Quarterly Report for Quarter Ending August 31, 2024 (Form 10-Q)

10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended August 31, 2024

or

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission File Number: 001-35992

Oracle Corporation

(Exact name of registrant as specified in its charter)

Delaware		54-2185193
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
2300 Oracle Way Austin, Texas		78741
(Address of principal executive offices)		(Zip Code)

(737) 867-1000

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share 3.125% senior notes due July 2025	ORCL -	New York Stock Exchange New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒		Accelerated filer ☐
Non-accelerated filer ☐		Smaller reporting company ☐
		Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐No ☒

The number of shares of registrant's common stock outstanding as of September 6, 2024 was: 2,770,968,000.

ORACLE CORPORATION

FORM 10-Q QUARTERLY REPORT

TABLE OF CONTENTS

				Page
PART I.		FINANCIAL INFORMATION		3
Item 1.		Financial Statements (Unaudited)		3
		Condensed Consolidated Balance Sheets as of August 31, 2024 and May 31, 2024		3
		Condensed Consolidated Statements of Operations for the Three Months Ended August 31, 2024 and 2023		4
		Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended August 31, 2024 and 2023		5
		Condensed Consolidated Statements of Stockholders' Equity for the Three Months Ended August 31, 2024 and 2023		6
		Condensed Consolidated Statements of Cash Flows for the Three Months Ended August 31, 2024 and 2023		7
		Notes to Condensed Consolidated Financial Statements		8
Item 2.		Management's Discussion and Analysis of Financial Condition and Results of Operations		22
Item 3.		Quantitative and Qualitative Disclosures About Market Risk		37
Item 4.		Controls and Procedures		37
PART II.		OTHER INFORMATION		38
Item 1.		Legal Proceedings		38
Item 1A.		Risk Factors		38
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds		38
Item 6.		Exhibits		39
		Signatures		40

Cautionary Note on Forward-Looking Statements

For purposes of this Quarterly Report on Form 10-Q (this Quarterly Report), the terms "Oracle," "we," "us" and "our" refer to Oracle Corporation and its consolidated subsidiaries. This Quarterly Report contains statements that are not historical in nature, are predictive in nature, or that depend upon or refer to future events or conditions or otherwise contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), and Section 27A of the Securities Act of 1933, as amended (the Securities Act). These include, among other things, statements regarding:

as well as other statements regarding our future operations, financial condition and prospects, and business strategies. Forward-looking statements may be preceded by, followed by or include the words "anticipates," "believes," "commits," "continues," "could," "endeavors," "estimates," "expects," "goal," "intends," "is designed to," "likely," "maintains," "may," "plans," "potential," "seeks," "shall," "should," "strives," "will" and similar expressions. We claim the protection of the safe harbor for forward-looking statements contained in the Exchange Act and the Securities Act for all forward-looking statements. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to risks, uncertainties and assumptions about our business that could affect our future results and could cause those results or other outcomes to differ materially from those expressed or implied in the forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in "Risk Factors" included in documents we file from time to time with the U.S. Securities and Exchange Commission, including our Annual Report on Form 10-K for the fiscal year ended May 31, 2024 and our other Quarterly Reports on Form 10-Q to be filed by us in our fiscal year 2025, which runs from June 1, 2024 to May 31, 2025.

We have no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or risks, except to the extent required by applicable securities laws. If we do update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements. New information, future events or risks could cause the forward-looking events we discuss in this Quarterly Report not to occur. You should not place undue reliance on these forward-looking statements, which reflect our expectations only as of the date of this Quarterly Report.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

ORACLE CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

As of August 31, 2024 and May 31, 2024

(Unaudited)

(in millions, except per share data)		August 31, 2024			May 31, 2024
ASSETS
Current assets:
Cash and cash equivalents		$	10,616			$	10,454
Marketable securities			295				207
Trade receivables, net of allowances for credit losses of $574and $485as of August 31, 2024 and May 31, 2024, respectively			8,021				7,874
Prepaid expenses and other current assets			4,140				4,019
Total current assets			23,072				22,554
Non-current assets:
Property, plant and equipment, net			23,094				21,536
Intangible assets, net			6,270				6,890
Goodwill, net			62,249				62,230
Deferred tax assets			12,219				12,273
Other non-current assets			17,310				15,493
Total non-current assets			121,142				118,422
Total assets		$	144,214			$	140,976
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and other borrowings, current		$	9,201			$	10,605
Accounts payable			2,207				2,357
Accrued compensation and related benefits			1,772				1,916
Deferred revenues			11,455				9,313
Other current liabilities			7,410				7,353
Total current liabilities			32,045				31,544
Non-current liabilities:
Notes payable and other borrowings, non-current			75,314				76,264
Income taxes payable			11,038				10,817
Deferred tax liabilities			3,442				3,692
Other non-current liabilities			11,106				9,420
Total non-current liabilities			100,900				100,193
Commitments and contingencies
Oracle Corporation stockholders' equity:
Preferred stock, $0.01par value-authorized: 1.0shares; outstanding: none			-				-
Common stock, $0.01par value and additional paid in capital-authorized: 11,000shares; outstanding: 2,771shares and 2,755shares as of August 31, 2024 and May 31, 2024, respectively			33,083				32,764
Accumulated deficit			(20,939	)			(22,628	)
Accumulated other comprehensive loss			(1,328	)			(1,432	)
Total Oracle Corporation stockholders' equity			10,816				8,704
Noncontrolling interests			453				535
Total stockholders' equity			11,269				9,239
Total liabilities and stockholders' equity		$	144,214			$	140,976

See notes to condensed consolidated financial statements.

ORACLE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three Months Ended August 31, 2024 and 2023

(Unaudited)

		Three Months Ended August 31,
(in millions, except per share data)		2024			2023
Revenues:
Cloud services and license support		$	10,519			$	9,547
Cloud license and on-premise license			870				809
Hardware			655				714
Services			1,263				1,383
Total revenues			13,307				12,453
Operating expenses:
Cloud services and license support(1)			2,597				2,179
Hardware(1)			162				219
Services(1)			1,147				1,212
Sales and marketing(1)			2,036				2,026
Research and development			2,306				2,216
General and administrative			358				393
Amortization of intangible assets			624				763
Acquisition related and other			13				11
Restructuring			73				138
Total operating expenses			9,316				9,157
Operating income			3,991				3,296
Interest expense			(842	)			(872	)
Non-operating income (expenses), net			20				(49	)
Income before income taxes			3,169				2,375
(Provision for) benefit from income taxes			(240	)			45
Net income		$	2,929			$	2,420
Earnings per share:
Basic		$	1.06			$	0.89
Diluted		$	1.03			$	0.86
Weighted average common shares outstanding:
Basic			2,761				2,728
Diluted			2,851				2,823

See notes to condensed consolidated financial statements.

ORACLE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the Three Months Ended August 31, 2024 and 2023

(Unaudited)

		Three Months Ended August 31,
(in millions)		2024			2023
Net income		$	2,929			$	2,420
Other comprehensive income, net of tax:
Net foreign currency translation gains (losses)			220				(44	)
Net unrealized (losses) gains on cash flow hedges			(116	)			72
Other, net			-				(3	)
Total other comprehensive income, net			104				25
Comprehensive income		$	3,033			$	2,445

See notes to condensed consolidated financial statements.

