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REDWOOD SHORES, Calif.,
20-MAR-2006 01:05 PM
Oracle Corporation (NASDAQ: ORCL) today announced that in Q3 fiscal 2006 GAAP earnings per share were $0.14, up 40% compared to the same quarter last year. Third quarter GAAP revenues were up 18% to $3.5 billion, while quarterly GAAP net income was up 42% to $765 million. Total GAAP software revenues were up 20% to $2.8 billion with GAAP database and middleware new license revenues up 5% and GAAP applications new license revenues up 77%. GAAP services revenues were up 9% to $671 million compared to the same quarter last year.
Non-GAAP earnings per share were $0.19 in Q3, up 21% compared to the same quarter last year. Non-GAAP net income was up 23% to $1 billion compared to Q3 last year.
"We reported record revenues for the quarter and delivered non-GAAP EPS of 19 cents," said Oracle President and CFO Safra Catz. "Our non-GAAP operating margins reached record levels for the quarter as well, exceeding all previous third quarter results."
"SAP's strongest geographical region is Europe," said Oracle President Charles Phillips. "So we are especially pleased that in Europe our applications new license revenue grew in excess of 100% year-over-year. It's very satisfying to be doing well right in SAP's backyard."
"Oracle's product strategy is based on a combination of innovations and acquisitions," said CEO Larry Ellison. "Over the last several weeks we announced our internally developed Secure Enterprise Search technology, and the completion of the Siebel acquisition. As a result, Oracle now has strong product offerings in both Search and Software as a Service. These two markets are red hot and will be engines for growth for Oracle and the entire software industry for years to come."
Oracle Corporation is the world's largest enterprise software company. For more information about Oracle, including supplemental financial information, please visit Oracle on the web at www.oracle.com/investor or call Investor Relations at (650) 506-4073.
"Safe Harbor" Statement: Statements in this press release relating to Oracle's future plans and prospects 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) Economic, political and market conditions could adversely affect our revenue growth and profitability through reductions in IT budgets and expenditures. (2) 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, unanticipated fluctuations in currency exchange rates, delays in delivery of new products or releases, or a decline in our renewal rates for software license updates and product support. (3) We cannot assure market acceptance of new products or new versions of existing products. (4) We have an active acquisition program (including our recent acquisition of Siebel Systems, Inc.), and our acquisitions may not be successful, may involve unanticipated costs or other integration issues, or may disrupt our existing operations. (5) Periodic changes to our pricing model and sales organization could temporarily disrupt operations and cause a decline or delay in sales. (6) Intense competitive forces demand rapid technological advances and frequent new product introductions, and could require us to reduce prices. 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, as amended, and Form 10-Q, particularly under the heading "Factors That May Affect Our Future Results or the Market Price of Our Stock." 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 release is current as of March 20, 2006. Oracle undertakes no duty to update any statement in light of new information or future events.
# # #
ORACLE CORPORATION
Q3 FISCAL 2006 QUARTER TO DATE FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share data)
Three Months Three Months % Increase
Ended Ended % Increase (Decrease)
February 28, February 28, (Decrease) in Constant
-------------------------------------------------
% of % of
2006 Revenues 2005 Revenues in US $ Currency (1)
-------------------------------------------------
REVENUES
New software
licenses $1,096 32% $947 32% 16% 20%
Software license
updates and
product support 1,703 49% 1,389 47% 23% 27%
---------------------------
Software Revenues 2,799 81% 2,336 79% 20% 24%
---------------------------
Services 671 19% 614 21% 9% 13%
---------------------------
Total Revenues 3,470 100% 2,950 100% 18% 22%
---------------------------
OPERATING EXPENSES
Sales and
marketing 756 22% 668 22% 13% 17%
Software license
updates and
product support 178 5% 161 5% 11% 15%
Cost of services 612 18% 555 19% 10% 14%
Research and
development 467 14% 411 14% 13% 14%
General and
administrative 146 4% 146 5% 0% 3%
Amortization of
intangible assets 148 4% 81 3% 83% 83%
Acquisition related 84 2% 51 2% 63% 63%
Restructuring 27 1% 107 4% (75%) (75%)
---------------------------
Total Operating
Expenses 2,418 70% 2,180 74% 11% 14%
---------------------------
OPERATING INCOME 1,052 30% 770 26% 37% 45%
Interest expense (49) (1%) (58) (2%) (15%) (15%)
Non-operating
income, net 75 2% 59 2% 27% 28%
---------------------------
INCOME BEFORE PROVISION
FOR INCOME TAXES 1,078 31% 771 26% 40% 48%
---------------------------
Provision for
income taxes 313 9% 231 8% 35% 38%
---------------------------
NET INCOME $765 22% $540 18% 42% 53%
===========================
EARNINGS PER SHARE:
Basic $0.15 $0.11 39%
Diluted $0.14 $0.10 40%
WEIGHTED AVERAGE
COMMON SHARES
OUTSTANDING:
Basic 5,207 5,122 2%
Diluted 5,304 5,230 1%
(1) We compare the percent change in the results from one period to
another period using constant currency disclosure. We present
constant currency information to provide a framework for assessing
how our underlying businesses performed excluding the effect of
foreign currency rate fluctuations. To present this information,
current and comparative prior period results for entities reporting
in currencies other than United States dollars are converted into
United States dollars at the exchange rate in effect on May 31, 2005,
which was the last day of our prior fiscal year, rather than the
actual exchange rates in effect during the respective periods. The
United States dollar strengthened relative to major international
currencies in the three months ended February 28, 2006 compared with
the corresponding prior year period, reducing revenue growth by 4
percentage points, operating expense growth by 3 percentage points
and operating income growth by 8 percentage points.
