FinanceLooker

Excrept from filing document 2025-05-31

The aggregate market value of the voting stock held by non affiliates of the registrant was 305 793 119 000 based on the number of shares held by non affiliates of the registrant as of May 31 2025 and based on the closing sale price of common stock as reported by the New York Stock Exchange on November 29 2024 which is the last business day of the registrant s most recently completed second fiscal quarter This calculation does not reflect a determination that persons are affiliates for any other purposes
Portions of the registrant s definitive proxy statement relating to its 2025 annual meeting of stockholders are incorporated by reference into Part III of this Annual Report on Form 10 K where indicated Such proxy statement will be filed with the U S Securities and Exchange Commission within 120 days of the registrant s fiscal year ended May 31 2025
For purposes of this Annual Report on Form 10 K this Annual Report the terms Oracle we us and our refer to Oracle Corporation and its consolidated subsidiaries This Annual 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 focus forecasts future goal intends is designed to likely maintains may ongoing plans possible potential projects 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 elsewhere in this Annual Report and as may be updated in filings we make from time to time with the U S Securities and Exchange Commission the SEC including our Quarterly Reports on Form 10 Q to be filed by us in our fiscal year 2026 which runs from June 1 2025 to May 31 2026
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 Annual 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 Annual Report
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 It is an important element of our corporate strategy to provide choice and flexibility to Oracle customers as to when and how they deploy Oracle applications and infrastructure technologies We believe that offering customers broad comprehensive flexible and interoperable deployment models for Oracle applications and infrastructure technologies is important to our growth strategy and better addresses customer needs relative to our competitors many of whom provide fewer offerings more restrictive deployment models and less flexibility for customers transitioning to cloud based IT environments
Oracle Cloud Applications OCA and Oracle Cloud Infrastructure OCI collectively with OCA Oracle Cloud Services offerings provide comprehensive and integrated applications and infrastructure services enabling our customers to choose the best option that meets their specific business needs Oracle Cloud Services integrate IT components in a cloud based IT environment that Oracle deploys and manages for customers and is accessible by utilizing common web browsers via a broad spectrum of devices Oracle Cloud Services are designed to be
Oracle cloud license and on premise license deployment offerings include Oracle Applications Oracle Database and Oracle Middleware software offerings among others which customers deploy using IT infrastructure from the Oracle Cloud or their own IT environments Substantially all customers opt to purchase license support contracts when they purchase an Oracle license
Our customers include businesses of many sizes government agencies educational institutions and resellers that we market and sell to directly through our worldwide sales force or indirectly through the Oracle Partner Network Using Oracle technologies our customers build deploy run manage and support their internal and external products services and business operations including for example an artificial intelligence AI product company that uses OCI to build and serve generative AI models a global technology company that uses multiple OCI compute and data services to power its logistics and mobile application offerings a multinational financial institution that runs its banking applications using Oracle Exadata Cloud Customer and a global consumer products company that leverages Oracle Fusion Cloud Enterprise Resource Planning ERP for its accounting processes risk management supply chain and financial planning functions
Our investments in and innovation with respect to Oracle products and services that we offer through our three businesses cloud and license hardware and services businesses described further below are another important element of our corporate strategy In fiscal 2025 2024 and 2023 we invested 9 9 billion 8 9 billion and 8 6 billion respectively in research and development to enhance our existing portfolio of offerings and to develop new
technologies and services We have a deep understanding as to how applications and infrastructure technologies interact and function with one another including using OCI to power our OCA which we and our customers use to run internal business processes We focus our development efforts on improving the performance security reliability operation integration and cost effectiveness of our offerings relative to our competitors facilitating the ease with which organizations are able to deploy use manage and maintain our offerings and incorporating emerging technologies such as AI within our offerings to enable leaner business processes automation and innovation
After an initial purchase of Oracle products and services our customers can continue to benefit from our offerings research and development efforts and deep IT expertise by electing to purchase and renew Oracle support offerings for their license and hardware deployments which may include product enhancements that we periodically deliver to our products and by renewing their Oracle Cloud Services contracts with us
Our selective and active acquisition program is another important element of our corporate strategy We believe that our acquisitions enhance the products and services that we can offer to customers expand our customer base provide greater scale to accelerate innovation grow our revenues and earnings and increase stockholder value We have invested billions of dollars over time to acquire a number of companies products services and technologies that add to are complementary to or have otherwise enhanced our existing offerings We expect to continue to acquire companies products services and technologies as suitable opportunities arise to further our corporate strategy
We have three businesses cloud and license hardware and services Each business is comprised of a single operating segment Item 7 Management s Discussion and Analysis of Financial Condition and Results of Operations and Note 13 of Notes to Consolidated Financial Statements both included elsewhere in this Annual Report provide additional information related to our businesses and operating segments
Oracle applications and infrastructure technologies including database and middleware software as well as enterprise applications virtualization clustering large scale systems management and related infrastructure products and services are based upon industry standards and are designed to be enterprise grade reliable scalable and secure These technologies are the building blocks of Oracle Cloud Services our partners cloud services and our customers cloud IT environments Oracle applications and infrastructure offerings are marketed and sold through our cloud and license and hardware businesses and are delivered through the Oracle Cloud or a variety of flexible and interoperable IT deployment models including cloud based hybrid and on premise deployments
We believe that our Oracle Cloud Services offerings represent opportunities for us to continue to expand our cloud and license business We believe that our customers increasingly recognize the value of access to the latest versions of Oracle cloud based applications and infrastructure capabilities via a lower cost rapidly deployable flexible and interoperable services model that Oracle provisions manages upgrades and maintains on our customers behalf We believe that we can market and sell our Oracle Cloud Services offerings together to help new and existing customers migrate their extensive installed base of on premise and cloud based applications and infrastructure technologies to the Oracle Cloud and we believe we are in the early stages of what we expect will be a material migration of our existing Oracle customer base from on premise applications and infrastructure products and services to the Oracle Cloud During the past three fiscal years customers with annual license support contracts that migrated to the Oracle Cloud contributed to the increase in annualized cloud services revenue by 4 3 billion In addition we also believe we can market our Oracle Cloud Services offerings to a broader ecosystem of small and medium sized businesses non IT lines of business purchasers developers and partners due to the highly available intuitive design ease of access low touch and low cost characteristics of the Oracle Cloud
In recent periods customer demand for our applications and infrastructure technologies delivered through our Oracle Cloud deployment models has increased To address customer demand and enable customer choice we have introduced certain programs for customers to pivot their applications and infrastructure licenses and license support
contracts 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 our cloud services revenues represented 43 37 and 32 of our total revenues during fiscal 2025 2024 and 2023 respectively We expect these trends to continue
