ORACLE CORP - FORM 8-K - EX-99.1

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8-K - FORM 8-K - ORACLE CORP	d239177d8k.htm

Exhibit 99.1

LOGO

For Immediate Release


Contact:	Ken Bond	Deborah Hellinger
	Oracle Investor Relations	Oracle Corporate Communications
	1.650.607.0349	1.212.508.7935
	ken.bond@oracle.com	deborah.hellinger@oracle.com

Q1 FY17 GAAP SAAS AND PAAS REVENUES WERE UP 77%, AND UP 79% IN CONSTANT CURRENCY

Q1 FY17 Non-GAAP SaaS and PaaS Revenues grew 82% in Constant Currency

REDWOOD SHORES, Calif., September 15, 2016 — Oracle Corporation (NYSE: ORCL) today announced fiscal 2017 Q1 results. Total Revenues were $8.6 billion, up 2% in U.S. dollars and up 3% in constant currency. Cloud plus On-Premise Software Revenues were $6.8 billion, up 5% in U.S. dollars and up 6% in constant currency. Cloud software as a service (SaaS) and platform as a service (PaaS) revenues were $798 million, up 77% in U.S. dollars and up 79% in constant currency. Total Cloud Revenues, including infrastructure as a service (IaaS), were $969 million, up 59% in U.S. dollars and up 61% in constant currency. Operating Income was $2.6 billion and Operating Margin was 31%. Non-GAAP Operating Income was $3.4 billion and non-GAAP Operating Margin was 39%. Net Income was $1.8 billion while non-GAAP Net Income was $2.3 billion. Earnings Per Share was up 10% to $0.43, while non-GAAP Earnings Per Share was up 4% to $0.55. GAAP and non-GAAP Earnings Per Share was negatively impacted by three factors: 1 cent because of a higher tax rate due to more cloud sales being in the U.S, half of one cent because of borrowing, and 1 cent due to strengthening of the U.S. dollar.

Short-term deferred revenues were $9.5 billion, up 4% in U.S. dollars and up 5% in constant currency compared with a year ago. Operating cash flow on a trailing twelve-month basis was $13.7 billion.

“Our Cloud business plus our On-Premise Software business grew 7% in constant currency in the first quarter, on a non-GAAP basis,” said Oracle CEO, Safra Catz. “The overall top-line growth of our two strategic businesses was driven by non-GAAP SaaS and PaaS revenue growing 82% in constant currency, substantially outperforming our guidance. As our SaaS and PaaS business continues its rapid growth, we expect its gross margins to climb from 62% this quarter toward our 80% target.”

“This year we are on track to sell more than $2 billion of SaaS and PaaS annually recurring revenue,” said Oracle CEO, Mark Hurd. “We believe this will be the second year in a row that Oracle has sold more SaaS and PaaS than any cloud services provider. In the first quarter alone, we added more than 750 new SaaS customers including 344 new SaaS Fusion ERP customers – that’s more ERP customers than Workday has sold in the history of their company.”

“Next week at Oracle OpenWorld, we will introduce the second generation of our Infrastructure as a Service,” said Larry Ellison, Oracle Chairman and CTO. “Our Generation2 IaaS delivers twice the compute, twice the memory, four times the storage and ten times more I/O at a 20% lower price than Amazon Web Services. IaaS represents a huge new cloud opportunity for Oracle to layer on top of our rapidly growing SaaS and PaaS businesses.”

The Board of Directors also declared a quarterly cash dividend of $0.15 per share of outstanding common stock. This dividend will be paid to stockholders of record as of the close of business on October 12, 2016, with a payment date of October 26, 2016.

Q1 Fiscal 2017 Earnings Conference Call and Webcast

Oracle will hold a conference call and webcast today to discuss these results at 2:00 p.m. Pacific. You may listen to the call by dialing (816) 287-5563, Passcode: 425392. To access the live webcast of this event, please visit the Oracle Investor Relations website at http://www.oracle.com/investor. In addition, Oracle’s Q1 results and Fiscal 2017 financial tables are available on the Oracle Investor Relations website.

A replay of the conference call will also be available by dialing (855) 859-2056 or (404) 537-3406, Passcode: 77971381.

