10-KPeriod: FY2023

ORACLE CORP Annual Report, Year Ended May 31, 2023

Filed June 20, 2023For Securities:ORCLORCL-PD

Summary

Oracle Corporation (ORCL) reported robust growth in its fiscal year ending May 31, 2023, driven significantly by its Cloud and License business, which represents the largest portion of its revenue. The acquisition of Cerner Corporation in June 2022 played a pivotal role, contributing substantial revenue and expanding Oracle's footprint, particularly in the healthcare sector. Despite currency headwinds, the company demonstrated strong top-line growth, with a notable increase in cloud services revenue as a percentage of total revenue. Key financial highlights include the strong performance of cloud services and license support, which grew significantly, alongside continued demand for on-premise licenses. The company also saw substantial increases in its Services business, largely due to the Cerner acquisition. Oracle maintained its commitment to research and development, investing heavily to enhance its product portfolio. While the hardware segment experienced some supply chain challenges, it also showed growth. The company's strong cash flow generation and ample liquidity position it well for future investments, debt management, and shareholder returns through dividends and stock repurchases.

Financial Highlights

56 data points
Beta

Revenue

$49.95B

Net Income

$8.50B

17.0% Net Margin

EPS (Diluted)

$3.07

Total Assets

$134.38B

Cash & Equivalents

$9.77B

Free Cash Flow

$8.47B

Financial Statements
Beta
Revenue$49.95B
R&D Expenses$8.62B
Operating Expenses$36.86B
Operating Income$13.09B
Interest Expense$3.50B
Net Income$8.50B
EPS (Basic)$3.15
EPS (Diluted)$3.07
Shares Outstanding (Basic)2.70B
Shares Outstanding (Diluted)2.77B

Key Highlights

  • 1Oracle's Cloud and License business continues to be the primary revenue driver, with cloud services and license support showing strong growth.
  • 2The acquisition of Cerner Corporation in June 2022 significantly contributed to revenue growth across all business segments, particularly in Services and Cloud and License.
  • 3Cloud services revenue represented 32% of total revenues in fiscal 2023, up from 25% in fiscal 2022, indicating a successful shift towards cloud-based offerings.
  • 4The company demonstrated solid revenue growth, with total revenues increasing by 18% in reported currency and 22% in constant currency, largely attributed to the Cerner acquisition.
  • 5Oracle continued to invest heavily in research and development, with R&D expenses increasing by 19% in reported currency and 21% in constant currency, reflecting a commitment to innovation.
  • 6The company maintained strong liquidity, with $10.2 billion in cash, cash equivalents, and marketable securities as of May 31, 2023, and generated $8.5 billion in free cash flow.
  • 7Oracle repurchased approximately 17.0 million shares for $1.3 billion during fiscal year 2023, and its Board of Directors has an $8.2 billion authorization remaining for future stock repurchases.

Frequently Asked Questions

The primary driver of Oracle's revenue growth in fiscal year 2023 was the acquisition of Cerner Corporation in June 2022. This acquisition significantly boosted revenues across all business segments, particularly in the Cloud and License, and Services businesses. Additionally, the company saw continued strong performance in its cloud services and license support offerings.

The acquisition of Cerner contributed substantially to Oracle's financial performance in fiscal year 2023. It added $5.9 billion to total revenues, with significant contributions to the Cloud and License segment ($3.6 billion), Hardware segment ($140 million), and Services segment ($2.2 billion). This acquisition also increased operating expenses, including amortization of intangible assets and restructuring costs associated with integration.

Oracle's strategy continues to emphasize the growth of its cloud services and license support. The company aims to pivot customers from on-premise solutions to its Oracle Cloud Services, including SaaS and OCI. The increasing proportion of cloud services revenue relative to total revenue (32% in FY23) demonstrates progress in this strategic shift. Oracle is investing in expanding its cloud infrastructure capacity and geographic footprint to meet growing customer demand.

Oracle has a significant amount of debt, totaling $90.5 billion as of May 31, 2023. However, the company is actively managing its capital resources by generating substantial operating cash flow ($17.2 billion in FY23) and free cash flow ($8.5 billion in FY23). It has also secured financing through term loan credit agreements and senior note issuances, largely to fund the Cerner acquisition. Oracle also continues to return capital to shareholders through dividends and an active stock repurchase program.