Oracle applications technologies are marketed sold delivered and supported through our cloud and license business Our applications cloud services and license support revenues represented 44 46 and 47 of our total cloud services and license support revenues during fiscal 2025 2024 and 2023 respectively Oracle applications offerings include our OCA offerings which are available for customers as a subscription and Oracle applications license offerings which are available for customers to purchase for use within the Oracle Cloud and other cloud based and on premise IT environments and include the option to purchase related license support Our applications technologies are designed to reduce the risk cost and complexity of our customers IT infrastructures while supporting customer choice with flexible deployment models that readily enable performance agility compatibility and extendibility The applications technologies that we offer are generally designed using industry standard architectures to manage and automate core business functions across the enterprise and a broad range of industries as well as to help customers differentiate and innovate in those processes unique to their industries or organizations We also offer industry specific applications which provide solutions to customers in the automotive communications construction and engineering consumer packaged goods defense and intelligence education financial services government healthcare high technology hospitality industrial manufacturing life sciences media and entertainment oil and gas professional services public safety restaurant retail travel and logistics utilities and wholesale distribution industries among others
The broad spectrum of OCA offerings provides customers with a choice of software applications delivered via a cloud based IT environment that we deploy and manage and that customers purchase by entering into a subscription agreement with us for a stated period Our OCA offerings represent an industry leading business innovation platform leveraging OCI and include a broad suite of modular next generation cloud software applications spanning all core business functions including among others
Customers partners and other interested parties may elect to subscribe to Oracle applications and infrastructure training and certification programs through learning subscriptions offered by Oracle University Learners generally have unlimited access to course content delivered during the subscription period
We believe that the comprehensiveness and breadth of our cloud applications offerings differentiate us from many of our competitors that offer more limited or specialized applications Our cloud applications offerings are designed to support connected business processes in the cloud and are centered on an intuitive and conversational user experience a responsive open and flexible business core and a common data model We believe Oracle Fusion Cloud ERP is a strategic suite of applications that is foundational to facilitating and extracting more business value out of the adoption of other OCA offerings such as Oracle Fusion Cloud HCM and Oracle Fusion Cloud EPM as customers realize the value of a common data model that spans across core business applications We believe our cloud applications offerings together remove business boundaries between front and back office activities Our cloud applications offerings are designed to deliver a secure data isolation architecture and flexible upgrades self service access controls for users a Service Oriented Architecture built in social mobile and business insight capabilities analytics and a high performance high availability infrastructure based on OCI These cloud applications capabilities are designed to simplify customer IT environments reduce time to implement and upgrade enable agility reduce risk and provide a user friendly experience Our cloud applications offerings incorporate advanced technologies such as AI Internet of Things IoT machine learning blockchain digital assistants and advances in the human interface and how users interact with OCA offerings within a business context or to augment human capabilities to enhance productivity
Customers have the ability to license Oracle Applications including Oracle E Business Suite PeopleSoft JD Edwards and Siebel applications among others for use within the Oracle Cloud or within their own cloud based or on premise IT environments These licensed applications are designed to manage and automate core business functions across the enterprise including HCM ERP EPM SCM Customer Experience and industry specific applications as described above among others
Oracle infrastructure technologies are marketed sold and delivered through our cloud and license business and through our hardware business Our infrastructure technologies are designed to be flexible cost effective standards based secure and highly performant to facilitate the development deployment integration management and extension across an organization s cloud based on premise and hybrid IT environments
Our cloud and license business infrastructure technologies include the Oracle Database and MySQL Database the world s most popular database management systems Java the computer industry s most widely used language by professional software developers and middleware including development tools among others These infrastructure technologies are available through a subscription to our OCI offerings or through the purchase of a license and related license support at the customer s option to run within the Oracle Cloud as a part of a customer s cloud based on premise or other IT environments Our OCI offerings also include cloud based compute storage and networking capabilities application development and cloud native services among others and new and innovative services such as AI Infrastructure offerings and emerging technologies such as generative AI agentic AI IoT and blockchain
Our hardware business infrastructure technologies consist of hardware products and certain unique hardware related software offerings including Oracle Engineered Systems enterprise servers storage solutions industry specific hardware virtualization software operating systems management software and related hardware support services Our customers use Oracle hardware products and related offerings in their cloud based on premise or hybrid IT environments to run their internal business operations and to deliver products and services to their customers
We design our infrastructure technologies to work in our customers on premise IT environments that may include other Oracle or non Oracle hardware or software components Our flexible and open approach also provides Oracle customers with a choice as to how they can utilize and deploy Oracle infrastructure technologies through the use of Oracle Cloud offerings on premise in our customers data centers or a hybrid combination of these two deployment models such as in the Oracle Exadata Cloud Customer deployment models described further below We focus on the operation and integration of Oracle infrastructure technologies to make them easier to deploy extend interconnect manage and maintain for our customers and to improve computing performance relative to our competitors offerings For example the Oracle Exadata Database Machine integrates multiple Oracle technology components to work together to deliver improved performance availability scalability security and operational efficiency of Oracle Database workloads relative to our competitors products
OCI offerings are designed to deliver our infrastructure technologies including compute storage and networking services as a service OCI offerings include our Oracle Autonomous Database offerings among others that Oracle runs manages upgrades and supports on behalf of the customer We also offer a portfolio of specialized databases to address specific customer requirements including MySQL the world s most popular open source database as a cloud service with Oracle HeatWave MySQL We typically charge a prepaid fee that is decremented as the OCI services are consumed by the customer over a stated time period By utilizing OCI customers can leverage the Oracle Cloud for enterprise grade high performance scalable cost effective and secure infrastructure technologies that are designed to be rapidly deployable and provide real time elasticity while reducing the amount of time and resources normally consumed by IT processes within on premise environments OCI is designed to be differentiated from other cloud vendors to provide better security by separating cloud control code computers from customer compute nodes Customers use OCI to build and operate new applications ranging from low code to AI powered cloud native applications to run new workloads and to move their existing Oracle or non Oracle workloads to the Oracle Cloud from their on premise data centers or other cloud based IT environments among other uses We continue to invest in OCI to improve features and performance to expand the catalog of cloud based infrastructure tools and services that we provide to increase the capacity and geographic footprint to deliver these services to simplify the processes for migrating workloads to the Oracle Cloud and to provide customers with the ability to run workloads across different IT environments the Oracle Cloud as well as other third party clouds in both hybrid and multicloud deployment models
Oracle customers and partners utilize OCI offerings for platform related services that are based upon the Oracle Database Java and Oracle Middleware including open source and other tools for a variety of use cases across data management including the use of Oracle Autonomous Database and Oracle HeatWave MySQL applications development integration content management analytics IT management and governance security and rapidly emerging technologies such as AI and machine learning OCI AI offerings are designed to be embedded into customer applications for a variety of predictive use cases including among others the servicing of machine parts that are at risk of failing using generative AI for fault detection on an assembly line improving customer experiences in the
Oracle customers and partners also utilize OCI offerings for highly scalable available and secure compute storage and networking services OCI compute services range from virtual machines to graphics processing unit based offerings to bare metal servers and include options for high I O workloads and high performance computing to run traditional compute intensive workloads and AI models OCI storage offerings include block file object and archive storage services In addition our OCI offerings include networking connectivity and edge services that help connect customers data centers and third party clouds with our OCI services for the creation of distributed and multicloud architectures
