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 Q4 FY16 SaaS and PaaS Revenues Were Up 66%, and Up 68% in Constant Currency
   Thursday, June 16, 2016 4:00:12 PM ET

Q1 FY17 SaaS and PaaS Revenues Expected to Be Up 75% to 80%

REDWOOD SHORES, CA--(Marketwired - Jun 16, 2016) - Oracle Corporation (ORCL ) today announced fiscal 2016 Q4 results. Total Q4 Revenues were $10.6 billion, down 1% in U.S. dollars and flat in constant currency. Cloud plus On-Premise Software Revenues were $8.4 billion, flat in U.S. dollars and up 2% in constant currency. Cloud software as a service (SaaS) and platform as a service (PaaS) revenues were $690 million, up 66% in U.S. dollars and up 68% in constant currency. Total Cloud revenues, including infrastructure as a service (IaaS), were $859 million, up 49% in U.S. dollars and up 51% in constant currency. Operating Income was $4.0 billion, and Operating Margin was 37%. Non-GAAP Operating Income was $4.8 billion, and the non-GAAP Operating Margin was 45%. Net Income was $2.8 billion while non-GAAP Net Income was $3.4 billion. Earnings Per Share was $0.66, while non-GAAP Earnings Per Share was $0.81. Without the impact of the U.S. dollar strengthening compared to foreign currencies, Oracle’s reported GAAP Earnings Per Share would have been 2 cents higher and non-GAAP Earnings Per Share would have been 1 cent higher.



Short-term deferred revenues were $7.7 billion, up 6% in U.S. dollars and up 7% in constant currency compared with a year ago. Operating cash flow on a trailing twelve-month basis was $13.6 billion.

For fiscal 2016, Total Revenues were $37.0 billion, down 3% in U.S. dollars and up 2% in constant currency. Cloud plus On-Premise Software Revenues were $29.0 billion, down 2% in U.S. dollars and up 3% in constant currency. Cloud SaaS and PaaS revenues were $2.2 billion, up 49% in U.S. dollars and up 52% in constant currency. Total Cloud revenues, including IaaS, were $2.9 billion, up 36% in U.S. dollars and up 40% in constant currency. Operating Income was $12.6 billion, and Operating Margin was 34%. Non-GAAP Operating Income was $15.8 billion and non-GAAP Operating Margin was 43%. Net Income was $8.9 billion while non-GAAP Net Income was $11.2 billion. Earnings Per Share was $2.07, while Non-GAAP Earnings Per Share was $2.61. Without the impact of the U.S. dollar strengthening compared to foreign currencies, Oracle’s reported GAAP and non-GAAP Earnings Per Share would have been 17 cents higher.

"Fourth quarter SaaS and PaaS revenue growth accelerated to 68% in constant currency, significantly higher than my guidance," said Oracle CEO, Safra Catz. "SaaS and PaaS gross margins continued to improve throughout the year, exiting FY16 at 56%. Bookings in Q4 were also very strong enabling us to raise our guidance for Q1 SaaS and PaaS revenue growth, which we now expect to be between 75% and 80%."

"We added more than 1,600 new SaaS customers and more than 2,000 new PaaS customers in Q4," said Oracle CEO, Mark Hurd. "In Fusion ERP alone, we added more than 800 new cloud customers. Today, Oracle has nearly 2,600 Fusion ERP customers in the Oracle Public Cloud -- that’s ten-times more cloud ERP customers than Workday."

"We expect that the SaaS and PaaS hyper-growth we experienced in FY16 will continue on for the next few years," said Oracle Executive Chairman and CTO, Larry Ellison. "That gives us a fighting chance to be the first cloud company to reach $10 billion in SaaS and PaaS revenue. We’re also very excited about the availability of version 2 of Oracle’s Infrastructure as a Service (IaaS) -- which will enable us to speed up the growth of our IaaS business, which customers want to buy in conjunction with our SaaS and PaaS."

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 July 6, 2016, with a payment date of July 27, 2016.

Q4 Fiscal 2016 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 Q4 results and fiscal 2016 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, Pass Code: 28515799.

About Oracle

Oracle offers a comprehensive and fully integrated stack of cloud applications and platform services. For more information about Oracle (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 future guidance, and expectations of future SaaS, PaaS and IaaS growth, 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) 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 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 June 16, 2016. Oracle undertakes no duty to update any statement in light of new information or future events.

 
ORACLE CORPORATION
 
Q4 FISCAL 2016 FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($in millions, except per share data)
 
                                                                                Three Months Ended May 31,                                                                                                                           
                                                                                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                       $      690      6             %      $      416      4             %      66                            %      68                                             %
    Cloud infrastructure as a service                                             169      2             %        160      1             %      5                             %      8                                              %
             Total cloud revenues                                            859      8             %        576      5             %      49                            %      51                                             %
    New software licenses                                                         2,766    26            %        3,138    29            %      (12                           %)     (10                                            %)
    Software license updates and product support                                  4,814    46            %        4,686    44            %      3                             %      4                                              %
             Total on-premise software revenues                              7,580    72            %        7,824    73            %      (3                            %)     (2                                             %)
                      Total cloud and on-premise software revenues      8,439    80            %        8,400    78            %      0                             %      2                                              %
    Hardware products                                                             725      7             %        818      8             %      (11                           %)     (10                                            %)
    Hardware support                                                              558      5             %        589      6             %      (5                            %)     (4                                             %)
                      Total hardware revenues                           1,283    12            %        1,407    14            %      (9                            %)     (7                                             %)
                      Total services revenues                           872      8             %        899      8             %      (3                            %)     (1                                             %)
                                        Total revenues             10,594   100           %        10,706   100           %      (1                            %)     0                                              %
                                                                                                                                                                                        
