10-QPeriod: Q1 FY2014

ORACLE CORP Quarterly Report for Q1 Ended Aug 31, 2013

Filed September 20, 2013For Securities:ORCLORCL-PD

Summary

Oracle Corporation's (ORCL) 10-Q filing for the period ending August 31, 2013, reveals a company demonstrating revenue growth driven primarily by its software segment, specifically cloud software subscriptions and license updates/product support. Total revenues increased to $8.37 billion, up from $8.18 billion in the prior year's comparable quarter, a modest 2% increase. While overall revenue grew, the hardware systems and services segments experienced declines. Profitability remained strong, with net income at $2.19 billion, a notable increase from $2.03 billion in the prior year, driven by improved margins in the software business and effective cost management, despite rising sales and marketing expenses. The company continued its active acquisition strategy, with recent acquisitions contributing to growth in the software segment. Oracle also maintained a strong cash position and robust cash flow from operations, enabling significant share repurchases and dividend payments. Management expressed confidence in continued growth, supported by its integrated hardware and software offerings and ongoing investment in research and development, while also navigating challenges such as competitive pressures and the integration of acquired businesses.

Financial Highlights

54 data points
Beta

Revenue

$8.37B

Net Income

$2.19B

26.2% Net Margin

EPS (Diluted)

$0.47

Total Assets

$86.41B

Cash & Equivalents

$19.66B

Free Cash Flow

$6.14B

Financial Statements
Beta
Revenue$8.37B
R&D Expenses$1.24B
Operating Expenses$5.50B
Operating Income$2.87B
Interest Expense$217.00M
Net Income$2.19B
EPS (Basic)$0.48
EPS (Diluted)$0.47
Shares Outstanding (Basic)4.61B
Shares Outstanding (Diluted)4.67B

Key Highlights

  • 1Total revenues increased by 2% to $8.37 billion for the three months ended August 31, 2013, compared to $8.18 billion in the prior year quarter.
  • 2Net income grew to $2.19 billion ($0.47 per diluted share) from $2.03 billion ($0.41 per diluted share) in the prior year quarter.
  • 3Software revenues increased by 6% to $6.08 billion, primarily driven by a 5% rise in new software licenses and cloud software subscriptions to $1.65 billion and an 7% increase in software license updates and product support to $4.43 billion.
  • 4Hardware systems revenues decreased by 7% to $1.26 billion, while services revenues declined by 8% to $1.03 billion.
  • 5The company generated strong operating cash flow of $6.29 billion for the quarter.
  • 6Oracle repurchased approximately 92.8 million shares of its common stock for $3.0 billion during the quarter, demonstrating a commitment to returning capital to shareholders.
  • 7The company issued new senior notes totaling $2.7 billion (Euro) and $3.0 billion (USD) in July 2013 for general corporate purposes.

Frequently Asked Questions

Revenue growth was primarily driven by the software segment. Specifically, new software licenses and cloud software subscriptions increased by 5% to $1.65 billion, and software license updates and product support grew by 7% to $4.43 billion. Acquisitions also contributed to the software segment's performance.

The hardware systems business saw a 7% decrease in revenues to $1.26 billion, and the services business experienced an 8% decline in revenues to $1.03 billion. This contrasts with the software segment's growth.

Oracle views an active acquisition program as a key element of its corporate strategy. The company expects to continue acquiring companies, products, services, and technologies to enhance its offerings, expand its customer base, accelerate innovation, and grow revenues and earnings. Recent acquisitions contributed to the growth in the software segment during this period.

Oracle generated strong operating cash flow of $6.29 billion during the quarter. The company actively repurchased its common stock, spending $3.0 billion on repurchases. Oracle also declared and paid a quarterly cash dividend of $0.12 per share.