Oracle Autonomous Database is designed to deliver performance and scale for enterprise database workloads with automated database operations and policy and AI and machine learning driven optimization by combining certain Oracle infrastructure technologies including the Oracle Database OCI Oracle Exadata and native AI and machine learning capabilities among others Oracle Autonomous Database is designed to be self driving automating routine database administration tasks including maintenance tuning patching scaling security and backup Oracle Autonomous Database is engineered to lower labor costs and reduce human error while using machine learning driven diagnostics for fault prediction and error handling and is also engineered to provide automatic threat detection and remediation Oracle Autonomous Database is designed to enable on demand automatic scaling of database resources combined with consumption based pricing in order to help organizations lower costs by paying only for resources used The integration of Oracle Autonomous Database with other Oracle Cloud services such as Java Cloud and the Oracle APEX low code application development service along with open interfaces and integrations is designed to provide developers with a modern open platform to develop new and innovative cloud native applications
For analytics workloads Oracle Autonomous Database is designed to provide customers with easy to use analytics tools and machine learning capabilities that are accelerated using Oracle Exadata s scale out infrastructure and work with Oracle Analytics Cloud and third party analytics tools We believe Oracle Autonomous Database s built in developer capabilities and automation can enable organizations to quickly deploy new data marts and data warehouses move existing ones to the cloud and create data lakes All of these capabilities are designed to enable
For transaction processing workloads Oracle Autonomous Database is designed to enable organizations to securely run a mix of high performance transactions of ranging complexity It is also designed to enable organizations to efficiently support dynamic workloads conduct real time analysis of transactional data and lower administration costs Oracle Autonomous Database is available on OCI for shared or dedicated deployments and on premise with Oracle Exadata Cloud Customer and OCI Dedicated Region In addition Oracle Autonomous Database is available on other hyperscale cloud IT environments such as Amazon Web Services Google Cloud and Microsoft Azure
We offer advanced AI functionality such as AI Vector Search and Select AI in our recent release of Oracle Database 23ai which enables customers to leverage their data for advanced generative AI functionality without needing to duplicate and maintain such data securely in other databases or external systems while also providing customers with an option to utilize generative AI large language models LLMs of their choice
Oracle Database is the world s most popular enterprise database and is designed to enable reliable and secure storage retrieval and manipulation of all forms of data Oracle Database is licensed throughout the world by businesses and organizations of all sizes for a multitude of purposes including among others for use within the Oracle Cloud to deliver our OCA and OCI offerings for use as a cloud license by a number of cloud based vendors as a component of their respective cloud offerings for packaged and custom applications for transaction processing and for data warehousing and business intelligence Oracle Database may be deployed in various IT environments including Oracle Public Cloud Oracle Exadata Cloud Customer OCI Dedicated Region Oracle Alloy other cloud based IT environments and on premise data centers among others Oracle Database Enterprise Edition is available with a number of optional add on products to address specific customer requirements As described above customers may elect to purchase license support for Oracle Database licenses We also offer Oracle Database as a cloud service such as with Oracle Exadata Database Service and Oracle Base Database Service
We license our Oracle Middleware which is a broad family of integrated application infrastructure software for use in various IT environments Oracle Middleware is designed to enable customers to design and integrate Oracle and non Oracle business applications automate business processes scale applications to meet customer demand simplify security and compliance manage lifecycles of documents and get actionable targeted business intelligence Built with Oracle s Java technology platform Oracle Middleware products are designed to be a foundation for custom packaged and composite applications thereby simplifying and reducing time to deployment Oracle Middleware is designed to protect customers IT investments and work with both Oracle and non Oracle databases middleware and applications software through an open architecture and adherence to industry standards In addition Oracle Middleware supports multiple development languages and tools which enables developers to flexibly build once and deploy applications globally across websites portals and cloud based applications utilizing a variety of IT environments
Among our other middleware license offerings we license development tools such as Oracle WebLogic Server for Java application development and Oracle Identity Manager which automates user identity provisioning and allows enterprises to manage the end to end lifecycle of user identities across all enterprise resources Organizations may elect to purchase license support as described above for Oracle Middleware licenses We also offer certain of our middleware capabilities as a part of our OCI offerings
Java is the world s most popular programming language among professional developers and is used to deliver cloud development and deployment services microservices analytics data management blockchain security and continuous integration tools for numerous platforms and technologies including websites enterprise and consumer applications embedded devices and large scale systems Java is designed to enable developers to write software on
a single platform and run it on many other different platforms independent of operating system and hardware architecture Java has been adopted by both independent software vendors ISVs that have built their products using Java and by enterprise organizations building custom applications or consuming Java based ISV products Customers generally purchase Java offerings through subscriptions that include licenses and support services
We provide customers the option to purchase license support contracts in connection with the purchase of Oracle applications and infrastructure licenses Substantially all of our customers opt to purchase license support contracts when they purchase these licenses to run within the Oracle Cloud or other cloud based and on premise IT environments We believe our license support offerings protect and enhance our customers investments in Oracle applications and infrastructure technologies because they provide proactive and personalized support services and unspecified license upgrades and enhancements during the term of the support period Substantially all license support customers renew their support contracts with us upon expiration in order to continue to benefit from technical support services and the periodic issuance of unspecified updates and enhancements which current license support customers are entitled to receive Our license support contracts are generally priced as a percentage of the net fees paid by the customer to purchase the license are typically one year in duration and are generally billed to the customer annually in advance
Oracle infrastructure technologies include a broad selection of hardware products and related hardware support services to power various IT environments Our hardware products and services include offerings designed for specific industries including the communications food and beverage healthcare hospitality and retail industries among others We also offer a portfolio of operating systems including Oracle Linux and Oracle Solaris virtualization and other hardware related software and a range of management technologies and products including Oracle Enterprise Manager and the Oracle Cloud Observability and Management platform These products are designed to help customers efficiently operate complex IT environments including both end users and service providers cloud IT environments Our primary hardware offerings are further described below
Oracle Engineered Systems are core to our cloud based and on premise data center infrastructure offerings Oracle Engineered Systems are pre built products combining multiple unique Oracle technology components that may include database storage operating system virtualization and management software with server storage networking hardware and other technologies Oracle Engineered Systems are designed to deliver improved performance scalability availability security and operational efficiency relative to our competitors products to be upgraded effectively and efficiently and to simplify maintenance cycles and improve security by providing a single solution for patching For example Oracle Exadata Database Machine is an integrated platform that is optimized for achieving higher performance scalability and availability at a lower cost by combining Oracle Database storage and operating system software with Oracle server storage and networking hardware We offer our Oracle Engineered Systems through flexible deployment options including on premise as a cloud offering in OCI as a platform for Oracle Database services in Oracle multicloud partner data centers and as a hybrid cloud offering in customer data centers