OPERATING EXPENSES                                                                                                                                                                           
    Sales and marketing                                                           2,306    22            %        2,212    21            %      4                             %      6                                              %
    Cloud software as a service and platform as a service                         304      3             %        256      2             %      19                            %      20                                             %
    Cloud infrastructure as a service                                             99       1             %        90       1             %      9                             %      11                                             %
    Software license updates and product support                                  268      2             %        331      3             %      (19                           %)     (18                                            %)
    Hardware products                                                             405      4             %        438      4             %      (8                            %)     (6                                             %)
    Hardware support                                                              168      2             %        188      2             %      (11                           %)     (10                                            %)
    Services                                                                      692      7             %        750      7             %      (8                            %)     (6                                             %)
    Research and development                                                      1,534    14            %        1,435    13            %      7                             %      8                                              %
    General and administrative                                                    323      3             %        278      3             %      16                            %      18                                             %
    Amortization of intangible assets                                             355      3             %        507      5             %      (30                           %)     (30                                            %)
    Acquisition related and other                                                 7        0             %        200      2             %      (97                           %)     (96                                            %)
    Restructuring                                                                 165      2             %        39       0             %      320                           %      314                                            %
                                                                                                                                                                                        
                                        Total operating expenses   6,626    63            %        6,724    63            %      (1                            %)     0                                              %
                                                                                                                                                                                        
OPERATING INCOME                                                                       3,968    37            %        3,982    37            %      0                             %      1                                              %
    Interest expense                                                              (362   )      (3            %)       (325   )      (3            %)     11                            %      11                                             %
    Non-operating income, net                                                     126      1             %        40       1             %      211                           %      211                                            %
                                                                                                                                                                                        
INCOME BEFORE PROVISION FOR INCOME TAXES                                               3,732    35            %        3,697    35            %      1                             %      3                                              %
    Provision for income taxes                                                    918      8             %        939      9             %      (2                            %)     0                                              %
                                                                                                                                                                                        
NET INCOME                                                                           $      2,814    27            %      $      2,758    26            %      2                             %      4                                              %
                                                                                                                                                                                        
EARNINGS PER SHARE:                                                                                                                                                                          
    Basic                                                                       $      0.68                $      0.63                                                                                      
    Diluted                                                                     $      0.66                $      0.62                                                                                      
                                                                                                                                                                                        
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:                                                                                                                                                  
    Basic                                                                         4,147                 4,359                                                                                     
    Diluted                                                                       4,238                 4,463                                                                                     
                                                                                                                                                                                        
(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, 2015, 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 May 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
 
Q4 FISCAL 2016 FINANCIAL RESULTS
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)
($ in millions, except per share data)
 
                                                                                     Three Months Ended May 31,                                                                                                                                    % Increase (Decrease)                 % Increase (Decrease) in Constant Currency (2)   
                                                                                                                                                                                                                                                                  in US $
                                                                                     2016 GAAP         Adj.              2016 Non-GAAP     2015 GAAP         Adj.              2015 Non-GAAP     GAAP          Non-GAAP      GAAP                      Non-GAAP     
                                                                                                                                                                                    
TOTAL REVENUES                                                                            $      10,594     $      2          $      10,596     $      10,706     $      6          $      10,712     (1        %)       (1        %)       0           %                  0           %
                                                                                                                                                                                    
TOTAL CLOUD AND ON-PREMISE SOFTWARE REVENUES                                              $      8,439      $      2          $      8,441      $      8,400      $      5          $      8,405      0         %        0         %        2           %                  2           %
                           Cloud software as a service and platform as a service       690          1            691          416          3            419        66        %        65        %        68          %                  67          %
                           Cloud infrastructure as a service                           169          -            169          160          -            160        5         %        5         %        8           %                  8           %
                           New software licenses                                       2,766        -            2,766        3,138        -            3,138      (12       %)       (12       %)       (10         %)                 (10         %)
                           Software license updates and product support                4,814        1            4,815        4,686        2            4,688      3         %        3         %        4           %                  4           %
                                                                                                                                                                                    
TOTAL HARDWARE REVENUES                                                                   $      1,283      $      -          $      1,283      $      1,407      $      1          $      1,408      (9        %)       (9        %)       (7          %)                 (7          %)
                           Hardware products                                           725          -            725          818          -            818        (11       %)       (11       %)       (10         %)                 (10         %)
                           Hardware support                                            558          -            558          589          1            590        (5        %)       (5        %)       (4          %)                 (4          %)
                                                                                                                                                                                    
TOTAL OPERATING EXPENSES                                                                  $      6,626      $      (796   )        $      5,830      $      6,724      $      (990   )        $      5,734      (1        %)       2         %        0           %                  3           %
                           Cloud software as a service and platform as a service (3)   304          (4     )          300          256          (3     )          253        19        %        18        %        20          %                  20          %
                           Stock-based compensation (3)                                265          (265   )          -            241          (241   )          -          10        %        *             10          %                  *            
                           Amortization of intangible assets (4)                       355          (355   )          -            507          (507   )          -          (30       %)       *             (30         %)                 *            
                           Acquisition related and other                               7            (7     )          -            200          (200   )          -          (97       %)       *             (96         %)                 *            
                           Restructuring                                               165          (165   )          -            39           (39    )          -          320       %        *             314         %                  *            
                                                                                                                                                                                    
CLOUD SOFTWARE AS A SERVICE AND PLATFORM AS A SERVICE MARGIN %                              56     %                  57     %          38     %                  40     %        1,748 bp.     1,707 bp.     1,749 bp.                 1,707 bp.    
                                                                                                                                                                                    
OPERATING INCOME                                                                          $      3,968      $      798        $      4,766      $      3,982      $      996        $      4,978      0         %        (4        %)       1           %                  (3          %)
OPERATING MARGIN %                                                                          37     %                  45     %          37     %                  46     %        26 bp.        (149) bp.     36 bp.                    (153) bp.    
                                                                                                                                                                                    
INCOME TAX EFFECTS (5)                                                                    $      918        $      188        $      1,106      $      939        $      258        $      1,197      (2        %)       (8        %)       0           %                  (6          %)
                                                                                                                                                                                    
