|
REDWOOD SHORES, Calif.,
26-MAR-2008 01:14 PM
Oracle Corporation (NASDAQ: ORCL) today announced fiscal 2008 Q3 GAAP earnings per share were up 30% to $0.26, compared to the same quarter last year. Third quarter total GAAP revenues were up 21% to $5.3 billion, while quarterly GAAP operating income was up 35% to $1.9 billion and GAAP net income was up 30% to $1.3 billion. Total GAAP software revenues were up 21% to $4.2 billion with GAAP new software license revenues up 16% to $1.6 billion. Database and middleware new license revenues were up 20% and applications new license revenues were up 7%. GAAP software license updates and product support revenues were up 25% to $2.6 billion. Service revenues were up 21% to $1.1 billion, compared to the same quarter last year.
Third quarter non-GAAP earnings per share were up 23% to $0.30, and non-GAAP net income was up 22% to $1.6 billion, compared to the same quarter last year.
"Oracle delivered another quarter of strong financial results and earnings growth. In Q3, we once again exceeded our non-GAAP EPS growth target of 20%," said Oracle President and CFO, Safra Catz. "For the first three quarters of this year we have grown our operating cash flow 55%, 3 times faster than at this point in the past five years."
"Database and middleware new software license revenues growth accelerated to 20% in the third quarter," said Oracle President, Charles Phillips. "We continue to grow faster and take market share from IBM."
"Software license updates and product support revenues were up 23% on a non-GAAP basis to $2.6 billion. By next quarter we expect to pass $10 billion for the year," said Oracle CEO, Larry Ellison. "Our non-GAAP operating income grew to $2.2 billion with our margins increasing nearly 200 basis points to 41% up from 39% in Q3 of last year. Our operating margins are now substantially higher than our competitors, including Microsoft, reflecting the unique leverage in our business."
Q3 Earnings Announcement
Oracle will hold a conference call and web broadcast today to discuss these results at 2:00 p.m. (PDT) / 5:00 p.m. (EDT). To access the live web broadcast of this event, please visit the Oracle Investor Relations website at http://www.oracle.com/investor. Please hold down your control key while pressing refresh to ensure that the weblink is visible.
About Oracle
Oracle (NASDAQ: ORCL) is the world's largest enterprise software company. For more information about Oracle, please visit our Web site at http://www.oracle.com.
# # #
Trademarks
Oracle is a registered trademark of Oracle Corporation 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 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 or acquired products. (4) We have an active acquisition program (including our recently announced proposed acquisition of BEA 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 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 March 26, 2008. Oracle undertakes no duty to update any statement in light of new information or future events.
ORACLE CORPORATION
Q3 FISCAL 2008 FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share data)
Three Months Ended %Increase
------------------------------------ %Increase (Decrease)
February 29, % of February 28, % of (Decrease) in Constant
2008 Revenues 2007 Revenues in US $ Currency(1)
------------------------------------------------------------
REVENUES
New software
licenses $1,616 30% $1,390 31% 16% 9%
Software
license
updates
and product
support 2,624 49% 2,108 48% 25% 18%
--------------------------------------
Software
Revenues 4,240 79% 3,498 79% 21% 15%
--------------------------------------
Services 1,109 21% 916 21% 21% 14%
--------------------------------------
Total
Revenues 5,349 100% 4,414 100% 21% 15%
--------------------------------------
OPERATING EXPENSES
Sales and
marketing 1,083 20% 967 22% 12% 6%
Software
license
updates
and product
support 254 5% 210 5% 22% 16%
Cost of
services 989 19% 820 18% 21% 14%
Research and
development 682 13% 570 13% 20% 17%
General and
administrative 206 4% 175 4% 18% 12%
Amortization of
intangible
assets 292 5% 222 5% 32% 31%
Acquisition
related and
other (2) (40) (1%) 53 1% (176%) (178%)
Restructuring 8 0% 3 0% 134% 125%
--------------------------------------
Total
Operating
Expenses 3,474 65% 3,020 68% 15% 10%
--------------------------------------
OPERATING INCOME 1,875 35% 1,394 32% 35% 24%
Interest
expense (82) (2%) (82) (2%) 0% 0%
Non-operating
income, net 84 2% 94 2% (11%) (13%)
--------------------------------------
INCOME BEFORE
PROVISION
FOR INCOME
TAXES 1,877 35% 1,406 32% 33% 23%
--------------------------------------
Provision for
income taxes 537 10% 373 9% 44% 40%
--------------------------------------
NET INCOME $1,340 25% $1,033 23% 30% 17%
======================================
EARNINGS PER SHARE:
Basic $0.26 $0.20
Diluted $0.26 $0.20
WEIGHTED AVERAGE
COMMON SHARES
OUTSTANDING:
Basic 5,148 5,159
Diluted 5,235 5,257
(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,
2007, 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 February 29, 2008 compared with
the corresponding prior year period, contributing 6 percentage
points of revenue, 5 percentage points of operating expense and 11
percentage points of operating income growth.