ORACLE CORPORATION
Q3 FISCAL 2006 QUARTER TO DATE
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)
(in millions, except per share data)
Three Months Ended February 28,
-----------------------------------------------
2006 2006 2005 2005
GAAP Adj. Non-GAAP GAAP Adj. Non-GAAP
-----------------------------------------------
TOTAL REVENUES (2) $3,470 $64 $3,534 $2,950 $143 $3,093
TOTAL SOFTWARE
REVENUES (2) $2,799 $64 $2,863 $2,336 $143 $2,479
New software licenses 1,096 - 1,096 947 - 947
Software license
updates and product
support (2) 1,703 64 1,767 1,389 143 1,532
TOTAL OPERATING EXPENSES $2,418 $(267) $2,151 $2,180 $(249) $1,931
Stock-based
compensation (3) 8 (8) - 10 (10) -
Amortization of
intangible assets (4) 148 (148) - 81 (81) -
Acquisition related 84 (84) - 51 (51) -
Restructuring 27 (27) - 107 (107) -
OPERATING INCOME $1,052 $331 $1,383 $770 $392 $1,162
OPERATING MARGIN % 30% 39% 26% 38%
INCOME BEFORE PROVISION
FOR INCOME TAXES $1,078 $331 $1,409 $771 $392 $1,163
Income tax effect on
above adjustments (5) 313 96 409 231 118 349
NET INCOME $765 $235 $1,000 $540 $274 $814
DILUTED EARNINGS PER SHARE $0.14 $0.19 $0.10 $0.16
% Increase (Decrease) in US $
------------------------
GAAP Non-GAAP
------------------------
TOTAL REVENUES (2) 18% 14%
TOTAL SOFTWARE REVENUES (2) 20% 16%
New software licenses 16% 16%
Software license updates and
product support (2) 23% 15%
TOTAL OPERATING EXPENSES 11% 11%
Stock-based compensation (3) * *
Amortization of intangible assets (4) 83% 0%
Acquisition related 63% 0%
Restructuring (75%) 0%
OPERATING INCOME 37% 19%
OPERATING MARGIN % 16% 4%
INCOME BEFORE PROVISION FOR
INCOME TAXES 40% 21%
Income tax effect on above
adjustments (5) 35% 17%
NET INCOME 42% 23%
DILUTED EARNINGS PER SHARE 40% 21%
* not meaningful
(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) Estimated revenues related to assumed support contracts, as of
February 28, 2006, that will not be recognized in future periods due
to business combination accounting rules are as follows:
Year Ended May 31,
-----------------
2006 $87
2007 137
2008 9
----------------
Total $233
================
(3) As of February 28, 2006, the portion of the intrinsic value of
invested options assumed from acquired companies related to future
service, which is approximately $42, is recorded as deferred stock-
based compensation on our consolidated balance sheet and will be
amortized using the accelerated expense attribution method over the
remaining vesting period.
Stock-based compensation is included in the following GAAP operating
expenses in the third quarter of fiscal 2006 and 2005:
Three Months Ended Three Months Ended
February 28, 2006 February 28, 2005
Non- Non-
GAAP Adj. GAAP GAAP Adj. GAAP
----------------------------------------
Sales and marketing $2 $(2) $- $2 $(2) $-
Software license updates
and product support 1 (1) - 1 (1) -
Cost of services 2 (2) - 3 (3) -
Research and development 3 (3) - 3 (3) -
General and
administrative - - - 1 (1) -
----- ------- ------ ------ ------- -----
Total stock-based
compensation $8 $(8) $- $10 $(10) $-
----- ------- ------ ------ ------- -----
(4) Estimated future amortization expense related to intangible assets as
of February 28, 2006 is as follows:
Year Ended May 31,
------------------
2006 $183
2007 734
2008 724
2009 719
2010 613
Thereafter 1,730
------------------
Total $4,703
------------------
(5) The income tax provision was calculated reflecting a tax rate of
29.0% and 30.0% in the third quarter of fiscal 2006 and 2005,
respectively.
