible through an Internet browser, is now live at 21 customers
including Oracle's own U.S. business and shipments to over 1,300 customers
have been made to date," said Jeffrey O. Henley, Executive Vice President and
Chief Financial Officer. "Oracle's Americas application license growth
rebounded to 31% growth in its second quarter. This is a very encouraging
trend particularly in light of the fact that historically, performance in the
Americas has been a leading indicator of international adoption rates."
Oracle made a number of significant announcements during the quarter:
* Oracle8i was formally launched to more than 18,000 customers, partners,
and developers at Oracle Open World on November 11, 1998. Oracle8i has been
in beta testing at more than 200 customer and partner sites since August.
Oracle8i extends Oracle's proven technology leadership in the areas of
transaction processing, data warehousing, mobile computing and high
availability systems. Oracle8i is the centerpiece of Oracle's Internet
computing platform which also includes Oracle Application Server 4.0 and
specialized development tools. This powerful combination of technologies will
deliver scalable, reliable and cost effective computing to businesses.
* Oracle announced that hundreds of leading hardware vendors, independent
software vendors (ISVs), and systems integrators (SIs) are delivering
breakthrough applications and services based on Oracle8i, the world's only
database for Internet computing. Together, Oracle and its partners are
delivering products and services in virtually every major industry category
that make Internet computing a reality.
* Collaborative Research survey revealed 69 percent of the world's top Web
sites are using Oracle technology, and an impressive 70 percent of the
remaining non-Oracle sites plan to evaluate Oracle products within the next
six months.
* Oracle announced over 1,300 customers have been shipped Oracle
Applications Release 11 since it became available in April. All of the more
than 45 modules are web-enabled, allowing them to be deployed on corporate
Intranets with no software other than a browser required on users' desktops.
This architecture allows companies to shift the complexity of application
management, maintenance and upgrading from users' desktops onto centralized,
professionally managed servers, thereby dramatically reducing the cost of
deploying and administering software.
* Oracle announced Oracle Front Office Version 3.0, its latest version of
front office applications that provides full call center functionality to
enable sales, service and marketing capabilities, including the first mobile
sales and service applications for the Palm Pilot, that are unmatched by
competitive offerings.
* Oracle agreed to acquire Concentra Corporation, a leading configurator
software provider, for $43 million in cash. This acquisition will give Oracle
the industry's most powerful configurator engine which Oracle will use as a
core technology for its electronic commerce, sales automation, and unassisted
selling in manufacturing businesses ranging from simple assembly to complex
engineer-to-order products.
* Oracle announced the successful closing of Versatility Inc., a leading
vendor of computer telephony integration (CTI)-enabled customer interaction
software, for $12 million in cash. This acquisition enhances our front office
call center offering and continues our strategy of integrating powerful sales
and marketing solutions with our ERP application suite.
* Oracle announced a pilot program for its Oracle Business OnLine hosting
service for enterprise business applications. Business OnLine frees
subscribing customers from having to worry about hardware and software
upgrades, capacity planning, hiring of scarce IT personnel, or disaster
recovery, as all such issues will be managed at the data center, transparently
to customers. Subscribers will receive a flexible service that offers high
availability and predictable costs, that can be expanded with their needs.
Oracle Corporation is the world's leading supplier of software for
information management, and the world's second largest independent software
company. With annual revenues of over $8.0 billion, the company offers its
database, tools and application products, along with related consulting,
education, and support services, in more than 145 countries around the world.
For more information about Oracle, please call Oracle Investor Relations
at 650-506-4073 or see Oracle's World Wide Web page: http://www.oracle.com/.
"Safe Harbor" Statement Under the Private Securities Litigation Reform
Act 1995:
Information in this release relating to Oracle's future prospects which
are "forward-looking statements" are subject to certain risks and
uncertainties that could cause actual results to differ materially, including,
but not necessarily limited to the following: (1) Management's ability to
manage growth, continuously hire and retain significant numbers of qualified
employees, forecast revenues and control expenses continues to be a challenge.