(2) Acquisition related and other expenses for the three months ended
February 29, 2008 include a gain on property sale of $57 million.
Please see Appendix A for further discussion.
ORACLE CORPORATION
Q3 FISCAL 2008 FINANCIAL RESULTS
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)
(in millions, except per share data)
% Increase
(Decrease)
Three Months Ended in US $
-----------------------------------------------------------------
February February February February
29, 2008 29, 2008 28, 2007 28, 2007 Non-
GAAP Adj. Non-GAAP GAAP Adj. Non-GAAP GAAP GAAP
-----------------------------------------------------------------
TOTAL
REVENUES(2) $5,349 $22 $5,371 $4,414 $35 $4,449 21% 21%
TOTAL
SOFTWARE
REVENUES(2) $4,240 $22 $4,262 $3,498 $35 $3,533 21% 21%
New software
licenses 1,616 - 1,616 1,390 - 1,390 16% 16%
Software
license
updates
and product
support(2) 2,624 22 2,646 2,108 35 2,143 25% 23%
TOTAL
OPERATING
EXPENSES $3,474 $(322) $3,152 $3,020 $(326) $2,694 15% 17%
Stock-based
compens-
ation(3) 62 (62) - 48 (48) - 30% *
Amortization
of intangible
assets (4) 292 (292) - 222 (222) - 32% *
Acquisition
related
and other (40) 40 - 53 (53) - (176%) *
Restructuring 8 (8) - 3 (3) - 134% *
OPERATING
INCOME $1,875 $344 $2,219 $1,394 $361 $1,755 35% 26%
OPERATING
MARGIN % 35% 41% 32% 39% 11% 5%
INCOME TAX
EFFECTS
ON ABOVE
ADJUSTMENTS(5)$537 $98 $635 $373 $93 $466 44% 36%
NET INCOME $1,340 $246 $1,586 $1,033 $268 $1,301 30% 22%
DILUTED
EARNINGS
PER SHARE(6) $0.26 $0.30 $0.20 $0.25 30% 23%
DILUTED
WEIGHTED
AVERAGE
COMMON
SHARES
OUTSTAND-
ING(6) 5,235 5,235 5,257 5 5,262 0% (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 condensed 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) As of February 29, 2008, approximately $9 million in estimated
revenues related to assumed support contracts will not be recognized
in fiscal 2008 due to business combination accounting rules.
(3) Stock-based compensation is included in the following GAAP operating
expense categories:
Three Months Ended Three Months Ended
February 29, 2008 February 28, 2007
----------------------- -----------------------
GAAP Adj. Non-GAAP GAAP Adj. Non-GAAP
----------------------- -----------------------
Sales and marketing $12 $(12) $- $9 $(9) $-
Software license updates
and product support 1 (1) - 3 (3) -
Cost of services 2 (2) - 3 (3) -
Research and development 31 (31) - 21 (21) -
General and administrative 16 (16) - 12 (12) -
------ ------ ------ ------ ------ ------
Subtotal 62 (62) - 48 (48) -
------ ------ ------ ------ ------ ------
Acquisition related and other 3 (3) - - - -
------ ------ ------ ------ ------ ------
Total stock-based
compensation $65 $(65) $- $48 $(48) $-
====== ====== ====== ====== ====== ======
(4) Estimated future annual amortization expense related to intangible
assets as of February 29, 2008 is as follows:
Remainder of Fiscal 2008 $317
Fiscal 2009 1,153
Fiscal 2010 1,029
Fiscal 2011 799
Fiscal 2012 660
Fiscal 2013 306
Thereafter 1,142
------
Total $5,406
======
(5) The income tax provision was calculated reflecting an effective tax
rate of 28.6% and 26.5% in the third quarter of fiscal 2008 and
2007, respectively.
(6) Non-GAAP diluted earnings per share and non-GAAP diluted weighted
average shares outstanding were calculated excluding the effects of
expensing stock options under Statement 123R.
