ORACLE CORP (ORCL) SEC Filing 10-K Annual report for the fiscal year ending Thursday, May 31, 2018
For Immediate Release
Oracle Investor Relations
Oracle Corporate Communications
Q4 FY18 GAAP EPS UP 8% TO $0.82 and NON-GAAP EPS UP 11% TO $0.99
Q4 FY18 Total Revenue Up 3% to $11.3 Billion and FY18 Total Revenue Up 6% to $39.8 BillionOracle Corporation (NYSE: ORCL) today announced fiscal 2018 Q4 results and fiscal 2018 full year results. In Q4, Total Revenues were up 3% to $11.3 billion compared to Q4 last year. Q4 Cloud Services and License Support revenues were up 8% to $6.8 billion. Q4 Cloud License and On-Premise License revenues were down 5% to $2.5 billion.
Q4 GAAP Operating Income was up 8% to $4.4 billion, and GAAP Operating Margin was 39%. Q4 Non-GAAP Operating Income was up 6% to $5.3 billion, and non-GAAP Operating Margin was 47%. Q4 GAAP Net Income was $3.4 billion, and non-GAAP Net Income was $4.1 billion. Q4 GAAP Earnings Per Share was up 8% to $0.82, while non-GAAP Earnings Per Share was up 11% to $0.99.
At the end of Q4, short-term deferred revenues were up 2% to $8.4 billion, while Operating Cash Flow on a trailing twelve-month basis was up 9%, or $1.3 billion, to a record $15.4 billion.
For the full fiscal year 2018, Total Revenues were up 6% to $39.8 billion compared to fiscal 2017. FY18 Cloud Services and License Support revenues were up 10% to $26.3 billion. FY18 Cloud License and On-Premise License revenues were down 4% to $6.2 billion.
FY18 GAAP Operating Income was up 8% to $13.7 billion, and GAAP Operating Margin was 34%. FY18 Non-GAAP Operating Income was up 9% to $17.6 billion, and non-GAAP Operating Margin was 44%. FY18 GAAP Net Income was $3.8 billion, and non-GAAP Net Income was $13.2 billion. FY18 GAAP Earnings Per Share was $0.90, while Non-GAAP Earnings Per Share was $3.12.
“Last year, I forecast double-digit non-GAAP earnings per share growth for FY18 and we delivered 14% growth this year, largely driven by strong growth in our cloud businesses,” said Oracle CEO, Safra Catz. “Looking ahead to FY19, I expect revenue growth will enable us to deliver double-digit non-GAAP earnings per share growth once again.”
“We had a great fourth quarter with total revenues more than $200 million above our constant currency forecast,” said Oracle CEO, Mark Hurd. “Our strategic Fusion ERP and HCM SaaS cloud applications suite revenues grew over 50% in the fourth quarter, and we expect continued strong growth from our Fusion SaaS suites throughout FY19.”
“Some of our largest customers have now begun the process of moving their on-premise Oracle databases to the Oracle Cloud,” said Oracle Chairman and CTO, Larry Ellison. “For example, AT&T is moving thousands of databases and tens of thousands of terabytes of data into the Oracle Cloud. We think that these large scale migrations of Oracle database to the cloud will drive our PaaS and IaaS businesses throughout FY19.”
The Board of Directors also declared a quarterly cash dividend of $0.19 per share of outstanding common stock. This dividend will be paid to stockholders of record as of the close of business on July 17, 2018, with a payment date of July 31, 2018.
The following information was filed by ORACLE CORP on Tuesday, June 19, 2018 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.
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- orcl_10k_2018-06-22_165_190Financial - EarningsThe increase in working capital as of May 31, 2017 in comparison to May 31, 2016 was primarily due to our issuance of $14.0 billion of long-term senior notes in July 2016, the favorable impacts to our net current assets resulting from our net income during fiscal 2017 and cash proceeds from stock option exercises.
