|
REDWOOD SHORES, Calif.,
19-SEP-2006 01:25 PM
Oracle Corporation (NASDAQ-GS: ORCL) today
announced fiscal 2007 Q1 GAAP earnings per share were up 28% to $0.13,
compared to the same quarter last year. First quarter total GAAP
revenues were up 30% to $3.6 billion, while quarterly GAAP net income
was up 29% to $670 million. Total GAAP software revenues were up 29% to
$2.7 billion with database and middleware new license revenues up 15%
and applications new license revenues up 80%. Services revenues were up
33% to $846 million, compared to the same quarter last year.
First quarter non-GAAP earnings per share
were up 24% to $0.18, and non-GAAP net income was up 26% to $931
million, compared to the same quarter last year.
"We reported record revenues and earnings for
the first quarter," said Oracle President and CFO, Safra Catz. "We
exceeded our guidance on every metric and delivered strong revenue
growth across all product lines and geographies. We are now in year
three of our five year plan targeting EPS growth at 20% per year. We
continue to deliver results comfortably ahead of target."
"We're rapidly taking applications market
share from SAP," said Oracle President, Charles Phillips. "Q1 was the
second consecutive quarter that Oracle's applications new license sales
growth was 80% or more. That's ten times SAP's 8% new license sales
growth rate in their most recently completed quarter."
"SAP appears to be rethinking their
strategy as they lose application market share to Oracle and confront
the difficulties of moving their application software to a modern
Service Oriented Architecture (SOA)," said CEO, Larry Ellison. "They've
just announced that they are delaying the next version of SAP
applications until 2010. That's a full two years behind Oracle's
scheduled delivery of our SOA Fusion applications. And now Kagermann is
talking about an acquisition strategy to augment SAP's slowing organic
growth. These are major changes in direction for SAP."
# # #
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
presentation 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, 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 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 release is current as of the date of this
presentation. Oracle undertakes no duty to update any statement in
light of new information or future events.
ORACLE CORPORATION
Q1 FISCAL 2007 FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share data)
% Increase
(Decrease)
Three Months Ended August 31, % in
------------------------------ Increase Constant
% of % of (Decrease)Currency
2006 Revenues 2005 Revenues in US $ (1)
REVENUES -------------------------------------------------
New software licenses $804 22% $629 23% 28% 26%
Software license updates
and product support 1,941 54% 1,502 54% 29% 27%
------------------------------
Software Revenues 2,745 76% 2,131 77% 29% 27%
------------------------------
Services 846 24% 637 23% 33% 31%
------------------------------
Total Revenues 3,591 100% 2,768 100% 30% 28%
------------------------------
OPERATING EXPENSES
Sales and marketing 750 21% 615 22% 22% 20%
Software license updates
and product support 200 6% 161 6% 24% 23%
Cost of services 780 22% 562 20% 39% 36%
Research and development 506 14% 400 15% 27% 27%
General and administrative 157 4% 156 6% 1% 1%
Amortization of
intangible assets 198 6% 123 4% 61% 61%
Acquisition related 48 1% 28 1% 71% 69%
Restructuring 9 -- 11 -- (20%) (22%)
------------------------------
Total Operating
Expenses 2,648 74% 2,056 74% 29% 27%
------------------------------
OPERATING INCOME 943 26% 712 26% 32% 28%
Interest expense (83) (2%) (21) (1%) 299% *
Non-operating income,
net 102 3% 42 2% 147% *
------------------------------
INCOME BEFORE PROVISION
FOR INCOME TAXES 962 27% 733 27% 31% *
------------------------------
Provision for income
taxes 292 8% 214 8% 37% *
------------------------------
NET INCOME $670 19% $519 19% 29% *
==============================
EARNINGS PER SHARE:
Basic $0.13 $0.10 27%
Diluted $0.13 $0.10 28%
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING:
Basic 5,217 5,148 1%
Diluted 5,307 5,244 1%
* not meaningful
(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, 2006, 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 weakened relative to major international currencies in the
three months ended August 31, 2006 compared with the corresponding
prior year period, contributing 2 percentage points of revenue and
operating expense growth and 4 percentage points of operating income
growth.