ORACLE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

For the Three Months Ended August 31, 2024 and 2023

(Unaudited)

		Three Months Ended August 31,
(in millions, except per share data)		2024			2023
Common stock and additional paid in capital
Balance, beginning of period		$	32,764			$	30,215
Common stock issued			179				308
Stock-based compensation			1,007				849
Repurchases of common stock			(13	)			(13	)
Shares repurchased for tax withholdings upon vesting of restricted stock-based awards			(851	)			(1,060	)
Other, net			(3	)			(4	)
Balance, end of period		$	33,083			$	30,295
Accumulated deficit
Balance, beginning of period		$	(22,628	)		$	(27,620	)
Repurchases of common stock			(137	)			(137	)
Cash dividends declared			(1,103	)			(1,091	)
Net income			2,929				2,420
Balance, end of period		$	(20,939	)		$	(26,428	)
Other stockholders' equity, net
Balance, beginning of period		$	(897	)		$	(1,039	)
Other comprehensive income, net			104				25
Other, net			(82	)			(12	)
Balance, end of period		$	(875	)		$	(1,026	)
Total stockholders' equity		$	11,269			$	2,841
Cash dividends declared per common share		$	0.40			$	0.40

See notes to condensed consolidated financial statements.

ORACLE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Months Ended August 31, 2024 and 2023

(Unaudited)

		Three Months Ended August 31,
(in millions)		2024			2023
Cash flows from operating activities:
Net income		$	2,929			$	2,420
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation			804				712
Amortization of intangible assets			624				763
Deferred income taxes			(151	)			(517	)
Stock-based compensation			1,007				849
Other, net			130				169
Changes in operating assets and liabilities:
(Increase) decrease in trade receivables, net			(81	)			380
Decrease in prepaid expenses and other assets			367				269
Decrease in accounts payable and other liabilities			(531	)			(457	)
Increase in income taxes payable			24				69
Increase in deferred revenues			2,305				2,317
Net cash provided by operating activities			7,427				6,974
Cash flows from investing activities:
Purchases of marketable securities and other investments			(477	)			(333	)
Proceeds from sales and maturities of marketable securities and other investments			15				85
Capital expenditures			(2,303	)			(1,314	)
Net cash used for investing activities			(2,765	)			(1,562	)
Cash flows from financing activities:
Payments for repurchases of common stock			(150	)			(150	)
Proceeds from issuances of common stock			179				308
Shares repurchased for tax withholdings upon vesting of restricted stock-based awards			(851	)			(1,060	)
Payments of dividends to stockholders			(1,103	)			(1,091	)
Repayments of commercial paper, net			(396	)			(562	)
Proceeds from issuances of term loan credit agreements			5,627				-
Repayments of senior notes and term loan credit agreements			(7,630	)			(1,000	)
Other, net			(261	)			27
Net cash used for financing activities			(4,585	)			(3,528	)
Effect of exchange rate changes on cash and cash equivalents			85				(36	)
Net increase in cash and cash equivalents			162				1,848
Cash and cash equivalents at beginning of period			10,454				9,765
Cash and cash equivalents at end of period		$	10,616			$	11,613
Non-cash investing activities:
Unpaid capital expenditures		$	1,582			$	507

See notes to condensed consolidated financial statements.

ORACLE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2024

(Unaudited)

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

We begin Management's Discussion and Analysis of Financial Condition and Results of Operations with an overview of our businesses and significant trends. This overview is followed by a summary of our critical accounting estimates that we believe are important to understanding significant assumptions and judgments incorporated in our reported financial results. We then provide a more detailed analysis of our results of operations and financial condition.

Business Overview

Oracle provides products and services that address enterprise information technology (IT) needs. Our products and services include enterprise applications and infrastructure offerings that are delivered worldwide through a variety of flexible and interoperable IT deployment models. These models include on-premise, cloud-based and hybrid deployments (an approach that combines both on-premise and cloud-based deployments). Accordingly, we offer choice and flexibility to our customers and facilitate the product, service and deployment combinations that best suit our customers' needs. Through our worldwide sales force and Oracle Partner Network, we sell to customers all over the world including businesses of many sizes, government agencies, educational institutions and resellers.

We have three businesses: cloud and license; hardware; and services; each of which comprises a single operating segment. The descriptions set forth below as a part of this Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations and the information contained within Note 7 of Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report provide additional information related to our businesses and operating segments and align to how our chief operating decision makers (CODMs), which are our Chief Executive Officer and Chief Technology Officer, view our operating results and allocate resources.

Cloud and License Business

Our cloud and license business, which represented 84% of our total revenues on a trailing 4-quarter basis, markets, sells and delivers a broad spectrum of enterprise applications and infrastructure technologies through our cloud and license offerings. Revenue streams included in our cloud and license business are:

Providing choice and flexibility to our customers as to when and how they deploy Oracle applications and infrastructure technologies are important elements of our corporate strategy. In recent periods, customer demand for our applications and infrastructure technologies delivered through our Oracle Cloud Services has increased. To address customer demand and enable customer choice, we have certain programs for customers to pivot their applications and infrastructure software licenses and the related license support to the Oracle Cloud for new deployments and to migrate to and expand with the Oracle Cloud for their existing workloads. The proportion of our cloud services revenues relative to our total revenues has increased and we expect this trend to continue. Cloud services revenues represented 42% and 37% of our total revenues in the first three months of fiscal 2025 and 2024, respectively.

Our cloud and license business' revenue growth is affected by many factors, including the strength of general economic and business conditions; governmental budgetary constraints; the strategy for and competitive position of our offerings; customer satisfaction with our offerings; the continued renewal of our cloud services and license support customer contracts by the customer contract base; substantially all customers continuing to purchase license support contracts in connection with their license purchases; the pricing of license support contracts sold in connection with the sales of licenses; the pricing, amounts and volumes of licenses and cloud services sold; our ability to manage Oracle Cloud capacity requirements to meet existing and prospective customer demand; and foreign currency rate fluctuations.

On a constant currency basis, we expect that our total cloud and license revenues generally will continue to increase due to:

We believe these factors should contribute to future growth in our cloud and license business' total revenues, which should enable us to continue to make investments in research and development and our cloud operations to develop, improve, increase the capacity of and expand the geographic footprint of our cloud and license products and services.

Our cloud and license business' margin has historically trended upward over the course of the four quarters within a particular fiscal year due to the historical upward trend of our cloud and license business' revenues over those quarterly periods and because the majority of our costs for this business are generally fixed in the short term. The historical upward trend of our cloud and license business' revenues over the course of the four quarters within a particular fiscal year is primarily due to the addition of new cloud services and license support contracts to the customer contract base that we generally recognize as revenues ratably or based upon customer usage over the respective contractual terms and the renewal of existing customers' cloud services and license support contracts over the course of each fiscal year that we generally recognize as revenues in a similar manner; and the historical upward trend of our cloud license and on-premise license revenues, which we generally recognize at a point in time upon delivery; in each case over those four fiscal quarterly periods.