* Not meaningful
ORACLE CORPORATION
Q3 FISCAL 2008 YEAR TO DATE FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share data)
Nine Months Ended % Increase
-------------------------------------- % Increase (Decrease)
February 29, % of February 28, % of (Decrease) in Constant
2008 Revenues 2007 Revenues in US $ Currency(1)
--------------------------------------------------------------
REVENUES
New software
licenses $4,371 29% $3,401 28% 29% 22%
Software
license
updates
and product
support 7,497 49% 6,056 50% 24% 18%
------------------------------------------
Software
Revenues 11,868 78% 9,457 78% 25% 20%
------------------------------------------
Services 3,323 22% 2,710 22% 23% 16%
------------------------------------------
Total
Revenues 15,191 100% 12,167 100% 25% 19%
------------------------------------------
OPERATING
EXPENSES
Sales and
marketing 3,153 21% 2,632 21% 20% 14%
Software
license
updates
and product
support 729 5% 613 5% 19% 13%
Cost of
services 2,911 19% 2,419 20% 20% 14%
Research and
development 2,007 13% 1,596 13% 26% 23%
General and
administrative 608 4% 503 4% 21% 16%
Amortization of
intangible
assets 867 6% 623 5% 39% 39%
Acquisition
related and
other(2) 28 0% 65 1% (57%) (60%)
Restructuring 14 0% 23 0% (41%) (44%)
------------------------------------------
Total
Operating
Expenses 10,317 68% 8,474 69% 22% 17%
------------------------------------------
OPERATING
INCOME 4,874 32% 3,693 31% 32% 24%
Interest
expense (265) (2%) (248) (2%) 7% 7%
Non-operating
income, net 284 2% 277 2% 2% 0%
------------------------------------------
INCOME BEFORE
PROVISION FOR
INCOME TAXES 4,893 32% 3,722 31% 31% 23%
------------------------------------------
Provision for
income taxes 1,409 9% 1,052 9% 34% 31%
------------------------------------------
NET INCOME $3,484 23% $2,670 22% 30% 20%
==========================================
EARNINGS PER SHARE:
Basic $0.68 $0.51
Diluted $0.67 $0.51
WEIGHTED
AVERAGE
COMMON
SHARES
OUTSTANDING:
Basic 5,128 5,186
Diluted 5,228 5,284
(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,
2007, 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 nine months ended February 29, 2008 compared with
the corresponding prior year period, contributing 6 percentage
points of revenue, 5 percentage points of operating expense and 8
percentage points of operating income growth.
(2) Acquisition related and other expenses for the nine months ended
February 29, 2008 include a gain on property sale of $57 million.
Acquisition related and other expenses for the nine months ended
February 28, 2007 include a benefit of $52 million related to the
settlement of a pre-acquisition lawsuit against PeopleSoft, Inc.
Please see Appendix A for further discussion.
ORACLE CORPORATION
Q3 FISCAL 2008 YEAR TO DATE FINANCIAL RESULTS
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)
(in millions, except per share data)
% Increase
(Decrease)
Nine Months Ended in US $
-----------------------------------------------------------------
February February February February
29, 2008 29, 2008 28, 2007 28, 2007 Non-
GAAP Adj. Non-GAAP GAAP Adj. Non-GAAP GAAP GAAP
-----------------------------------------------------------------
TOTAL
REVENUES(2) $15,191 $138 $15,329 $12,167 $158 $12,325 25% 24%
TOTAL
SOFTWARE
REVENUES(2) $11,868 $138 $12,006 $9,457 $158 $9,615 25% 25%
New software
licenses 4,371 - 4,371 3,401 - 3,401 29% 29%
Software
license
updates
and product
support(2) 7,497 138 7,635 6,056 158 6,214 24% 23%
TOTAL
OPERATING
EXPENSES $10,317 $(1,103) $9,214 $8,474 $(856) $7,618 22% 21%
Stock-based
compen-
sation(3) 194 (194) - 145 (145) - 34% *
Amortization
of intangible
assets(4) 867 (867) - 623 (623) - 39% *
Acquisition
related and
other 28 (28) - 65 (65) - (57%) *
Restructuring 14 (14) - 23 (23) - (41%) *
OPERATING
INCOME $4,874 $1,241 $6,115 $3,693 $1,014 $4,707 32% 30%
OPERATING
MARGIN % 32% 40% 31% 38% 6% 4%
INCOME TAX
EFFECTS
ON ABOVE
ADJUST-
MENTS(5) $1,409 $357 $1,766 $1,052 $287 $1,339 34% 32%
NET INCOME $3,484 $884 $4,368 $2,670 $727 $3,397 30% 29%
DILUTED
EARNINGS
PER SHARE(6) $0.67 $0.84 $0.51 $0.64 32% 30%
DILUTED
WEIGHTED
AVERAGE
COMMON
SHARES
OUTSTAND-
ING(6) 5,228 1 5,229 5,284 9 5,293 (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 condensed 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) As of February 29, 2008, approximately $9 million in estimated
revenues related to assumed support contracts will not be recognized
in fiscal 2008 due to business combination accounting rules.