NET INCOME                                                                                $      2,814      $      610        $      3,424      $      2,758      $      738        $      3,496      2         %        (2        %)       4           %                  (1          %)
                                                                                                                                                                                    
DILUTED EARNINGS PER SHARE                                                                $      0.66               $      0.81       $      0.62               $      0.78       7         %        3         %        9           %                  5           %
                                                                                                                                                                                    
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING                                          4,238        -            4,238        4,463        -            4,463      (5        %)       (5        %)       (5          %)                 (5          %)
                                                                                                                                                                                                                                                                                                                                                                                                                    
(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 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)    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, 2015, which was the last day of our prior fiscal year, rather than the actual exchange rates in effect during the respective periods.
                                                                                                                                                                                                                                                                                                                                                                                                                    
(3)    Stock-based compensation was included in the following GAAP operating expense categories:
                                                                                                                                                                                                                                                                                                                                                                                                                    
                                                                                   Three Months Ended                                                                                                                                                                                                      Three Months Ended
                                                                                   May 31, 2016                                                                                                                                                                                                            May 31, 2015
                                                                                   GAAP                                                       Adj.                                                                                 Non-GAAP                                                 GAAP                                                       Adj.                                                                                 Non-GAAP
  Sales and marketing                                                                   $                             57                           $                             (57  )                                                      $                             -                          $                             49                           $                             (49  )                                                      $                             -
  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   )                                                                               -                                                   2                                                     (2   )                                                                               -
  Services                                                                                                       7                                                     (7   )                                                                               -                                                   8                                                     (8   )                                                                               -
  Research and development                                                                                       157                                                   (157 )                                                                               -                                                   142                                                   (142 )                                                                               -
  General and administrative                                                                                     34                                                    (34  )                                                                               -                                                   31                                                    (31  )                                                                               -
                           Subtotal                                                                         265                                                   (265 )                                                                               -                                                   241                                                   (241 )                                                                               -
  Cloud software as a service and platform as a service                                                          4                                                     (4   )                                                                               -                                                   3                                                     (3   )                                                                               -
  Acquisition related and other                                                                                  -                                                     -                                                                               -                                                   -                                                     -                                                                               -
                           Total stock-based compensation                          $                             269                          $                             (269 )                                                      $                             -                          $                             244                          $                             (244 )                                                      $                             -
                                                                                                 
(4)    Estimated future annual amortization expense related to intangible assets as of May 31, 2016 was as follows:
                                                                                                 
  Fiscal 2017                                                                   $ 1,026                    
  Fiscal 2018                                                                   878                        
  Fiscal 2019                                                                   770                        
  Fiscal 2020                                                                   621                        
  Fiscal 2021                                                                   476                        
  Thereafter                                                                    1,172                      
                                    Total intangible assets, net           $ 4,943                    
                                                                                                 
(5)    Income tax effects were calculated reflecting an effective GAAP tax rate of 24.6% and 25.4% in the fourth quarter of fiscal 2016 and 2015, respectively, and an effective non-GAAP tax rate of 24.4% and 25.5% in the fourth quarter of fiscal 2016 and 2015, respectively. The differences between our GAAP and non-GAAP tax rates in the fourth quarter of fiscal 2016 and 2015 were primarily due to the net tax effects of acquisition related items, including the tax effects of amortization of intangible assets.
                                                                                                 
*      Not meaningful
   
   
   
 
ORACLE CORPORATION
 
FISCAL 2016 YEAR TO DATE FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($ in millions, except per share data)
 
                                                                              Year Ended May 31,                                                                                                                                   
                                                                              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                     $      2,207    6             %      $      1,485    4             %      49                            %      52                                             %
    Cloud infrastructure as a service                                           646      2             %        608      2             %      6                             %      11                                             %
             Total cloud revenues                                          2,853    8             %        2,093    6             %      36                            %      40                                             %
    New software licenses                                                       7,276    19            %        8,535    22            %      (15                           %)     (11                                            %)
    Software license updates and product support                                18,861   51            %        18,847   49            %      0                             %      5                                              %
             Total on-premise software revenues                            26,137   70            %        27,382   71            %      (5                            %)     0                                              %
                      Total cloud and on-premise software revenues    28,990   78            %        29,475   77            %      (2                            %)     3                                              %
    Hardware products                                                           2,471    7             %        2,825    8             %      (13                           %)     (7                                             %)
    Hardware support                                                            2,197    6             %        2,380    6             %      (8                            %)     (3                                             %)
                      Total hardware revenues                         4,668    13            %        5,205    14            %      (10                           %)     (5                                             %)
                      Total services revenues                         3,389    9             %        3,546    9             %      (4                            %)     2                                              %
                                                                                                                                                                       
                                        Total revenues           37,047   100           %        38,226   100           %      (3                            %)     2                                              %
                                                                                                                                                                                      
OPERATING EXPENSES                                                                                                                                                                         
    Sales and marketing                                                         7,884    21            %        7,655    20            %      3                             %      8                                              %
    Cloud software as a service and platform as a service                       1,152    3             %        773      2             %      49                            %      53                                             %
    Cloud infrastructure as a service                                           366      1             %        344      1             %      6                             %      10                                             %
    Software license updates and product support                                1,146    3             %        1,199    3             %      (4                            %)     1                                              %
    Hardware products                                                           1,371    4             %        1,471    4             %      (7                            %)     (1                                             %)
    Hardware support                                                            693      2             %        816      2             %      (15                           %)     (10                                            %)
    Services                                                                    2,751    8             %        2,929    8             %      (6                            %)     0                                              %
    Research and development                                                    5,787    16            %        5,524    14            %      5                             %      7                                              %
    General and administrative                                                  1,155    3             %        1,077    3             %      7                             %      11                                             %
    Amortization of intangible assets                                           1,638    4             %        2,149    5             %      (24                           %)     (24                                            %)
    Acquisition related and other                                               42       0             %        211      1             %      (80                           %)     (80                                            %)
    Restructuring                                                               458      1             %        207      1             %      121                           %      145                                            %
                                                                                                                                                                                      