Hardware Business

Our hardware business, which represented 6% of our total revenues on a trailing 4-quarter basis, provides a broad selection of enterprise hardware products and hardware-related software products including Oracle Engineered Systems, servers, storage, industry-specific hardware offerings, operating systems, virtualization, management and other hardware-related software and related hardware support. Each hardware product and its related software, such as an operating system or firmware, are highly interdependent and interrelated and are accounted for as a combined performance obligation. The revenues for this combined performance obligation are generally recognized at the point in time that the hardware product and its related software are delivered to the customer and ownership

is transferred to the customer. We expect to continue to make investments in research and development to improve existing hardware products and services and to develop new hardware products and services. The majority of our hardware products are sold through indirect channels, including independent distributors and value-added resellers. Our hardware support offerings provide customers with unspecified software updates for software components that are essential to the functionality of our hardware products and associated software products. Our hardware support offerings can also include product repairs, maintenance services and technical support services. Hardware support contracts are entered into and renewed at the option of the customer, are generally priced as a percentage of the net hardware products fees and are generally recognized as revenues ratably as the hardware support services are delivered over the contractual terms.

We generally expect our hardware business to have lower operating margins as a percentage of revenues than our cloud and license business due to the incremental costs we incur to produce and distribute these products and to provide support services, including direct materials and labor costs.

Our quarterly hardware revenues are difficult to predict. Our hardware revenues, cost of hardware and hardware operating margins that we report are affected by many factors, including our manufacturing partners' abilities to timely manufacture or deliver a few large hardware transactions; our strategy for and the position of our hardware products relative to competitor offerings; customer demand for competing offerings, including cloud infrastructure offerings; the strength of general economic and business conditions; governmental budgetary constraints; whether customers decide to purchase hardware support contracts at or in close proximity to the time of hardware product sale; the percentage of our hardware support contract customer base that renews its support contracts; and the close association between hardware products, which have a finite life, and customer demand for related hardware support as hardware products age; customer decisions to either maintain or upgrade their existing hardware infrastructure to newly developed technologies that are available; and foreign currency rate fluctuations.

Services Business

Our services business, which represented 10% of our total revenues on a trailing 4-quarter basis, helps customers and partners maximize the performance of their investments in Oracle applications and infrastructure technologies. We believe that our services are differentiated based on our focus on Oracle technologies, extensive experience, broad sets of intellectual property and best practices. Our services offerings include consulting services and advanced customer services. Our services business has lower margins than our cloud and license and hardware businesses. Our services revenues are affected by many factors including our strategy for, and the competitive position of, our services; customer demand for our cloud and license and hardware offerings and the related services that we may market and sell in connection with these offerings; general economic conditions; governmental budgetary constraints; personnel reductions in our customers' IT departments; tighter controls over customer discretionary spending; and foreign currency rate fluctuations.

Acquisitions

Our selective and active acquisition program is another important element of our corporate strategy. Historically, we have invested billions of dollars to acquire a number of complementary companies, products, services and technologies. As compelling opportunities become available, we may acquire companies, products, services and technologies in furtherance of our corporate strategy.

We believe that we can fund our future acquisitions with our internally available cash, cash equivalents and marketable securities balances, cash generated from operations, additional borrowings or from the issuance of additional securities. We estimate the financial impact of any potential acquisition with regard to earnings, operating margin, cash flows and return on invested capital targets, among others, before deciding to move forward with an acquisition.

Investment in Ampere Computing Holdings LLC

From time to time since 2017, we have made investments in Ampere Computing Holdings LLC (Ampere), a related party entity, in the form of equity and convertible debt instruments. The total carrying value of our investments in Ampere, after accounting for losses under the equity method of accounting, was $1.5 billion as of August 31, 2024. We currently expect Ampere to continue to generate net losses in future periods but we remain confident in the long-term potential of Ampere's server chips.

Our equity investments in Ampere represent an ownership interest of approximately 29% as of August 31, 2024. We also own convertible debt investments in Ampere which, under the terms of an agreement with Ampere and other co-investors, will mature in June 2026 and are convertible into equity securities at the holder's option under certain circumstances. During the three months ended August 31, 2024, we invested $75 million in convertible debt instruments issued by Ampere. In accordance with the terms of an agreement with other co-investors, we are also a counterparty to certain put (exercisable by a co-investor) and call (exercisable by Oracle) options at prices of approximately $450 million to $1.5 billion, respectively, to acquire additional equity interests in Ampere from our co-investors through January 2027. If either of such options is exercised by us or our co-investors, we would obtain control of Ampere and consolidate its results with our results of operations.

Critical Accounting Estimates

Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (GAAP), which requires us to make certain estimates, judgments and assumptions that can affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosure. Critical accounting estimates are those estimates that involve a significant level of estimation uncertainty and have had, or are reasonably likely to have, a material impact on our financial condition or results of operations. We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. To the extent that there are differences between these estimates, judgments or assumptions and actual results, our financial statements will be affected. We have critical accounting estimates in the areas of business combinations, income taxes and non-marketable investments.

During the first quarter of fiscal 2025, we completed an assessment of the useful lives of our servers and increased the estimated useful lives from five years to six years, effective at the beginning of fiscal 2025. Refer to Note 1 of Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for more information. There were no other significant changes to our critical accounting estimates. Refer to "Critical Accounting Estimates" under Management's Discussion and Analysis of Financial Condition and Results of Operations contained in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended May 31, 2024 for a more complete discussion of our critical accounting estimates.

Results of Operations

Presentation of Operating Segment Results and Other Financial Information

In our results of operations discussion below, we provide an overview of our total consolidated revenues, total consolidated operating expenses and total consolidated operating margin, all of which are presented on a GAAP basis. We also present a GAAP-based discussion below for substantially all of the other expense items as presented in our condensed consolidated statements of operations that are not directly attributable to our three businesses.

In addition, we discuss below the results of each of our three businesses-cloud and license, hardware and services-which are our operating segments as defined pursuant to ASC 280, Segment Reporting. The financial reporting for our three businesses that is presented below is presented in a manner that is consistent with that used by our CODMs. Our operating segment presentation below reflects revenues, direct costs and sales and marketing expenses that correspond to and are directly attributable to each of our three businesses. We also utilize these inputs to calculate and present a segment margin for each of our three businesses in the discussion below.

Consistent with our internal management reporting processes, research and development expenses, general and administrative expenses, stock-based compensation expenses, amortization of intangible assets, certain other expense allocations, acquisition related and other expenses, restructuring expenses, interest expense, non-operating income (expenses), net and (provision for) benefit from income taxes are not attributed to our three

operating segments because our management does not view the performance of our three businesses including such items and/or it is impracticable to do so. Refer to "Supplemental Disclosure Related to Certain Charges" below for additional discussion of certain of these items and Note 7 of Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for a reconciliation of the summations of total segment margin as presented in the discussion below to total income before income taxes as presented per our condensed consolidated statements of operations for all periods presented.