About Oracle

Oracle offers a comprehensive and fully integrated stack of cloud applications and platform services. For more information about Oracle (NYSE: ORCL), visit www.oracle.com or contact Investor Relations at investor_us@oracle.com or (650) 506-4073.

# # #

Trademarks

Oracle and Java are registered trademarks of Oracle and/or its affiliates. Other names may be trademarks of their respective owners.

“Safe Harbor” Statement: Statements in this press release relating to Oracle’s future plans, expectations, beliefs, intentions and prospects, including statements regarding our expectations of future growth in our SaaS and PaaS gross margins and recurring revenues; our introduction of new products; and the opportunities to grow the IaaS business are all “forward-looking statements” and are subject to material risks and uncertainties. Many factors could affect our current expectations and our actual results, and could cause actual results to differ materially. We presently consider the following to be among the important factors that could cause actual results to differ materially from expectations: (1) Our cloud computing strategy, including our Oracle Cloud SaaS, PaaS, IaaS and data as a service offerings, may not be successful. (2) If we are unable to develop new or sufficiently differentiated products and services, or to enhance and improve our products and support services in a timely manner or to position and/or price our products and services to meet market demand, customers may not buy new software licenses, cloud software subscriptions or hardware systems products or purchase or renew support contracts. (3) If the security measures for our software, hardware, services or Oracle Cloud offerings are compromised or if such offerings contain significant coding, manufacturing or configuration errors, we may experience reputational harm, legal claims and financial exposure. (4) We may fail to achieve our financial forecasts due to such factors as delays or size reductions in transactions, fewer large transactions in a particular quarter, fluctuations in currency exchange rates, delays in delivery of new products or releases or a decline in our renewal rates for support contracts. (5) Our international sales and operations subject us to additional risks that can adversely affect our operating results, including risks relating to foreign currency gains and losses. (6) Economic, geopolitical and market conditions, including the continued slow economic recovery in the U.S. and other parts of the world, can adversely affect our business, results of operations and financial condition, including our revenue growth and profitability, which in turn could adversely affect our stock price. (7) We have an active acquisition program and our acquisitions may not be successful, may involve unanticipated costs or other integration issues or may disrupt our existing operations. A detailed discussion of these factors and other risks that affect our business is contained in our U.S. Securities and Exchange Commission (SEC) filings, including our most recent reports on Form 10-K and Form 10-Q, particularly under the heading “Risk Factors.” Copies of these filings are available online from the SEC or by contacting Oracle Corporation’s Investor Relations Department at (650) 506-4073 or by clicking on SEC Filings on Oracle’s Investor Relations website at http://www.oracle.com/investor. All information set forth in this press release is current as of September 15, 2016. Oracle undertakes no duty to update any statement in light of new information or future events.

ORACLE CORPORATION

Q1 FISCAL 2017 FINANCIAL RESULTS

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

($ in millions, except per share data)


	Three Months Ended August 31,												% Increase (Decrease) in US $			% Increase (Decrease) in Constant Currency (1)
	2016			% of Revenues			2015			% of Revenues			% Increase (Decrease) in US $			% Increase (Decrease) in Constant Currency (1)

REVENUES
Cloud software as a service and platform as a service	$	798			9%		$	451			5%			77%			79%
Cloud infrastructure as a service		171			2%			160			2%			7%			10%

Total cloud revenues		969			11%			611			7%			59%			61%

New software licenses		1,030			12%			1,151			14%			(11%	)		(10%	)
Software license updates and product support		4,792			56%			4,696			56%			2%			3%

Total on-premise software revenues		5,822			68%			5,847			70%			0%			1%

Total cloud and on-premise software revenues		6,791			79%			6,458			77%			5%			6%

Hardware products		462			6%			570			7%			(19%	)		(18%	)
Hardware support		534			6%			558			6%			(4%	)		(3%	)

Total hardware revenues		996			12%			1,128			13%			(12%	)		(11%	)

Total services revenues		808			9%			862			10%			(6%	)		(5%	)