We offer a wide range of Oracle server products that are designed for mission critical enterprise environments and that are key components of our Oracle Engineered Systems and Oracle Cloud offerings We have two families of server products those using x86 microprocessors and those based on the Oracle SPARC microprocessor We also offer Oracle storage products which combine flash disk and server technologies with optimized software and unique integrations with the Oracle Database offering greater performance and efficiency and lower total cost relative to our competitors storage products Certain of our storage products provide integration with Oracle Cloud Services for backup and archiving
Oracle hardware support offerings provide customers with unspecified software updates for software components that are essential to the functionality of our hardware products such as for Oracle operating systems and firmware These offerings can also include product repairs maintenance services and technical support services We continue to evolve hardware support processes that are intended to proactively identify and solve quality issues Hardware support contracts are generally priced as a percentage of net hardware products fees
We offer services to help 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 expertise in Oracle technologies extensive experience and broad sets of intellectual property and best practices Our services offerings substantially include among others
Oracle Cloud Operations deliver our Oracle Cloud Services to customers through a secure reliable scalable enterprise grade cloud infrastructure platform managed by Oracle employees within a global network of data centers which we refer to as the Oracle Cloud The Oracle Cloud enables secure and isolated cloud based instances for each of our customers to access the functionality of Oracle Cloud Services via a broad spectrum of devices Oracle Cloud Operations leverage automated software tools to enable the rapid delivery of the latest cloud technology capabilities to the Oracle Cloud as they become available and provide Oracle customers access to the latest Oracle releases We have invested in the rapid expansion of the Oracle Cloud by increasing existing data center capacity and adding data centers in new geographic locations to meet current and expected customer demand We expect this trend will continue
We rely on third party manufacturing partners to produce most of our hardware products that we market and sell to customers and utilize internally to deliver Oracle Cloud Services and we distribute most of our hardware products from these partners facilities Our manufacturing processes are substantially based on standardization of components across product types and centralization of assembly and distribution centers Production of our hardware products requires that we purchase materials supplies product subassemblies and full assemblies from a number of suppliers For most of our hardware products we have existing alternative sources of supply or such sources are readily available However we do rely on sole sources for certain hardware components We monitor and evaluate potential risks of disruption within our supply chain operations Refer to Risk Factors included in Item 1A within this Annual Report for additional discussion of the challenges we encounter with respect to the sources and availability of supplies for our hardware products and the related risks to our businesses
In the United States U S our sales and services employees are based throughout the country Outside the U S our international subsidiaries sell support and service our offerings in their local countries as well as within other foreign countries where we do not operate through a direct sales subsidiary Our geographic coverage allows us to draw on business and technical expertise from a global workforce provides stability to our operations and revenue streams to offset geography specific economic trends and offers us an opportunity to take advantage of new markets for our offerings Our international operations subject us to certain risks which are more fully described in Risk Factors included in Item 1A of this Annual Report A summary of our domestic and international revenues and long lived assets is set forth in Note 13 of Notes to Consolidated Financial Statements included elsewhere in this Annual Report
We also market our product offerings worldwide through indirect channels The companies that comprise our indirect channel network are members of the Oracle Partner Network The Oracle Partner Network is a global program that manages our business relationships with a large broad based network of companies including cloud and license hardware and services suppliers system integrators and resellers that deliver innovative solutions and services based upon and in conjunction with our product offerings By offering our partners access to our product offerings educational information technical services marketing and sales support the Oracle Partner Network program extends our market reach by providing our partners with the resources they need to be successful in delivering solutions to customers globally
We develop the substantial majority of our products and services offerings internally utilizing the skills and diversity of a global workforce In addition we have extended our products and services offerings and intellectual property through acquisitions of businesses and technologies We also purchase or license intellectual property rights in certain circumstances Internal development allows us to maintain technical control over the design and development of our products We have a number of U S and foreign patents and pending applications that relate to various aspects of our products and technology However although we believe that our patents have value neither our business as a whole nor any of our principal businesses are materially dependent on a single patent Rapid technological advances in cloud software and hardware development evolving standards in computer hardware and software technology changing customer needs and frequent new product introductions offerings and enhancements characterize the markets in which we compete We plan to continue to dedicate a significant amount of resources to research and development efforts to develop new products and services offerings as well as maintain and improve our current offerings
At Oracle our success is driven by the quality of our people who we believe are among the best and brightest in the industry We strive to attract and retain talented employees to support our employees success and well being and to foster a culture of inclusion where everyone is empowered to have a voice in driving innovation The Compensation Committee of our Board of Directors the Compensation Committee is responsible for reviewing and monitoring matters related to human capital management including talent acquisition and retention
In order to attract and retain high quality talent Oracle strives to deliver a great employee experience anchored by an inclusive culture where employees can thrive engage in meaningful work leverage growth opportunities and focus on their well being We support employee well being from multiple dimensions including flexible benefits economic health development lifestyle and compensation
We believe that one of the primary reasons candidates join Oracle is for the opportunity to develop their career and participate in our global inclusive culture We have programs and resources to help our employees explore build and achieve their career goals By promoting an inclusive culture that leverages a broad range of perspectives and fosters a sense of belonging we inspire and engage our workforce to solve complex problems to help our customers across the globe
We promote regular career conversations between leaders and employees focused on helping employees identify and take steps to grow their careers Our Talent Review process which runs on Oracle Fusion Cloud HCM provides the mechanism for leaders to review and discuss opportunities and action plans to develop employees 29 of our open non entry level positions were filled internally in fiscal 2025 providing growth opportunities and retaining critical knowledge and talent
We believe that helping our employees learn and apply new skills is key to retaining and engaging them It is also critical to our ability to innovate and rapidly evolve We believe that our easily accessible learning resources enable us to improve our employees learning experience and better measure learning consumption Oracle employees received more than 4 7 million hours of training in fiscal 2025 and accessed online learning content at an average rate of approximately 2 5 million views per month Our employees take advantage of instructor led classes virtual library content and online learning resources on sales business product market industry leadership technical and compliance skills well being and personal development related topics
We believe that an important aspect of creating a workforce that supports employee customer and business success is listening to employee feedback We share the results of our annual employee engagement survey with leaders including members of our Board of Directors the Board In fiscal 2025 83 of our employees participated in the annual survey Leaders listen to employees evaluate feedback and prioritize actions to enhance employee business and customer success
During fiscal 2025 Oracle donated tens of millions of dollars to advance education promote health strengthen communities and protect the environment We also have two nonprofit foundations that focus on children and young people Oracle Health Foundation makes pediatric case grants available globally that fund medical care ranging from hearing aids to major surgeries Oracle Education Foundation teaches young people how to innovate solve problems with technology and shape a better future Since 2014 Oracle has partnered with Design Tech High School a public charter school for which we built a home at our Redwood Shores California campus in 2016