Constant Currency Presentation

Our international operations have provided, and are expected to continue to provide, a significant portion of each of our businesses' revenues and expenses. As a result, each of our businesses' revenues and expenses and our total revenues and expenses will continue to be affected by changes in the U.S. Dollar against major international currencies. In order to provide a framework for assessing how our underlying businesses performed, excluding the effects of foreign currency rate fluctuations, we compare the percent change in the results from one period to another period in this Quarterly Report using constant currency. To present this information, current and comparative prior period results for entities reporting in currencies other than U.S. Dollars are converted into U.S. Dollars at constant exchange rates (i.e., the rates in effect on May 31, 2024, which was the last day of our prior fiscal year) rather than the actual exchange rates in effect during the respective periods. For example, if an entity reporting in Euros had revenues of 1.0 million Euros from products sold on August 31, 2024 and 2023, our financial statements would reflect reported revenues of $1.11 million in the first quarter of fiscal 2025 (using 1.11 as the applicable average exchange rate for the period) and $1.08 million in the first quarter of fiscal 2024 (using 1.08 as the applicable average exchange rate for the period). The constant currency presentation, however, would translate the results for each of the first quarters of fiscal 2025 and 2024 using the May 31, 2024 exchange rate and indicate, in this example, no change in revenues between the periods compared. In each of the tables below, we present the percent change based on actual, unrounded results in reported currency and in constant currency.

Total Revenues and Operating Expenses

		Three Months Ended August 31,
					Percent Change
(Dollars in millions)		2024			Actual		Constant		2023
Total Revenues by Geography:
Americas		$	8,372			7%		7%		$	7,841
EMEA(1)			3,228			7%		7%			3,005
Asia Pacific			1,707			6%		8%			1,607
Total revenues			13,307			7%		8%			12,453
Total Operating Expenses			9,316			2%		2%			9,157
Total Operating Margin		$	3,991			21%		22%		$	3,296
Total Operating Margin %		30%							26%
% Revenues by Geography:
Americas		63%							63%
EMEA		24%							24%
Asia Pacific		13%							13%
Total Revenues by Business:
Cloud and license		$	11,389			10%		11%		$	10,356
Hardware			655			-8%		-8%			714
Services			1,263			-9%		-8%			1,383
Total revenues		$	13,307			7%		8%		$	12,453
% Revenues by Business:
Cloud and license		86%							83%
Hardware		5%							6%
Services		9%							11%

Total revenues increased by $854 million in reported currency in the first quarter of fiscal 2025, relative to the first quarter of fiscal 2024, due to a $1.0 billion increase in cloud and license revenues, partially offset by a decrease in hardware and services revenues by $59 million and $120 million, respectively. Excluding the unfavorable effect of foreign currency rate fluctuations of 1%, the increase in our cloud and license business in the first quarter of fiscal

2025, relative to the first quarter of fiscal 2024, was primarily due to growth in our cloud services revenues as customers purchased our applications and infrastructure technologies and also renewed their related cloud contracts to continue to gain access to the latest versions of our technologies. In constant currency, applications cloud services and license support and infrastructure cloud services and license support contributed 30% and 70%, respectively, of the growth in cloud services and license support revenues during the first quarter of fiscal 2025. In our hardware business, the constant currency decrease in revenues in the first quarter of fiscal 2025 was due to the emphasis we placed on the marketing and sale of our growing cloud-based infrastructure technologies. In our services business, the constant currency decrease in revenues in the first quarter of fiscal 2025 was attributable to a decrease in revenues from each of our primary services offerings. In constant currency, the Americas, the EMEA and the Asia Pacific regions contributed 63%, 23% and 14%, respectively, of the constant currency total revenue growth during the first quarter of fiscal 2025.

Total GAAP operating expenses increased by $159 million in reported currency in the first quarter of fiscal 2025 relative to the first quarter of fiscal 2024. The increase in GAAP operating expenses was due to a $418 million increase in cloud services and license support expenses primarily due to higher infrastructure expenses that were incurred to support the increase in our cloud services revenues and higher employee related expenses, including increased expenses relating to stock-based compensation, and a $90 million increase in research and development expenses primarily due to higher employee related expenses. These increases in operating expenses were partially offset by a $139 million decrease in expenses for amortization of intangible assets as certain of our assets were fully amortized; a $65 million decrease in services expenses primarily due to lower external contractor expenses; a $65 million decrease in restructuring expenses; a $57 million decrease in hardware expenses primarily due to lower hardware product and support costs; and a $35 million decrease in general and administrative expenses.

In constant currency, our total operating margin and total operating margin as a percentage of revenues increased in the first quarter of fiscal 2025, relative to the first quarter of fiscal 2024, due to higher revenues.

Supplemental Disclosure Related to Certain Charges

To supplement our condensed consolidated financial information, we believe that the following information is helpful to an overall understanding of our past financial performance and prospects for the future.

Our operating results reported pursuant to GAAP included the following business combination accounting adjustments and expenses related to acquisitions and certain other expenses, including stock-based compensation, that affected our GAAP net income:

		Three Months Ended August 31,
(in millions)		2024			2023
Amortization of intangible assets(1)		$	624			$	763
Acquisition related and other(2)			13				11
Restructuring(3)			73				138
Stock-based compensation, operating segments(4)			352				285
Stock-based compensation, R&D and G&A(4)			655				564
Income tax effects(5)			(682	)			(823	)
		$	1,035			$	938

	Remainder of fiscal 2025		$	1,683
	Fiscal 2026			1,639
	Fiscal 2027			672
	Fiscal 2028			635
	Fiscal 2029			561
	Fiscal 2030			522
	Thereafter			558
	Total intangible assets, net		$	6,270

			Three Months Ended August 31,
			2024			2023
	Cloud services and license support		$	141			$	111
	Hardware			6				5
	Services			43				34
	Sales and marketing			162				135
	Stock-based compensation, operating segments			352				285
	Research and development			569				484
	General and administrative			86				80
	Total stock-based compensation		$	1,007			$	849

Cloud and License Business

Our cloud and license business engages in the sale and marketing of our applications and infrastructure technologies that are delivered through various deployment models and include: Oracle Cloud Services offerings; Oracle cloud license and on-premise license offerings; and Oracle license support offerings. Our cloud services deliver applications and infrastructure technologies on a subscription basis via cloud-based deployment models that we develop, provide unspecified updates and enhancements for, deploy, host, manage and support. Revenues for our cloud services are generally recognized ratably over the contractual term, which is generally one to four years, or in the case of usage model contracts, as the cloud services are consumed. Cloud license and on-premise license revenues represent fees earned from granting customers licenses, generally on a perpetual basis, to use our database and middleware and our applications software products within cloud and on-premise IT environments and are generally recognized up front at the point in time when the software is made available to the customer to download and use. License support revenues are typically generated through the sale of applications and infrastructure software license support contracts related to cloud licenses and on-premise licenses; are purchased by our customers at their option; and are generally recognized as revenues ratably over the contractual term, which is generally one year. We continue to place significant emphasis, both domestically and internationally, on direct sales through our own sales force. We also continue to market certain of our offerings through indirect channels. Costs associated with our cloud and license business are included in cloud services and license support expenses and sales and marketing expenses. These costs are largely personnel and infrastructure related including the cost of providing our cloud services and license support offerings, salaries and commissions earned by our sales force for the sale of our cloud and license offerings and marketing program costs.