Total revenues		8,595			100%			8,448			100%			2%			3%


OPERATING EXPENSES
Sales and marketing		1,919			22%			1,731			21%			11%			12%
Cloud software as a service and platform as a service		319			4%			276			3%			16%			18%
Cloud infrastructure as a service		96			1%			89			1%			9%			10%
Software license updates and product support		275			3%			291			4%			(6%	)		(4%	)
Hardware products		242			3%			303			4%			(20%	)		(19%	)
Hardware support		149			2%			180			2%			(18%	)		(16%	)
Services		695			8%			711			8%			(2%	)		0%
Research and development		1,520			17%			1,390			17%			9%			11%
General and administrative		315			4%			257			3%			22%			25%
Amortization of intangible assets		311			4%			452			5%			(31%	)		(31%	)
Acquisition related and other		14			0%			31			0%			(55%	)		(54%	)
Restructuring		99			1%			83			1%			19%			23%

Total operating expenses		5,954			69%			5,794			69%			3%			4%


OPERATING INCOME		2,641			31%			2,654			31%			(1%	)		0%
Interest expense		(416	)		(5%	)		(374	)		(4%	)		11%			11%
Non-operating income, net		148			2%			30			0%			403%			467%

INCOME BEFORE PROVISION FOR INCOME TAXES		2,373			28%			2,310			27%			3%			4%

Provision for income taxes		541			7%			563			6%			(4%	)		(3%	)

NET INCOME	$	1,832			21%		$	1,747			21%			5%			6%

EARNINGS PER SHARE:
Basic	$	0.44					$	0.40
Diluted	$	0.43					$	0.40
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic		4,119						4,317
Diluted		4,221						4,412

(1)

We compare the percent change in the results from one period to another period using constant currency disclosure. We present constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the exchange rates in effect on May 31, 2016, which was the last day of our prior fiscal year, rather than the actual exchange rates in effect during the respective periods. Movements in international currencies relative to the United States dollar during the three months ended August 31, 2016 compared with the corresponding prior year period decreased our revenues by 1 percentage point, operating expenses by 1 percentage point and operating income by 1 percentage point.

ORACLE CORPORATION

Q1 FISCAL 2017 FINANCIAL RESULTS

RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)

($ in millions, except per share data)


	Three Months Ended August 31,													% Increase (Decrease) in US $				% Increase (Decrease) in Constant Currency (2)
	2016 GAAP		Adj.			2016 Non-GAAP		2015 GAAP		Adj.		2015 Non-GAAP		GAAP		Non-GAAP		GAAP		Non-GAAP
TOTAL REVENUES	$	8,595	$	18		$	8,613	$	8,448	$	3	$	8,451		2%		2%		3%		3%

TOTAL CLOUD AND ON-PREMISE SOFTWARE REVENUES	$	6,791	$	18		$	6,809	$	6,458	$	2	$	6,460		5%		5%		6%		7%
Cloud software as a service and platform as a service		798		17			815		451		1		452		77%		80%		79%		82%
Cloud infrastructure as a service		171		—			171		160		—		160		7%		7%		10%		10%
New software licenses		1,030		—			1,030		1,151		—		1,151		(11%)		(11%)		(10%)		(10%)
Software license updates and product support		4,792		1			4,793		4,696		1		4,697		2%		2%		3%		3%
TOTAL HARDWARE REVENUES	$	996	$	—		$	996	$	1,128	$	1	$	1,129		(12%)		(12%)		(11%)		(11%)
Hardware products		462		—			462		570		—		570		(19%)		(19%)		(18%)		(18%)
Hardware support		534		—			534		558		1		559		(4%)		(4%)		(3%)		(3%)