Total operating expenses                                                             24,443   66            %        24,355   64            %      0                             %      4                                              %
                                                                                                                                                                                      
OPERATING INCOME                                                                     12,604   34            %        13,871   36            %      (9                            %)     (2                                             %)
    Interest expense                                                            (1,467 )      (4            %)       (1,143 )      (3            %)     28                            %      28                                             %
    Non-operating income, net                                                   305      1             %        106      0             %      188                           %      221                                            %
                                                                                                                                                                                      
INCOME BEFORE PROVISION FOR INCOME TAXES                                             11,442   31            %        12,834   33            %      (11                           %)     (4                                             %)
    Provision for income taxes                                                  2,541    7             %        2,896    7             %      (12                           %)     (5                                             %)
                                                                                                                                                                                      
NET INCOME                                                                         $      8,901    24            %      $      9,938    26            %      (10                           %)     (3                                             %)
                                                                                                                                                                                      
EARNINGS PER SHARE:                                                                                                                                                                        
    Basic                                                                     $      2.11                $      2.26                                                                                      
    Diluted                                                                   $      2.07                $      2.21                                                                                      
                                                                                                                                                                                      
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:                                                                                                                                                
    Basic                                                                       4,221                 4,404                                                                                     
    Diluted                                                                     4,305                 4,503                                                                                     
                                                                                                                                                                                      
(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, 2015, 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 year ended May 31, 2016 compared with the corresponding prior year period decreased our revenues by 5 percentage points, operating expenses by 4 percentage points and operating income by 7 percentage points.
   
   
   
ORACLE  CORPORATION
 
FISCAL 2016 YEAR TO DATE FINANCIAL RESULTS
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)
($ in millions, except per share data)
 
                                                                             Year Ended May 31,                                                                                                                                            % Increase (Decrease)                 % Increase (Decrease) in Constant Currency (2)   
                                                                                                                                                                                                                                                               in US $
                                                                             2016 GAAP         Adj.              2016 Non-GAAP     2015 GAAP         Adj.              2015 Non-GAAP     GAAP          Non-GAAP      GAAP                      Non-GAAP     
                                                                                                                                                                            
TOTAL REVENUES                                                                    $      37,047     $      10         $      37,057     $      38,226     $      27         $      38,253     (3        %)       (3        %)       2           %                  2           %
                                                                                                                                                                            
TOTAL CLOUD AND ON-PREMISE SOFTWARE REVENUES                                      $      28,990     $      9          $      28,999     $      29,475     $      23         $      29,498     (2        %)       (2        %)       3           %                  3           %
                     Cloud software as a service and platform as a service     2,207        7            2,214        1,485        12           1,497      49        %        48        %        52          %                  52          %
                     Cloud infrastructure as a service                         646          -            646          608          -            608        6         %        6         %        11          %                  11          %
                     New software licenses                                     7,276        -            7,276        8,535        -            8,535      (15       %)       (15       %)       (11         %)                 (11         %)
                     Software license updates and product support              18,861       2            18,863       18,847       11           18,858     0         %        0         %        5           %                  5           %
                                                                                                                                                                            
TOTAL HARDWARE REVENUES                                                           $      4,668      $      1          $      4,669      $      5,205      $      4          $      5,209      (10       %)       (10       %)       (5          %)                 (5          %)
                     Hardware products                                         2,471        -            2,471        2,825        -            2,825      (13       %)       (13       %)       (7          %)                 (7          %)
                     Hardware support                                          2,197        1            2,198        2,380        4            2,384      (8        %)       (8        %)       (3          %)                 (3          %)
                                                                                                                                                                            
TOTAL OPERATING EXPENSES                                                          $      24,443     $      (3,172 )        $      21,271     $      24,355     $      (3,495 )        $      20,860     0         %        2         %        4           %                  7           %
                     Stock-based compensation (3)                              1,034        (1,034 )          -            928          (928   )          -          11        %        *             11          %                  *            
                     Amortization of intangible assets (4)                     1,638        (1,638 )          -            2,149        (2,149 )          -          (24       %)       *             (24         %)                 *            
                     Acquisition related and other                             42           (42    )          -            211          (211   )          -          (80       %)       *             (80         %)                 *            
                     Restructuring                                             458          (458   )          -            207          (207   )          -          121       %        *             145         %                  *            
                                                                                                                                                                            
OPERATING INCOME                                                                  $      12,604     $      3,182      $      15,786     $      13,871     $      3,522      $      17,393     (9        %)       (9        %)       (2          %)                 (4          %)
                                                                                                                                                                            
OPERATING MARGIN %                                                                  34     %                  43     %          36     %                  45     %        (226) bp.     (287) bp.     (153) bp.                 (254) bp.    
                                                                                                                                                                            
INCOME TAX EFFECTS (5)                                                            $      2,541      $      846        $      3,387      $      2,896      $      971        $      3,867      (12       %)       (12       %)       (5          %)                 (7          %)
                                                                                                                                                                            
NET INCOME                                                                        $      8,901      $      2,336      $      11,237     $      9,938      $      2,551      $      12,489     (10       %)       (10       %)       (3          %)                 (4          %)
                                                                                                                                                                            
DILUTED EARNINGS PER SHARE                                                        $      2.07               $      2.61       $      2.21               $      2.77       (6        %)       (6        %)       1           %                  0           %
                                                                                                                                                                            
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING                                  4,305        -            4,305        4,503        -            4,503      (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 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)    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, 2015, which was the last day of our prior fiscal year, rather than the actual exchange rates in effect during the respective periods.
                                                                                                                                                                                                                                                                                                                                                                                                                                               
(3)    Stock-based compensation was included in the following GAAP operating expense categories:
                                                                                                                                                                                                                                                                                                                                                                                                                                               