- orcl_10k_2018-06-22_60_69Financial - ExpenseRestructuring costs are typically comprised of employee severance costs, costs of consolidating duplicate facilities and contract termination costs.
- orcl_10k_2018-06-22_165_191MA - OtherThese favorable working capital movements were partially offset by cash used for acquisitions, including $9.0 billion of net cash used for our acquisition of NetSuite in the second quarter of fiscal 2017, cash used for repurchases of our common stock, cash used to pay dividends to our stockholders and cash used for capital expenditures.
- orcl_10k_2018-06-22_65_76Revenue - ProductThese estimates and assumptions include revenue growth rates and operating margins used to calculate projected future cash flows, risk-adjusted discount rates, future economic and market conditions and the determination of appropriate market comparables.
- orcl_10k_2018-06-22_104_294Financial - Expenseemployee expenses and lower hardware products costs and a related decrease in hardware sales and marketing costs, both of which aligned to lower hardware revenues.
- orcl_10k_2018-06-22_83_130Financial - Income$7.8 billion of income tax expense, which we refined by a $166 million increase as of May 31, 2018 from our initial estimate made in our third quarter of fiscal 2018 in accordance with SEC Staff Accounting Bulletin No.
- orcl_10k_2018-06-22_54_60Other - OtherSince fiscal 1989, when our financing division was formed, we have established a history of collection, without concessions, on these receivables with payment terms that generally extend up to five years from the contract date.
- orcl_10k_2018-06-22_78_127Other - OtherSuch revisions in the estimates of the potential liabilities could have a material impact on our results of operations and financial position.
- orcl_10k_2018-06-22_15_16Revenue - ProductOur hardware business, which represented 10%, 11% and 13% of our total revenues in fiscal 2018, 2017 and 2016, respectively, provides a broad selection of hardware products and hardware-related software products including Oracle Engineered Systems, servers, storage, industry-specific hardware, operating systems, virtualization, management and other hardware related software, and related hardware support.
- orcl_10k_2018-06-22_32_256Revenue - Productservices revenues, which are earned from providing cloud-, license- and hardware-related services including consulting, advanced customer support and education services.
- orcl_10k_2018-06-22_133_175Revenue - ProductThe decreases in hardware products revenues in both fiscal 2018 and 2017, each relative to the corresponding prior year period, were primarily attributable to our continued emphasis on the marketing and sale of our cloud-based infrastructure technologies, which resulted in reduced sales volumes of certain of our hardware product lines and also impacted the volume of customers that purchased hardware support contracts.
- orcl_10k_2018-06-22_203_217Financial - IncomeWe cannot make a reasonably reliable estimate of the period in which the remainder of our unrecognized income tax benefits will be settled or released with the relevant tax authorities, although we believe it is reasonably possible that certain of these liabilities could be settled or released during fiscal 2019.
- orcl_10k_2018-06-22_63_74Financial - IncomeSubsequent to the measurement period or our final determination of the tax allowances or contingencys estimated value, whichever comes first, changes to these uncertain tax positions and tax related valuation allowances will affect our provision for income taxes in our consolidated statement of operations and could have a material impact on our results of operations and financial position.
- orcl_10k_2018-06-22_52_53Revenue - ProductIf we determine upon execution of these arrangements that the likelihood of cancellation is remote, we then recognize revenues for such arrangements once all of the criteria described above have been met.
- orcl_10k_2018-06-22_138_180Financial - EarningsTotal margin and total margin as a percentage of total services revenues decreased in fiscal 2018 due to the revenue decreases for this segment.
- orcl_10k_2018-06-22_103_154Financial - ExpenseExcluding the effects of currency rate fluctuations, our total operating expenses increased during fiscal 2018 primarily due to higher cloud services and license support expenses resulting primarily from increased headcount and infrastructure expenses to support the increases in our revenues higher sales and marketing expenses related to our cloud and license business increased stock-based compensation expenses higher general and administrative expenses increased restructuring expenses and higher intangible asset amortization.