TOTAL OPERATING EXPENSES	$	5,954	$	(743	)	$	5,211	$	5,794	$	(816)	$	4,978		3%		5%		4%		6%
Cloud software as a service and platform as a service (3)		319		(5	)		314		276		(4)		272		16%		15%		18%		17%
Stock-based compensation (3)		314		(314	)		—		246		(246)		—		28%		*		28%		*
Amortization of intangible assets (4)		311		(311	)		—		452		(452)		—		(31%)		*		(31%)		*
Acquisition related and other		14		(14	)		—		31		(31)		—		(55%)		*		(54%)		*
Restructuring		99		(99	)		—		83		(83)		—		19%		*		23%		*
CLOUD SOFTWARE AS A SERVICE AND PLATFORM AS A SERVICE MARGIN %		60%					62%		39%				40%		2,124 bp.		2,082 bp.		2,166 bp.		2,123 bp.
OPERATING INCOME	$	2,641	$	761		$	3,402	$	2,654	$	819	$	3,473		(1%)		(2%)		0%		(1%)
OPERATING MARGIN %		31%					39%		31%				41%		(69) bp.		(160) bp.		(82) bp.		(180) bp.
INCOME TAX EFFECTS (5)	$	541	$	258		$	799	$	563	$	219	$	782		(4%)		2%		(3%)		3%
NET INCOME	$	1,832	$	503		$	2,335	$	1,747	$	600	$	2,347		5%		(1%)		6%		0%
DILUTED EARNINGS PER SHARE	$	0.43				$	0.55	$	0.40			$	0.53		10%		4%		11%		5%
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING		4,221		—			4,221		4,412		—		4,412		(4%)		(4%)		(4%)		(4%)

(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)

(3)	Stock-based compensation was included in the following GAAP operating expense categories:


	Three Months Ended August 31, 2016							Three Months Ended August 31, 2015
	GAAP		Adj.			Non-GAAP		GAAP		Adj.			Non-GAAP
Sales and marketing	$	63	$	(63	)	$	—	$	51	$	(51	)	$	—
Cloud infrastructure as a service		1		(1	)		—		1		(1	)		—
Software license updates and product support		6		(6	)		—		6		(6	)		—
Hardware products		2		(2	)		—		2		(2	)		—
Hardware support		1		(1	)		—		1		(1	)		—
Services		8		(8	)		—		8		(8	)		—
Research and development		195		(195	)		—		148		(148	)		—
General and administrative		38		(38	)		—		29		(29	)		—

Subtotal		314		(314	)		—		246		(246	)		—

Cloud software as a service and platform as a service		5		(5	)		—		4		(4	)		—
Acquisition related and other		—		—			—		3		(3	)		—

Total stock-based compensation	$	319	$	(319	)	$	—	$	253	$	(253	)	$	—

(4)	Estimated future annual amortization expense related to intangible assets as of August 31, 2016 was as follows:


Remainder of fiscal 2017	$	806
Fiscal 2018		945
Fiscal 2019		836
Fiscal 2020		688
Fiscal 2021		543
Fiscal 2022		442
Thereafter		831

Total intangible assets, net	$	5,091

(5)

Income tax effects were calculated reflecting an effective GAAP tax rate of 22.8% and 24.4% in the first quarter of fiscal 2017 and 2016, respectively, and an effective non-GAAP tax rate of 25.5% and 25.0% in the first quarter of fiscal 2017 and 2016, respectively. The difference between our GAAP and non-GAAP tax rate in the first quarter of fiscal 2017 was primarily due to the net tax effects on stock-based compensation expense and acquisition related items, including the tax effects of amortization of intangible assets. The difference between our GAAP and non-GAAP tax rate in the first quarter of fiscal 2016 was primarily due to the net tax effects of acquisition related items, including the tax effects of amortization of intangible assets.

*	Not meaningful

ORACLE CORPORATION

Q1 FISCAL 2017 FINANCIAL RESULTS

CONDENSED CONSOLIDATED BALANCE SHEETS

($ in millions)


	August 31, 2016		May 31, 2016
ASSETS

Current Assets:
Cash and cash equivalents	$	28,614	$	20,152
Marketable securities		39,782		35,973
Trade receivables, net		3,407		5,385
Inventories		286		212
Prepaid expenses and other current assets		2,362		2,591

Total Current Assets		74,451		64,313
Non-Current Assets:
Property, plant and equipment, net		4,108		4,000
Intangible assets, net		5,091		4,943
Goodwill, net		35,350		34,590
Deferred tax assets		1,142		1,291
Other assets		3,081		3,043

Total Non-Current Assets		48,772		47,867

TOTAL ASSETS	$	123,223	$	112,180

LIABILITIES AND EQUITY
Current Liabilities:
Notes payable and other borrowings, current	$	999	$	3,750
Accounts payable		551		504
Accrued compensation and related benefits		1,419		1,966
Deferred revenues		9,462		7,655
Other current liabilities		2,711		3,333

