10-QPeriod: Q1 FY2025

ORACLE CORP Quarterly Report for Q1 Ended Aug 31, 2024

Filed September 10, 2024For Securities:ORCLORCL-PD

Summary

Oracle Corporation's (ORCL) Q1 fiscal year 2025 filing shows robust revenue growth, driven by a significant increase in cloud services and license support. Total revenues grew 7% year-over-year to $13.3 billion, with the cloud and license segment, representing 86% of total revenue, seeing a 10% increase to $11.4 billion. This strong performance in cloud services, up 21%, highlights the company's successful transition and ongoing demand for its cloud offerings. Despite an increase in operating expenses, primarily due to higher infrastructure and employee costs to support cloud growth, operating income rose 21% to $4.0 billion, demonstrating improved profitability. The company's balance sheet remains solid with total assets of $144.2 billion. While current liabilities saw an increase, primarily due to a significant rise in deferred revenues, long-term debt remains substantial but managed. Cash flow from operations was strong, increasing 6% to $7.4 billion, underscoring the company's ability to generate cash from its core business. Oracle continues to return value to shareholders through dividends and share repurchases, with $6.8 billion remaining under its repurchase program.

Financial Highlights

54 data points
Beta

Revenue

$13.31B

Net Income

$2.93B

22.0% Net Margin

EPS (Diluted)

$1.03

Total Assets

$144.21B

Cash & Equivalents

$10.62B

Free Cash Flow

$5.12B

Financial Statements
Beta
Revenue$13.31B
R&D Expenses$2.31B
Operating Expenses$9.32B
Operating Income$3.99B
Interest Expense$842.00M
Net Income$2.93B
EPS (Basic)$1.06
EPS (Diluted)$1.03
Shares Outstanding (Basic)2.76B
Shares Outstanding (Diluted)2.85B

Key Highlights

  • 1Total revenues increased 7% year-over-year to $13.3 billion, driven by strong cloud adoption.
  • 2Cloud services and license support revenue grew 10% to $11.4 billion, with cloud services revenue up 21%.
  • 3Operating income increased 21% to $4.0 billion, indicating improved profitability.
  • 4Net income rose to $2.9 billion from $2.4 billion in the prior year's comparable quarter.
  • 5Cash flow from operating activities increased 6% to $7.4 billion, showcasing operational strength.
  • 6Deferred revenues saw a significant increase of over $2.3 billion, indicating strong future revenue potential.
  • 7The company announced a quarterly cash dividend of $0.40 per share and has $6.8 billion remaining under its stock repurchase program.

Frequently Asked Questions

Oracle's revenue growth is primarily driven by its Cloud and License segment, specifically a substantial increase in Cloud Services and License Support revenue, which grew 10% year-over-year. Within this segment, Cloud Services revenue alone surged by 21%, reflecting strong customer adoption and renewal of Oracle's cloud-based applications and infrastructure technologies.

While Oracle's total revenues and operating income have grown, operating expenses also increased by 2% year-over-year to $9.3 billion. This increase is largely attributed to higher cloud services and license support expenses (up 19%) and research and development expenses (up 4%), reflecting investments in infrastructure and personnel to support the growth in cloud services. However, the company has managed to increase its operating margin in constant currency due to higher revenues.

Oracle generated strong cash flow from operations, increasing 6% to $7.4 billion for the quarter. The company maintains a healthy balance of cash, cash equivalents, and marketable securities. Oracle continues to return capital to shareholders through regular dividend payments, with a quarterly dividend of $0.40 per share declared. Additionally, the company has a significant stock repurchase program with approximately $6.8 billion remaining authorization, indicating a commitment to share buybacks.

The company is involved in ongoing legal proceedings, including derivative litigations related to its NetSuite acquisition and cloud business, and a Netherlands privacy class action. However, Oracle states that it does not believe these matters will have a material impact on its financial position or results of operations. The company also notes ongoing audits by tax authorities in various jurisdictions but believes it has adequately provided for potential outcomes.