ORACLE CORPORATION
Q1 FISCAL 2007
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)
(in millions, except per share data)
Three Months Ended August 31,
---------------------------------------------
2006 2006 2005 2005
GAAP Adj. Non-GAAP GAAP Adj. Non-GAAP
---------------------------------------------
TOTAL REVENUES (2) $3,591 $70 $3,661 $2,768 $139 $2,907
TOTAL SOFTWARE
REVENUES (2) $2,745 $70 $2,815 $2,131 $139 $2,270
New software licenses 804 -- 804 629 -- 629
Software license
updates and product
support (2) 1,941 70 2,011 1,502 139 1,641
TOTAL OPERATING EXPENSES $2,648 $(305) $2,343 $2,056 $(171) $1,885
Stock-based
compensation (3) 50 (50) -- 9 (9) --
Amortization of
intangible assets (4) 198 (198) -- 123 (123) --
Acquisition related 48 (48) -- 28 (28) --
Restructuring 9 (9) -- 11 (11) --
OPERATING INCOME $943 $375 $1,318 $712 $310 $1,022
OPERATING MARGIN % 26% 36% 26% 35%
INCOME TAX EFFECTS ON
ABOVE ADJUSTMENTS (5) 292 114 406 $214 $91 $305
NET INCOME $670 $261 $931 $519 $219 $738
DILUTED EARNINGS PER
SHARE (6) $0.13 $0.18 $0.10 $0.14
DILUTED WEIGHTED AVERAGE
COMMON SHARES
OUTSTANDING (6) 5,307 7 5,314 5,244 - 5,244
% Increase (Decrease) in US $
GAAP Non-GAAP
TOTAL REVENUES (2) 30% 26%
TOTAL SOFTWARE REVENUES (2) 29% 24%
New software licenses 28% 28%
Software license updates
and product support (2) 29% 23%
TOTAL OPERATING EXPENSES 29% 24%
Stock-based compensation
(3) 455% *
Amortization of intangible
assets (4) 61% *
Acquisition related 71% *
Restructuring (20%) *
OPERATING INCOME 32% 29%
OPERATING MARGIN % 2% 2%
INCOME TAX EFFECTS ON ABOVE
ADJUSTMENTS (5) 37% 33%
NET INCOME 29% 26%
DILUTED EARNINGS PER SHARE (6) 28% 24%
DILUTED WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING (6) 1% 1%
(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
August 31, 2006, that will not be recognized in future periods due
to business combination accounting rules are as follows:
Remainder of Fiscal 2007 $81
Fiscal 2008 9
----
Total $90
====
(3) Stock-based compensation is included in the following GAAP operating
expenses:
Q1 Fiscal 2007 Q1 Fiscal 2006
-------------- ---------------
Non- Non-
GAAP Adj. GAAP GAAP Adj. GAAP
--------------- ----------------
Sales and marketing $10 $(10) $-- $2 $(2) $--
Software license updates
and product support 3 (3) -- 1 (1) --
Cost of services 3 (3) -- 2 (2) --
Research and development 22 (22) -- 4 (4) --
General and administrative 12 (12) -- -- -- --
---- ---- ---- ---- ---- ----
Subtotal 50 (50) -- 9 (9) --
---- ---- ---- ---- ---- ----
Acquisition related -- -- -- 3 (3) --
---- ---- ---- ---- ---- ----
Total stock-based
compensation $50 $(50) $-- $12 $(12) $--
==== ==== ==== ==== ==== ====
Stock-based compensation expense in the first quarter of fiscal
2007 is recognized at fair value under FASB Statement 123R.
Stock-based compensation expense in the first quarter of fiscal
2006 is recognized at intrinsic value under APB Opinion 25 and
pertains only to unvested stock-options assumed from acquisitions.