Total Current Liabilities		15,142		17,208
Non-Current Liabilities:
Notes payable, non-current		53,057		40,105
Income taxes payable		5,031		4,908
Other non-current liabilities		2,161		2,169

Total Non-Current Liabilities		60,249		47,182
Equity		47,832		47,790

TOTAL LIABILITIES AND EQUITY	$	123,223	$	112,180

ORACLE CORPORATION

Q1 FISCAL 2017 FINANCIAL RESULTS

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

($ in millions)


	Three Months Ended August 31,
	2016			2015
Cash Flows From Operating Activities:
Net income	$	1,832		$	1,747
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		222			219
Amortization of intangible assets		311			452
Deferred income taxes		145			(30	)
Stock-based compensation		319			253
Tax benefits on the vesting of restricted stock-based awards and exercise of stock options		215			102
Other, net		39			45
Changes in operating assets and liabilities, net of effects from acquisitions:
Decrease in trade receivables, net		1,993			2,150
(Increase) decrease in inventories		(75	)		50
Decrease in prepaid expenses and other assets		435			379
Decrease in accounts payable and other liabilities		(1,013	)		(1,353	)
Decrease in income taxes payable		(309	)		(204	)
Increase in deferred revenues		1,761			2,071

Net cash provided by operating activities		5,875			5,881

Cash Flows From Investing Activities:
Purchases of marketable securities and other investments		(5,513	)		(11,669	)
Proceeds from maturities and sales of marketable securities and other investments		1,752			4,644
Acquisitions, net of cash acquired		(1,143	)		—
Capital expenditures		(299	)		(446	)

Net cash used for investing activities		(5,203	)		(7,471	)

Cash Flows From Financing Activities:
Payments for repurchases of common stock		(2,002	)		(2,846	)
Proceeds from issuances of common stock		487			296
Shares repurchased for tax withholdings upon vesting of restricted stock-based awards		(170	)		(70	)
Payments of dividends to stockholders		(618	)		(650	)
Proceeds from borrowings, net of issuance costs		13,932			—
Repayments of borrowings		(3,750	)		—
Distributions to noncontrolling interests		(167	)		(25	)

Net cash provided by (used for) financing activities		7,712			(3,295	)

Effect of exchange rate changes on cash and cash equivalents		78			(92	)

Net increase (decrease) in cash and cash equivalents		8,462			(4,977	)

Cash and cash equivalents at beginning of period		20,152			21,716

Cash and cash equivalents at end of period	$	28,614		$	16,739

ORACLE CORPORATION

Q1 FISCAL 2017 FINANCIAL RESULTS

FREE CASH FLOW - TRAILING 4-QUARTERS (1)

($ in millions)


	Fiscal 2016												Fiscal 2017
	Q1			Q2			Q3			Q4			Q1			Q2	Q3	Q4
GAAP Operating Cash Flow	$	13,682		$	13,113		$	14,252		$	13,685		$	13,679

Capital Expenditures		(1,636	)		(1,606	)		(1,606	)		(1,189	)		(1,042	)

Free Cash Flow	$	12,046		$	11,507		$	12,646		$	12,496		$	12,637


% Growth over prior year		(20)%			(22	)%		(8)%			(5)%			5%
GAAP Net Income	$	9,501		$	9,198		$	8,844		$	8,901		$	8,986

Free Cash Flow as a % of Net Income		127%			125%			143%			140%			141%

(1)

To supplement our statements of cash flows presented on a GAAP basis, we use non-GAAP measures of cash flows on a trailing 4-quarter basis to analyze cash flow generated from operations. We believe free cash flow is also useful as one of the bases for comparing our performance with our competitors. The presentation of non-GAAP free cash flow is not meant to be considered in isolation or as an alternative to net income as an indicator of our performance, or as an alternative to cash flows from operating activities as a measure of liquidity.