                                                                                   Year Ended                                                                                                                                                                                                                                         Year Ended
                                                                                   May 31, 2016                                                                                                                                                                                                                                       May 31, 2015
                                                                                   GAAP                                                         Adj.                                                                                                          Non-GAAP                                                 GAAP                                                       Adj.                                                                                 Non-GAAP
  Sales and marketing                                                                   $                             220                            $                             (220                          )                                                      $                             -                          $                             180                          $                             (180 )                                                      $                             -
  Cloud software as a service and platform as a service                                                          17                                                      (17                           )                                                                               -                                                   10                                                    (10  )                                                                               -
  Cloud infrastructure as a service                                                                              4                                                       (4                            )                                                                               -                                                   5                                                     (5   )                                                                               -
  Software license updates and product support                                                                   23                                                      (23                           )                                                                               -                                                   21                                                    (21  )                                                                               -
  Hardware products                                                                                              7                                                       (7                            )                                                                               -                                                   6                                                     (6   )                                                                               -
  Hardware support                                                                                               5                                                       (5                            )                                                                               -                                                   6                                                     (6   )                                                                               -
  Services                                                                                                       29                                                      (29                           )                                                                               -                                                   30                                                    (30  )                                                                               -
  Research and development                                                                                       609                                                     (609                          )                                                                               -                                                   522                                                   (522 )                                                                               -
  General and administrative                                                                                     120                                                     (120                          )                                                                               -                                                   148                                                   (148 )                                                                               -
                           Subtotal                                                                         1,034                                                   (1,034                        )                                                                               -                                                   928                                                   (928 )                                                                               -
  Acquisition related and other                                                                                  3                                                       (3                            )                                                                               -                                                   5                                                     (5   )                                                                               -
                           Total stock-based compensation                          $                             1,037                          $                             (1,037                        )                                                      $                             -                          $                             933                          $                             (933 )                                                      $                             -
                                                                                                                                                                                                                                                                                                                                                                           
(4)    Estimated future annual amortization expense related to intangible assets as of May 31, 2016 was as follows:
                                                                                                                                                                                                                                                                                                                                                                           
  Fiscal 2017                                                                          $                             1,026                                                                                                                                                                                                                                                           
  Fiscal 2018                                                                                                   878                                                                                                                                                                                                                                                             
  Fiscal 2019                                                                                                   770                                                                                                                                                                                                                                                             
  Fiscal 2020                                                                                                   621                                                                                                                                                                                                                                                             
  Fiscal 2021                                                                                                   476                                                                                                                                                                                                                                                             
  Thereafter                                                                                                    1,172                                                                                                                                                                                                                                                           
                           Total intangible assets, net                           $                             4,943                                                                                                                                                                                                                                                           
                                                                                                                                                                                                                                                                                                                                                                      
(5)    Income tax effects were calculated reflecting an effective GAAP tax rate of 22.2% and 22.6% in fiscal 2016 and 2015, respectively, and an effective non-GAAP tax rate of 23.2% and 23.6% in fiscal 2016 and 2015, respectively. The differences between our GAAP and non-GAAP tax rates in fiscal 2016 and 2015 were primarily due to the net tax effects of acquisition related items, including the tax effects of amortization of intangible assets.
                                                                                                                                                                                                                                                                                                                                                                      
*      Not meaningful
   
   
   
ORACLE CORPORATION
                                                                              
FISCAL 2016 FINANCIAL RESULTS
CONDENSED CONSOLIDATED BALANCE SHEETS
($ in millions)
                                                                              
                                                                 May 31,          May 31,
                                                                 2016             2015
ASSETS                                                                          
                                                                           
   Current Assets:                                                         
       Cash and cash equivalents                            $      20,152    $      21,716
       Marketable securities                                  35,973      32,652
       Trade receivables, net                                 5,385       5,618
       Inventories                                            212         314
       Prepaid expenses and other current assets              2,591       2,220
                       Total Current Assets              64,313      62,520
                                                                      
   Non-Current Assets:                                                     
       Property, plant and equipment, net                     4,000       3,686
       Intangible assets, net                                 4,943       6,406
       Goodwill, net                                          34,590      34,087
       Deferred tax assets                                    1,291       1,458
       Other assets                                           3,043       2,746
                       Total Non-Current Assets          47,867      48,383
                                                                           
TOTAL ASSETS                                                          $      112,180   $      110,903
                                                                           
LIABILITIES AND EQUITY                                                          
                                                                           
   Current Liabilities:                                                    
       Notes payable, current                               $      3,750     $      1,999
       Accounts payable                                       504         806
       Accrued compensation and related benefits              1,966       1,839
       Deferred revenues                                      7,655       7,245
       Other current liabilities                              3,333       3,317
                       Total Current Liabilities         17,208      15,206
                                                                      
   Non-Current Liabilities:                                                
       Notes payable, non-current                             40,105      39,959
       Income taxes payable                                   4,908       4,386
       Other non-current liabilities                          2,169       2,254
                       Total Non-Current Liabilities     47,182      46,599
                                                                      
   Equity                                                          47,790      49,098
                                                                           
TOTAL LIABILITIES AND EQUITY                                          $      112,180   $      110,903
                                                                           
                                                                           
                                                                           
ORACLE CORPORATION                                                                                                                                                                                               
                                                                                                                                                                                                            
FISCAL 2016 FINANCIAL RESULTS                                                                                                                                                                                    
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                                                                                                                                                                  
($ in millions)                                                                                                                                                                                                  
                                                                                                                                                                                   