ORACLE CORPORATION
Q3 FISCAL 2006 YEAR TO DATE FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share data)
Nine Months Nine Months % Increase
Ended Ended % Increase (Decrease)
February 28, February 28, (Decrease) in Constant
-------------------------------------------------
% of % of
2006 Revenues 2005 Revenues in US $ Currency (1)
-------------------------------------------------
REVENUES
New software
licenses $2,783 29% $2,481 31% 12% 15%
Software license
updates and
product support 4,764 50% 3,816 48% 25% 27%
---------------------------
Software
Revenues 7,547 79% 6,297 79% 20% 22%
---------------------------
Services 1,982 21% 1,624 21% 22% 24%
---------------------------
Total Revenues 9,529 100% 7,921 100% 20% 22%
---------------------------
OPERATING EXPENSES
Sales and marketing 2,076 22% 1,703 22% 22% 24%
Software license
updates and
product support 514 6% 438 6% 17% 19%
Cost of services 1,757 19% 1,423 18% 24% 25%
Research and
development 1,335 14% 1,034 13% 29% 29%
General and
administrative 410 4% 401 5% 2% 3%
Amortization of
intangible assets 398 4% 97 1% 308% 308%
Acquisition related 122 1% 103 1% 18% 18%
Restructuring 38 0% 107 1% (65%) (64%)
---------------------------
Total Operating
Expenses 6,650 70% 5,306 67% 25% 27%
---------------------------
OPERATING INCOME 2,879 30% 2,615 33% 10% 13%
Interest expense (86) (1%) (69) (1%) 25% 26%
Non-operating
income, net 138 2% 117 2% 18% 19%
---------------------------
INCOME BEFORE PROVISION
FOR INCOME TAXES 2,931 31% 2,663 34% 10% 13%
---------------------------
Provision for
income taxes 850 9% 799 10% 6% 8%
---------------------------
NET INCOME $2,081 22% $1,864 24% 12% 16%
===========================
EARNINGS PER SHARE:
Basic $0.40 $0.36 11%
Diluted $0.40 $0.36 11%
WEIGHTED AVERAGE
COMMON SHARES
OUTSTANDING:
Basic 5,169 5,133 1%
Diluted 5,262 5,229 1%
(1) We compare the percent change in the results from one period to
another period using constant currency disclosure. We present
constant currency information to provide a framework for assessing
how our underlying businesses performed excluding the effect of
foreign currency rate fluctuations. To present this information,
current and comparative prior period results for entities reporting
in currencies other than United States dollars are converted into
United States dollars at the exchange rate in effect on May 31, 2005,
which was the last day of our prior fiscal year, rather than the
actual exchange rates in effect during the respective periods. The
United States dollar strengthened relative to major international
currencies in the nine months ended February 28, 2006 compared with
the corresponding prior year period, reducing revenue growth by 2
percentage points, operating expense growth by 2 percentage points
and operating income growth by 3 percentage points.
ORACLE CORPORATION
Q3 FISCAL 2006 YEAR TO DATE
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)
(in millions, except per share data)
Nine Months Ended February 28,
------------------------------------------------
2006 2006 2005 2005
GAAP Adj. Non-GAAP GAAP Adj. Non-GAAP
------------------------------------------------
TOTAL REVENUES (2) $9,529 $305 $9,834 $7,921 $143 $8,064
TOTAL SOFTWARE
REVENUES (2) $7,547 $305 $7,852 $6,297 $143 $6,440
New software
licenses 2,783 - 2,783 2,481 - 2,481
Software license
updates and product
support (2) 4,764 305 5,069 3,816 143 3,959
TOTAL OPERATING
EXPENSES $6,650 $(582) $6,068 $5,306 $(317) $4,989
Stock-based
compensation (3) 24 (24) - 10 (10) -
Amortization of
intangible assets (4) 398 (398) - 97 (97) -
Acquisition related 122 (122) - 103 (103) -
Restructuring 38 (38) - 107 (107) -
OPERATING INCOME $2,879 $887 $3,766 $2,615 $460 $3,075
OPERATING MARGIN % 30% 38% 33% 38%
INCOME BEFORE PROVISION
FOR INCOME TAXES $2,931 $887 $3,818 $2,663 $460 $3,123
Income tax effect on
above adjustments (5) 850 257 1,107 799 138 937
NET INCOME $2,081 $630 $2,711 $1,864 $322 $2,186
DILUTED EARNINGS
PER SHARE $0.40 $0.52 $0.36 $0.42
% Increase (Decrease) in US $
-----------------------------
GAAP Non-GAAP
-----------------------------
TOTAL REVENUES (2) 20% 22%
TOTAL SOFTWARE REVENUES (2) 20% 22%
New software licenses 12% 12%
Software license updates and
product support (2) 25% 28%
TOTAL OPERATING EXPENSES 25% 22%
Stock-based compensation (3) * *
Amortization of intangible assets (4) 308% 0%
Acquisition related 18% 0%
Restructuring (65%) 0%
OPERATING INCOME 10% 22%
OPERATING MARGIN % (8%) 0%
INCOME BEFORE PROVISION FOR
INCOME TAXES 10% 22%
Income tax effect on above
adjustments (5) 6% 18%
NET INCOME 12% 24%
DILUTED EARNINGS PER SHARE 11% 23%
* not meaningful
(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) Estimated revenues related to assumed support contracts, as of
February 28, 2006, that will not be recognized in future periods due
to business combination accounting rules are as follows:
Year Ended May 31,
------------------
2006 $87
2007 137
2008 9
------------------
Total $233
==================
(3) As of February 28, 2006, the portion of the intrinsic value of
unvested options assumed from acquired companies related to future
service, which is approximately $42, is recorded as deferred stock-
based compensation on our consolidated balance sheet and will be
amortized using the accelerated expense attribution method over the
remaining vesting period.