Our quarterly revenues have historically been affected by a variety of seasonal factors including the structure of our sales force incentive compensation plans which are common in the IT industry In each fiscal year our total revenues and operating margins are typically highest in our fourth fiscal quarter and lowest in our first fiscal quarter See Cloud and License Business in Item 7 of this Annual Report for more information regarding the seasonality and cyclicality of the revenues expenses and margins of our cloud and license business which is our largest business
Our customers are demanding less complexity and lower total cost in the implementation sourcing integration and ongoing maintenance of their IT environments Our enterprise cloud license and hardware offerings compete directly with certain offerings from some of the largest and most competitive companies in the world including Adobe Systems Incorporated Alphabet Inc Amazon com Inc Cisco Systems Inc Intel Corporation International Business Machines Corporation Microsoft Corporation Salesforce Inc and SAP SE as well as other companies like Hewlett Packard Enterprise and Workday Inc In addition due to the low barriers to entry in many of our market segments new technologies and new and growing competitors frequently emerge to challenge our offerings Our competitors range from companies offering broad IT solutions across many of our lines of business to vendors providing point solutions or offerings focused on a specific functionality product area or industry In addition as we expand into new market segments we face increased competition as we compete with existing competitors as well as firms that may be partners in other areas of our business and other firms with whom we have not previously competed For example following our acquisition of Cerner Corporation we also face competition from large healthcare IT providers such as Allscripts Healthcare Solutions Inc Arcadia Solutions athenahealth Inc Epic Systems Corporation and InterSystems Corporation among others Moreover we or our competitors may take certain strategic actions including acquisitions partnerships and joint ventures or repositioning of product lines which invite even greater competition in one or more product offering categories
Key competitive factors in each of the segments in which we currently compete and may compete in the future include total cost of ownership performance scalability reliability security functionality efficiency ease of use speed to production and quality of technical support Our products and services sales and the relative strength of our products and services versus those of our competitors are also directly and indirectly affected by the following among other factors
Our Annual Reports on Form 10 K Quarterly Reports on Form 10 Q Current Reports on Form 8 K and amendments to those reports filed pursuant to Sections 13 a and 15 d of the Exchange Act are available free of charge on the SEC website at www sec gov and our Investor Relations website at www oracle com investor as soon as reasonably practicable after we electronically file such materials with or furnish them to the SEC We use our Investor Relations website as a means of disclosing material non public information Accordingly investors should monitor our Investor Relations website in addition to following our press releases SEC filings and public conference calls and webcasts In addition information regarding our environmental policy and global sustainability initiatives and solutions are also available on our website at www oracle com social impact The information posted on or accessible through our website is not incorporated into this Annual Report The references to our websites are intended to be inactive textual references only
Mr Ellison 80 has been our Chairman of the Board and Chief Technology Officer since September 2014 He served as our Chief Executive Officer from June 1977 when he founded Oracle until September 2014 He has served as a Director since June 1977 He previously served as our Chairman of the Board from May 1995 to January 2004
Ms Catz 63 has been our Chief Executive Officer since September 2014 She served as our President from January 2004 to September 2014 our Chief Financial Officer most recently from April 2011 until September 2014 and a Director since October 2001 She was previously our Chief Financial Officer from November 2005 until September 2008 and our Interim Chief Financial Officer from April 2005 until July 2005 Prior to being named our President she held various other positions with us since joining Oracle in 1999 She previously served as a director of The Walt Disney Company
Mr Henley 80 has served as our Vice Chairman of the Board since September 2014 He previously served as our Chairman of the Board from January 2004 to September 2014 and has served as a Director since June 1995 He served as our Executive Vice President and Chief Financial Officer from March 1991 to July 2004
Mr Magouyrk 38 has been our President Oracle Cloud Infrastructure since June 2025 From December 2019 to June 2025 he served as an Executive Vice President in various roles including Executive Vice President Cloud Infrastructure and Executive Vice President Oracle Cloud Infrastructure Engineering Prior to being named Executive Vice President Mr Magouyrk held various other positions with us since joining Oracle in 2014 Prior to joining Oracle he was a senior engineer at Amazon and Amazon Web Services from 2008 to 2014
Mr Sicilia 54 has been our President Industries since June 2025 From October 2019 to June 2025 he served as an Executive Vice President in various roles including Executive Vice President Industries and Executive Vice President Global Business Units Prior to being named Executive Vice President Mr Sicilia held various other positions with us since joining Oracle in 2009 Prior to joining Oracle he was Chief Technology Officer at Primavera Systems and held other positions from 1993 to 2008
Ms Smith 59 has been our Executive Vice President Chief Accounting Officer since December 2022 She served as our Senior Vice President Corporate Controller from December 2020 to December 2022 as our Senior Vice President Assistant Corporate Controller from September 2017 to December 2020 and as our Vice President Global Controllers Organization and Mergers and Acquisitions from November 2012 to September 2017 She held various other positions with us since joining Oracle in 1999
We operate in rapidly changing economic and technological environments that present numerous risks many of which are driven by factors that we cannot control or predict The following discussion as well as our discussion in Item 7 Management s Discussion and Analysis of Financial Condition and Results of Operations highlights some of these risks The risks described below are not exhaustive and you should carefully consider these risks and uncertainties before investing in our securities
We may be unsuccessful in developing and selling new products and services integrating acquired products and services and enhancing our existing products and services Our industry is characterized by rapid technological advances intense competition changing delivery models evolving standards in communications infrastructure increasingly sophisticated customer needs and frequent new product introductions and enhancements We have continued to refresh and release new offerings of our cloud products and services but if we are unable to develop new or sufficiently differentiated products and services enhance and improve our product offerings and support services in a timely manner or position and price our products and services to meet demand customers may not purchase or subscribe to our license hardware or cloud offerings or renew license support hardware support or cloud subscriptions contracts Renewals of these contracts are important to our future success In addition we cannot provide any assurance that the standards on which we choose to develop new products will allow us to compete effectively for business opportunities in emerging areas
Our AI products may not operate as anticipated which could adversely affect our reputation revenues and profitability Machine learning and AI including generative AI agentic AI and LLMs are increasingly driving innovations in technology and AI technology and services are highly competitive and rapidly evolving We have invested and expect to continue to invest significant resources to build and support our AI products In addition we rely on partners and suppliers to produce some of our AI products If we are unable to introduce new AI products or if our AI products fail to operate as anticipated or as well as competing products or otherwise do not meet customer needs or if our competitors AI products achieve higher market acceptance than ours we may fail to
recoup our investments in AI and our business and reputation may be harmed Further if we do not continue to invest significant resources to develop and support our AI products we may fall behind technological developments and evolving industry standards which would likewise harm our ability to compete In addition AI technologies are rapidly changing and present evolving legal regulatory and ethical issues including claims of bias discrimination a perceived lack of transparency as well as sometimes unpredictable behaviors or improper use of copyrighted or other protected material such as personal and patient health information any of which could expose us or our customers to reputational or legal risk and inhibit adoption of our AI products Regulatory uncertainty including the lack of comprehensive federal legislation and a patchwork of existing and proposed frameworks and regulatory initiatives in numerous jurisdictions may expose us to compliance challenges and uncertainties Our failure to adapt to these changes or any failure by our employees contractors partners suppliers or agents to comply with laws and regulations applicable to our AI products or our related policies and procedures could result in legal financial and reputational consequences including but not limited to being required to adjust or limit our product offerings or our use of AI in certain jurisdictions to comply with new and evolving AI laws and regulations