                                                                                                                                                          Year Ended May 31,                           
                                                                                                                                                          2016               2015            
Cash Flows From Operating Activities:                                                                                                                                                   
        Net income                                                                                                                                        $      8,901       $      9,938    
        Adjustments to reconcile net income to net cash provided by operating activities:                                                                                
                            Depreciation                                                                                                               871           712      
                            Amortization of intangible assets                                                                                          1,638         2,149    
                            Deferred income taxes                                                                                                      (105    )          (548    )
                            Stock-based compensation                                                                                                   1,037         933      
                            Tax benefits on the exercise of stock options and vesting of restricted stock-based awards                                 311           396      
                            Excess tax benefits on the exercise of stock options and vesting of restricted stock-based awards                          (124    )          (244    )
                            Other, net                                                                                                                 143           327      
                            Changes in operating assets and liabilities, net of effects from acquisitions:                                                          
                                                        Decrease in trade receivables, net                                                        226           264      
                                                        Decrease (increase) in inventories                                                        88            (96     )
                                                        Increase in prepaid expenses and other assets                                             (90     )          (387    )
                                                        (Decrease) increase in accounts payable and other liabilities                             (13     )          247      
                                                        Increase (decrease) in income taxes payable                                               2             (10     )
                                                        Increase in deferred revenues                                                             676           655      
                                                                                                                                                          
                                                                                    Net cash provided by operating activities                13,561        14,336   
                                                                                                                                                                         
Cash Flows From Investing Activities:                                                                                                                                         
        Purchases of marketable securities and other investments                                                                                            (24,562 )          (31,421 )
        Proceeds from maturities and sales of marketable securities and other investments                                                                   21,247        20,004   
        Acquisitions, net of cash acquired                                                                                                                  (650    )          (6,239  )
        Capital expenditures                                                                                                                                (1,189  )          (1,391  )
                                                                                                                                                                    
                                                                                    Net cash used for investing activities                   (5,154  )          (19,047 )
                                                                                                                                                                         
Cash Flows From Financing Activities:                                                                                                                                         
        Payments for repurchases of common stock                                                                                                            (10,440 )          (8,087  )
        Proceeds from issuances of common stock                                                                                                             1,425         1,816    
        Shares repurchased for tax withholdings upon vesting of restricted stock-based awards                                                               (89     )          (14     )
        Payments of dividends to stockholders                                                                                                               (2,541  )          (2,255  )
        Proceeds from borrowings, net of issuance costs                                                                                                     3,750         19,842   
        Repayments of borrowings                                                                                                                            (2,000  )          (1,500  )
        Excess tax benefits on the exercise of stock options and vesting of restricted stock-based awards                                                   124           244      
        Distributions to noncontrolling interests                                                                                                           (85     )          (196    )
                                                                                                                                                                    
                                                                                    Net cash (used for) provided by financing activities     (9,856  )          9,850    
                                                                                                                                                                         
Effect of exchange rate changes on cash and cash equivalents                                                                                                     (115    )          (1,192  )
                                                                                                                                                                         
Net (decrease) increase in cash and cash equivalents                                                                                                             (1,564  )          3,947    
                                                                                                                                                                         
Cash and cash equivalents at beginning of period                                                                                                                 21,716        17,769   
                                                                                                                                                                         
Cash and cash equivalents at end of period                                                                                                                     $      20,152      $      21,716   
                                                                                                                                                                         
                                                                                                                                                                         
                                                                                                                                                                         
ORACLE CORPORATION
FISCAL 2016 FINANCIAL RESULTS
FREE CASH FLOW - TRAILING 4-QUARTERS (1)
($ in millions)
 
                               Fiscal 2015                                                                                           Fiscal 2016                                                                                        
                               Q1                Q2                Q3                Q4                Q1                Q2                Q3                Q4             
                                                                                                                                    
GAAP Operating Cash Flow            $      15,357     $      15,273     $      14,509     $      14,336     $      13,464     $      12,903     $      14,114     $      13,561  
                                                                                            
Capital Expenditures                  (628   )          (727   )          (948   )          (1,391 )          (1,636 )          (1,606 )          (1,606 )          (1,189 )
                                                                                            
Free Cash Flow                      $      14,729     $      14,546     $      13,561     $      12,945     $      11,828     $      11,297     $      12,508     $      12,372  
                                                                                            
% Growth over prior year              4      %          0      %          (6     )%         (10    )%         (20    )%         (22    )%         (8     )%         (4     )%
                                                                                            
                                                                                            
GAAP Net Income                     $      10,948     $      10,896     $      10,827     $      9,938      $      9,501      $      9,198      $      8,844      $      8,901   
                                                                                            
Free Cash Flow as a % of Net Income   135    %          133    %          125    %          130    %          124    %          123    %          141    %          139    %
                                                                                            
   
(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
FISCAL 2016 FINANCIAL RESULTS
SUPPLEMENTAL ANALYSIS OF GAAP REVENUES AND HEADCOUNT (1)
($ in millions)
 
                                                                            Fiscal 2015                                                                                                                           Fiscal 2016                                                                                                                        
                                                                                 Q1                 Q2                 Q3                 Q4                 TOTAL             Q1                 Q2                 Q3                 Q4                 TOTAL          
REVENUES                                                                                                                                                              
  Cloud software as a service and platform as a service                     $      337         $      361         $      372         $      416         $      1,485      $      451         $      484         $      583         $      690         $      2,207   
  Cloud infrastructure as a service                                           138           155           155           160           608          160           165           152           169           646     
           Total cloud revenues                                          475           516           527           576           2,093        611           649           735           859           2,853   
  New software licenses                                                       1,370         2,045         1,982         3,138         8,535        1,151         1,677         1,680         2,766         7,276   
  Software license updates and product support                                4,731         4,768         4,661         4,686         18,847       4,696         4,683         4,669         4,814         18,861  
           Total on-premise software revenues                            6,101         6,813         6,643         7,824         27,382       5,847         6,360         6,349         7,580         26,137  
                    Total cloud and on-premise software revenues    6,576         7,329         7,170         8,400         29,475       6,458         7,009         7,084         8,439         28,990  
                                                                                                                                                            
  Hardware products                                                           578           717           712           818           2,825        570           573           604           725           2,471   
  Hardware support                                                            587           617           587           589           2,380        558           550           531           558           2,197   
                    Total hardware revenues                         1,165         1,334         1,299         1,407         5,205        1,128         1,123         1,135         1,283         4,668   
                                                                                                                                                  