ORACLE CORPORATION

Q1 FISCAL 2017 FINANCIAL RESULTS

SUPPLEMENTAL ANALYSIS OF GAAP REVENUES AND HEADCOUNT (1)

($ in millions)


	Fiscal 2016															Fiscal 2017
	Q1			Q2			Q3			Q4			TOTAL			Q1			Q2	Q3	Q4	TOTAL
REVENUES
Cloud software as a service and platform as a service	$	451		$	484		$	583		$	690		$	2,207		$	798					$	798
Cloud infrastructure as a service		160			165			152			169			646			171						171

Total cloud revenues		611			649			735			859			2,853			969						969
New software licenses		1,151			1,677			1,680			2,766			7,276			1,030						1,030
Software license updates and product support		4,696			4,683			4,669			4,814			18,861			4,792						4,792

Total on-premise software revenues		5,847			6,360			6,349			7,580			26,137			5,822						5,822

Total cloud and on-premise software revenues		6,458			7,009			7,084			8,439			28,990			6,791						6,791
Hardware products		570			573			604			725			2,471			462						462
Hardware support		558			550			531			558			2,197			534						534

Total hardware revenues		1,128			1,123			1,135			1,283			4,668			996						996
Total services revenues		862			861			793			872			3,389			808						808

Total revenues	$	8,448		$	8,993		$	9,012		$	10,594		$	37,047		$	8,595					$	8,595

AS REPORTED REVENUE GROWTH RATES
Cloud software as a service and platform as a service		34%			34%			57%			66%			49%			77%						77%
Cloud infrastructure as a service		16%			7%			(2%	)		5%			6%			7%						7%
Total cloud revenues		29%			26%			40%			49%			36%			59%						59%
New software licenses		(16%	)		(18%	)		(15%	)		(12%	)		(15%	)		(11%	)					(11%	)
Software license updates and product support		(1%	)		(2%	)		0%			3%			0%			2%						2%
Total on-premise software revenues		(4%	)		(7%	)		(4%	)		(3%	)		(5%	)		0%						0%
Total cloud and on-premise software revenues		(2%	)		(4%	)		(1%	)		0%			(2%	)		5%						5%
Hardware products		(1%	)		(20%	)		(15%	)		(11%	)		(13%	)		(19%	)					(19%	)
Hardware support		(5%	)		(11%	)		(10%	)		(5%	)		(8%	)		(4%	)					(4%	)
Total hardware revenues		(3%	)		(16%	)		(13%	)		(9%	)		(10%	)		(12%	)					(12%	)
Total services revenues		1%			(8%	)		(7%	)		(3%	)		(4%	)		(6%	)					(6%	)
Total revenues		(2%	)		(6%	)		(3%	)		(1%	)		(3%	)		2%						2%
CONSTANT CURRENCY GROWTH RATES (2)
Cloud software as a service and platform as a service		38%			39%			61%			68%			52%			79%						79%
Cloud infrastructure as a service		23%			11%			2%			8%			11%			10%						10%
Total cloud revenues		34%			31%			44%			51%			40%			61%						61%
New software licenses		(9%	)		(12%	)		(11%	)		(10%	)		(11%	)		(10%	)					(10%	)
Software license updates and product support		8%			5%			5%			4%			5%			3%						3%
Total on-premise software revenues		4%			0%			0%			(2%	)		0%			1%						1%
Total cloud and on-premise software revenues		6%			2%			3%			2%			3%			6%						6%
Hardware products		9%			(14%	)		(10%	)		(10%	)		(7%	)		(18%	)					(18%	)
Hardware support		4%			(5%	)		(5%	)		(4%	)		(3%	)		(3%	)					(3%	)
Total hardware revenues		6%			(10%	)		(8%	)		(7%	)		(5%	)		(11%	)					(11%	)
Total services revenues		10%			0%			(2%	)		(1%	)		2%			(5%	)					(5%	)
Total revenues		7%			0%			1%			0%			2%			3%						3%


GEOGRAPHIC REVENUES
REVENUES
Americas	$	4,716		$	4,960		$	4,942		$	5,847		$	20,466		$	4,817					$	4,817
Europe, Middle East & Africa		2,456			2,645			2,661			3,120			10,881			2,413						2,413
Asia Pacific		1,276			1,388			1,409			1,627			5,700			1,365						1,365

Total revenues	$	8,448		$	8,993		$	9,012		$	10,594		$	37,047		$	8,595					$	8,595



HEADCOUNT
GEOGRAPHIC AREA
Americas		59,901			59,999			60,437			60,329						61,221
Europe, Middle East & Africa		27,030			27,541			27,275			27,061						26,895
Asia Pacific		48,139			48,620			48,694			48,872						49,234

Total company		135,070			136,160			136,406			136,262						137,350

(1)	The sum of the quarterly information presented may vary from the year-to-date information presented due to rounding.