(3) Stock-based compensation is included in the following GAAP operating
expenses:
Nine Months Ended Nine Months Ended
February 29, 2008 February 28, 2007
--------------------- -------------------
GAAP Adj. Non-GAAP GAAP Adj. Non-GAAP
--------------------- -------------------
Sales and marketing $38 $(38) $- $27 $(27) $-
Software license updates
and product support 8 (8) - 8 (8) -
Cost of services 9 (9) - 11 (11) -
Research and development 84 (84) - 63 (63) -
General and administrative 55 (55) - 36 (36) -
------ ------ ------ ------ ------ ------
Subtotal 194 (194) - 145 (145) -
------ ------ ------ ------ ------ ------
Acquisition related
and other 39 (39) - 1 (1) -
------ ------ ------ ------ ------ ------
Total stock-based
compensation $233 $(233) $- $146 $(146) $-
====== ====== ====== ====== ====== ======
(4) Estimated future amortization expense related to intangible assets
as of February 29, 2008 is as follows:
Remainder of Fiscal 2008 $317
Fiscal 2009 1,153
Fiscal 2010 1,029
Fiscal 2011 799
Fiscal 2012 660
Fiscal 2013 306
Thereafter 1,142
------
Total $5,406
======
(5) The income tax provision was calculated reflecting a tax rate of
28.8% and 28.3% in the first nine months of fiscal 2008 and 2007,
respectively.
(6) Non-GAAP diluted earnings per share and non-GAAP diluted weighted
average shares outstanding were calculated excluding the effects of
expensing stock options under Statement 123R.
* Not meaningful
ORACLE CORPORATION
Q3 FISCAL 2008 FINANCIAL RESULTS
CONDENSED CONSOLIDATED BALANCE SHEETS
($ in millions)
February 29, May 31,
2008 2007
-------------------------
ASSETS
Current Assets:
Cash and cash equivalents $8,409 $6,218
Marketable securities 2,097 802
Trade receivables, net 3,235 4,074
Deferred tax assets 964 968
Other current assets 1,026 821
-------------------------
Total Current Assets 15,731 12,883
Non-Current Assets:
Property, net 1,570 1,603
Intangible assets, net 5,406 5,964
Goodwill 13,677 13,479
Deferred tax assets 257 48
Other assets 675 595
-------------------------
Total Non-Current Assets 21,585 21,689
-------------------------
TOTAL ASSETS $37,316 $34,572
=========================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Commercial paper and other
short-term borrowings $1 $1,358
Accounts payable 383 315
Income taxes payable - 1,237
Accrued compensation and
related benefits 1,292 1,349
Accrued restructuring 168 201
Deferred revenues 3,683 3,492
Other current liabilities 1,303 1,435
-------------------------
Total Current Liabilities 6,830 9,387
Non-Current Liabilities:
Notes payable, non-current 6,237 6,235
Income taxes payable 1,522 -
Deferred tax liabilities 742 1,121
Accrued restructuring 229 258
Deferred revenues 257 93
Minority interests 341 316
Other long-term liabilities 343 243
-------------------------
Total Non-Current Liabilities 9,671 8,266
Stockholders' Equity 20,815 16,919
-------------------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $37,316 $34,572
=========================
ORACLE CORPORATION
Q3 FISCAL 2008 FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in millions)
Nine Months Ended
--------------------------------
February 29, 2008 February 28, 2007
---------------------------------
Cash Flows From Operating Activities:
Net income $3,484 $2,670
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 202 184
Amortization of intangible assets 867 623
Deferred income taxes (130) (20)
Minority interests in income 45 52
Stock-based compensation 233 146
Tax benefit on the exercise of stock
options 492 259
Excess tax benefits from stock-based
compensation (403) (204)
In-process research and development 7 95
Other gains, net (64) (20)
Changes in operating assets and
liabilities, net of effects from
acquisitions:
Decrease in trade receivables, net 980 501
Decrease (increase) in prepaid
expenses and other assets 61 (33)
Decrease in accounts payable and
other liabilities (482) (817)
Decrease in income taxes payable (273) (110)
Increase (decrease) in deferred
revenues 88 (21)
------------------------
Net cash provided by operating
activities 5,107 3,305
-------------------------
Cash Flows From Investing Activities:
Purchases of marketable securities
and other investments (3,629) (4,686)
Proceeds from maturities and sales
of marketable securities and other
investments 2,532 4,653
Acquisitions, net of cash acquired (700) (2,290)
Capital expenditures (195) (183)
Proceeds from sale of property 153 2
-------------------------
Net cash used for investing