                    Total services revenues                         855           935           858           899           3,546        862           861           793           872           3,389   
                                                                                                                                                       
                                      Total revenues         $      8,596       $      9,598       $      9,327       $      10,706      $      38,226     $      8,448       $      8,993       $      9,012       $      10,594      $      37,047  
                                                                                                                                                                 
AS REPORTED REVENUE GROWTH RATES                                                                                                                                      
  Cloud software as a service and platform as a service                       32      %          39      %          30      %          29      %          32     %          34      %          34      %          57      %          66      %          49     %
  Cloud infrastructure as a service                                           26      %          60      %          28      %          25      %          33     %          16      %          7       %          (2      %)         5       %          6      %
           Total cloud revenues                                          31      %          45      %          29      %          28      %          33     %          29      %          26      %          40      %          49      %          36     %
  New software licenses                                                       (2      %)         (4      %)         (7      %)         (17     %)         (9     %)         (16     %)         (18     %)         (15     %)         (12     %)         (15    %)
  Software license updates and product support                                7       %          6       %          2       %          0       %          4      %          (1      %)         (2      %)         0       %          3       %          0      %
           Total on-premise software revenues                            5       %          3       %          (1      %)         (8      %)         (1     %)         (4      %)         (7      %)         (4      %)         (3      %)         (5     %)
                    Total cloud and on-premise software revenues    6       %          5       %          1       %          (6      %)         1      %          (2      %)         (4      %)         (1      %)         0       %          (2     %)
                                                                                                                                                            
  Hardware products                                                           (14     %)         0       %          (2      %)         (6      %)         (5     %)         (1      %)         (20     %)         (15     %)         (11     %)         (13    %)
  Hardware support                                                            (1      %)         1       %          (2      %)         (1      %)         (1     %)         (5      %)         (11     %)         (10     %)         (5      %)         (8     %)
                    Total hardware revenues                         (8      %)         1       %          (2      %)         (4      %)         (3     %)         (3      %)         (16     %)         (13     %)         (9      %)         (10    %)
                                                                                                                                                  
                    Total services revenues                         (7      %)         (3      %)         (3      %)         (4      %)         (4     %)         1       %          (8      %)         (7      %)         (3      %)         (4     %)
                                                                                                                                                       
                                      Total revenues           3       %          3       %          0       %          (5      %)         0      %          (2      %)         (6      %)         (3      %)         (1      %)         (3     %)
                                                                                                                                                                 
CONSTANT CURRENCY GROWTH RATES (2)                                                                                                                                    
  Cloud software as a service and platform as a service                       32      %          41      %          34      %          35      %          35     %          38      %          39      %          61      %          68      %          52     %
  Cloud infrastructure as a service                                           25      %          62      %          32      %          31      %          36     %          23      %          11      %          2       %          8       %          11     %
           Total cloud revenues                                          30      %          47      %          33      %          34      %          36     %          34      %          31      %          44      %          51      %          40     %
  New software licenses                                                       (2      %)         0       %          0       %          (10     %)         (4     %)         (9      %)         (12     %)         (11     %)         (10     %)         (11    %)
  Software license updates and product support                                6       %          9       %          8       %          8       %          8      %          8       %          5       %          5       %          4       %          5      %
           Total on-premise software revenues                            4       %          6       %          6       %          0       %          4      %          4       %          0       %          0       %          (2      %)         0      %
                    Total cloud and on-premise software revenues    6       %          8       %          7       %          2       %          5      %          6       %          2       %          3       %          2       %          3      %
                                                                                                                                                            
  Hardware products                                                           (14     %)         4       %          6       %          3       %          0      %          9       %          (14     %)         (10     %)         (10     %)         (7     %)
  Hardware support                                                            (2      %)         5       %          4       %          7       %          4      %          4       %          (5      %)         (5      %)         (4      %)         (3     %)
                    Total hardware revenues                         (8      %)         4       %          5       %          5       %          2      %          6       %          (10     %)         (8      %)         (7      %)         (5     %)
                                                                                                                                                  
                    Total services revenues                         (8      %)         1       %          3       %          5       %          0      %          10      %          0       %          (2      %)         (1      %)         2      %
                                                                                                                                                  
                                      Total revenues           2       %          7       %          6       %          3       %          4      %          7       %          0       %          1       %          0       %          2      %
                                                                                                                                                                 
                                                                                                                                                                 
GEOGRAPHIC REVENUES                                                                                                                                                   
                                                                                                                                                                 
REVENUES                                                                                                                                                              
  Americas                                                                  $      4,620       $      5,221       $      5,134       $      6,133       $      21,107     $      4,716       $      4,960       $      4,942       $      5,847       $      20,466  
  Europe, Middle East & Africa                                                2,589         2,911         2,813         3,067         11,380       2,456         2,645         2,661         3,120         10,881  
  Asia Pacific                                                                1,387         1,466         1,380         1,506         5,739        1,276         1,388         1,409         1,627         5,700   
                                      Total revenues         $      8,596       $      9,598       $      9,327       $      10,706      $      38,226     $      8,448       $      8,993       $      9,012       $      10,594      $      37,047  
                                                                                                                                                                 
                                                                                                                                                                 
HEADCOUNT                                                                                                                                                             
                                                                                                                                                                 
GEOGRAPHIC AREA                                                                                                                                                       
  Americas                                                                    54,073        57,243        58,117        58,415                59,901        59,999        60,437        60,329           
  Europe, Middle East & Africa                                                23,349        26,997        26,989        26,988                27,030        27,541        27,275        27,061           
  Asia Pacific                                                                45,496        46,312        46,456        46,962                48,139        48,620        48,694        48,872           
                                      Total company            122,918       130,552       131,562       132,365               135,070       136,160       136,406       136,262          
                                                                                                                                             
(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, 2015 and 2014 for the fiscal 2016 and fiscal 2015 constant currency growth rate calculations presented, respectively, rather than the actual exchange rates in effect during the respective periods.
   