(2)

We compare the percent change in the results from one period to another period using constant currency disclosure. We present constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the exchange rates in effect on May 31, 2016 and 2015 for the fiscal 2017 and fiscal 2016 constant currency growth rate calculations presented, respectively, rather than the actual exchange rates in effect during the respective periods.

ORACLE CORPORATION

Q1 FISCAL 2017 FINANCIAL RESULTS

SUPPLEMENTAL GEOGRAPHIC REVENUES ANALYSIS (1)

($ in millions)


	Fiscal 2016															Fiscal 2017
	Q1			Q2			Q3			Q4			TOTAL			Q1			Q2	Q3	Q4	TOTAL
AMERICAS
Total cloud and on-premise software revenues	$	3,684		$	3,927		$	3,964		$	4,771		$	16,346		$	3,876					$	3,876

Total hardware revenues	$	589		$	595		$	571		$	650		$	2,404		$	526					$	526


AS REPORTED GROWTH RATES
Total cloud and on-premise software revenues		2%			(3%	)		(1%	)		(3%	)		(2%	)		5%						5%
Total hardware revenues		1%			(17%	)		(17%	)		(14%	)		(12%	)		(11%	)					(11%	)
CONSTANT CURRENCY GROWTH RATES (2)
Total cloud and on-premise software revenues		6%			0%			1%			(2%	)		1%			6%						6%
Total hardware revenues		6%			(14%	)		(13%	)		(11%	)		(9%	)		(10%	)					(10%	)

EUROPE / MIDDLE EAST / AFRICA
Total cloud and on-premise software revenues	$	1,873		$	2,066		$	2,069		$	2,462		$	8,471		$	1,903					$	1,903

Total hardware revenues	$	330		$	316		$	349		$	382		$	1,377		$	275					$	275

AS REPORTED GROWTH RATES
Total cloud and on-premise software revenues		(6%	)		(8%	)		(5%	)		4%			(3%	)		2%						2%
Total hardware revenues		(2%	)		(17%	)		(8%	)		(10%	)		(9%	)		(17%	)					(17%	)
CONSTANT CURRENCY GROWTH RATES (2)
Total cloud and on-premise software revenues		7%			3%			2%			5%			4%			7%						7%
Total hardware revenues		14%			(6%	)		(1%	)		(8%	)		(1%	)		(13%	)					(13%	)


ASIA PACIFIC
Total cloud and on-premise software revenues	$	901		$	1,016		$	1,051		$	1,206		$	4,173		$	1,012					$	1,012

Total hardware revenues	$	209		$	212		$	215		$	251		$	887		$	195					$	195


AS REPORTED GROWTH RATES
Total cloud and on-premise software revenues		(7%	)		(3%	)		7%			9%			2%			12%						12%
Total hardware revenues		(14%	)		(11%	)		(8%	)		8%			(7%	)		(7%	)					(7%	)
CONSTANT CURRENCY GROWTH RATES (2)
Total cloud and on-premise software revenues		7%			6%			13%			11%			9%			8%						8%
Total hardware revenues		(3%	)		(3%	)		(3%	)		9%			0%			(9%	)					(9%	)


TOTAL COMPANY
Total cloud and on-premise software revenues	$	6,458		$	7,009		$	7,084		$	8,439		$	28,990		$	6,791					$	6,791

Total hardware revenues	$	1,128		$	1,123		$	1,135		$	1,283		$	4,668		$	996					$	996

AS REPORTED GROWTH RATES
Total cloud and on-premise software revenues		(2%	)		(4%	)		(1%	)		0%			(2%	)		5%						5%
Total hardware revenues		(3%	)		(16%	)		(13%	)		(9%	)		(10%	)		(12%	)					(12%	)
CONSTANT CURRENCY GROWTH RATES (2)
Total cloud and on-premise software revenues		6%			2%			3%			2%			3%			6%						6%
Total hardware revenues		6%			(10%	)		(8%	)		(7%	)		(5%	)		(11%	)					(11%	)

(1)	The sum of the quarterly information presented may vary from the year-to-date information presented due to rounding.

