ORACLE  CORPORATION

Q3 FISCAL 2022 FINANCIAL RESULTS

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

($ in millions, except per share data)

Three Months Ended February 28,

2022

2021

2021

GAAP

GAAP

Non-GAAP

GAAP

Adj.

Non-GAAP

GAAP

Adj.

Non-GAAP

TOTAL REVENUES

$  10,513

$            -

$  10,513

$  10,085

$            1

$  10,086

4%

4%

7%

7%

     Cloud services and license support

7,637

-

7,637

7,252

1

7,253

5%

5%

8%

8%

TOTAL OPERATING EXPENSES

$     6,691

$      (992)

$     5,699

$     6,207

$      (905)

$     5,302

8%

8%

10%

10%

     Stock-based compensation (3)

674

(674)

-

479

(479)

-

41%

*

41%

*

     Amortization of intangible assets (4)

279

(279)

-

347

(347)

-

(20%)

*

(19%)

*

     Acquisition related and other

20

(20)

-

13

(13)

-

47%

*

54%

*

     Restructuring

19

(19)

-

66

(66)

-

(71%)

*

(70%)

*

OPERATING INCOME

$     3,822

$        992

$     4,814

$     3,878

$        906

$     4,784

(1%)

1%

3%

4%

OPERATING MARGIN %

36%

46%

38%

47%

(210) bp.

(165) bp.

(155) bp.

(132) bp.

INCOME TAX EFFECTS (5)

$      (521)

$       (209)

$      (730)

$     1,745

$   (2,442)

$      (697)

*

5%

*

9%

NET INCOME

$     2,319

$        783

$     3,102

$     5,021

$   (1,536)

$     3,485

(54%)

(11%)

(51%)

(7%)

DILUTED EARNINGS PER SHARE

$       0.84

$       1.13

$       1.68

$       1.16

(50%)

(3%)

(47%)

1%

DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING

2,754

-

2,754

2,994

-

2,994

(8%)

(8%)

(8%)

(8%)

(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, 2021, 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

February 28, 2022

February 28, 2021

GAAP

Adj.

Non-GAAP

GAAP

Adj.

Non-GAAP

     Cloud services and license support

$          55

$         (55)

$           -

$          33

$         (33)

$           -

     Hardware

4

(4)

-

2

(2)

-

     Services

17

(17)

-

15

(15)

-

     Sales and marketing

113

(113)

-

82

(82)

-

     Research and development

421

(421)

-

307

(307)

-

     General and administrative

64

(64)

-

40

(40)

-

           Total stock-based compensation

$      (674)

$           -

$        479

$      (479)

$           -

(4)

Estimated future annual amortization expense related to intangible assets as of February 28, 2022 was as follows:

     Remainder of fiscal 2022

$        267

     Fiscal 2023

744

     Fiscal 2024

501

     Fiscal 2025

142

     Fiscal 2026

24

     Fiscal 2027

6

     Thereafter

4

           Total intangible assets, net

$     1,688

(5)

Income tax effects were calculated reflecting an effective GAAP tax rate of 18.4% and (53.3%) in the third quarter of fiscal 2022 and 2021, respectively, and an effective non-GAAP tax rate of 19.0% and 16.7% in the third quarter of fiscal 2022 and 2021, respectively. The difference in our GAAP and non-GAAP tax rates in the third quarter of fiscal 2022 was primarily due to the net tax effects related to stock-based compensation expense and acquisition related and other items, including the tax effects on amortization of intangible assets, partially offset by the net deferred tax effects related to an income tax benefit that was recorded in the third quarter of fiscal 2021 due to the partial realignment of our legal entity structure. The difference in our GAAP and non-GAAP tax rates in the third quarter of fiscal 2021 was primarily due to a net tax benefit of $2.3 billion related to the partial realignment of our legal entity structure (refer to Appendix A for additional information), the net tax effects related to stock-based compensation expense, and the net tax effects related to acquisition related and other items, including the net tax effects on amortization of intangible assets.