Oracle Corp 10-Q for FY2024 Q2

Oracle Corp (ORCL)

10-Q 2023-12-12 For: 2023-11-30

Added on April 02, 2026

About this 10-Q

Oracle Corp filed this 10-Q on December 12, 2023, covering the quarter ended November 30, 2023 (FY2024 Q2).

Headline figures

Quarter ended November 30, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $12.94B; up 5.4% from $12.28B a year earlier
Net income: $2.5B; up 43.8% from net income of $1.74B a year earlier
Diluted EPS: $0.89; up 41.3% from $0.63 a year earlier

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Delaware		54-2185193
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

2300 Oracle Way Austin, Texas		78741
(Address of principal executive offices)		(Zip Code)


Large accelerated filer ☒		Accelerated filer ☐
Non-accelerated filer ☐		Smaller reporting company ☐
		Emerging growth company ☐


		Page

PART I.	FINANCIAL INFORMATION	3

Item 1.	Financial Statements (Unaudited)	3

	Condensed Consolidated Balance Sheets as of November 30, 2023 and May 31, 2023	3

	Condensed Consolidated Statements of Operations for the Three and Six Months Ended November 30, 2023 and 2022	4

	Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended November 30, 2023 and 2022	5

	Condensed Consolidated Statements of Stockholders’ Equity (Deficit) for the Three and Six Months Ended November 30, 2023 and 2022	6

	Condensed Consolidated Statements of Cash Flows for the Six Months Ended November 30, 2023 and 2022	7

	Notes to Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	36

Item 4.	Controls and Procedures	36

PART II.	OTHER INFORMATION	37

Item 1.	Legal Proceedings	37

Item 1A.	Risk Factors	37

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37

Item 5.	Other Information	38

Item 6.	Exhibits	39

	Signatures	40


(in millions, except per share data)	November 30, 2023			May 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	8,244		$	9,765
Marketable securities		446			422
Trade receivables, net of allowances for credit losses of $470 and $428 as of November 30, 2023 and May 31, 2023, respectively		6,804			6,915
Prepaid expenses and other current assets		3,795			3,902
Total current assets		19,289			21,004
Non-current assets:
Property, plant and equipment, net		18,009			17,069
Intangible assets, net		8,378			9,837
Goodwill, net		62,231			62,261
Deferred tax assets		12,758			12,226
Other non-current assets		13,659			11,987
Total non-current assets		115,035			113,380
Total assets	$	134,324		$	134,384
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Notes payable and other borrowings, current	$	6,321		$	4,061
Accounts payable		1,107			1,204
Accrued compensation and related benefits		1,706			2,053
Deferred revenues		8,878			8,970
Other current liabilities		6,395			6,802
Total current liabilities		24,407			23,090
Non-current liabilities:
Notes payable and other borrowings, non-current		82,468			86,420
Income taxes payable		10,046			11,077
Deferred tax liabilities		5,244			5,772
Other non-current liabilities		7,781			6,469
Total non-current liabilities		105,539			109,738
Commitments and contingencies
Oracle Corporation stockholders’ equity:
Preferred stock, $0.01 par value—authorized: 1.0 shares; outstanding: none		—			—
Common stock, $0.01 par value and additional paid in capital—authorized: 11,000 shares; outstanding: 2,748 shares and 2,713 shares as of November 30, 2023 and May 31, 2023, respectively		30,724			30,215
Accumulated deficit		(25,431	)		(27,620	)
Accumulated other comprehensive loss		(1,427	)		(1,522	)
Total Oracle Corporation stockholders’ equity		3,866			1,073
Noncontrolling interests		512			483
Total stockholders’ equity		4,378			1,556
Total liabilities and stockholders’ equity	$	134,324		$	134,384


	Three Months Ended November 30,						Six Months Ended November 30,
(in millions, except per share data)	2023			2022			2023			2022
Revenues:
Cloud services and license support	$	9,639		$	8,598		$	19,186		$	17,015
Cloud license and on-premise license		1,178			1,435			1,987			2,339
Hardware		756			850			1,470			1,613
Services		1,368			1,392			2,751			2,753
Total revenues		12,941			12,275			25,394			23,720
Operating expenses:
Cloud services and license support(1)		2,274			1,891			4,452			3,626
Hardware(1)		213			286			432			536
Services(1)		1,253			1,181			2,465			2,233
Sales and marketing(1)		2,093			2,216			4,118			4,393
Research and development		2,226			2,158			4,442			4,251
General and administrative		375			366			769			777
Amortization of intangible assets		755			907			1,518			1,826
Acquisition related and other		47			62			58			103
Restructuring		83			137			222			281
Total operating expenses		9,319			9,204			18,476			18,026
Operating income		3,622			3,071			6,918			5,694
Interest expense		(888	)		(856	)		(1,760	)		(1,643	)
Non-operating expenses, net		(14	)		(71	)		(63	)		(251	)
Income before income taxes		2,720			2,144			5,095			3,800
Provision for income taxes		217			403			172			511
Net income	$	2,503		$	1,741		$	4,923		$	3,289
Earnings per share:
Basic	$	0.91		$	0.65		$	1.80		$	1.22
Diluted	$	0.89		$	0.63		$	1.75		$	1.20
Weighted average common shares outstanding:
Basic		2,746			2,695			2,737			2,690
Diluted		2,817			2,746			2,820			2,747