activities (1,839) (2,504)
-------------------------
Cash Flows From Financing Activities:
Payments for repurchases of common stock (1,520) (2,933)
Proceeds from issuance of common stock 1,047 684
Payments of debt (1,362) (175)
Excess tax benefits from stock-based
compensation 403 204
Distributions to minority interests (49) (46)
-------------------------
Net cash used for financing
activities (1,481) (2,266)
-------------------------
Effect of exchange rate changes on
cash and cash equivalents 404 56
-------------------------
Net increase (decrease) in cash and
cash equivalents 2,191 (1,409)
-------------------------
Cash and cash equivalents at
beginning of period 6,218 6,659
-------------------------
Cash and cash equivalents at end of
period $8,409 $5,250
=========================
ORACLE CORPORATION
Q3 FISCAL 2008 FINANCIAL RESULTS
FREE CASH FLOW - TRAILING 4-QUARTERS (1)
($ in millions)
Fiscal 2007 Fiscal 2008
----------------------------------------------------------
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
----------------------------------------------------------
GAAP Operating
Cash Flow $4,706 $4,651 $4,984 $5,520 $6,598 $6,957 $7,322
Capital
Expenditures(2) (233) (256) (258) (319) (357) (369) (331)
----------------------------------------------------------
Free Cash Flow $4,473 $4,395 $4,726 $5,201 $6,241 $6,588 $6,991
==========================================================
% Growth over
prior year 32% 32% 29% 21% 40% 50% 48%
----------------------------------------------------------
GAAP Net Income $3,532 $3,702 $3,970 $4,274 $4,444 $4,781 $5,088
Free Cash Flow
as a % of Net
Income 127% 119% 119% 122% 140% 138% 137%
(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) Represents capital expenditures as reported in cash flows from
investing activities on our cash flow statements presented in
accordance with GAAP.
ORACLE CORPORATION
Q3 FISCAL 2008 FINANCIAL RESULTS
SUPPLEMENTAL ANALYSIS OF GAAP REVENUES AND HEADCOUNT (1)
(in millions, except headcount data)
Fiscal 2007
----------------------------------------
Q1 Q2 Q3 Q4 TOTAL
----------------------------------------
REVENUES
New software licenses $804 $1,207 $1,390 $2,481 $5,882
Software license updates
and product support 1,941 2,007 2,108 2,272 8,329
----------------------------------------
Software Revenues 2,745 3,214 3,498 4,753 14,211
Consulting 640 716 694 819 2,869
On Demand 125 140 142 151 557
Education 81 93 80 105 359
----------------------------------------
Services Revenues 846 949 916 1,075 3,785
----------------------------------------
Total Revenues $3,591 $4,163 $4,414 $5,828 $17,996
========================================
AS REPORTED REVENUE GROWTH RATES
New software licenses 28% 14% 27% 17% 20%
Software license updates
and product support 29% 29% 24% 21% 25%
Software Revenues 29% 23% 25% 19% 23%
Consulting 33% 42% 38% 30% 35%
On Demand 49% 61% 48% 16% 40%
Education 13% 14% 8% 10% 11%
Services Revenues 33% 41% 36% 26% 33%
Total Revenues 30% 26% 27% 20% 25%
CONSTANT CURRENCY GROWTH
RATES
New software licenses 26% 10% 23% 13% 17%
Software license updates
and product support 27% 25% 20% 17% 22%
Software Revenues 27% 19% 21% 15% 20%
Consulting 31% 37% 34% 24% 31%
On Demand 47% 56% 43% 12% 37%
Education 11% 11% 4% 6% 8%
Services Revenues 31% 36% 32% 20% 29%
Total Revenues 28% 23% 23% 16% 22%
----------------------------------------
GEOGRAPHIC REVENUES
REVENUES
Americas $1,956 $2,170 $2,315 $3,018 $9,460
Europe, Middle East &
Africa 1,140 1,422 1,484 1,992 6,037
Asia Pacific 495 571 615 818 2,499
----------------------------------------
Total Revenues $3,591 $4,163 $4,414 $5,828 $17,996
========================================
HEADCOUNT (2)
GEOGRAPHIC AREA
Americas 26,798 27,444 27,873 29,830
Europe, Middle East &
Africa 14,199 14,640 14,758 15,680
Asia Pacific 24,129 26,350 27,850 29,164
----------------------------------------
Total Company 65,126 68,434 70,481 74,674
========================================
Fiscal 2008
-----------------------------------------
Q1 Q2 Q3 Q4 TOTAL
-----------------------------------------
REVENUES
New software licenses $1,087 $1,668 $1,616 $4,371
Software license updates and
product support 2,383 2,491 2,624 7,497
-----------------------------------------
Software Revenues 3,470 4,159 4,240 11,868
Consulting 801 877 843 2,520
On Demand 158 167 174 500
Education 100 110 92 303
-----------------------------------------
Services Revenues 1,059 1,154 1,109 3,323
