Oracle Corp 10-Q for FY2022 Q1

Oracle Corp (ORCL)

10-Q 2021-09-13 For: 2021-08-31

Added on April 02, 2026

About this 10-Q

Oracle Corp filed this 10-Q on September 13, 2021, covering the quarter ended August 31, 2021 (FY2022 Q1).

Headline figures

Quarter ended August 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $9.73B; up 3.9% from $9.37B a year earlier
Net income: $2.46B; up 9.2% from net income of $2.25B a year earlier
Diluted EPS: $0.86; up 19.4% from $0.72 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 August 31, 2021 and May 31, 2021	3

	Condensed Consolidated Statements of Operations for the Three Months Ended August 31, 2021 and 2020	4

	Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended August 31, 2021 and 2020	5

	Condensed Consolidated Statements of Stockholders’ (Deficit) Equity for the Three Months Ended August 31, 2021 and 2020	6

	Condensed Consolidated Statements of Cash Flows for the Three Months Ended August 31, 2021 and 2020	7

	Notes to Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	40

Item 4.	Controls and Procedures	40

PART II.	OTHER INFORMATION	41

Item 1.	Legal Proceedings	41

Item 1A.	Risk Factors	41

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41

Item 6.	Exhibits	42

	Signatures	43

(in millions, except per share data)	August 31, 2021			May 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	23,059		$	30,098
Marketable securities		16,251			16,456
Trade receivables, net of allowances for doubtful accounts of $402 and $373 as of August 31, 2021 and May 31, 2021, respectively		4,482			5,409
Prepaid expenses and other current assets		3,325			3,604
Total current assets		47,117			55,567
Non-current assets:
Property, plant and equipment, net		7,610			7,049
Intangible assets, net		2,181			2,430
Goodwill, net		43,862			43,935
Deferred tax assets		13,391			13,636
Other non-current assets		8,763			8,490
Total non-current assets		75,807			75,540
Total assets	$	122,924		$	131,107
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
Current liabilities:
Notes payable, current	$	6,748		$	8,250
Accounts payable		749			745
Accrued compensation and related benefits		1,470			2,017
Deferred revenues		10,011			8,775
Other current liabilities		4,093			4,377
Total current liabilities		23,071			24,164
Non-current liabilities:
Notes payable and other borrowings, non-current		75,970			75,995
Income taxes payable		12,315			12,345
Deferred tax liabilities		7,648			7,864
Other non-current liabilities		5,050			4,787
Total non-current liabilities		100,983			100,991
Commitments and contingencies
Oracle Corporation stockholders’ (deficit) 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: 2,743 shares and 2,814 shares as of August 31, 2021 and May 31, 2021, respectively		25,534			26,533
Accumulated deficit		(25,679	)		(20,120	)
Accumulated other comprehensive loss		(1,396	)		(1,175	)
Total Oracle Corporation stockholders’ (deficit) equity		(1,541	)		5,238
Noncontrolling interests		411			714
Total stockholders’ (deficit) equity		(1,130	)		5,952
Total liabilities and stockholders’ (deficit) equity	$	122,924		$	131,107

	Three Months Ended August 31,
(in millions, except per share data)	2021			2020
Revenues:
Cloud services and license support	$	7,371		$	6,947
Cloud license and on-premise license		813			886
Hardware		763			814
Services		781			720
Total revenues		9,728			9,367
Operating expenses:
Cloud services and license support⁽¹⁾		1,214			1,011
Hardware⁽¹⁾		245			246
Services		644			623
Sales and marketing⁽¹⁾		1,854			1,854
Research and development		1,684			1,589
General and administrative		298			295
Amortization of intangible assets		303			345
Acquisition related and other		21			19
Restructuring		38			174
Total operating expenses		6,301			6,156
Operating income		3,427			3,211
Interest expense		(705	)		(614	)
Non-operating expenses, net		(41	)		(2	)
Income before provision for income taxes		2,681			2,595
Provision for income taxes		224			344
Net income	$	2,457		$	2,251
Earnings per share:
Basic	$	0.89		$	0.74
Diluted	$	0.86		$	0.72
Weighted average common shares outstanding:
Basic		2,769			3,041
Diluted		2,861			3,107

	Three Months Ended August 31,
(in millions)	2021			2020
Net income	$	2,457		$	2,251
Other comprehensive (loss) income, net of tax:
Net foreign currency translation (losses) gains		(223	)		325
Net unrealized gains on defined benefit plans		2			46
Net unrealized gains on marketable securities		—			3
Net unrealized gains on cash flow hedges		—			5
Total other comprehensive (loss) income, net		(221	)		379
Comprehensive income	$	2,236		$	2,630

	August 31, 2021						May 31, 2021
	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	$	5,269	$	—	$	5,269	$	12,263	$	—	$	12,263
Corporate debt securities and other		2,204		9,450		11,654		1,250		8,220		9,470
Commercial paper debt securities		—		9,510		9,510		—		11,712		11,712
Derivative financial instruments		—		35		35		—		73		73
Total assets	$	7,473	$	18,995	$	26,468	$	13,513	$	20,005	$	33,518