(4) Estimated future amortization expense related to intangible assets
as of August 31, 2006 is as follows:
Remainder of Fiscal 2007 $603
Fiscal 2008 790
Fiscal 2009 783
Fiscal 2010 660
Fiscal 2011 454
Fiscal 2012 358
Thereafter 992
------
Total $4,640
======
(5) The income tax provision was calculated reflecting a tax rate of
30.4% and 29.2% in the first quarter of fiscal 2007 and 2006,
respectively.
(6) Non-GAAP diluted earnings per share and non-GAAP diluted
weighted shares outstanding were calculated excluding the
effects of expensing stock options under Statement 123R.
ORACLE CORPORATION
Q1 FISCAL 2007 FINANCIAL RESULTS
CONDENSED CONSOLIDATED BALANCE SHEETS (1)
($ in millions)
August 31, May 31,
2006 2006
----------- -----------
ASSETS
Current Assets:
Cash and cash equivalents $5,446 $6,659
Marketable securities 2,852 946
Trade receivables, net 2,118 3,022
Deferred tax assets 725 714
Other current assets 550 633
----------- -----------
Total Current Assets 11,691 11,974
Non-Current Assets:
Property, net 1,437 1,391
Intangible assets, net 4,640 4,528
Goodwill 10,529 9,809
Other assets 551 1,327
----------- -----------
Total Non-Current Assets 17,157 17,055
----------- -----------
TOTAL ASSETS $28,848 $29,029
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Short-term borrowings and current
portion of long-term debt $166 $159
Accounts payable 223 268
Income taxes payable 859 810
Accrued compensation and
related benefits 840 1,172
Accrued restructuring 198 412
Deferred revenues 3,269 2,830
Other current liabilities 1,143 1,279
----------- -----------
Total Current Liabilities 6,698 6,930
Non-Current Liabilities:
Long-term debt 5,737 5,735
Deferred tax liabilities 573 564
Accrued restructuring 277 273
Deferred revenues 114 114
Minority interests 323 202
Other long-term liabilities 227 199
----------- -----------
Total Non-Current
Liabilities 7,251 7,087
Stockholders' Equity 14,899 15,012
----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $28,848 $29,029
----------- -----------
(1) Certain prior period balances have been reclassified to conform
to the current period presentation.
ORACLE CORPORATION
Q1 FISCAL 2007 FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (1)
($ in millions)
Three Months Ended August 31,
-----------------------------
2006 2005
-------- --------
Cash Flows From Operating Activities:
Net income $670 $519
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 59 57
Amortization of intangible assets 198 123
Deferred income taxes (6) (46)
Minority interests in income 12 8
Stock-based compensation 50 12
Tax benefit on the exercise of stock options 49 31
Excess tax benefits from stock-based
compensation (2) (30) --
In-process research and development 43 7
Net investment gains related to
equity securities (15) (2)
Changes in operating assets and liabilities,
net of effects from acquisitions:
Decrease in trade receivables 1,040 913
Decrease in prepaid expenses and other assets 86 154
Decrease in accounts payable and
other liabilities (900) (451)
Decrease in income taxes payable (6) (203)
Increase in deferred revenues 373 336
-------- --------
Net cash provided by operating activities 1,623 1,458
-------- --------
Cash Flows From Investing Activities:
Purchases of marketable securities (2,430) (791)
Proceeds from maturities and sale of
investments 642 827
Acquisitions, net of cash acquired (225) (309)
Capital expenditures (49) (52)
Proceeds from sales of property -- 70
-------- --------
Net cash used for investing activities (2,062) (255)
Cash Flows From Financing Activities:
Payments for repurchase of common stock (3) (936) (250)
Proceeds from issuance of common stock 162 158
Proceeds from borrowings, net of
financing costs -- 5,408
Payments of debt (7) (6,590)
Excess tax benefits from stock-based
compensation (2) 30 --
Distributions to minority interests (25) (23)
-------- --------
Net cash used for financing activities (776) (1,297)
-------- --------
Effect of exchange rate changes on
cash and cash equivalents 2 (10)
-------- --------
Net decrease in cash and cash equivalents (1,213) (104)
-------- --------
Cash and cash equivalents at
beginning of period 6,659 3,894
-------- --------
Cash and cash equivalents at end of period $5,446 $3,790
-------- --------
(1) Certain prior period balances have been reclassified to conform to
the current period presentation.