		Three Months Ended August 31,
					Percent Change
(Dollars in millions)		2024			Actual		Constant		2023
Cloud and License Revenues:
Americas		$	7,317			11%		12%		$	6,597
EMEA			2,687			9%		8%			2,473
Asia Pacific			1,385			8%		10%			1,286
Total revenues			11,389			10%		11%			10,356
Expenses:
Cloud services and license support(1)			2,422			19%		19%			2,040
Sales and marketing(1)			1,771			-1%		0%			1,784
Total expenses(1)			4,193			10%		10%			3,824
Total Margin		$	7,196			10%		11%		$	6,532
Total Margin %		63%							63%
% Revenues by Geography:
Americas		64%							64%
EMEA		24%							24%
Asia Pacific		12%							12%
Revenues by Offerings:
Cloud services		$	5,623			21%		22%		$	4,635
License support			4,896			0%		0%			4,912
Cloud license and on-premise license			870			7%		8%			809
Total revenues		$	11,389			10%		11%		$	10,356
Cloud Services and License Support Revenues by Ecosystem:
Applications cloud services and license support		$	4,769			7%		7%		$	4,471
Infrastructure cloud services and license support			5,750			13%		14%			5,076
Total cloud services and license support revenues		$	10,519			10%		11%		$	9,547

Our cloud and license business' total revenues increased by $1.0 billion in reported currency in the first quarter of fiscal 2025 relative to the first quarter of fiscal 2024 primarily due to a $988 million increase in cloud services revenues as customers purchased our applications and infrastructure technologies and renewed their related cloud contracts to continue to gain access to the latest versions of our technologies for which we delivered such cloud services during the period presented and a $61 million increase in our cloud license and on-premise license revenues. In constant currency, applications cloud services and license support and infrastructure cloud services and license support contributed 30% and 70%, respectively, of the growth in cloud services and license support revenues during the first quarter of fiscal 2025. License support revenues decreased slightly by $16 million in the first quarter of fiscal 2025 relative to the first quarter of fiscal 2024. In constant currency, the Americas, the EMEA and the Asia Pacific regions contributed 70%, 19% and 11%, respectively, of the revenue growth for this business during the first quarter of fiscal 2025.

Total cloud and license business' expenses increased by $369 million in reported currency in the first quarter of fiscal 2025 relative to the first quarter of fiscal 2024. Excluding the favorable effects of currency rate fluctuations of less than 1%, the constant currency increase in expenses was primarily due to a $255 million increase in infrastructure expenses and a $75 million increase in employee related expenses to support the increase in our cloud services revenues. Our cloud services and license support expenses have grown in recent periods, and we expect this trend to continue during fiscal 2025 as we increase our existing data center capacity and establish data centers in new geographic locations in order to meet current and expected customer demand.

Excluding the effects of currency rate fluctuations, our cloud and license business' total margin increased in the first quarter of fiscal 2025, relative to the first quarter of fiscal 2024, due to increases in total revenues for this business. In constant currency, total margin as a percentage of revenues remained flat in the first quarter of fiscal 2025, relative to the first quarter of fiscal 2024.

Hardware Business

Our hardware business' revenues are generated from the sales of our Oracle Engineered Systems, server, storage and industry-specific hardware offerings. The hardware product and related software, such as an operating system or firmware, are highly interdependent and interrelated and are accounted for as a combined performance obligation. The revenues for this combined performance obligation are generally recognized at the point in time that the hardware product is delivered to the customer and ownership is transferred to the customer. Our hardware business also earns revenues from the sale of hardware support contracts purchased by our customers at their option and that are generally recognized as revenues ratably as the hardware support services are delivered over the contractual term, which is generally one year. The majority of our hardware products are sold through indirect channels such as independent distributors and value-added resellers and we also market and sell our hardware products through our direct sales force. Operating expenses associated with our hardware business include the cost of hardware products, which consists of expenses for materials and labor used to produce these products by our internal manufacturing operations or by third-party manufacturers, warranty and related expenses and the impact of periodic changes in inventory valuation, including the impact of inventory determined to be excess and obsolete; the cost of materials used to repair customer products with eligible support contracts; the cost of labor and infrastructure to provide support services; and sales and marketing expenses, which are largely personnel related and include variable compensation earned by our sales force for the sales of our hardware offerings.

		Three Months Ended August 31,
					Percent Change
(Dollars in millions)		2024			Actual		Constant		2023
Hardware Revenues:
Americas		$	288			-17%		-17%		$	349
EMEA			214			2%		2%			209
Asia Pacific			153			-2%		0%			156
Total revenues			655			-8%		-8%			714
Expenses:
Hardware products and support(1)			152			-28%		-27%			211
Sales and marketing(1)			65			-7%		-6%			70
Total expenses(1)			217			-23%		-22%			281
Total Margin		$	438			1%		2%		$	433
Total Margin %		67%							61%
% Revenues by Geography:
Americas		44%							49%
EMEA		33%							29%
Asia Pacific		23%							22%

Total hardware revenues decreased by $59 million in reported currency in the first quarter of fiscal 2025 relative to the first quarter of fiscal 2024. Excluding the unfavorable impact of currency rate fluctuation of less than 1%, the decrease in hardware revenues was primarily due to our continued emphasis on the marketing and sale of our cloud-based infrastructure technologies, which resulted in reduced sales volumes of certain of our hardware product lines and also impacted the volume of hardware support contracts sold in recent periods. Geographically, we experienced constant currency hardware revenue decline in the Americas region, partially offset by increase in the EMEA region. Constant currency hardware revenue remained flat in the Asia Pacific region in the first quarter of fiscal 2025 relative to the first quarter of fiscal 2024.

Total hardware expenses decreased by $64 million in reported currency in the first quarter of fiscal 2025 relative to the first quarter of fiscal 2024. Excluding the favorable currency rate fluctuations effect of 1%, the constant currency decrease in hardware expenses was primarily due to a $57 million decrease in hardware product and support costs, which aligned with lower hardware revenues.

In constant currency, our hardware business' total margin and total margin as a percentage of revenues increased in the first quarter of fiscal 2025, relative to the first quarter of fiscal 2024, due to lower total expenses for this business.

Services Business

Our services offerings are designed to help maximize the performance of customer investments in Oracle applications and infrastructure technologies and include our consulting services and advanced customer services offerings. Services revenues are generally recognized over time as the services are performed. The cost of providing our services consists primarily of personnel related expenses, technology infrastructure expenditures, facilities expenses and external contractor expenses.

		Three Months Ended August 31,
					Percent Change
(Dollars in millions)		2024			Actual		Constant		2023
Services Revenues:
Americas		$	767			-14%		-14%		$	895
EMEA			327			1%		1%			323
Asia Pacific			169			2%		4%			165
Total revenues			1,263			-9%		-8%			1,383
Total Expenses(1)			1,066			-7%		-6%			1,145
Total Margin		$	197			-17%		-17%		$	238
Total Margin %		16%							17%
% Revenues by Geography:
Americas		61%							65%
EMEA		26%							23%
Asia Pacific		13%							12%

Total services revenues decreased by $120 million in reported currency in the first quarter of fiscal 2025 relative to the first quarter of fiscal 2024. Excluding the effects of unfavorable currency rate fluctuations of 1%, the decrease in total services revenues was due to a decrease in revenues in each of our primary services offerings. The constant currency decrease in services revenues in the Americas region was partially offset by constant currency increases in services revenues in the EMEA and the Asia Pacific regions in the first quarter of fiscal 2025.