	Three Months Ended November 30,					Six Months Ended November 30,
(in millions)	2023			2022		2023			2022
Net income	$	2,503		$	1,741	$	4,923		$	3,289
Other comprehensive income (loss), net of tax:
Net foreign currency translation gains (losses)		86			95		42			(194	)
Net unrealized (losses) gains on cash flow hedges		(17	)		93		55			110
Other, net		1			—		(2	)		(1	)
Total other comprehensive income (loss), net		70			188		95			(85	)
Comprehensive income	$	2,573		$	1,929	$	5,018		$	3,204


	November 30, 2023						May 31, 2023
	Fair Value Measurements Using Input Types						Fair Value Measurements Using Input Types
(in millions)	Level 1		Level 2		Total		Level 1		Level 2		Total
Assets:
Money market funds	$	1,568	$	—	$	1,568	$	1,694	$	—	$	1,694
Time deposits and other		151		384		535		180		288		468
Derivative financial instruments		—		158		158		—		102		102
Total assets	$	1,719	$	542	$	2,261	$	1,874	$	390	$	2,264
Liabilities:
Derivative financial instruments	$	—	$	94	$	94	$	—	$	126	$	126


	Intangible Assets, Gross						Accumulated Amortization									Intangible Assets, Net				Weighted Average
(Dollars in millions)	May 31, 2023		Additions		November 30, 2023		May 31, 2023			Expense			November 30, 2023			May 31, 2023		November 30, 2023		Useful Life(1)
Developed technology	$	4,300	$	59	$	4,359	$	(2,407	)	$	(337	)	$	(2,744	)	$	1,893	$	1,615		3
Cloud services and license support agreements and related relationships		9,456		—		9,456		(5,579	)		(528	)		(6,107	)		3,877		3,349	N.A.
Cloud license and on-premise license agreements and related relationships		2,688		—		2,688		(697	)		(233	)		(930	)		1,991		1,758	N.A.
Other		3,582		—		3,582		(1,506	)		(420	)		(1,926	)		2,076		1,656	N.A.
Total intangible assets, net	$	20,026	$	59	$	20,085	$	(10,189	)	$	(1,518	)	$	(11,707	)	$	9,837	$	8,378


Remainder of fiscal 2024	$	1,488
Fiscal 2025		2,303
Fiscal 2026		1,639
Fiscal 2027		672
Fiscal 2028		635
Fiscal 2029		561
Thereafter		1,080
Total intangible assets, net	$	8,378


(in millions)	Cloud and License		Hardware		Services			Total Goodwill, net
Balances as of May 31, 2023	$	57,060	$	2,732	$	2,469		$	62,261
Goodwill adjustments, net(1)		12		—		(42	)		(30	)
Balances as of November 30, 2023	$	57,072	$	2,732	$	2,427		$	62,231


	Accrued		Six Months Ended November 30, 2023										Accrued		Total Costs		Total Expected
(in millions)	May 31, 2023(2)		Initial Costs(3)		Adj. to Cost(4)			Cash Payments			Others(5)		November 30, 2023(2)		Accrued to Date		Program Costs
2024 Restructuring Plan(1)
Cloud and license	$	—	$	119	$	(1	)	$	(47	)	$	1	$	72	$	118	$	184
Hardware		—		5		—			(2	)		—		3		5		15
Services		—		32		—			(17	)		—		15		32		177
Other		—		89		(1	)		(56	)		—		32		88		233
Total 2024 Restructuring Plan	$	—	$	245	$	(2	)	$	(122	)	$	1	$	122	$	243	$	609
Total other restructuring plans(6)	$	199	$	—	$	(21	)	$	(64	)	$	2	$	116
Total restructuring plans	$	199	$	245	$	(23	)	$	(186	)	$	3	$	238