If we do not successfully execute our Oracle Cloud strategy including our offerings of Oracle Cloud Services our revenues and profitability may decline We provide our cloud and other offerings to customers worldwide via a variety of deployment models including via our cloud based OCA and OCI offerings As these business models continue to evolve we may not be able to compete effectively generate significant revenues or maintain the profitability of our cloud offerings Additionally the increasing prevalence of various cloud offering models by us and our competitors may unfavorably impact the pricing of our cloud and license offerings If we do not successfully execute our cloud computing strategy or anticipate the cloud computing needs of our customers our reputation as a cloud services provider could be harmed and our revenues and profitability could decline
As customer demand for our cloud offerings increases we experience volatility in our reported revenues and operating results due to the differences in timing of revenue recognition between our cloud license and on premise license and hardware product arrangements relative to our cloud offering arrangements Customers predominantly purchase our cloud offerings on a subscription basis and revenues from these offerings are generally recognized ratably or as services are consumed over the terms of the subscriptions Consequently any deterioration in sales activity associated with our cloud offerings may not be immediately observable in our consolidated statements of operations This is in contrast to revenues associated with our license and hardware product arrangements which are generally recognized in full at the time of delivery of the related licenses and hardware products In addition we may not be able to accurately anticipate customer transitions from or be able to sufficiently backfill reduced customer demand for our license hardware and support offerings relative to the expected increase in customer adoption of and demand for our Oracle Cloud Services which could adversely affect our revenues and profitability
If we are unable to secure data center capacity at affordable rates or do not accurately plan for and manage our infrastructure capacity requirements our profitability may decline As a part of our Oracle Cloud strategy we plan our investment levels based on estimates of future revenues and customer demand and future anticipated rates of growth In recent periods our cloud services and license support expenses have grown to meet current and expected demand for our cloud offerings including investments to increase our existing data center capacity and to establish data centers in new geographic locations In connection with these investments we entered and expect to continue to enter into long term lease commitments with third party data center providers and other significant commitments with suppliers of chips and other data center infrastructure If we underestimate customer demand or our data center capacity needs we may face shortages of available infrastructure limiting our ability to support customer growth and potentially causing us to lose business to competitors Conversely if we overestimate customer demand or our data center capacity needs we could be locked into multi year commitments for excess data center space resulting in lower profitability and cash flows because our third party data center vendors generally require us to pay significant contract termination fees to early exit such obligations Data centers in geographies that we rely on may also be unavailable on commercially reasonable terms or at all Moreover we do not control the operation of these third party data centers and they may suffer interruptions in service from events beyond our control including from acts of government natural events power loss break ins or misconduct by those third parties We have faced and may continue to face rising costs for data center energy demands In addition we rely on third party suppliers to provide equipment and components required to outfit these data centers on a timely basis Ongoing or future delays or the inability to meet customer demand could cause the loss of additional sales delay our revenue recognition or increase our costs all of which could adversely affect the margins of our business We typically depreciate these assets over their estimated useful lives which could be shortened should our cloud strategies change which could adversely affect our profitability
Our products and services may not function properly if we experience significant coding manufacturing or configuration errors in our cloud license and hardware offerings Despite testing prior to the release and throughout the lifecycle of a product or service our cloud license and hardware offerings sometimes contain coding manufacturing or configuration errors that can impact their function performance and security and result in other negative consequences The detection and correction of any errors in released cloud license or hardware offerings can be time consuming and costly Errors in our cloud license or hardware offerings or errors embedded in third party software products or services incorporated into our own products can affect their ability to properly function integrate or operate with other cloud license or hardware offerings result in service interruptions delays or outages of our cloud offerings create security vulnerabilities in our products or services delay the development or release of new products or services or new versions of products or services and adversely affect market acceptance of our products or services If we experience any of these errors or if there are delays in releasing our cloud license or hardware offerings or new versions of these offerings our sales could be affected and revenues could decline In addition we run Oracle s business operations as well as cloud and other services that we offer to our customers on our products and networks Therefore any flaws could affect our and our customers abilities to conduct business operations and to ensure accuracy in financial processes and reporting and may result in unanticipated costs and interruptions Enterprise customers rely on our cloud license and hardware offerings and related services to run their businesses and errors in our cloud license and hardware offerings and related services could expose us to product liability performance and warranty claims as well as significant harm to our brand and reputation which could impact our future sales
If we are unable to compete effectively the results of operations and prospects for our business could be harmed We face intense competition in all aspects of our business The nature of the IT industry creates a competitive landscape that is constantly evolving as firms emerge expand or are acquired as technology evolves and as delivery models change Our enterprise cloud license and hardware offerings compete directly with certain offerings from some of the largest and most competitive companies in the world many of which have well developed customer bases and strong brand recognition In addition due to the low barriers to entry in many of our market segments new technologies and new agile and growing competitors frequently emerge to challenge our offerings We believe many vendors spend amounts in excess of what Oracle spends to develop and market applications and infrastructure technologies including databases middleware products application development tools business applications collaboration products and business intelligence compute storage and networking products among others which compete with Oracle applications and infrastructure offerings
In addition use of our competitors technologies can influence a customer s purchasing decision or create an environment that makes it less efficient to utilize or migrate to Oracle products and services For example we offer our customers multicloud services whereby our customers can combine cloud services from multiple clouds with the goal of optimizing cost functionality and performance OCI s multicloud services work with a number of our competitors products including Microsoft Azure Amazon Web Services and Google Cloud This multicloud strategy could lead our customers to migrate away from our cloud offerings to our competitors products or limit their purchases of additional Oracle products either of which could adversely affect our revenues and profitability
Our competitors may also seek to attract or retain customers who might otherwise purchase our products and services by offering competing products and services on terms that we may not generally find acceptable We could lose customers if our competitors introduce new competitive products add new functionality acquire competitive products reduce prices better execute on their sales and marketing strategies offer more flexible business practices provide debt or equity financing to customers or form strategic alliances with other companies Mergers consolidations or alliances among our competitors or acquisitions of our competitors by large companies may result in increased competition