-----------------------------------------
Total Revenues $4,529 $5,313 $5,349 $15,191
=========================================
AS REPORTED REVENUE GROWTH RATES
New software licenses 35% 38% 16% 29%
Software license updates and
product support 23% 24% 25% 24%
Software Revenues 26% 29% 21% 25%
Consulting 25% 23% 21% 23%
On Demand 27% 20% 23% 23%
Education 24% 17% 16% 19%
Services Revenues 25% 22% 21% 23%
Total Revenues 26% 28% 21% 25%
CONSTANT CURRENCY GROWTH RATES
New software licenses 32% 31% 9% 22%
Software license updates and
product support 19% 18% 18% 18%
Software Revenues 23% 23% 15% 20%
Consulting 20% 15% 14% 16%
On Demand 23% 15% 17% 18%
Education 20% 10% 9% 13%
Services Revenues 21% 15% 14% 16%
Total Revenues 22% 21% 15% 19%
-----------------------------------------
GEOGRAPHIC REVENUES
REVENUES
Americas $2,375 $2,674 $2,707 $7,756
Europe, Middle East & Africa 1,530 1,865 1,871 5,265
Asia Pacific 624 774 771 2,170
-----------------------------------------
Total Revenues $4,529 $5,313 $5,349 $15,191
=========================================
HEADCOUNT (2)
GEOGRAPHIC AREA
Americas 30,455 30,654 30,624
Europe, Middle East & Africa 15,985 16,140 16,383
Asia Pacific 31,212 32,855 33,212
-----------------------------------------
Total Company 77,652 79,649 80,219
=========================================
(1) The sum of the quarterly financial information may vary from
year-to-date financial information due to rounding.
(2) Headcount has increased primarily due to our acquisitions.
ORACLE CORPORATION
Q3 FISCAL 2008 FINANCIAL RESULTS
SUPPLEMENTAL TOTAL SOFTWARE PRODUCT REVENUE ANALYSIS (1)
($ in millions)
Fiscal 2007
-----------------------------------------
Q1 Q2 Q3 Q4 TOTAL
-----------------------------------------
APPLICATIONS REVENUES
New software licenses $228 $340 $423 $726 $1,716
Software license updates and
product support 703 728 769 832 3,032
-----------------------------------------
Software Revenues $931 $1,068 $1,192 $1,558 $4,748
=========================================
AS REPORTED GROWTH RATES
New software licenses 80% 28% 57% 13% 32%
Software license updates and
product support 51% 45% 27% 23% 35%
Software Revenues 57% 39% 36% 18% 34%
CONSTANT CURRENCY GROWTH RATES
New software licenses 78% 25% 52% 10% 29%
Software license updates and
product support 49% 41% 23% 19% 32%
Software Revenues 55% 35% 32% 15% 31%
-----------------------------------------
DATABASE & MIDDLEWARE REVENUES
New software licenses $576 $867 $967 $1,755 $4,166
Software license updates and
product support 1,238 1,279 1,339 1,440 5,297
-----------------------------------------
Software Revenues $1,814 $2,146 $2,306 $3,195 $9,463
=========================================
AS REPORTED GROWTH RATES
New software licenses 15% 9% 17% 18% 16%
Software license updates and
product support 19% 21% 22% 20% 21%
Software Revenues 18% 16% 20% 19% 18%
CONSTANT CURRENCY GROWTH RATES
New software licenses 13% 5% 13% 15% 12%
Software license updates and
product support 18% 18% 19% 17% 18%
Software Revenues 16% 13% 16% 16% 15%
Fiscal 2008
-----------------------------------------
Q1 Q2 Q3 Q4 TOTAL
-----------------------------------------
APPLICATIONS REVENUES
New software licenses $376 $553 $451 $1,380
Software license updates and
product support 886 929 974 2,789
-----------------------------------------
Software Revenues $1,262 $1,482 $1,425 $4,169
=========================================
AS REPORTED GROWTH RATES
New software licenses 65% 63% 7% 39%
Software license updates and
product support 26% 28% 27% 27%
Software Revenues 36% 39% 20% 31%
CONSTANT CURRENCY GROWTH RATES
New software licenses 61% 56% 2% 34%
Software license updates and
product support 22% 21% 20% 21%
Software Revenues 32% 32% 14% 25%
-----------------------------------------
DATABASE & MIDDLEWARE REVENUES
New software licenses $711 $1,115 $1,165 $2,991
Software license updates and
product support 1,497 1,562 1,650 4,708
-----------------------------------------
Software Revenues $2,208 $2,677 $2,815 $7,699
=========================================
AS REPORTED GROWTH RATES
New software licenses 23% 29% 20% 24%
Software license updates and
product support 21% 22% 23% 22%
Software Revenues 22% 25% 22% 23%
CONSTANT CURRENCY GROWTH RATES
New software licenses 20% 22% 13% 18%
Software license updates and
product support 17% 16% 17% 17%
Software Revenues 18% 18% 15% 17%
(1) The sum of the quarterly financial information may vary from
year-to-date financial information due to rounding.