Stock-based compensation is included in the following GAAP operating
expenses in the first nine months of fiscal 2006 and 2005:
Nine Months Ended Nine Months Ended
February 28, 2006 February 28, 2005
GAAP Adj. Non-GAAP GAAP Adj. Non-GAAP
---------------------------------------------
Sales and marketing $5 $(5) $- $2 $(2) $-
Software license
updates and
product support 2 (2) - 1 (1) -
Cost of services 6 (6) - 3 (3) -
Research and
development 11 (11) - 3 (3) -
General and
administrative - - - 1 (1) -
----- ------- -------- ------ ------ --------
Total stock-based
compensation $24 $(24) $- $10 $(10) $-
----- ------- -------- ------ ------ --------
(4) Estimated future amortization expense related to intangible assets as
of February 28, 2006 is as follows:
Year Ended May 31,
-----------------
2006 $183
2007 734
2008 724
2009 719
2010 613
Thereafter 1,730
-----------------
Total $4,703
=================
(5) The income tax provision was calculated reflecting a tax rate of
29.0% and 30.0% in the first nine months of fiscal 2006 and 2005,
respectively.
ORACLE CORPORATION
Q3 FISCAL 2006 FINANCIAL RESULTS
CONDENSED CONSOLIDATED BALANCE SHEETS (1)
($ in millions)
February 28, May 31,
2006 2005
----------------------------
ASSETS
Current Assets:
Cash and cash equivalents $6,921 $3,894
Marketable securities 843 877
Trade receivables, net 2,201 2,570
Deferred tax assets 738 486
Other current assets 496 621
----------------------------
Total Current Assets 11,199 8,448
Non-Current Assets:
Property, net 1,375 1,442
Intangible assets, net 4,703 3,373
Goodwill 10,075 7,003
Other assets 1,112 421
----------------------------
Total Non-Current Assets 17,265 12,239
----------------------------
TOTAL ASSETS $28,464 $20,687
============================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Short-term borrowings and
current portion of long-term debt $341 $2,693
Accounts payable 233 230
Income taxes payable 678 904
Accrued compensation and related benefits 858 923
Accrued restructuring 247 156
Deferred revenues 2,467 2,289
Other current liabilities 1,042 868
----------------------------
Total Current Liabilities 5,866 8,063
Non-Current Liabilities:
Long-term debt 5,741 159
Deferred tax liabilities 799 1,010
Accrued restructuring 521 120
Deferred revenues 111 126
Other long-term liabilities 383 372
----------------------------
Total Non-Current Liabilities 7,555 1,787
Stockholders' Equity 15,043 10,837
----------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $28,464 $20,687
----------------------------
(1) Certain prior period balances have been reclassified to conform
to the current period presentation.
ORACLE CORPORATION
Q3 FISCAL 2006 YEAR TO DATE FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (1)
($ in millions)
Nine Months Ended February 28,
-----------------------------
2006 2005
-----------------------------
Cash Flows From Operating Activities:
Net income $2,081 $1,864
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 160 142
Amortization of intangible assets 398 97
Deferred income taxes (115) (117)
Minority interests in income 27 27
Amortization of stock-based compensation 33 10
Non-cash restructuring - 33
In-process research and development 86 34
Changes in operating assets and
liabilities, net of effects from
acquisitions:
Decrease in trade receivables 670 824
Decrease in prepaid expenses and
other assets 123 195
Decrease in accounts payable and
other liabilities (382) (455)
Decrease in income taxes payable (201) (121)
(Decrease) Increase in deferred revenues (18) 24
-----------------------------
Net cash provided by operating
activities 2,862 2,557
-----------------------------
Cash Flows From Investing Activities:
Purchases of marketable securities (1,473) (6,545)
Proceeds from maturities and sale
of marketable securities 3,083 10,537
Acquisitions, net of cash acquired (3,932) (9,892)
Purchase of equity investment (605) -
Capital expenditures (161) (150)
Proceeds from sales of property 140 -
Increase in other assets (4) (5)
-----------------------------
Net cash used for investing
activities (2,952) (6,055)
-----------------------------
Cash Flows From Financing Activities:
Payments for repurchase of common stock (324) (1,095)
Proceeds from issuance of common stock 333 360
Proceeds from borrowings, net of
financing costs 12,636 9,200
Payments of debt (9,446) (2,000)
Distributions to minority interests (39) (44)
-----------------------------
Net cash provided by financing
activities 3,160 6,421
-----------------------------
Effect of exchange rate changes on
cash and cash equivalents (43) 160
-----------------------------
Net increase in cash and cash equivalents 3,027 3,083
-----------------------------
Cash and cash equivalents at
beginning of period 3,894 4,138
-----------------------------
Cash and cash equivalents at end of
period $6,921 $7,221
-----------------------------
(1) Certain prior period balances have been reclassified to conform to
the current period presentation.