(2)

We compare the percent change in the results from one period to another period using constant currency disclosure. We present constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the exchange rates in effect on May 31, 2016 and 2015 for the fiscal 2017 and fiscal 2016 constant currency growth rate calculations presented, respectively, rather than the actual exchange rates in effect during the respective periods.

APPENDIX A

ORACLE CORPORATION

Q1 FISCAL 2017 FINANCIAL RESULTS

EXPLANATION OF NON-GAAP MEASURES

To supplement our financial results presented on a GAAP basis, we use the non-GAAP measures indicated in the tables, which exclude certain business combination accounting entries and expenses related to acquisitions, as well as other significant expenses including stock-based compensation, that we believe are helpful in understanding our past financial performance and our future results. Our non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. Our management regularly uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our business and make operating decisions. These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. Compensation of our executives is based in part on the performance of our business based on these non-GAAP measures. Our non-GAAP financial measures reflect adjustments based on the following items, as well as the related income tax effects:

•

Cloud software as a service and platform as a service, software license updates and product support and hardware support deferred revenues: Business combination accounting rules require us to account for the fair values of cloud software as a service and platform as a service contracts, software license updates and product support contracts and hardware support contracts assumed in connection with our acquisitions. Because these contracts are generally one year in duration, our GAAP revenues generally for the one year period subsequent to our acquisition of a business do not reflect the full amount of revenues on these assumed cloud and support contracts that would have otherwise been recorded by the acquired entity. The non-GAAP adjustment to our cloud software as a service and platform as a service revenues, software license updates and product support revenues and hardware support revenues is intended to include, and thus reflect, the full amount of such revenues. We believe the adjustment to these revenues is useful to investors as a measure of the ongoing performance of our business. We have historically experienced high renewal rates on our software license updates and product support contracts and our objective is to increase the renewal rates on acquired and new cloud software as a service and platform as a service and hardware support contracts; however, we cannot be certain that our customers will renew our cloud software as a service and platform as a service contracts, software license updates and product support contracts or our hardware support contracts.

•

Stock-based compensation expenses: We have excluded the effect of stock-based compensation expenses from our non-GAAP operating expenses and net income measures. Although stock-based compensation is a key incentive offered to our employees, and we believe such compensation contributed to the revenues earned during the periods presented and also believe it will contribute to the generation of future period revenues, we continue to evaluate our business performance excluding stock-based compensation expenses. Stock-based compensation expenses will recur in future periods.

•

Amortization of intangible assets: We have excluded the effect of amortization of intangible assets from our non-GAAP operating expenses and net income measures. Amortization of intangible assets is inconsistent in amount and frequency and is significantly affected by the timing and size of our acquisitions. Investors should note that the use of intangible assets contributed to our revenues earned during the periods presented and will contribute to our future period revenues as well. Amortization of intangible assets will recur in future periods.

•

Acquisition related and other expenses; and restructuring expenses: We have excluded the effect of acquisition related and other expenses and the effect of restructuring expenses from our non-GAAP operating expenses and net income measures. We incurred significant expenses in connection with our acquisitions and also incurred certain other operating expenses or income, which we generally would not have otherwise incurred in the periods presented as a part of our continuing operations. Acquisition related and other expenses consist of personnel related costs for transitional employees, other acquired employee related costs, stock-based compensation expenses (in addition to the stock-based compensation expenses described above), integration related professional services, certain business combination adjustments including adjustments after the measurement period has ended and certain other operating items, net. Substantially all of the stock-based compensation expenses included in acquisition related and other expenses resulted from unvested options assumed in acquisitions whose vesting was fully accelerated upon termination of the employees pursuant to the original terms of those options. Restructuring expenses consist of employee severance and other exit costs. We believe it is useful for investors to understand the effects of these items on our total operating expenses. Although acquisition related expenses and restructuring expenses generally diminish over time with respect to past acquisitions, we generally will incur these expenses in connection with any future acquisitions.

ORACLE CORP - FORM 8-K - EX-99.1 - September 15, 2016

Attached files

ORACLE CORP Reports