10-QPeriod: Q2 FY2014

ORACLE CORP Quarterly Report for Q2 Ended Nov 30, 2013

Filed December 20, 2013For Securities:ORCLORCL-PD

Summary

Oracle Corporation's Q2 FY14 report (period ending November 30, 2013) shows continued revenue growth, primarily driven by its robust software business, particularly software license updates and product support. Total revenues increased to $9.275 billion from $9.094 billion in the prior year's comparable quarter. The company also saw growth in new software licenses and cloud subscriptions, partially fueled by recent acquisitions. However, the hardware systems business experienced a slight revenue decline. Profitability remained strong, with operating income at $3.41 billion, though slightly down from the prior year's $3.47 billion, reflecting increased operating expenses, especially in sales and marketing and R&D, partly due to integration costs from acquisitions. The company continued its aggressive share repurchase program, demonstrating a commitment to returning value to shareholders while also investing in strategic acquisitions to bolster its product and service offerings.

Financial Highlights

54 data points
Beta

Revenue

$9.28B

Net Income

$2.55B

27.5% Net Margin

EPS (Diluted)

$0.56

Total Assets

$85.24B

Cash & Equivalents

$14.89B

Free Cash Flow

$1.02B

Financial Statements
Beta
Revenue$9.28B
R&D Expenses$1.27B
Operating Expenses$5.87B
Operating Income$3.41B
Interest Expense$230.00M
Net Income$2.55B
EPS (Basic)$0.56
EPS (Diluted)$0.56
Shares Outstanding (Basic)4.54B
Shares Outstanding (Diluted)4.60B

Key Highlights

  • 1Total revenues increased by 2% to $9.275 billion for the quarter ended November 30, 2013, compared to $9.094 billion in the prior year.
  • 2Software license updates and product support revenue grew by 6% to $4.516 billion, showcasing the strength of its recurring revenue streams.
  • 3New software licenses and cloud software subscriptions revenue remained flat at $2.380 billion, but cloud subscription revenue saw a significant 19% increase.
  • 4Hardware systems products revenue decreased by 3% to $714 million, while hardware systems support revenue increased by 4% to $609 million.
  • 5Operating income slightly decreased by 2% to $3.410 billion, impacted by increased operating expenses, particularly in sales and marketing.
  • 6The company repurchased approximately 83.3 million shares for an average price of $33.47 per share during the quarter, demonstrating a commitment to share buybacks.
  • 7Total debt increased to $24.2 billion, reflecting new senior note issuances totaling $5.7 billion in July 2013 to fund general corporate purposes.

Frequently Asked Questions

Oracle reported total revenues of $9.275 billion for the quarter ended November 30, 2013, a slight increase of 2% from $9.094 billion in the same period last year. This growth was primarily driven by the software segment, specifically software license updates and product support.

The software business remains a strong contributor. While new software licenses and cloud software subscriptions revenue was flat year-over-year, cloud subscription revenue showed significant growth, increasing by 19% to $259 million. Software license updates and product support revenue continued its upward trend, growing by 6%.

The hardware systems products revenue saw a slight decrease of 3% to $714 million. However, hardware systems support revenue increased by 4% to $609 million. The company expects its hardware business to have lower operating margins compared to its software business due to associated production and support costs.

Oracle continues to pursue an active acquisition strategy, noting recent acquisitions like Tekelec and Acme Packet. The company also demonstrates a commitment to shareholder returns through its stock repurchase program, with approximately $8.3 billion remaining available for repurchases as of November 30, 2013. It believes it has sufficient resources for future acquisitions, dividends, and stock repurchases.