ORACLE CORPORATION
Q3 FISCAL 2006 FINANCIAL RESULTS
FREE CASH FLOW - TRAILING 4-QUARTERS (1)
($ in millions)
Fiscal 2005
-----------------------------------
Q1 Q2 Q3 Q4
-----------------------------------
GAAP Operating Cash Flow $3,350 $3,386 $3,575 $3,552
Capital Expenditures (3) (147) (178) (195) (188)
-----------------------------------
Free Cash Flow $3,203 $3,208 $3,380 $3,364
===================================
% Growth 16% 12% 27% 12%
-----------------------------------
GAAP Net Income $2,749 $2,948 $2,854 $2,886
Free Cash Flow as a % of
Net Income 117% 109% 118% 117%
-----------------------------------
Fiscal 2006
--------------------------
Q1 Q2 Q3 (2) Q4
GAAP Operating Cash Flow $3,596 $3,509 $3,857
Capital Expenditures (3) (206) (182) (199)
--------------------------
Free Cash Flow $3,390 $3,327 $3,658
==========================
% Growth 6% 4% 8%
--------------------------
GAAP Net Income $2,896 $2,878 $3,103
Free Cash Flow as a % of
Net Income 117% 116% 118%
--------------------------
(1) To supplement our statements of cash flows presented on a GAAP basis,
we use non-GAAP measures of cash flows on a trailing 4-quarter basis
to analyze cash flow generated from operations. We believe free cash
flow is also useful as one of the bases for comparing our performance
with our competitors. The presentation of non-GAAP free cash flow is
not meant to be considered in isolation or as an alternative to net
income as an indicator of our performance, or as an alternative to
cash flows from operating activities as a measure of liquidity.
(2) Free cash flow and free cash flow as a percent of GAAP net income
for the first nine months of fiscal 2006 and first nine months of
fiscal 2005:
First Nine Months First Nine Months
of Fiscal 2005 of Fiscal 2006
-----------------------------------
GAAP Operating Cash Flow $2,557 $2,862
Capital Expenditures (150) (161)
-----------------------------------
Free Cash Flow $2,407 $2,701
===================================
% Growth 18% 12%
-----------------------------------
GAAP Net Income $1,864 $2,081
Free Cash Flow as a % of
Net Income 129% 130%
(3) Represents capital expenditures as reported in cash flows from
investing activities of our cash flow statements presented in
accordance with U.S. generally accepted accounting principles.
ORACLE CORPORATION
Q3 FISCAL 2006 FINANCIAL RESULTS
SUPPLEMENTAL ANALYSIS OF GAAP REVENUES AND HEADCOUNT (1)
(in millions, except headcount data)
Fiscal 2005
--------------------------------------
Q1 Q2 Q3 Q4 TOTAL
REVENUES
New software licenses $563 $971 $947 $1,609 $4,091
Software license updates
and product support 1,176 1,252 1,389 1,514 5,330
--------------------------------------
Software Revenues 1,739 2,223 2,336 3,123 9,421
Consulting 355 395 470 589 1,810
On Demand 71 72 76 80 299
Education 50 66 68 86 269
--------------------------------------
Services Revenues 476 533 614 755 2,378
--------------------------------------
Total Revenues $2,215 $2,756 $2,950 $3,878 $11,799
======================================
AS REPORTED REVENUE GROWTH
RATES
New software licenses 7% 14% 12% 23% 16%
Software license updates
and product support 14% 12% 18% 26% 18%
Software Revenues 11% 13% 15% 24% 17%
Consulting (10%) 0% 26% 40% 14%
On Demand 18% 11% 23% 12% 16%
Education (11%) (4%) 37% 32% 13%
Services Revenues (7%) 1% 27% 35% 14%
Total Revenues 7% 10% 18% 26% 16%
CONSTANT CURRENCY GROWTH
RATES
New software licenses 3% 9% 8% 20% 12%
Software license updates
and product support 10% 8% 15% 22% 14%
Software Revenues 8% 8% 12% 21% 13%
Consulting (13%) (4%) 23% 36% 10%
On Demand 14% 7% 20% 9% 12%
Education (14%) (9%) 33% 28% 8%
Services Revenues (10%) (3%) 23% 32% 10%
Total Revenues 3% 6% 14% 23% 12%
--------------------------------------
GEOGRAPHIC REVENUES
REVENUES
Americas $1,091 $1,292 $1,437 $1,977 $5,798
Europe, Middle East &
Africa 778 1,062 1,088 1,361 4,288
Asia Pacific 346 402 425 540 1,713
--------------------------------------
Total Revenues $2,215 $2,756 $2,950 $3,878 $11,799
======================================
HEADCOUNT
GEOGRAPHIC AREA
Domestic 16,458 16,347 21,774 21,544
International 25,610 26,233 29,107 28,328
------------------------------
Total Company 42,068 42,580 50,881 49,872
==============================