(2) Excess tax benefits received from stock-based compensation
arrangements are presented as financing cash inflows rather than
operating cash inflows prospectively from June 1, 2006, which is our
adoption date of Statement 123R. Prior period reclassifications are
not allowed.
(3) We repurchased 66.8 million shares for $1.0 billion during the three
months ended August 31, 2006 (including 4.1 million shares for $64
million that were repurchased but not settled at August 31, 2006).
ORACLE CORPORATION
Q1 FISCAL 2007 FINANCIAL RESULTS
FREE CASH FLOW - TRAILING 4-QUARTERS (1)
($ in millions)
Fiscal
Fiscal 2006 2007
------------------------------ --------
Q1 Q2 Q3 Q4 Q1 (2)(3)
GAAP Operating Cash Flow $3,596 $3,509 $3,857 $4,541 $4,706
Capital Expenditures (4) (206) (182) (199) (236) (233)
------------------------------ --------
Free Cash Flow $3,390 $3,327 $3,658 $4,305 $4,473
============================== ========
% Growth 6% 4% 8% 28% 32%
----------------------------------------
GAAP Net Income $2,896 $2,878 $3,103 $3,381 $3,532
Free Cash Flow as a % of Net
Income 117% 116% 118% 127% 127%
------------------------------ --------
(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:
Q1 Fiscal Q1 Fiscal
2006 2007
---------------------------
GAAP Operating Cash Flow $1,458 $1,623
Capital Expenditures (52) (49)
---------------------------
Free Cash Flow $1,406 $1,574
===========================
% Growth 2% 12%
---------------------------
GAAP Net Income $519 $670
Free Cash Flow as a % of Net
Income 271% 235%
(3) We adopted FASB Statement 123R on June 1, 2006 under the
modified prospective method. Under the modified prospective
method, prior period reclassifications are not allowed. Excess
tax benefits received from stock-based compensation arrangements
are presented as financing cash inflows rather than operating cash
inflows prospectively from June 1, 2006. Excess tax benefits
reclassified from GAAP Operating Cash Flow were $30 million for
the trailing 4-quarters ended August 31, 2006. GAAP net income
includes $67 million of stock-based compensation expense, net of
tax of $20 million for the trailing 4-quarters ended August 31,
2006. Stock-based compensation expense for quarters prior to June
1, 2006 pertains only to unvested options assumed from
acquisitions and were recognized under APB Opinion 25.
(4) 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
Q1 FISCAL 2007 FINANCIAL RESULTS
SUPPLEMENTAL ANALYSIS OF GAAP REVENUES AND HEADCOUNT (1)
(in millions, except headcount data)
Fiscal 2006
---------------------------------------
Q1 Q2 Q3 Q4 TOTAL
---------------------------------------
REVENUES
--------
New software licenses $629 $1,058 $1,096 $2,121 $4,905
Software license updates
and product support 1,502 1,559 1,703 1,873 6,636
---------------------------------------
Software Revenues 2,131 2,617 2,799 3,994 11,541
Consulting 481 506 501 632 2,120
On Demand 84 87 96 130 397
Education 72 82 74 95 322
---------------------------------------