If our competitors offer deep discounts on certain products or services or develop products that the marketplace considers more valuable we may need to lower prices introduce pricing models and offerings or offer other terms that are less favorable to us to compete successfully Any such changes may reduce revenues and margins and could adversely affect operating results Additionally the increasing prevalence of cloud delivery models offered by us and our competitors may unfavorably impact the pricing of our other cloud and license hardware and services offerings and we have incurred increased cloud delivery expenses as we expand our cloud operations and update our infrastructure all of which could reduce our revenues and profitability Our license support fees and hardware support fees are generally priced as a percentage of our net license fees and net new hardware products fees respectively Our competitors may offer lower pricing on their support offerings which could put pressure on us to further discount our offerings If we do not adapt our pricing models to reflect changes in customer use of our products changes in customer demand or increased competition our revenues could decrease
Any failure to offer high quality technical support services may adversely affect our relationships with our customers and our financial results Our customers depend on our support organization to resolve technical issues related to our applications and infrastructure offerings We may be unable to respond quickly enough to accommodate short term increases in customer demand for support services or resolve issues efficiently Increased customer demand for these services without corresponding revenues could increase costs and adversely affect our operating results Any failure to maintain high quality technical support or even the perception that our support is insufficient could adversely affect our reputation hinder our ability to sell and renew our applications and infrastructure offerings to existing and prospective customers and negatively impact our business operating results and financial position
We may not receive significant revenues from our current research and development efforts for several years if at all Developing our various product offerings is expensive and the return on investment is often long An important element of our corporate strategy is to commit significant resources to research and development as well as related product and service opportunities both through internal investments and the acquisition of intellectual property from acquired companies Accelerated product and service introductions and short lifecycles require high levels of research and development spending which could adversely affect our operating results if not offset by revenue increases We believe that continued investment in research and development is essential to maintaining our competitive position However our investments in research and development may fail to yield competitive products and services and we do not expect to receive significant revenues from these investments for several years if at all
Our cloud offerings and hardware offerings are complex and if we cannot successfully manage this complexity including the sourcing of technologies and components the results of these businesses will suffer We depend on suppliers to develop manufacture and deliver on a timely basis the necessary technologies and components for our hardware products that we market and sell to our customers and that we use as a part of our cloud infrastructure to deliver our cloud offerings and there are some technologies and components that can only be purchased from a single vendor due to price quality technology availability or other business constraints Our supply chain operations are affected by industry consolidation and component constraints or shortages natural disasters political unrest such as the tensions between China and Taiwan public health crises changes to trade laws or regulations tariffs and customs controls port stoppages shipping interruptions or other transportation disruptions or slowdowns and other factors affecting the countries or regions where these single source component vendors are located or where the products are being shipped If disruption caused by one or more of the risks described above occurs our cloud and license business and hardware business and related operating results could be materially and adversely affected
Supply chain shortages have in some instances resulted in increases to the costs of production of our hardware products that we may not be able to pass on to our customers In addition we have in some instances responded to such shortages by committing to higher purchases and balances of hardware products that we market and sell to our customers and that we use as a part of our cloud infrastructure to deliver our cloud offerings relative to our historical positions For example industry supply capacity for AI accelerators including graphics processing units is competitive and we at times have to accept less favorable terms with suppliers to avoid supply constraints While this permits us to secure cloud infrastructure capacity it has increased excess and obsolescence risk of such hardware products and could adversely impact our profitability and cash flows We expect these factors will continue to impact us in the future
We outsource most of our manufacturing assembly delivery and technology of and certain component designs for our hardware products to a variety of companies many of which are located outside the U S From time to time these partners experience production problems or delays or cannot meet our demand for products on a timely or cost effective basis including as a result of changes to trade laws or regulations tariffs sanctions and export or import controls Ongoing or future delays or cost increases in manufacturing could cause the loss of additional sales delayed revenue recognition or an increase in our hardware products expenses all of which could adversely affect the margins of our cloud and license business and hardware business These challenges could arise if we alter our manufacturing strategies suppliers or locations
Our periodic workforce restructurings and reorganizations can be disruptive We periodically restructure or make other adjustments to our workforce in response to management changes product changes performance issues changes in strategies acquisitions and other internal and external considerations These types of restructurings have resulted and may in the future result in increased restructuring costs and temporarily reduced productivity while employees adjust to the restructuring These types of restructurings may also lead to shortages of sufficiently skilled employees in certain roles loss of valuable institutional knowledge and damage to employee morale and retention
Hiring freezes or slowdowns can also result in decreased productivity while existing employees take on additional roles and responsibilities and may also lead to a shortage of sufficiently skilled employees in certain roles In addition we may not achieve or sustain the expected growth resource redeployment or cost savings benefits of these restructurings or may not do so within our expected timeframe These effects could recur in connection with future acquisitions and other restructurings and our revenues and other results of operations could be negatively affected
We may lose key employees or may be unable to hire enough qualified employees We rely on hiring qualified employees and retaining our senior management including our Chairman of the Board Chief Technology Officer and founder our Chief Executive Officer other executive team members and key employees In the technology industry especially in the AI field competition for highly skilled business product development and technical personnel is intense and ongoing
We may also face rising compensation costs without corresponding gains in productivity or sales We may not be successful in recruiting new personnel and in retaining and motivating existing personnel With rare exceptions we do not have long term employment agreements with our employees Members of our senior management team have left Oracle over the years for a variety of reasons and any future departures may be disruptive to our operations
To manage expenses we hire personnel in countries where advanced technical and other expertise are available at lower costs When we make adjustments to our workforce we may incur expenses associated with workforce reductions that delay the benefit of a more efficient workforce structure We are experiencing increased competition for employees in these countries as the trend toward globalization continues which has affected our employee retention efforts and increased our expenses in an effort to offer a competitive compensation program In addition changes to immigration and labor law policies may adversely impact our access to technical and professional talent
Our general compensation program includes restricted stock units RSUs and performance based equity which are important tools in attracting and retaining employees in our industry If our stock price stagnates or declines our ability to retain or attract employees may be harmed We continually evaluate our compensation practices and consider changes from time to time which may have an impact on our ability to retain employees and the amount of stock based compensation expense that we record Any changes in our compensation practices or those of our competitors could affect our ability to retain and motivate existing personnel and recruit new personnel
There are risks associated with our cloud and license and hardware indirect sales channels which could affect our future operating results Our cloud and license and hardware indirect channel networks consist primarily of resellers system integrators implementers consultants education providers internet service providers network integrators and ISVs Our relationships with these channel participants are important elements of our cloud software and hardware marketing and sales efforts Our financial results could be adversely affected if
We may not successfully maintain expand or develop our relationships with channel participants If we are not successful we may lose sales opportunities customers and revenues In addition we do not control channel participants some of whom operate in jurisdictions with elevated corruption risks Our compliance policies and procedures may fail to prevent or detect violations of anti corruption or other laws and channel participants may violate such laws all of which could subject us to litigation or regulatory risk and result in liability