Fiscal 2006
--------------------------------------
Q1 Q2 Q3 Q4 TOTAL
REVENUES
New software licenses $629 $1,058 $1,096 $2,783
Software license updates
and product support 1,502 1,559 1,703 4,764
---------------------------------------
Software Revenues 2,131 2,617 2,799 7,547
Consulting 481 506 501 1,489
On Demand 84 87 96 266
Education 72 82 74 227
---------------------------------------
Services Revenues 637 675 671 1,982
Total Revenues $2,768 $3,292 $3,470 $9,529
=======================================
AS REPORTED REVENUE GROWTH RATES
New software licenses 12% 9% 16% 12%
Software license updates
and product support 28% 25% 23% 25%
Software Revenues 23% 18% 20% 20%
Consulting 36% 28% 7% 22%
On Demand 18% 20% 26% 22%
Education 42% 25% 9% 24%
Services Revenues 34% 26% 9% 22%
Total Revenues 25% 19% 18% 20%
CONSTANT CURRENCY GROWTH RATES
New software licenses 10% 12% 20% 15%
Software license updates
and product support 26% 27% 27% 27%
Software Revenues 21% 20% 24% 22%
Consulting 34% 31% 10% 24%
On Demand 17% 22% 29% 23%
Education 40% 27% 13% 26%
Services Revenues 32% 29% 13% 24%
Total Revenues 23% 22% 22% 22%
GEOGRAPHIC REVENUES
REVENUES
Americas $1,475 $1,733 $1,848 $5,057
Europe, Middle East
& Africa 883 1,090 1,164 3,136
Asia Pacific 410 469 458 1,336
---------------------------------------
Total Revenues $2,768 $3,292 $3,470 $9,529
=======================================
HEADCOUNT
GEOGRAPHIC AREA
Domestic 21,198 21,133 23,256
International 28,318 30,021 32,326
-----------------------
Total Company 49,516 51,154 55,582
=======================
(1) The sum of the quarterly financial information may vary from the
year-to-date financial information due to rounding.
ORACLE CORPORATION
Q3 FISCAL 2006 FINANCIAL RESULTS
SUPPLEMENTAL TOTAL SOFTWARE PRODUCT REVENUE ANALYSIS (1)
($ in millions)
Fiscal 2005
-----------------------------------
Q1 Q2 Q3 Q4 Total
APPLICATIONS REVENUES
New software licenses $69 $215 $152 $350 $785
Software license updates and
product support 238 254 351 445 1,288
-----------------------------------
Software Revenues 307 469 503 795 2,073
AS REPORTED REVENUE GROWTH
RATES
New software licenses (36%) 57% 9% 52% 28%
Software license updates and
product support 8% 7% 48% 86% 38%
Software Revenues (6%) 25% 34% 69% 34%
CONSTANT CURRENCY GROWTH RATES
New software licenses (38%) 51% 7% 49% 25%
Software license updates and
product support 4% 3% 43% 80% 33%
Software Revenues (9%) 21% 30% 65% 30%
DATABASE & MIDDLEWARE REVENUES
New software licenses $494 $756 $795 $1,259 $3,306
Software license updates and
product support 938 998 1,038 1,070 4,042
-----------------------------------
Software Revenues 1,432 1,754 1,833 2,329 7,349
AS REPORTED REVENUE GROWTH RATES
New software licenses 18% 5% 12% 16% 13%
Software license updates and
product support 15% 14% 11% 11% 12%
Software Revenues 16% 10% 11% 14% 13%
CONSTANT CURRENCY GROWTH RATES
New software licenses 14% 1% 9% 13% 9%
Software license updates and
product support 11% 10% 7% 7% 9%
Software Revenues 12% 6% 8% 10% 9%
Fiscal 2006
-----------------------------------
Q1 Q2 Q3 Q4 Total
APPLICATIONS REVENUES
New software licenses $127 $266 $269 $662
Software license updates and
product support 466 502 608 1,576
-----------------------------------
Software Revenues 593 768 877 2,238
AS REPORTED REVENUE GROWTH
RATES
New software licenses 84% 24% 77% 52%
Software license updates and
product support 96% 98% 73% 87%
Software Revenues 93% 64% 74% 75%
CONSTANT CURRENCY GROWTH RATES
New software licenses 82% 27% 82% 54%
Software license updates and
product support 93% 101% 79% 90%
Software Revenues 91% 67% 80% 78%
DATABASE & MIDDLEWARE
REVENUES
New software licenses $502 $792 $827 $2,121
Software license updates and
product support 1,036 1,057 1,095 3,188
-----------------------------------
Software Revenues 1,538 1,849 1,922 5,309
AS REPORTED REVENUE GROWTH
RATES
New software licenses 2% 5% 4% 4%
Software license updates and
product support 10% 6% 6% 7%
Software Revenues 7% 5% 5% 6%
CONSTANT CURRENCY GROWTH RATES
New software licenses 0% 8% 8% 6%
Software license updates and
product support 9% 8% 9% 9%
Software Revenues 6% 8% 9% 8%
(1) The sum of the quarterly financial information may vary from
year-to-date financial information due to rounding.