	Three Months Ended November 30,						Six Months Ended November 30,
			Percent Change						Percent Change
(Dollars in millions)	2023		Actual	Constant	2022		2023		Actual	Constant	2022
Total Revenues by Geography:
Americas	$	8,067	4%	3%	$	7,786	$	15,907	6%	6%	$	14,978
EMEA(1)		3,170	10%	5%		2,895		6,175	11%	6%		5,586
Asia Pacific		1,704	7%	8%		1,594		3,312	5%	7%		3,156
Total revenues		12,941	5%	4%		12,275		25,394	7%	6%		23,720
Total Operating Expenses		9,319	1%	0%		9,204		18,476	2%	2%		18,026
Total Operating Margin	$	3,622	18%	15%	$	3,071	$	6,918	22%	19%	$	5,694
Total Operating Margin %	28%				25%		27%				24%
% Revenues by Geography:
Americas	62%				63%		63%				63%
EMEA	25%				24%		24%				24%
Asia Pacific	13%				13%		13%				13%
Total Revenues by Business:
Cloud and license	$	10,817	8%	6%	$	10,033	$	21,173	9%	8%	$	19,354
Hardware		756	-11%	-12%		850		1,470	-9%	-10%		1,613
Services		1,368	-2%	-3%		1,392		2,751	0%	-1%		2,753
Total revenues	$	12,941	5%	4%	$	12,275	$	25,394	7%	6%	$	23,720
% Revenues by Business:
Cloud and license	83%				82%		83%				82%
Hardware	6%				7%		6%				7%
Services	11%				11%		11%				11%


(Dollars in millions)	November 30, 2023			Change	May 31, 2023
Working capital	$	(5,118	)	145%	$	(2,086	)
Cash, cash equivalents and marketable securities	$	8,690		-15%	$	10,187


	Trailing 4-Quarters Ended November 30,
(Dollars in millions)	2023			Change	2022
Net cash provided by operating activities	$	17,039		13%	$	15,073
Capital expenditures		(6,935	)	4%		(6,678	)
Free cash flow	$	10,104		20%	$	8,395
Net income	$	10,137			$	8,797
Net cash provided by operating activities as a percent of net income	168%				171%
Free cash flow as percent of net income	100%				95%


(in millions, except per share amounts)	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Program		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program
September 1, 2023—September 30, 2023		3.6	$	112.48		3.6	$	7,604.7
October 1, 2023—October 31, 2023		0.3	$	107.44		0.3	$	7,575.6
November 1, 2023—November 30, 2023		0.1	$	114.02		0.1	$	7,562.2
Total		4.0	$	112.18		4.0


	Three Months Ended November 30,						Six Months Ended November 30,
(in millions, except per share data)	2023			2022			2023			2022
Common stock and additional paid in capital
Balance, beginning of period	$	30,295		$	27,224		$	30,215		$	26,808
Common stock issued		118			146			426			661
Stock-based compensation		1,029			909			1,878			1,659
Repurchases of common stock		(43	)		(61	)		(56	)		(134	)
Shares repurchased for tax withholdings upon vesting of restricted stock-based awards		(673	)		(66	)		(1,733	)		(895	)
Other, net		(2	)		(4	)		(6	)		49
Balance, end of period	$	30,724		$	28,148		$	30,724		$	28,148
Accumulated deficit
Balance, beginning of period	$	(26,428	)	$	(31,134	)	$	(27,620	)	$	(31,336	)
Repurchases of common stock		(407	)		(361	)		(544	)		(847	)
Cash dividends declared		(1,099	)		(863	)		(2,190	)		(1,723	)
Net income		2,503			1,741			4,923			3,289
Balance, end of period	$	(25,431	)	$	(30,617	)	$	(25,431	)	$	(30,617	)
Other stockholders’ equity (deficit), net
Balance, beginning of period	$	(1,026	)	$	(1,539	)	$	(1,039	)	$	(1,240	)
Other comprehensive income (loss), net		70			188			95			(85	)
Other, net		41			44			29			18
Balance, end of period	$	(915	)	$	(1,307	)	$	(915	)	$	(1,307	)
Total stockholders’ equity (deficit)	$	4,378		$	(3,776	)	$	4,378		$	(3,776	)
Cash dividends declared per common share	$	0.40		$	0.32		$	0.80		$	0.64


*	Not meaningful


*	Indicates management contract or compensatory plan or arrangement.
‡	Filed herewith.
†	Furnished herewith.


	ORACLE CORPORATION

Date: December 12, 2023	By:	/s/ Safra A. Catz
		Safra A. Catz Chief Executive Officer and Director (Principal Executive and Financial Officer)

Date: December 12, 2023	By:	/s/ Maria Smith
		Maria Smith
		Executive Vice President, Chief Accounting Officer (Principal Accounting Officer)


Date: December 12, 2023	By:	/s/ Safra A. Catz
		Safra A. Catz
		Chief Executive Officer and Director (Principal Executive and Financial Officer)