Services Revenues 637 675 671 857 2,839
Total Revenues $2,768 $3,292 $3,470 $4,851 $14,380
=======================================
AS REPORTED REVENUE GROWTH RATES
New software licenses 12% 9% 16% 32% 20%
Software license updates
and product support 28% 25% 23% 24% 25%
Software Revenues 23% 18% 20% 28% 23%
Consulting 36% 28% 7% 7% 17%
On Demand 18% 20% 26% 62% 32%
Education 42% 25% 9% 11% 20%
Services Revenues 34% 26% 9% 13% 19%
Total Revenues 25% 19% 18% 25% 22%
CONSTANT CURRENCY GROWTH
RATES
New software licenses 10% 12% 20% 32% 21%
Software license updates
and product support 26% 27% 27% 25% 26%
Software Revenues 21% 20% 24% 28% 24%
Consulting 34% 31% 10% 8% 19%
On Demand 17% 22% 29% 63% 33%
Education 40% 27% 13% 12% 21%
Services Revenues 32% 29% 13% 14% 21%
Total Revenues 23% 22% 22% 26% 23%
GEOGRAPHIC REVENUES
-------------------
REVENUES
Americas $1,475 $1,733 $1,848 $2,595 $7,652
Europe, Middle East &
Africa 883 1,090 1,164 1,572 4,708
Asia Pacific 410 469 458 684 2,020
---------------------------------------
Total Revenues $2,768 $3,292 $3,470 $4,851 $14,380
=======================================
HEADCOUNT (2)
-------------
GEOGRAPHIC AREA
Domestic 21,198 21,133 23,256 23,209
International 28,318 30,021 32,326 32,924
---------------------------------------
Total Company 49,516 51,154 55,582 56,133
=======================================
Fiscal 2007
---------------------------------------
Q1 Q2 Q3 Q4 TOTAL
---------------------------------------
REVENUES
--------
New software licenses $804 $804
Software license updates and
product support 1,941 1,941
---------------------------------------
Software Revenues 2,745 2,745
Consulting 640 640
On Demand 125 125
Education 81 81
---------------------------------------
Services Revenues 846 846
Total Revenues $3,591 $3,591
=======================================
AS REPORTED REVENUE GROWTH RATES
New software licenses 28% 28%
Software license updates and
product support 29% 29%
Software Revenues 29% 29%
Consulting 33% 33%
On Demand 49% 49%
Education 13% 13%
Services Revenues 33% 33%
Total Revenues 30% 30%
CONSTANT CURRENCY GROWTH RATES
New software licenses 26% 26%
Software license updates and
product support 27% 27%
Software Revenues 27% 27%
Consulting 31% 31%
On Demand 47% 47%
Education 11% 11%
Services Revenues 31% 31%
Total Revenues 28% 28%
GEOGRAPHIC REVENUES
-------------------
REVENUES
Americas $1,956 $1,956
Europe, Middle East & Africa 1,140 1,140
Asia Pacific 495 495
---------------------------------------
Total Revenues $3,591 $3,591
=======================================
HEADCOUNT (2)
-------------
GEOGRAPHIC AREA
Domestic 23,503
International 41,623
---------------------------------------
Total Company 65,126
=======================================
(1) The sum of the quarterly financial information may vary from
year-to-date financial information due to rounding.
(2) Headcount as of August 31, 2006 includes 7,101 employees of i-flex,
a recently acquired company, which was consolidated in our
first quarter of fiscal 2007.