ORACLE CORPORATION
Q3 FISCAL 2006 FINANCIAL RESULTS
SUPPLEMENTAL GEOGRAPHIC NEW SOFTWARE LICENSE REVENUES ANALYSIS (1) (2)
($ in millions)
Fiscal 2005
----------------------------------
Q1 Q2 Q3 Q4 TOTAL
AMERICAS
Database & Middleware $197 $285 $289 $542 $1,313
Applications 30 116 91 229 466
----------------------------------
New Software License Revenues $227 $401 $380 $771 $1,779
==================================
AS REPORTED GROWTH RATES
Database & Middleware 22% (5%) 14% 29% 16%
Applications (27%) 53% 7% 71% 39%
New Software License Revenues 12% 7% 12% 39% 21%
CONSTANT CURRENCY GROWTH RATES
Database & Middleware 21% (5%) 12% 27% 15%
Applications (27%) 51% 7% 69% 38%
New Software License Revenues 11% 7% 11% 37% 20%
EUROPE / MIDDLE EAST / AFRICA
Database & Middleware $158 $304 $325 $483 $1,270
Applications 28 80 44 76 227
----------------------------------
New Software License Revenues $186 $384 $369 $559 $1,497
==================================
AS REPORTED GROWTH RATES
Database & Middleware 10% 16% 12% 7% 11%
Applications (49%) 67% 7% 6% 5%
New Software License Revenues (6%) 23% 11% 7% 10%
CONSTANT CURRENCY GROWTH RATES
Database & Middleware 3% 5% 6% 3% 4%
Applications (53%) 54% 2% 3% 0%
New Software License Revenues (12%) 13% 6% 3% 4%
ASIA PACIFIC
Database & Middleware $131 $160 $168 $222 $682
Applications 11 19 17 45 92
----------------------------------
New Software License Revenues $142 $179 $185 $267 $774
==================================
AS REPORTED GROWTH RATES
Database & Middleware 27% 7% 8% 10% 12%
Applications 0% 46% 21% 80% 46%
New Software License Revenues 25% 10% 9% 18% 15%
CONSTANT CURRENCY GROWTH RATES
Database & Middleware 21% 3% 3% 7% 8%
Applications 0% 38% 23% 72% 42%
New Software License Revenues 19% 6% 5% 14% 11%
TOTAL COMPANY
Database & Middleware $486 $749 $782 $1,247 $3,265
Applications 69 215 152 350 785
----------------------------------
New Software License Revenues $555 $964 $934 $1,597 $4,050
==================================
AS REPORTED GROWTH RATES
Database & Middleware 19% 5% 12% 16% 13%
Applications (36%) 57% 9% 52% 28%
New Software License Revenues 8% 14% 11% 22% 15%
CONSTANT CURRENCY GROWTH RATES
Database & Middleware 14% 1% 8% 13% 9%
Applications (38%) 51% 7% 49% 25%
New Software License Revenues 4% 9% 8% 20% 12%
Fiscal 2006
-----------------------------------
Q1 Q2 Q3 Q4 TOTAL
AMERICAS
Database & Middleware $194 $327 $334 $856
Applications 75 163 148 386
-----------------------------------
New Software License Revenues $269 $490 $482 $1,242
===================================
AS REPORTED GROWTH RATES
Database & Middleware (2%) 15% 16% 11%
Applications 150% 41% 61% 62%
New Software License Revenues 19% 22% 27% 23%
CONSTANT CURRENCY GROWTH RATES
Database & Middleware (4%) 13% 14% 9%
Applications 148% 40% 60% 61%
New Software License Revenues 17% 21% 25% 22%
EUROPE / MIDDLE EAST / AFRICA
Database & Middleware $164 $282 $316 $763
Applications 38 75 96 208
-----------------------------------
New Software License Revenues $202 $357 $412 $971
===================================
AS REPORTED GROWTH RATES
Database & Middleware 4% (7%) (3%) (3%)
Applications 38% (6%) 119% 38%
New Software License Revenues 9% (7%) 12% 4%
CONSTANT CURRENCY GROWTH RATES
Database & Middleware 3% 0% 6% 3%
Applications 36% 1% 138% 46%
New Software License Revenues 8% 0% 22% 10%
ASIA PACIFIC
Database & Middleware $134 $176 $170 $478
Applications 14 28 25 68
-----------------------------------
New Software License Revenues $148 $203 $195 $546
===================================
AS REPORTED GROWTH RATES
Database & Middleware 2% 9% 1% 4%
Applications 28% 48% 52% 45%
New Software License Revenues 4% 13% 5% 8%
CONSTANT CURRENCY GROWTH RATES
Database & Middleware 0% 14% 6% 7%
Applications 23% 50% 60% 47%
New Software License Revenues 2% 18% 11% 11%
TOTAL COMPANY
Database & Middleware $492 $785 $820 $2,097
Applications 127 266 269 662
-----------------------------------
New Software License Revenues $619 $1,051 $1,089 $2,759
===================================
AS REPORTED GROWTH RATES
Database & Middleware 1% 5% 5% 4%
Applications 84% 24% 77% 52%
New Software License Revenues 12% 9% 17% 13%
CONSTANT CURRENCY GROWTH RATES
Database & Middleware 0% 8% 9% 6%
Applications 82% 27% 82% 54%
New Software License Revenues 10% 12% 21% 15%
(1) The sum of the quarterly financial information may vary from
year-to-date financial information due to rounding.
(2) New Software License Revenues presented exclude documentation