ORACLE CORPORATION
Q3 FISCAL 2008 FINANCIAL RESULTS
SUPPLEMENTAL GEOGRAPHIC NEW SOFTWARE LICENSE REVENUE ANALYSIS (1) (2)
($ in millions)
Fiscal 2007
-----------------------------------------
Q1 Q2 Q3 Q4 TOTAL
-----------------------------------------
AMERICAS
Database & Middleware $232 $333 $383 $795 $1,743
Applications 126 195 250 415 986
-----------------------------------------
New Software License
Revenues $358 $528 $633 $1,210 $2,729
=========================================
AS REPORTED GROWTH RATES
Database & Middleware 19% 2% 15% 20% 15%
Applications 69% 19% 69% 5% 26%
New Software License
Revenues 33% 8% 31% 14% 19%
CONSTANT CURRENCY GROWTH RATES
Database & Middleware 18% 2% 15% 19% 14%
Applications 69% 19% 69% 4% 26%
New Software License
Revenues 32% 7% 31% 13% 18%
-----------------------------------------
EUROPE / MIDDLE EAST / AFRICA
Database & Middleware $184 $341 $363 $619 $1,507
Applications 69 101 124 224 518
-----------------------------------------
New Software License
Revenues $253 $442 $487 $843 $2,025
=========================================
AS REPORTED GROWTH RATES
Database & Middleware 12% 21% 15% 20% 18%
Applications 83% 35% 29% 42% 42%
New Software License
Revenues 25% 24% 18% 25% 23%
CONSTANT CURRENCY GROWTH RATES
Database & Middleware 8% 11% 6% 12% 10%
Applications 78% 25% 19% 34% 33%
New Software License
Revenues 21% 14% 9% 18% 15%
-----------------------------------------
ASIA PACIFIC
Database & Middleware $149 $185 $213 $322 $869
Applications 33 44 49 87 212
-----------------------------------------
New Software License
Revenues $182 $229 $262 $409 $1,081
=========================================
AS REPORTED GROWTH RATES
Database & Middleware 12% 5% 26% 10% 13%
Applications 126% 58% 89% (1%) 36%
New Software License
Revenues 23% 12% 34% 8% 17%
CONSTANT CURRENCY GROWTH RATES
Database & Middleware 13% 2% 24% 7% 11%
Applications 124% 53% 83% (4%) 33%
New Software License
Revenues 24% 9% 32% 5% 15%
-----------------------------------------
TOTAL COMPANY
Database & Middleware $565 $859 $959 $1,736 $4,119
Applications 228 340 423 726 1,716
-----------------------------------------
New Software License
Revenues $793 $1,199 $1,382 $2,462 $5,835
=========================================
AS REPORTED GROWTH RATES
Database & Middleware 15% 9% 17% 18% 15%
Applications 80% 28% 57% 13% 32%
New Software License
Revenues 28% 14% 27% 17% 20%
CONSTANT CURRENCY GROWTH RATES
Database & Middleware 13% 5% 13% 14% 12%
Applications 78% 25% 52% 10% 29%
New Software License
Revenues 27% 10% 23% 13% 16%
Fiscal 2008
-----------------------------------------
Q1 Q2 Q3 Q4 TOTAL
-----------------------------------------
AMERICAS
Database & Middleware $286 $438 $476 $1,200
Applications 199 306 252 757
-----------------------------------------
New Software License
Revenues $485 $744 $728 $1,957
=========================================
AS REPORTED GROWTH RATES
Database & Middleware 23% 32% 24% 27%
Applications 58% 57% 1% 33%
New Software License
Revenues 35% 41% 15% 29%
CONSTANT CURRENCY GROWTH RATES
Database & Middleware 22% 29% 21% 24%
Applications 57% 54% (1%) 31%
New Software License
Revenues 34% 38% 12% 26%
-----------------------------------------
EUROPE / MIDDLE EAST / AFRICA
Database & Middleware $253 $420 $446 $1,119
Applications 123 174 141 438
-----------------------------------------
New Software License
Revenues $376 $594 $587 $1,557
=========================================
AS REPORTED GROWTH RATES
Database & Middleware 38% 23% 23% 26%
Applications 77% 72% 14% 49%
New Software License
Revenues 49% 34% 21% 32%
CONSTANT CURRENCY GROWTH RATES
Database & Middleware 30% 12% 11% 16%
Applications 69% 58% 6% 39%
New Software License
Revenues 41% 23% 10% 21%
-----------------------------------------
ASIA PACIFIC
Database & Middleware $155 $244 $231 $630
Applications 54 73 58 185
-----------------------------------------
New Software License
Revenues $209 $317 $289 $815
=========================================
AS REPORTED GROWTH RATES
Database & Middleware 4% 32% 8% 15%
Applications 67% 66% 18% 47%
New Software License
Revenues 15% 39% 10% 21%
CONSTANT CURRENCY GROWTH RATES
Database & Middleware 1% 26% 0% 9%
Applications 60% 57% 5% 37%
New Software License
Revenues 12% 32% 1% 14%
-----------------------------------------
TOTAL COMPANY
Database & Middleware $694 $1,102 $1,153 $2,949
Applications 376 553 451 1,380
-----------------------------------------