ORACLE CORPORATION
Q1 FISCAL 2007 FINANCIAL RESULTS
SUPPLEMENTAL TOTAL SOFTWARE PRODUCT REVENUE ANALYSIS (1)
($ in millions)
Fiscal 2006
---------------------------------------
Q1 Q2 Q3 Q4 TOTAL
---------------------------------------
APPLICATIONS REVENUES
---------------------
New software licenses $127 $266 $269 $641 $1,303
Software license updates and
product support 466 502 608 676 2,252
---------------------------------------
Software Revenues 593 768 877 1,317 3,555
=======================================
AS REPORTED GROWTH RATES
New software licenses 84% 24% 77% 83% 66%
Software license updates and
product support 96% 98% 73% 52% 75%
Software Revenues 93% 64% 74% 66% 71%
CONSTANT CURRENCY GROWTH RATES
New software licenses 82% 27% 82% 83% 67%
Software license updates and
product support 93% 101% 79% 53% 77%
Software Revenues 91% 67% 80% 66% 72%
DATABASE AND MIDDLEWARE REVENUES
----------------------------
New software licenses $502 $792 $827 $1,480 $3,602
Software license updates and
product support 1,036 1,057 1,095 1,197 4,384
---------------------------------------
Software Revenues 1,538 1,849 1,922 2,677 7,986
=======================================
AS REPORTED GROWTH RATES
New software licenses 2% 5% 4% 18% 9%
Software license updates and
product support 10% 6% 6% 12% 8%
Software Revenues 7% 5% 5% 15% 9%
CONSTANT CURRENCY GROWTH RATES
New software licenses 0% 8% 8% 18% 10%
Software license updates and
product support 9% 8% 9% 13% 9%
Software Revenues 6% 8% 9% 15% 10%
Fiscal 2007
---------------------------------------
Q1 Q2 Q3 Q4 TOTAL
---------------------------------------
APPLICATIONS REVENUES
---------------------
New software licenses $228 $228
Software license updates and
product support 703 703
---------------------------------------
Software Revenues 931 931
=======================================
AS REPORTED GROWTH RATES
New software licenses 80% 80%
Software license updates and
product support 51% 51%
Software Revenues 57% 57%
CONSTANT CURRENCY GROWTH RATES
New software licenses 78% 78%
Software license updates and
product support 49% 49%
Software Revenues 55% 55%
DATABASE AND MIDDLEWARE REVENUES
----------------------------
New software licenses $576 $576
Software license updates and
product support 1,238 1,238
---------------------------------------
Software Revenues 1,814 1,814
=======================================
AS REPORTED GROWTH RATES
New software licenses 15% 15%
Software license updates and
product support 19% 19%
Software Revenues 18% 18%
CONSTANT CURRENCY GROWTH RATES
New software licenses 13% 13%
Software license updates and
product support 18% 18%
Software Revenues 16% 16%
(1) The sum of the quarterly financial information may vary from
year-to-date financial information due to rounding.
ORACLE CORPORATION
Q1 FISCAL 2007 FINANCIAL RESULTS
SUPPLEMENTAL GEOGRAPHIC NEW SOFTWARE LICENSE REVENUE ANALYSIS (1) (2)
($ in millions)
Fiscal 2006
---------------------------------------
Q1 Q2 Q3 Q4 TOTAL
---------------------------------------
AMERICAS
--------
Database and Middleware $194 $327 $334 $662 $1,518
Applications 75 163 148 395 782
---------------------------------------
New Software License
Revenues $269 $490 $482 $1,057 $2,300
=======================================
AS REPORTED GROWTH RATES
Database and Middleware (2%) 15% 16% 22% 16%
Applications 150% 41% 61% 73% 67%
New Software License
Revenues 19% 22% 27% 37% 29%
CONSTANT CURRENCY GROWTH RATES
Database and Middleware (4%) 13% 14% 21% 14%
Applications 148% 40% 60% 72% 66%
New Software License
Revenues 17% 21% 25% 36% 28%
EUROPE / MIDDLE EAST / AFRICA
-----------------------------
Database and Middleware $164 $282 $316 $515 $1,278
Applications 38 75 96 158 366
---------------------------------------
New Software License
Revenues $202 $357 $412 $673 $1,644
=======================================
AS REPORTED GROWTH RATES
Database and Middleware 4% (7%) (3%) 7% 1%
Applications 38% (6%) 119% 108% 61%
New Software License
Revenues 9% (7%) 12% 20% 10%
CONSTANT CURRENCY GROWTH RATES
Database and Middleware 3% 0% 6% 7% 5%
Applications 36% 1% 138% 108% 67%
New Software License
Revenues 8% 0% 22% 21% 14%
ASIA PACIFIC
------------
Database and Middleware $134 $176 $170 $292 $771
Applications 14 28 25 88 155
---------------------------------------
New Software License
Revenues $148 $203 $195 $380 $926
=======================================
AS REPORTED GROWTH RATES
Database and Middleware 2% 9% 1% 31% 13%