and miscellaneous revenues.
APPENDIX A
ORACLE CORPORATION
Q3 FISCAL 2006 QUARTER TO DATE AND YEAR TO DATE
EXPLANATION OF NON-GAAP MEASURES
Due to a series of acquisitions, our results of operations have undergone significant change. To supplement our financial results presented on a GAAP basis, we use the non-GAAP measures indicated in the table, which exclude certain business combination accounting entries and expenses related to acquisitions and other significant expenses 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 effect:
* Support deferred revenue: Business combination accounting rules require us to account for the fair value of support contracts assumed in connection with acquisitions. Because these are typically one-year contracts, our GAAP software license updates and support revenues for the one year period subsequent to acquisitions do not reflect the full amount of revenue on assumed contracts that would have otherwise been recorded by the acquired entities. The non-GAAP adjustment is intended to reflect the full amount of such revenue. We believe this adjustment is useful to investors as a measure of the ongoing performance of our business, because we have historically experienced high renewal rates on these contracts although we cannot assure that customers will renew these contracts. For further information on this non-GAAP adjustment, see footnote 2 to our Reconciliation of Selected GAAP Measures to non-GAAP Measures.
* Stock-based compensation: Certain of our operating expenses include stock-based compensation related to unvested stock options assumed in connection with acquisitions. We believe it is useful to highlight the effect of stock-based compensation related to acquisitions because, in compliance with our historical practices under SFAS 123, we do not otherwise expense Oracle stock-based compensation in the current or in past reporting periods. However, stock-based compensation is a key incentive offered to our employees, and we believe it contributed to the revenue earned during the period and will contribute to our future revenue generation. Stock-based compensation expenses will recur in future periods. For further information on the effect of this non-GAAP adjustment on our operating expense line items, see footnote 3 to our Reconciliation of Selected GAAP Measures to non-GAAP Measures.
* Amortization of intangible assets: We have excluded the effect of amortization of intangibles from our non-GAAP operating expenses. We believe this is useful because, prior to the PeopleSoft acquisition, we did not incur significant charges of this nature, and the exclusion of this amount helps investors understand a significant reason why our operating expenses increased compared to the prior period. Investors should note that the use of intangible assets contributed to revenue earned during the period and will contribute to future revenue generation and should also note that these amortization expenses are recurring. See footnote 4 to our Reconciliation of Selected GAAP Measures to non-GAAP Measures for information on our estimated future amortization expense related to intangible assets.
* Acquisition related charges and restructuring costs: We incurred significant expenses in connection our acquisitions, principally PeopleSoft and Siebel, that we would not have otherwise incurred. Acquisition related charges primarily consist of in-process research and development expenses, integration-related professional services, stock-based compensation expenses (in addition to the stock-based compensation expenses described above), personnel related costs for transitional employees as well as costs associated with our tender offer for PeopleSoft prior to the agreement date. Stock-based compensation included in acquisition related charges resulted from unvested options assumed in acquisitions whose vesting was fully accelerated upon termination of the employees pursuant to the terms of the options. Restructuring costs consist of Oracle employee severance and Oracle duplicate facility closures in connection with acquisitions. We believe it is useful for investors to understand the effect of these expenses on our cost structure. Although acquisition related charges and restructuring costs are not recurring with respect to past acquisitions, we will incur these charges in connection with future acquisitions.
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