Total services expenses decreased by $79 million in reported currency in the first quarter of fiscal 2025 relative to the first quarter of fiscal 2024. Excluding the favorable effects of currency rate fluctuations of 1%, the decrease in services expenses was primarily due to a decrease in external contractor expenses of $65 million.

In constant currency, our services business' total margin and total margin as a percentage of revenues decreased in the first quarter of fiscal 2025, relative to the first quarter of fiscal 2024, due to lower total revenues for this business.

Research and Development Expenses:Research and development expenses consist primarily of personnel related expenditures. We intend to continue to invest significantly in our research and development efforts because, in our judgment, they are essential to maintaining our competitive position.

		Three Months Ended August 31,
					Percent Change
(Dollars in millions)		2024			Actual		Constant		2023
Research and development(1)		$	1,737			0%		1%		$	1,732
Stock-based compensation			569			18%		18%			484
Total expenses		$	2,306			4%		5%		$	2,216
% of Total Revenues		17%							18%

Total research and development expenses increased by $90 million in reported currency in the first quarter of fiscal 2025, relative to the first quarter of fiscal 2024, primarily due to higher stock-based compensation expenses.

General and Administrative Expenses: General and administrative expenses primarily consist of personnel related expenditures for IT, finance, legal and human resources support functions.

		Three Months Ended August 31,
					Percent Change
(Dollars in millions)		2024			Actual		Constant		2023
General and administrative(1)		$	272			-13%		-12%		$	313
Stock-based compensation			86			6%		6%			80
Total expenses		$	358			-9%		-8%		$	393
% of Total Revenues		3%							3%

Total general and administrative expenses decreased by $35 million in reported currency in the first quarter of fiscal 2025 relative to the first quarter of fiscal 2024. Excluding the favorable effects of currency rate fluctuations of 1%, the decrease was primarily due to a $14 million decrease in facilities and related expenses and a $6 million decrease in professional fees.

Amortization of Intangible Assets:Substantially all of our intangible assets were acquired through our business combinations. We amortize our intangible assets over, and monitor the appropriateness of, the estimated useful lives of these assets. We also periodically review these intangible assets for potential impairment based upon relevant facts and circumstances. Refer to Note 6 of Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended May 31, 2024 for additional information regarding our intangible assets and related amortization.

		Three Months Ended August 31,
					Percent Change
(Dollars in millions)		2024			Actual		Constant		2023
Developed technology		$	165			-2%		-2%		$	168
Cloud services and license support agreements and related relationships			211			-22%		-22%			269
Cloud license and on-premise license agreements and related relationships			115			-1%		-1%			116
Other			133			-37%		-37%			210
Total amortization of intangible assets		$	624			-18%		-18%		$	763

Amortization of intangible assets decreased by $139 million in reported currency in the first quarter of fiscal 2025, relative to the first quarter of fiscal 2024, due to a reduction in expenses associated with certain of our intangible assets that became fully amortized.

Acquisition Related and Other Expenses:Acquisition related and other expenses consist of personnel related costs for transitional and certain other employees, certain business combination adjustments, including adjustments after the measurement period has ended, and certain other operating items, net.

		Three Months Ended August 31,
					Percent Change
(Dollars in millions)		2024			Actual		Constant		2023
Transitional and other employee related costs		$	2			-66%		-67%		$	6
Business combination adjustments, net			(5	)		*		*			1
Other, net			16			244%		242%			4
Total acquisition related and other expenses		$	13			9%		9%		$	11

*	Not meaningful

Acquisition related and other expenses increased slightly in the first quarter of fiscal 2025, relative to the first quarter of fiscal 2024, due to a $12 million increase in other expenses primarily related to certain asset impairment charges, partially offset by a $6 million decrease in business combination adjustments, net, and a $4 million decrease in transitional and other employee related costs.

Restructuring Expenses: Restructuring expenses resulted from the execution of management-approved restructuring plans that were generally developed to improve our cost structure and/or operations, often in conjunction with our acquisition integration strategies and/or other strategic initiatives. Restructuring expenses consist of employee severance costs, contract termination costs and certain other exit costs to improve our cost structure prospectively. For additional information regarding our restructuring plans, see Note 3 of Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report and Note 8 of Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended May 31, 2024.

		Three Months Ended August 31,
					Percent Change
(Dollars in millions)		2024			Actual		Constant		2023
Restructuring expenses		$	73			-47%		-47%		$	138

Restructuring expenses in each of the first quarters of fiscal 2025 and 2024 primarily related to the 2024 Restructuring Plan. Our management approved, committed to and initiated the 2024 Restructuring Plan in order to restructure and further improve efficiencies in our operations. We may incur additional restructuring expenses in future periods due to the initiation of new restructuring plans or from changes in estimated costs associated with existing restructuring plans.

The majority of the initiatives undertaken by the 2024 Restructuring Plan were effected to implement our continued emphasis in developing, marketing, selling and delivering our cloud-based offerings. Certain of the cost savings realized pursuant to the 2024 Restructuring Plan initiatives were offset by investments in resources and geographies that we believe better address the development, marketing, sale and delivery of our cloud-based offerings, including investments in the development and delivery of our second-generation cloud infrastructure.

Interest Expense:

		Three Months Ended August 31,
					Percent Change
(Dollars in millions)		2024			Actual		Constant		2023
Interest expense		$	842			-3%		-3%		$	872

Interest expense decreased in the first quarter of fiscal 2025, relative to the first quarter of fiscal 2024, primarily due to $2.0 billion and $3.5 billion of scheduled repayments of senior notes made during the first quarter of fiscal 2025 and full year of fiscal 2024, respectively.

Non-Operating Income (Expenses), net:Non-operating income (expenses), net consists primarily of interest income, net foreign currency exchange losses, the noncontrolling interests in the net profits of our majority-owned subsidiaries (primarily Oracle Financial Services Software Limited and Oracle Corporation Japan), net losses related to equity investments, including losses attributable to equity method investments (primarily Ampere) and net other income and expenses, including net unrealized gains and losses from our investment portfolio related to our deferred compensation plan and non-service net periodic pension income and losses.

		Three Months Ended August 31,
					Percent Change
(Dollars in millions)		2024			Actual		Constant		2023
Interest income		$	133			-2%		-2%		$	136
Foreign currency losses, net			(50	)		-38%		-39%			(82	)
Noncontrolling interests in income			(43	)		17%		17%			(37	)
Losses from equity investments, net			(69	)		-42%		-42%			(118	)
Other income, net			49			-4%		-4%			52
Total non-operating income (expenses), net		$	20			*		*		$	(49	)

*	Not meaningful

Our non-operating income, net increased by $69 million in the first quarter of fiscal 2025 relative to the first quarter of fiscal 2024. The increase was primarily due to a $32 million decrease in foreign currency losses and a $49 million decrease in losses from equity investments, partially offset by higher expenses for noncontrolling interests in income.