   
   
ORACLE CORPORATION
FISCAL 2016 FINANCIAL RESULTS
SUPPLEMENTAL GEOGRAPHIC REVENUES ANALYSIS (1)
($ in millions)
 
                                                          Fiscal 2015                                                                                                                       Fiscal 2016                                                                                                                    
                                                          Q1                Q2                Q3                Q4                TOTAL             Q1                Q2                Q3                Q4                TOTAL          
                                                                                                                                       
AMERICAS                                                                                                                                    
             Total cloud and on-premise software revenues $      3,614      $      4,044      $      4,021      $      4,926      $      16,604     $      3,684      $      3,927      $      3,964      $      4,771      $      16,346  
             Total hardware revenues                      $      583        $      716        $      686        $      751        $      2,737      $      589        $      595        $      571        $      650        $      2,404   
                                                                                                                                       
AS REPORTED GROWTH RATES                                                                                                                    
             Total cloud and on-premise software revenues   5      %          6      %          5      %          6      %          6      %          2      %          (3     %)         (1     %)         (3     %)         (2     %)
Total hardware revenues                                          (9     %)         3      %          5      %          1      %          0      %          1      %          (17    %)         (17    %)         (14    %)         (12    %)
                                                                                                                                       
CONSTANT CURRENCY GROWTH RATES (2)                                                                                                          
             Total cloud and on-premise software revenues   6      %          8      %          7      %          9      %          7      %          6      %          0      %          1      %          (2     %)         1      %
             Total hardware revenues                        (8     %)         5      %          7      %          4      %          2      %          6      %          (14    %)         (13    %)         (11    %)         (9     %)
                                                                                                                                       
                                                                                                                                       
EUROPE / MIDDLE EAST / AFRICA                                                                                                               
             Total cloud and on-premise software revenues $      1,992      $      2,234      $      2,169      $      2,369      $      8,764      $      1,873      $      2,066      $      2,069      $      2,462      $      8,471   
             Total hardware revenues                      $      338        $      380        $      379        $      423        $      1,519      $      330        $      316        $      349        $      382        $      1,377   
                                                                                                                                       
AS REPORTED GROWTH RATES                                                                                                                    
             Total cloud and on-premise software revenues   10     %          4      %          (3     %)         (22    %)         (5     %)         (6     %)         (8     %)         (5     %)         4      %          (3     %)
             Total hardware revenues                        (6     %)         2      %          (6     %)         (4     %)         (3     %)         (2     %)         (17    %)         (8     %)         (10    %)         (9     %)
                                                                                                                                       
CONSTANT CURRENCY GROWTH RATES (2)                                                                                                          
             Total cloud and on-premise software revenues   7      %          9      %          9      %          (8     %)         3      %          7      %          3      %          2      %          5      %          4      %
             Total hardware revenues                        (7     %)         8      %          8      %          15     %          6      %          14     %          (6     %)         (1     %)         (8     %)         (1     %)
                                                                                                                                       
                                                                                                                                       
ASIA PACIFIC                                                                                                                                
             Total cloud and on-premise software revenues $      970        $      1,051      $      980        $      1,105      $      4,107      $      901        $      1,016      $      1,051      $      1,206      $      4,173   
             Total hardware revenues                      $      244        $      238        $      234        $      233        $      949        $      209        $      212        $      215        $      251        $      887     
                                                                                                                                       
AS REPORTED GROWTH RATES                                                                                                                    
             Total cloud and on-premise software revenues   3      %          2      %          (3     %)         (10    %)         (3     %)         (7     %)         (3     %)         7      %          9      %          2      %
             Total hardware revenues                        (8     %)         (7     %)         (12    %)         (16    %)         (11    %)         (14    %)         (11    %)         (8     %)         8      %          (7     %)
                                                                                                                                       
CONSTANT CURRENCY GROWTH RATES (2)                                                                                                          
             Total cloud and on-premise software revenues   2      %          7      %          4      %          (1     %)         3      %          7      %          6      %          13     %          11     %          9      %
             Total hardware revenues                        (8     %)         (3     %)         (6     %)         (8     %)         (6     %)         (3     %)         (3     %)         (3     %)         9      %          0      %
                                                                                                                                       
                                                                                                                                       
TOTAL COMPANY                                                                                                                               
             Total cloud and on-premise software revenues $      6,576      $      7,329      $      7,170      $      8,400      $      29,475     $      6,458      $      7,009      $      7,084      $      8,439      $      28,990  
             Total hardware revenues                      $      1,165      $      1,334      $      1,299      $      1,407      $      5,205      $      1,128      $      1,123      $      1,135      $      1,283      $      4,668   
                                                                                                                                       
AS REPORTED GROWTH RATES                                                                                                                    
             Total cloud and on-premise software revenues   6      %          5      %          1      %          (6     %)         1      %          (2     %)         (4     %)         (1     %)         0      %          (2     %)
             Total hardware revenues                        (8     %)         1      %          (2     %)         (4     %)         (3     %)         (3     %)         (16    %)         (13    %)         (9     %)         (10    %)
                                                                                                                                       
CONSTANT CURRENCY GROWTH RATES (2)                                                                                                          
             Total cloud and on-premise software revenues   6      %          8      %          7      %          2      %          5      %          6      %          2      %          3      %          2      %          3      %
             Total hardware revenues                        (8     %)         4      %          5      %          5      %          2      %          6      %          (10    %)         (8     %)         (7     %)         (5     %)
                                                                                                                                       
   
(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, 2015 and 2014 for the fiscal 2016 and fiscal 2015 constant currency growth rate calculations presented, respectively, rather than the actual exchange rates in effect during the respective periods.
   
   
   
APPENDIX A
 
ORACLE CORPORATION
Q4 FISCAL 2016 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.

Contact: Ken Bond Oracle Investor Relations 1.650.607.0349 Email Contact Deborah Hellinger Oracle Corporate Communications 1.212.508.7935 Email Contact



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