An unexpected decline in the growth rate of revenues without a corresponding
and timely slowdown in expense growth could have a material adverse effect on
results of operations. (2) The market for Oracle's products is intensely
competitive and is characterized by rapid technological advances and frequent
new product introductions. There can be no assurances that Oracle will
continue to introduce new products and new versions of existing products that
keep pace with technological developments, satisfy increasingly sophisticated
customer requirements and achieve market acceptance. (3) Intense competition
in the various markets in which Oracle competes may put pressure on Oracle to
reduce prices on certain products, particularly in the departmental database
marketplace. (4) Delays in product delivery or closing of sales can cause
quarterly revenues and income to fall significantly short of anticipated
levels. (5) Oracle is introducing new products, such as web applications
servers and network computing software; the market acceptance and contribution
to Oracle's revenues of these products cannot be assured. (6) A significant
amount of current demand for applications software may be generated by
customers in the process of replacing and upgrading applications in order to
accommodate the change in date to the year 2000. Once such customers have
completed such preparations, the software industry and Oracle may experience a
significant deceleration from the strong annual growth rates recently
experienced in the applications software marketplace. In addition, Oracle may
generally experience increased expenses in addressing issues associated with
the transition to software that is year 2000 compliant. Oracle undertakes no
obligation to update information contained in this release. For further
information regarding risks and uncertainties associated with Oracle's
business, please refer to the "Risk Factors" section of Oracle Corporation's
SEC filings, including, but not limited to, its annual report on Form 10-K and
quarterly reports on Form 10-Q, copies of which may be obtained by contacting
Oracle Corporation's Investor Relations Department at 650-506-4073 or Oracle's
Investor Relations website at http://www.oracle.com/.
NOTE: Oracle is a registered trademark of Oracle Corporation. All other
trademarks are property of their respective holders.
ORACLE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
($ in thousands, except per share data)
(unaudited)
2nd Quarter Ended Six Months Ended
November 30 November 30
----------------- -----------------
1998 1997 1998 1997
---- ---- ---- ---
REVENUES
Licenses and other $767,428 $645,366 $1,349,893 $1,176,008
Services 1,288,516 968,361 2,455,162 1,806,548
--------- --------- --------- ---------
Total Revenues 2,055,944 1,613,727 3,805,055 2,982,556
--------- --------- --------- ---------
OPERATING EXPENSES
Sales and marketing 591,754 528,490 1,101,830 977,941
Cost of services 779,847 548,631 1,459,137 1,016,798
Research and
development (B) 200,678 183,217 388,301 342,884
General and
administrative 101,598 81,383 195,883 156,897
Acquired in-process
research and
development (A) -- -- -- 167,054
--------- --------- --------- ---------
Total Operating
Expenses 1,673,877 1,341,721 3,145,151 2,661,574
--------- --------- --------- ---------
OPERATING INCOME 382,067 272,006 659,904 320,982
Other income
(expense) (A) 28,654 16,248 50,819 56,222
--------- --------- --------- ---------
INCOME BEFORE TAXES 410,721 288,254 710,723 377,204
Provision for
income taxes 136,645 100,930 241,646 181,409
--------- --------- --------- ---------
NET INCOME (A) $274,076 $187,324 $469,077 $195,795
========= ========= ========= =========
EARNINGS PER SHARE (A)
Basic $0.28 $0.19 $0.48 $0.20
Diluted $0.28 $0.19 $0.48 $0.19
Shares Outstanding
Basic 963,840 982,491 968,367 980,888
Diluted 983,270 1,008,558 986,210 1,007,412
(A) Acquisition charges incurred in the first quarter of fiscal 1998
included in-process research and development charges of $91,500 and $75,554,
respectively, for the Treasury Services Corporation and Navio Communications,
Inc. merger transactions that closed in August, 1997. Excluding the effect of
these transactions, which also included a credit of $25,726 for minority
interest in other income (expense), the provision for income taxes would have
been 35% and net income and earnings per share for the six months ended
November 30, 1997 would have been $337,123 and $0.33 per share, respectively.
(B) In accordance with Statement of Financial Accounting Standards No. 86,
$7,783 and $12,895 were capitalized in the quarters ended November 30, 1998
and 1997, respectively. Amortization of capitalized software costs was $7,749
and $12,804 in the quarters ended November 30, 1998 and 1997, respectively.
ORACLE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
($ in thousands)
November 30, May 31,
1998 1998
(unaudited)
ASSETS
Current Assets
Cash and short term investments $1,908,067 $1,919,199
Trade receivables, net 1,604,336 1,857,480
Prepaid and refundable income taxes 314,849 260,624
Other current assets 260,621 285,747
--------- ---------
Total Current Assets 4,087,873 4,323,050
--------- ---------
Long-term cash investments 152,128 186,511
Property and equipment, net 976,662 934,350
Computer software development
costs, net 98,867 99,012
Other assets 331,061 276,088
--------- ---------
TOTAL ASSETS $5,646,591 $5,819,011
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Notes payable, including
current maturities $7,878 $2,924
Accounts payable 296,963 239,698
Income taxes 99,762 181,354
Customer advances and unearned
revenues 800,214 877,087
Other current liabilities 1,047,649 1,183,102
--------- ---------
Total Current Liabilities 2,252,466 2,484,165
--------- ---------
Long-term debt 304,201 304,337
Long-term liabilities 58,265 57,095
Deferred income taxes 16,349 15,856
Stockholders' equity 3,015,310 2,957,558
--------- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $5,646,591 $5,819,011
========= ========= |