- orcl_10k_2018-06-22_107_156Revenue - GeographyExcluding the effects of foreign currency rate variations, our total operating expenses increased during fiscal 2017 relative to the prior year period due to higher sales and marketing and research and development expenses, which were primarily attributable to increased headcount and increased stock-based compensation expenses and higher cloud services and license support expenses resulting primarily from increased headcount and infrastructure expenses to support the increase in our revenues.
- orcl_10k_2018-06-22_6_11Revenue - ProductOur license support contracts are generally priced as a percentage of the net fees paid by the customer to access the license, are generally billed in advance of the support services being performed and are generally recognized as revenues ratably as the support services are delivered over the contractual terms and
- orcl_10k_2018-06-22_16_24Revenue - ProductHardware support contracts are entered into at the option of the customer, are generally priced as a percentage of the net hardware products fees and are generally recognized as revenues ratably as the hardware support services are delivered over the contractual terms.
- orcl_10k_2018-06-22_107_157Financial - ExpenseThese constant currency expense increases were partially offset by certain expense decreases in fiscal 2017, primarily lower hardware expenses due to similar reasons noted for the fiscal 2018 decrease above and lower intangible asset amortization in fiscal 2017 due to certain of our intangible assets that became fully amortized.
- orcl_10k_2018-06-22_227_389Financial - Shares / EquityRestricted stock-based awards and stock options outstanding as a percent of shares outstanding at May 31, 2018
- orcl_10k_2018-06-22_228_390Financial - Shares / EquityTotal restricted stock-based awards and in the money stock options outstanding based on the closing price of our common stock on the last trading day of fiscal 2018 as a percent of shares outstanding at May 31, 2018
- orcl_10k_2018-06-22_133_174Revenue - ProductExcluding the effects of currency rate fluctuations, total hardware revenues decreased in fiscal 2018 and 2017, each relative to the corresponding prior year period, due to lower hardware products revenues and, to a lesser extent, lower hardware support revenues.
- orcl_10k_2018-06-22_36_47Revenue - ProductRevenues for our cloud services offerings sold on a subscription basis are generally recognized ratably over the contract term commencing with the date the service is made available to customers.
- orcl_10k_2018-06-22_230_392Financial - Shares / EquityWeighted-average annualized restricted stock-based awards and stock options granted and assumed, net of forfeitures and cancellations and after stock repurchases, as a percent of weighted-average shares outstanding from June 1, 2015 through May 31, 2018
- orcl_10k_2018-06-22_170_344Financial - DebtThe increase in cash, cash equivalents and marketable securities at May 31, 2017 in comparison to May 31, 2016 was primarily due to cash inflows generated by our operations during fiscal 2017, $13.6 billion of net cash inflows from fiscal 2017 debt issuances, net of debt repayments, and cash inflows from fiscal 2017 stock option
- orcl_10k_2018-06-22_122_308Revenue - ProductOur cloud and license business engages in the sale, marketing and delivery of our applications, platform and infrastructure technologies through various deployment models including license support offerings Oracle
- orcl_10k_2018-06-22_134_316Financial - ExpenseExcluding the effects of currency rate fluctuations, total hardware expenses decreased in fiscal 2018 and 2017, each relative to the corresponding prior year period, primarily due to lower hardware products costs and lower employee related expenses, which aligned to lower hardware revenues.
- orcl_10k_2018-06-22_13_246Revenue - ProductWe believe all of these factors should contribute to future growth in our cloud and license revenues, which should enable us to continue to make investments in research and development to develop and improve our cloud and license products and services.
- orcl_10k_2018-06-22_9_242Revenue - ProductOur cloud services revenues growth and our cloud license and
- orcl_10k_2018-06-22_132_171Revenue - ProductOur hardware business also earns revenues from the sale of hardware support contracts purchased by our customers at their option and are generally recognized as revenues ratably as the hardware support services are delivered over the contractual term.