Applications 28% 48% 52% 94% 69%
New Software License
Revenues 4% 13% 5% 42% 20%
CONSTANT CURRENCY GROWTH RATES
Database and Middleware 0% 14% 6% 34% 16%
Applications 23% 50% 60% 96% 71%
New Software License
Revenues 2% 18% 11% 45% 23%
TOTAL COMPANY
-------------
Database and Middleware $492 $785 $820 $1,469 $3,567
Applications 127 266 269 641 1,303
---------------------------------------
New Software License
Revenues $619 $1,051 $1,089 $2,110 $4,870
=======================================
AS REPORTED GROWTH RATES
Database and Middleware 1% 5% 5% 18% 9%
Applications 84% 24% 77% 83% 66%
New Software License
Revenues 12% 9% 17% 32% 20%
CONSTANT CURRENCY GROWTH RATES
Database and Middleware 0% 8% 9% 18% 10%
Applications 82% 27% 82% 83% 67%
New Software License
Revenues 10% 12% 21% 32% 21%
Fiscal 2007
---------------------------------------
Q1 Q2 Q3 Q4 TOTAL
---------------------------------------
AMERICAS
--------
Database and Middleware $232 $232
Applications 126 126
---------------------------------------
New Software License
Revenues $358 $358
AS REPORTED GROWTH RATES
Database and Middleware 19% 19%
Applications 69% 69%
New Software License
Revenues 33% 33%
CONSTANT CURRENCY GROWTH RATES
Database and Middleware 18% 18%
Applications 69% 69%
New Software License
Revenues 32% 32%
EUROPE / MIDDLE EAST / AFRICA
-----------------------------
Database and Middleware $184 $184
Applications 69 69
---------------------------------------
New Software License
Revenues $253 $253
AS REPORTED GROWTH RATES
Database and Middleware 12% 12%
Applications 83% 83%
New Software License
Revenues 25% 25%
CONSTANT CURRENCY GROWTH RATES
Database and Middleware 8% 8%
Applications 78% 78%
New Software License
Revenues 21% 21%
ASIA PACIFIC
------------
Database and Middleware $149 $149
Applications 33 33
---------------------------------------
New Software License
Revenues $182 $182
AS REPORTED GROWTH RATES
Database and Middleware 12% 12%
Applications 126% 126%
New Software License
Revenues 23% 23%
CONSTANT CURRENCY GROWTH RATES
Database and Middlware 13% 13%
Applications 125% 125%
New Software License
Revenues 24% 24%
TOTAL COMPANY
-------------
Database and Middleware $565 $565
Applications 228 228
---------------------------------------
New Software License
Revenues $793 $793
AS REPORTED GROWTH RATES
Database and Middleware 15% 15%
Applications 80% 80%
New Software License
Revenues 28% 28%
CONSTANT CURRENCY GROWTH RATES
Database and Middleware 13% 13%
Applications 78% 78%
New Software License
Revenues 27% 27%
(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
Q1 FISCAL 2007 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 table, 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 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
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 support
contracts,
although we cannot be sure that customers will renew these contracts.
-- Stock-based compensation: We adopted FASB Statement No. 123R,
Share-
Based Payments, on June 1, 2006 under the modified prospective method.
Statement 123R requires us to record non-cash operating expenses
associated
with stock option awards at their estimated fair values. Prior to our
Statement 123R adoption, we were required to record stock-based
compensation
expenses at intrinsic values, which were substantially related to
options
assumed from acquisitions. In accordance with the modified prospective
method,
our financial statements for prior periods have not been restated to
reflect,
and do not include, the changes in methodology to expense options at
fair
values in accordance with Statement 123R. Although 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, 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 intangibles from our non-GAAP net income. We believe
this is
useful because, prior to the PeopleSoft acquisition in the third
quarter of
fiscal 2005, we did not incur significant charges of this nature, and
the
exclusion of this amount helps investors understand a significant
reason why
our GAAP operating expenses increased in periods subsequent to the
PeopleSoft
acquisition. 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.
-- Acquisition related charges and restructuring costs: We incurred
significant expenses in connection with acquisitions, principally
Siebel,
which 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)
and
personnel related costs for transitional employees. 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.
|