New Software License
Revenues $1,070 $1,655 $1,604 $4,329
=========================================
AS REPORTED GROWTH RATES
Database & Middleware 23% 28% 20% 24%
Applications 65% 63% 7% 39%
New Software License
Revenues 35% 38% 16% 28%
CONSTANT CURRENCY GROWTH RATES
Database & Middleware 19% 21% 12% 17%
Applications 61% 56% 2% 34%
New Software License
Revenues 31% 31% 9% 22%
(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 2008 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 effects: -- Support deferred revenue: Business combination accounting rules require
us to account for the fair value of support contracts assumed in connection
with our acquisitions. Because these are typically one-year contracts, our
GAAP revenues for the one-year period subsequent to our acquisitions do not
reflect the full amount of software license updates and product support
revenues on assumed support contracts that would have otherwise been recorded
by the acquired entities. The non-GAAP adjustment is intended to reflect the
full amount of such revenues. 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 certain that customers will renew these contracts. -- Stock-based compensation expenses: We have excluded the effect of
stock-based compensation expenses from our non-GAAP operating expenses and net
income. 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 expenses: We have excluded the effect
of amortization of intangibles from our non-GAAP operating expenses and net
income. Amortization of intangible assets expense 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 revenues earned during the periods presented and will
contribute to future period revenues as well. Amortization expenses will recur
in future periods. -- Acquisition related and other expenses, and restructuring expenses: We
incurred significant expenses in connection with our acquisitions and also
incurred certain other operating expenses or income, which we would not have
otherwise incurred in the periods presented. Acquisition related and other
expenses 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 expenses for transitional employees, certain business
combination contingency adjustments after the purchase price allocation period
has ended, and certain other operating expenses or income. Stock-based
compensation expenses included in acquisition related and other expenses
primarily resulted from unvested options assumed in acquisitions whose vesting
was fully accelerated upon termination of the employees pursuant to the terms
of those options. Restructuring expenses consist of Oracle employee severance
and other exit costs. We believe it is useful for investors to understand the
effect of these items on our total operating expenses. Although acquisition
related expenses and restructuring expenses are not recurring with respect to
past acquisitions, we will incur these expenses in connection with future
acquisitions. For the three and nine months ended February 29, 2008, acquisition
related and other expenses include a gain on property sale of $57 million.
For the nine months ended February 28, 2007, acquisition related and other
expenses included a $52 million benefit related to the settlement of a lawsuit
filed against PeopleSoft, Inc. on behalf of the U.S. government. This lawsuit
was filed in October 2003, prior to our acquisition of PeopleSoft and
represented a pre-acquisition contingency that we identified and assumed in
connection with our acquisition of PeopleSoft. In October 2006, we agreed to
pay the U.S. government $98 million to settle this lawsuit. Business
combination accounting standards require that after the end of the purchase
price allocation period, any adjustment that results from a pre-acquisition
contingency should be included as an element of net income in the period of
settlement, versus an adjustment to the original purchase price allocation.
Since the purchase price allocation period for PeopleSoft ended in the third
quarter of fiscal 2006, the favorable difference of $52 million between the
estimated exposure recorded for this lawsuit during the purchase price
allocation period and the actual settlement amount has been included in our
consolidated statement of operations for the nine months ended February 28,
2007 as a component of acquisition related and other expenses.
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