- orcl_10k_2018-06-22_84_283Financial - Income$820 million of income tax benefit, which we refined by a $76 million increase as of May 31, 2018 from our initial estimate made in our third quarter of fiscal 2018 in accordance with SAB 118, related to the remeasurement of our net deferred tax liabilities based on the rates at which they are expected to reverse in the future and
- orcl_10k_2018-06-22_76_113Other - Otherwe have adequately reserved for our uncertain tax positions, no assurance can be given with respect to the final outcome of these matters.
- orcl_10k_2018-06-22_74_108Other - OtherAdjustments based on filed returns are generally recorded in the period when the tax returns are filed and the global tax implications are known, which can materially impact our effective tax rate.
- orcl_10k_2018-06-22_33_257Revenue - ProductRevenue Recognition for Cloud Services Offerings, Hardware Products, Hardware Support and Related Services Non-software Elements
- orcl_10k_2018-06-22_38_260Revenue - ProductRevenue Recognition for Multiple-Element Arrangements Cloud Services Offerings, Hardware Products, Hardware Support and Related Services Non-software Arrangements
- orcl_10k_2018-06-22_36_48Revenue - ProductRevenues for cloud services offerings sold on a usage basis are generally recognized as the customer consumes the service, provided all other revenue recognition criteria have been satisfied.
- orcl_10k_2018-06-22_204_370Other - OtherWe believe that our current cash, cash equivalents and marketable securities and cash generated from operations will be sufficient to meet our working capital, capital expenditures and contractual obligation requirements, including the $7.8 billion
- orcl_10k_2018-06-22_52_54Revenue - ProductIf such a determination cannot be made, revenues are recognized upon the earlier of cash receipt or approval of the applicable funding provision by the governmental entity for such arrangements.
- orcl_10k_2018-06-22_229_391Financial - Shares / EquityWeighted-average annualized restricted stock-based awards and stock options granted and assumed, net of forfeitures and cancellations and before stock repurchases, as a percent of weighted-average shares outstanding from June 1, 2015 through May 31, 2018
- orcl_10k_2018-06-22_132_170Revenue - ProductOur hardware business revenues are generated from the sales of our Oracle Engineered Systems, server, storage, and industry-specific hardware products that are generally recognized as revenues upon delivery to the customer, provided all other revenue recognition criteria are met.
- orcl_10k_2018-06-22_37_50Revenue - ProductHardware support contracts are entered into at the customers option and are recognized ratably over the contractual term of the arrangements, which is typically one year, provided all other revenue recognition criteria have been satisfied.
- orcl_10k_2018-06-22_200_369Other - OtherRefer to Notes 7 and 10 of Notes to Consolidated Financial Statements included elsewhere in this Annual Report for additional information related to our notes payable and other borrowings and related derivative agreements.
- orcl_10k_2018-06-22_15_17Revenue - ProductHardware transactions are generally recognized as revenues upon delivery to the customer provided all other revenue recognition criteria are met.
- orcl_10k_2018-06-22_37_49Revenue - ProductRevenues from the sale of hardware products are generally recognized upon delivery of the hardware product to the customer provided all other revenue recognition criteria are satisfied.
- orcl_10k_2018-06-22_17_248Financial - EarningsWe generally expect our hardware business to have lower operating margins as a percentage of revenues than our cloud and license business due to the incremental costs we incur to produce and distribute these products and to provide support services, including direct materials and labor costs.
- orcl_10k_2018-06-22_203_216Financial - IncomeAs of May 31, 2018, we had $6.6 billion of gross unrecognized income tax benefits, including related interest and penalties, recorded on our consolidated balance sheet, and all such obligations have been excluded from the contractual obligations table above due to the uncertainty as to when they might be settled.
- orcl_10k_2018-06-22_19_29Revenue - ProductOur services offerings include consulting services, advanced support services and education services and represented 8% of our total revenues in fiscal 2018 and 9% of our total revenues in each of fiscal 2017 and 2016.