	Intangible Assets, Gross							Accumulated Amortization									Intangible Assets, Net				Weighted Average Useful Life⁽²⁾
(Dollars in millions)	May 31, 2021		Additions & Adjustments, net⁽¹⁾			August 31, 2021		May 31, 2021			Expense			August 31, 2021			May 31, 2021		August 31, 2021		Weighted Average Useful Life⁽²⁾
Developed technology	$	4,237	$	59		$	4,296	$	(3,621	)	$	(127	)	$	(3,748	)	$	616	$	548		3
Cloud services and license support agreements and related relationships		5,497		(5	)		5,492		(3,834	)		(155	)		(3,989	)		1,663		1,503	N.A.
Other		1,269		—			1,269		(1,118	)		(21	)		(1,139	)		151		130	N.A.
Total intangible assets, net	$	11,003	$	54		$	11,057	$	(8,573	)	$	(303	)	$	(8,876	)	$	2,430	$	2,181

Remainder of fiscal 2022	$	834
Fiscal 2023		716
Fiscal 2024		473
Fiscal 2025		124
Fiscal 2026		24
Fiscal 2027		6
Thereafter		4
Total intangible assets, net	$	2,181

(in millions)	Cloud and License		Hardware		Services			Total Goodwill, net
Balances as of May 31, 2021	$	39,786	$	2,367	$	1,782		$	43,935
Goodwill adjustments, net⁽¹⁾		186		—		(259	)		(73	)
Balances as of August 31, 2021	$	39,972	$	2,367	$	1,523		$	43,862

			Three Months Ended August 31, 2021											Accrued August 31, 2021⁽²⁾		Total Costs Accrued to Date		Total Expected Program Costs
(in millions)	Accrued May 31, 2021⁽²⁾		Initial Costs⁽³⁾		Adj. to Cost⁽⁴⁾			Cash Payments			Others⁽⁵⁾			Accrued August 31, 2021⁽²⁾		Total Costs Accrued to Date		Total Expected Program Costs
2022 Restructuring Plan⁽¹⁾
Cloud and license	$	—	$	37	$	—		$	(13	)	$	—		$	24	$	37	$	247
Hardware		—		3		—			(2	)		—			1		3		26
Services		—		4		—			(1	)		—			3		4		37
Other⁽⁶⁾		—		11		—			(2	)		—			9		11		43
Total 2022 Restructuring Plan	$	—	$	55	$	—		$	(18	)	$	—		$	37	$	55	$	353
Total other restructuring plans⁽⁷⁾	$	225	$	—	$	(17	)	$	(50	)	$	(6	)	$	152
Total restructuring plans	$	225	$	55	$	(17	)	$	(68	)	$	(6	)	$	189

Total margin for operating segments	$	6,013		$	5,855
Cloud and license revenues⁽¹⁾		—			(1	)
Research and development		(1,684	)		(1,589	)
General and administrative		(298	)		(295	)
Amortization of intangible assets		(303	)		(345	)
Acquisition related and other		(21	)		(19	)
Restructuring		(38	)		(174	)
Stock-based compensation for operating segments		(152	)		(116	)
Expense allocations and other, net		(90	)		(105	)
Interest expense		(705	)		(614	)
Non-operating expenses, net		(41	)		(2	)
Income before provision for income taxes	$	2,681		$	2,595

	Three Months Ended August 31,
			Percent Change
(Dollars in millions)	2021		Actual	Constant	2020
Total Revenues by Geography:
Americas	$	5,321	5%	4%	$	5,068
EMEA⁽¹⁾		2,784	2%	-1%		2,738
Asia Pacific		1,623	4%	3%		1,561
Total revenues		9,728	4%	2%		9,367
Total Operating Expenses		6,301	2%	1%		6,156
Total Operating Margin	$	3,427	7%	5%	$	3,211
Total Operating Margin %	35%				34%
% Revenues by Geography:
Americas	55%				54%
EMEA	28%				29%
Asia Pacific	17%				17%
Total Revenues by Business:
Cloud and license	$	8,184	4%	3%	$	7,833
Hardware		763	-6%	-7%		814
Services		781	8%	7%		720
Total revenues	$	9,728	4%	2%	$	9,367
% Revenues by Business:
Cloud and license	84%				83%
Hardware	8%				9%
Services	8%				8%

	Trailing 4-Quarters Ended August 31,
(Dollars in millions)	2021			Change	2020
Net cash provided by operating activities	$	15,325		17%	$	13,092
Capital expenditures		(2,761	)	71%		(1,614	)
Free cash flow	$	12,564		9%	$	11,478
Net income	$	13,952			$	10,249
Free cash flow as percent of net income	90%				112%

(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
June 1, 2021—June 30, 2021		30.8	$	81.19		30.8	$	13,148.4
July 1, 2021—July 31, 2021		52.0	$	86.49		52.0	$	8,648.4
August 1, 2021—August 31, 2021		11.2	$	89.50		11.2	$	7,648.4
Total		94.0	$	85.11		94.0

	ORACLE CORPORATION

Date: September 13, 2021	By:	/s/ Safra A. Catz
		Safra A. Catz Chief Executive Officer and Director (Principal Executive and Financial Officer)

Date: September 13, 2021	By:	/s/ William Corey West
		William Corey West
		Executive Vice President, Chief Accounting Officer (Principal Accounting Officer)

Date: September 13, 2021	By:	/s/ Safra A. Catz
		Safra A. Catz
		Chief Executive Officer and Director (Principal Executive and Financial Officer)