(Provision for) Benefit from Income Taxes:Our effective income tax rates for each of the periods presented were the result of the mix of income earned in various tax jurisdictions that apply a broad range of income tax rates. Refer to Note 6 of Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for a discussion regarding the differences between the effective income tax rates as presented for the periods below and the U.S. federal statutory income tax rates that were in effect during these periods. Future effective tax rates could be adversely affected by an unfavorable shift of earnings weighted to jurisdictions with higher tax rates, by unfavorable changes in tax laws and regulations, by adverse rulings in tax related litigation, or by shortfalls in stock-based compensation realized by employees relative to stock-based compensation that was recorded for book purposes, among others.

		Three Months Ended August 31,
					Percent Change
(Dollars in millions)		2024			Actual		Constant		2023
(Provision for) benefit from income taxes		$	(240	)		*		*		$	45
Effective tax expense (benefit) rate		7.6%							(1.9%)

*	Not meaningful

Provision for income taxes increased during the first quarter of fiscal 2025, relative to the first quarter of fiscal 2024, primarily due to an unfavorable jurisdictional mix of earnings of $215 million and a decrease in tax benefits of $127 million related to stock-based compensation, partially offset by a $65 million benefit in unrecognized tax benefits associated with settlements with taxing authorities and other events.

Liquidity and Capital Resources

(Dollars in millions)		August 31, 2024			Change		May 31, 2024
Working capital		$	(8,973	)		0%		$	(8,990	)
Cash, cash equivalents and marketable securities		$	10,911			2%		$	10,661

Working capital:The increase in working capital as of August 31, 2024 in comparison to May 31, 2024 was primarily due to favorable impacts to our net current assets resulting from net income during the first quarter of fiscal 2025, substantially offset by $2.3 billion of cash used for capital expenditures, $1.1 billion of cash used to pay dividends to our stockholders, €750 million of long-term senior notes that were reclassified to current liabilities, $672 million of net cash used for our employee stock programs, $375 million of cash used for purchases of non-marketable investments and $150 million of cash used for repurchases of our common stock during the first quarter of fiscal 2025. Our working capital may be impacted by some or all of the aforementioned factors in future periods, the amounts and timing of which are variable.

Cash, cash equivalents and marketable securities:Cash and cash equivalents primarily consist of deposits held at major banks, money market funds and other securities with original maturities of 90 days or less. Marketable securities consist of time deposits, marketable equity securities and certain other securities with original maturities at the time of purchase greater than 90 days. The increase in cash, cash equivalents and marketable securities as of August 31, 2024 in comparison to May 31, 2024 was primarily due to cash inflows from our operations during the first quarter of fiscal 2025. This increase was partially offset by $2.4 billion of cash used for repayment of senior notes and commercial paper notes, $2.3 billion of cash used for capital expenditures, $1.1 billion of cash used to pay dividends to our stockholders, $672 million of net cash used for our employee stock programs, $375 million of cash used for purchases of non-marketable investments and $150 million of cash used for repurchases of our common stock. Our cash and cash equivalents may be impacted by some or all of the aforementioned factors in future periods, the amounts and timing of which are variable.

		Three Months Ended August 31,
(Dollars in millions)		2024			Change		2023
Net cash provided by operating activities		$	7,427			6%		$	6,974
Net cash used for investing activities		$	(2,765	)		77%		$	(1,562	)
Net cash used for financing activities		$	(4,585	)		30%		$	(3,528	)

Cash flows from operating activities:Our largest source of operating cash flows is cash collections from our customers following the purchase and renewal of their cloud services and license support agreements. Customers for these cloud services and license support agreements are generally billed in advance of services being provided. Over the course of a fiscal year, we also generate cash from the sales of new licenses, hardware offerings and other services. Our primary uses of cash from operating activities are typically for employee related expenditures, material and manufacturing costs related to the production of our hardware products, taxes, interest payments and leased facilities.

Net cash provided by operating activities increased by $453 million in the first quarter of fiscal 2025, relative to the first quarter of fiscal 2024, primarily due to higher net income, partially offset by certain cash unfavorable working capital changes, net.

Cash flows from investing activities:The changes in cash flows from investing activities primarily relate to our acquisitions, purchases, maturities and sales of our investments in marketable securities and other instruments and investments in capital assets primarily to support the growth in our cloud and license business.

Net cash used for investing activities increased by $1.2 billion in the first quarter of fiscal 2025, relative to the first quarter of fiscal 2024, primarily due to the increase in capital expenditures.

Cash flows from financing activities: The changes in cash flows from financing activities primarily relate to borrowings and repayments related to our debt instruments, stock repurchases, dividend payments and net proceeds related to employee stock programs.

Net cash used for financing activities increased by $1.1 billion in the first quarter of fiscal 2025, relative to the first quarter of fiscal 2024, primarily due to higher maturities of senior notes of $1.0 billion, higher repayments of commercial paper notes of $166 million, net of issuances, partially offset by higher net cash used for other activities of $220 million, in each case in the first quarter of fiscal 2025 relative to the first quarter of fiscal 2024. Further, during the first quarter of fiscal 2025, we refinanced our Term Loan Credit Agreement (defined below) that resulted in no net impact on financing cash flows for the period reported.

Free cash flow:To supplement our statements of cash flows presented on a GAAP basis, we use non-GAAP measures of cash flows on a trailing 4-quarter basis to analyze cash flows generated from our operations. We believe that free cash flow is also useful as one of the bases for comparing our performance with that of our competitors. The presentation of non-GAAP free cash flow is not meant to be considered in isolation or as an alternative to net income as an indicator of our performance, or as an alternative to cash flows from operating activities as a measure of liquidity. We calculate free cash flow as follows:

		Trailing 4-Quarters Ended August 31,
(Dollars in millions)		2024			Change		2023
Net cash provided by operating activities		$	19,126			8%		$	17,745
Capital expenditures			(7,855	)		-5%			(8,290	)
Free cash flow		$	11,271			19%		$	9,455
Net income		$	10,976					$	9,375
Net cash provided by operating activities as a percent of net income		174%					189%
Free cash flow as percent of net income		103%					101%

Recent Financing Activities:

Term Loan Credit Agreements: On June 10, 2024, we terminated our term loan credit agreement that we entered into in fiscal 2023 and repaid the principal amount outstanding together with interest accrued up to the date of repayment. Simultaneously, we borrowed up to the maximum commitment amount of $5.6 billion pursuant to a term loan credit agreement (Term Loan Credit Agreement) executed on the same date. Any remaining unpaid principal balance under the Term Loan Credit Agreement will become fully due and payable on August 16, 2027, unless the termination date of Term Loan Credit Agreement is extended. Refer to Note 7 of Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended May 31, 2024 for additional details about our borrowings.

Contractual Obligations: During the first quarter of fiscal 2025, there were no significant changes to our estimates of future payments under our fixed contractual obligations and commitments as presented in Part II, Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended May 31, 2024, other than an increase in our operating lease commitments to $36.2 billion as of August 31, 2024. Our operating lease commitments, which are primarily for data centers, are generally expected to commence between the remainder of fiscal 2025 and fiscal 2027 and for terms of nine to fifteen years. We have not recorded these lease commitments on our Condensed Consolidated Balance Sheets as of August 31, 2024. Refer to Note 10 of Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended May 31, 2024 for more information about our lease commitments.