- orcl_10k_2018-06-22_70_93Financial - IncomeSuch differences could have a material effect on our income tax provision and net income in the period in which such determination is made.
- orcl_10k_2018-06-22_19_31Revenue - ProductOur services revenues are impacted by, among others: our strategy for, and the competitive position of, our services customer demand for our cloud and license and hardware offerings and the associated services for these offerings our strategic emphasis on growing our cloud revenues certain of our acquisitions general economic conditions governmental budgetary constraints personnel reductions in our customers IT departments and tighter controls over discretionary spending.
- orcl_10k_2018-06-22_60_68Financial - ExpenseIn connection with a business combination or other strategic initiative, we may estimate costs associated with restructuring plans committed to by our management.
- orcl_10k_2018-06-22_213_232Financial - Shares / EquityThe potential dilution percentage is calculated as the average annualized new restricted stock-based awards or stock options granted and assumed, net of restricted stock-based awards and stock options forfeited by employees leaving the company, divided by the weighted-average outstanding shares during the calculation period.
- orcl_10k_2018-06-22_22_36MA - OtherWe believe that we can fund our future acquisitions with our internally available cash, cash equivalents and marketable securities, cash generated from operations, additional borrowings or from the issuance of additional securities.
- orcl_10k_2018-06-22_205_224Revenue - ProductThese factors have historically caused a decrease in our first quarter revenues as compared to revenues in the immediately preceding fourth quarter, which historically has been our highest revenue quarter within a particular fiscal year.
- orcl_10k_2018-06-22_128_169Financial - ExpenseIn addition, our constant currency cloud services and license support expenses increased during fiscal 2018 due to higher technology infrastructure expenses that supported the growth in our revenues.
- orcl_10k_2018-06-22_194_207Financial - DividendWe issued the senior notes for general corporate purposes, which may include stock repurchases, payment of cash dividends on our common stock, repayment of indebtedness and future acquisitions.
- orcl_10k_2018-06-22_77_117MA - OtherIn addition, as a part of our accounting for business combinations, intangible assets are recognized at fair values and goodwill is measured as the excess of consideration transferred over the net estimated fair values of assets acquired.
- orcl_10k_2018-06-22_80_129Revenue - GeographyEffective January 1, 2018, the Tax Act reduces the U.S. federal corporate tax rate from 35% to 21% creates a quasi-territorial tax system that a generally allows, among other provisions, companies to repatriate certain foreign source earnings without incurring additional U.S. income tax for such earnings generated after December 31, 2017 and b generally requires companies to pay a
- orcl_10k_2018-06-22_202_214Legal - OtherPrimarily represents amounts associated with agreements that are enforceable and legally binding and specify terms, including: fixed or minimum quantities to be purchased fixed, minimum or variable price provisions and the approximate timing of the payment.
- orcl_10k_2018-06-22_72_102Financial - EarningsIn the event we were to determine that we would not be able to realize all or part of our net deferred tax assets in the future, an adjustment to the deferred tax assets valuation allowance would be charged to earnings in the period in which we make such a determination, or goodwill would be adjusted at our final determination of the valuation allowance related to an acquisition within the measurement period.
- orcl_10k_2018-06-22_45_267Revenue - ProductRevenue Recognition for Multiple-Element Arrangements Cloud License and On-Premise License, Support and Related Services Software Arrangements
- orcl_10k_2018-06-22_91_286Revenue - Productthe amounts shown as cloud services and license support deferred revenues and hardware deferred revenues in our Supplemental Disclosure Related to Certain Charges presented below are not necessarily indicative of revenue improvements we will achieve upon contract renewals to the extent customers do not renew.
- orcl_10k_2018-06-22_152_332Other - OtherTotal amortization of intangible assets
- orcl_10k_2018-06-22_108_297Financial - EarningsIn constant currency, our total operating margin increased in fiscal 2017 due to the increase in our total revenues while total operating margin as a percentage of revenues was flat.
- orcl_10k_2018-06-22_222_384Other - OtherRestricted stock-based awards and stock options outstanding at May 31, 2018
- orcl_10k_2018-06-22_225_387Financial - Shares / EquityShares outstanding at May 31, 2018
- orcl_10k_2018-06-22_226_388Financial - Shares / EquityBasic weighted-average shares outstanding from June 1, 2015 through May 31, 2018
- orcl_10k_2018-06-22_213_234Other - OtherOf the outstanding stock options at May 31, 2018, which generally have a
- orcl_10k_2018-06-22_217_379Other - OtherRestricted stock-based awards and stock options outstanding at May 31, 2015
- orcl_10k_2018-06-22_58_275MA - OtherAccounting for business combinations requires our management to make significant estimates and assumptions, especially at the acquisition date, including our estimates for intangible assets, contractual obligations assumed,
- orcl_10k_2018-06-22_85_284Other - Otherthe net favorable impacts of the Tax Act on our tax profile and effective tax rate beginning on January 1, 2018, which we generally expect will continue into future periods.
- orcl_10k_2018-06-22_68_84Other - OtherAssumptions and estimates about future values and remaining useful lives of our intangible assets are complex and subjective.
- orcl_10k_2018-06-22_26_251Other - OtherGoodwill and Intangible Assets Impairment Assessments
- orcl_10k_2018-06-22_15_19Other - OtherWe expect to make investments in research and development to improve existing hardware products and services and to develop new hardware products and services.
- orcl_10k_2018-06-22_66_279Other - OtherOur most recent annual goodwill impairment analysis, which was performed on March 1, 2018, did not result in a goodwill impairment charge, nor did we recognize an impairment charge in fiscal 2017 or 2016.
- orcl_10k_2018-06-22_75_112Financial - IncomeFor those tax related contingencies that are not a part of a business combination, we account for these uncertain tax issues pursuant to ASC 740, Income Taxes, which contains a
- orcl_10k_2018-06-22_205_222Revenue - GeographyIn addition, our European operations generally provide lower revenues in our first fiscal quarter because of the reduced economic activity in Europe during the summer.
- orcl_10k_2018-06-22_121_307MA - OtherStock-based compensation included in acquisition related and other expenses resulted from unvested stock options and restricted stock-based awards assumed from acquisitions whose vesting was accelerated generally upon termination of the employees pursuant to the terms of those stock options and restricted stock-based awards.
- orcl_10k_2018-06-22_206_228Other - OtherWe believe that all necessary adjustments, which consisted only of normal recurring adjustments, have been included in the amounts stated below to present fairly the results of such periods when read in conjunction with the consolidated financial statements and related notes included elsewhere in this Annual Report.
- orcl_10k_2018-06-22_187_205Other - OtherAs of May 31, 2018, our April 2038 Notes had effective interest rates of 5.65% after considering the effects of the aforementioned interest rate swap arrangements.
- orcl_10k_2018-06-22_82_282Financial - IncomeDuring fiscal 2018, our provision for income taxes increased and our net income decreased, primarily as a result of the following items related to the enactment of the Tax Act:
- orcl_10k_2018-06-22_95_143Revenue - ProductConsistent with our internal management reporting processes, the below operating segment presentation includes revenues adjustments related to cloud services and license support contracts and hardware contracts that would have otherwise been recorded by the acquired businesses as independent entities but were not recognized in our consolidated statements of operations for the periods presented due to business combination accounting requirements.
- orcl_10k_2018-06-22_156_185Other - OtherOur management approved, committed to and initiated these plans in order to restructure and further improve efficiencies in our operations.
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- Form Type: Annual
- Number of times amended: 0
- Accession Number: 0001193125-18-201034
- Submitted to the SEC: Friday, June 22, 2018 4:09:07 PM EST
- Accepted by the SEC: Friday, June 22, 2018
- Fiscal Year ending: May 2018
- Industry: Prepackaged Software
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