We believe that our current cash, cash equivalents and marketable securities balances, cash generated from operations, and our borrowing arrangements will be sufficient to meet our working capital, capital expenditures and contractual obligations requirements. In addition, we believe that we could fund our future acquisitions, dividend payments and repurchases of common stock or debt with our internally available cash, cash equivalents and marketable securities, cash generated from operations, additional borrowings or from the issuance of additional securities.

Stock-Based Awards

Our stock-based compensation program is a key component of the compensation package we provide to attract and retain certain of our talented employees and align their interests with the interests of existing stockholders.

We recognize that stock-based awards dilute existing stockholders and have sought to control the number of stock-based awards granted while providing competitive compensation packages. Consistent with these dual goals, our cumulative potential dilution since June 1, 2021 has been an annualized rate of 1.9% per year. The potential dilution percentage is calculated as the average annualized new stock-based awards granted and assumed, net of stock-based awards forfeited by employees leaving the company, divided by the weighted-average outstanding shares during the calculation period. This maximum potential dilution will only result if all stock-based awards vest and, if applicable, are exercised. Of the outstanding stock options as of August 31, 2024, which generally have a ten-year exercise period, all have exercise prices lower than the market price of our common stock on such date. In recent years, our stock repurchase program has substantially offset the dilutive effect of our stock-based compensation program. However, we may modify the levels of our stock repurchases in the future depending on a number of factors, including the amount of cash we have available for acquisitions, to pay dividends, to repay or repurchase indebtedness or for other purposes. As of August 31, 2024, the maximum potential dilution from all outstanding stock-based awards, regardless of when granted and regardless of whether vested or unvested, was 6.1%.

Recent Accounting Pronouncements

For information with respect to recent accounting pronouncements, and the impact of these pronouncements on our consolidated financial statements, see Note 1 of Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There were no significant changes to our quantitative and qualitative disclosures about market risk during the first quarter of fiscal 2025. Please refer to Part II, Item 7A Quantitative and Qualitative Disclosures about Market Risk included in our Annual Report on Form 10-K for the fiscal year ended May 31, 2024 for a more complete discussion of the market risks we encounter.

Item 4. Controlsand Procedures

Evaluation of Disclosure Controls and Procedures:Based on our management's evaluation (with the participation of our Principal Executive and Financial Officer), as of the end of the period covered by this Quarterly Report, our Principal Executive and Financial Officer has concluded that our "disclosure controls and procedures" (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were effective to provide reasonable assurance that the information required to be disclosed by us in our reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms and is accumulated and communicated to our management (including our Principal Executive and Financial Officer) as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting:There were no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls:Our management, including our Principal Executive and Financial Officer, believes that our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving their objectives and are effective at the reasonable assurance level. However, our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well-conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision making can be faulty and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

PART II. OTHER INFORMATION

Item 1. LegalProceedings

The material set forth in Note 6 (pertaining to information regarding contingencies related to our income taxes) and Note 9 (pertaining to information regarding legal contingencies) of Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report is incorporated herein by reference.

Item 1A. Risk Factors

In addition to the other information set forth in this Quarterly Report, you should carefully consider the factors discussed in Part I, Item 1A Risk Factors in our Annual Report on Form 10-K for the fiscal year ended May 31, 2024. The risks discussed in our Annual Report on Form 10-K could materially affect our business, financial condition and future results. The risks described in our Annual Report on Form 10-K are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be insignificant also may materially and adversely affect our business, financial condition or operating results in the future.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Our Board of Directors has approved a program for us to repurchase shares of our common stock. As of August 31, 2024, approximately $6.8 billion remained available for stock repurchases pursuant to our stock repurchase program.

Our stock repurchase authorization does not have an expiration date and the pace of our repurchase activity will depend on factors such as our working capital needs, our cash requirements for acquisitions and dividend payments, our debt repayment obligations or repurchases of our debt, our stock price, and economic and market conditions. Our stock repurchases may be effected from time to time through open market purchases or pursuant to a Rule 10b5-1 trading plan. Our stock repurchase program may be accelerated, suspended, delayed or discontinued at any time.

The following table summarizes the stock repurchase activity for the three months ended August 31, 2024 and the approximate dollar value of shares that may yet be purchased pursuant to our stock repurchase program:

(in millions, except per share amounts)		Total Number of Shares Purchased			Average Price Paid per Share			Total Number of Shares Purchased as Part of Publicly Announced Program			Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program
June 1, 2024-June 30, 2024			0.3			$	133.23				0.3			$	6,916.3
July 1, 2024-July 31, 2024			0.4			$	141.40				0.4			$	6,864.0
August 1, 2024-August 31, 2024			0.4			$	135.45				0.4			$	6,812.3
Total			1.1			$	136.76				1.1

Item 6. Exhibits

Exhibit No.

Incorporated by Reference

Exhibit Description

Form

File No.

Exhibit

Filing Date

Filed By

3.01

Amended and Restated Certificate of Incorporation of Oracle Corporation and Certificate of Amendment of Amended and Restated Certificate of Incorporation of Oracle Corporation

8-K 12G3

000-51788

3.1

2/6/06

Oracle Corporation

3.02

Amended and Restated Bylaws of Oracle Corporation

8-K

001-35992

3.02

11/17/23

Oracle Corporation

31.01‡

Rule 13a-14(a)/15d-14(a) Certification of Principal Executive and Financial Officer

32.01†

Section 1350 Certification of Principal Executive and Financial Officer

99.01

$5,630,000,000 Term Loan Credit Agreement dated as of June 10, 2024 among Oracle Corporation and the lenders and agents named therein

10-K

001-35992

99.01

6/20/24

Oracle Corporation

101‡

Interactive Data Files Pursuant to Rule 405 of Regulation S-T, formatted in Inline XBRL: (i) Condensed Consolidated Balance Sheets as of August 31, 2024 and May 31, 2024, (ii) Condensed Consolidated Statements of Operations for the three months ended August 31, 2024 and 2023, (iii) Condensed Consolidated Statements of Comprehensive Income for the three months ended August 31, 2024 and 2023, (iv) Condensed Consolidated Statements of Stockholders' Equity for the three months ended August 31, 2024 and 2023, (v) Condensed Consolidated Statements of Cash Flows for the three months ended August 31, 2024 and 2023 and (vi) Notes to Condensed Consolidated Financial Statements

104‡

The cover page from the Company's Quarterly Report on Form 10-Q for the quarter ended August 31, 2024, formatted in Inline XBRL and included in Exhibit 101

‡	Filed herewith.
†	Furnished herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, Oracle Corporation has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		ORACLE CORPORATION
Date: September 10, 2024		By:		/s/ Safra A. Catz
				Safra A. Catz Chief Executive Officer and Director (Principal Executive and Financial Officer)
Date: September 10, 2024		By:		/s/ Maria Smith
				Maria Smith
				Executive Vice President, Chief Accounting Officer (Principal Accounting Officer)