Acquisitions present many risks and we may not achieve the financial and strategic goals that were contemplated at the time of a transaction We regularly review and consider strategic acquisitions of companies products services and technologies as a part of our corporate strategy and we expect to continue making acquisitions in the future However our strategic acquisition program carries several risks including but not limited to
We are subject to risks with respect to environmental social and governance ESG matters We are subject to evolving and sometimes conflicting laws regulations policies and stakeholder expectations relating to matters beyond our core products and services including ESG matters such as environmental sustainability climate change human capital and workforce matters The Nomination and Governance Committee of our Board oversees and periodically reviews our ESG programs and our management evaluates if climate or environmental risks could significantly impact our core or strategic business functions including service delivery and support product development and deployment supply chain management facility operations employee recruitment and retention or brand reputation Any failure to identify and address these risks could adversely affect our reputation business financial performance and growth
Further in an effort to be responsive to customer employee and other stakeholder interests and expectations we publicly disclose certain ESG related goals and statistics If we fail to meet these goals or are perceived as failing to meet our ESG goals our revenues reputation and brand may be harmed In addition views on ESG and related matters diverge within and among different stakeholder groups including stockholders customers and employees as well as government actors Efforts to meet evolving and increasingly divergent stakeholder expectations on ESG and related matters may place a strain on our employees and systems and if we are targeted by those who disagree with our public positions on ESG and related issues or if we do not otherwise successfully manage ESG related expectations across our stakeholders it could erode stakeholder trust impact our reputation or subject us to litigation which could adversely affect our business and reputation
If our security measures for our products and services are compromised and as a result our data our customers data or our IT systems are accessed improperly made unavailable or improperly modified our products and services may be perceived as vulnerable our brand and reputation could be damaged the IT services we provide to our customers could be disrupted and customers may stop using our products and services any of which could reduce our revenue and earnings increase our expenses and expose us to legal claims and regulatory actions Our products and services including Oracle Cloud Services store retrieve process and manage third party data such as our customers data as well as our own data We believe that Oracle has been and is a target for computer hackers cyberattacks and other perpetrators or threat actors because Oracle stores and processes large amounts of data including sensitive data such as health sciences including patient health information financial services retail hospitality telecommunications and government data We and our third party vendors are regularly subject to attempts by third parties which may include individuals or groups of hackers and sophisticated organizations such as state sponsored organizations nation states and individuals sponsored by them to identify and exploit product and service vulnerabilities penetrate or bypass our security measures and gain unauthorized access to our or our customers partners and suppliers software hardware and cloud offerings networks and systems Such malicious attacks can lead and have led to the compromise of personal information or the confidential information or data of Oracle or our customers Attempts of this nature typically involve IT related viruses worms and other malicious software programs that attack networks systems products and services exploit potential security vulnerabilities of networks systems products and services create system disruptions and cause shutdowns or denials of service Third parties may attempt to fraudulently induce customers partners employees or suppliers into disclosing sensitive information such as user names passwords or other credentials to gain access to our data our customers suppliers or partners data or the IT systems of Oracle our customers suppliers or partners Our products and services including our Oracle Cloud Services may also be accessed or modified improperly as a result of customer partner employee contractor or supplier error or malfeasance
When a cyberattack or other security event or incident results in unauthorized access to or modification or exfiltration of our customers or suppliers data other external data our own data or our IT systems or if the services we provide to our customers are disrupted or if our products or services are reported to have or are perceived as having security vulnerabilities we have incurred and could incur significant expenses and could suffer substantial damage to our brand and reputation If our customers lose confidence in the security and reliability of our products and services including our cloud offerings they may reduce or terminate their spending with us In addition cyberattacks and other security events or incidents have resulted and could result in significant investigation and remediation costs loss or destruction of data operational disruptions inappropriate use of proprietary and sensitive data lawsuits indemnity obligations regulatory investigations and financial penalties and increased legal liability including in some cases contractual costs for customer notification and fraud monitoring Our remediation efforts may not be successful
Because the techniques used to obtain unauthorized access to or sabotage IT systems constantly evolve grow more complex over time and often are not detected until launched against a target we may be unable to anticipate or implement adequate measures to prevent such techniques Our internal IT systems continue to evolve and we are often early adopters of new technologies However our business policies and internal security controls may not keep pace with emerging threats We may not detect or confirm any security breach and loss of information for a significant period of time after the security breach
Our products operate in conjunction with and are dependent on a wide variety of third party products components and services If a security vulnerability exists in one of these components a targeted exploit could lead to increased costs liability claims customer dissatisfaction reduced revenue or harm to our reputation or competitive position We also have an active acquisition program and have acquired a number of companies products services and technologies over the years While we make significant efforts to address any IT security issues with respect to our acquired companies we may still inherit such risks when we integrate these companies within Oracle
Our business practices with respect to data could give rise to operational interruption liabilities or reputational harm as a result of governmental regulation legal requirements or industry standards relating to privacy and data protection As regulatory focus on privacy issues continues to increase and worldwide laws and regulations concerning the handling of personal information expand and become more complex and stringent potential risks related to data collection and use within our business will intensify In addition U S federal and state as well as foreign governments have enacted or are considering enacting legislation or regulations or may in the near future interpret existing legislation or regulations in a manner that could significantly impact our ability as well as the
ability of our customers partners and data providers to collect augment analyze use transfer including across national borders and share personal and other information that is integral to certain services we provide We are also subject to data privacy and other related regulations governing the healthcare industry and patient information including but not limited to regulations governing electronic health data transmissions the processing of patient information healthcare fraud and healthcare information sharing
Following the European Union s EU General Data Protection Regulation GDPR the rate of global consideration and adoption of privacy laws has increased giving rise to more global jurisdictions in which regulatory inquiries and audits may be requested of Oracle and if we are not deemed to be in compliance could result in enforcement actions and or fines This is true in the U S where for example a number of states have enacted privacy laws the U S Congress has been considering several privacy and security related bills at the federal level the federal government is pursuing a range of cybersecurity initiatives pertaining to critical infrastructure companies and government contractors and a number of other state legislatures have passed or are considering privacy laws Regulators globally are also imposing greater monetary fines for privacy violations The GDPR provides for monetary penalties of up to 20 million or up to 4 of an organization s worldwide revenue of the preceding financial year whichever is greater These penalties can be significant For example a U S based technology company was fined 1 2 billion for alleged GDPR violations in 2023 The U S Federal Trade Commission continues to fine companies for unfair and deceptive data protection practices and these fines may increase in size Taken together the laws or regulations associated with the enhanced protection of personal and other types of data could greatly increase the size of potential fines related to data protection and our cost of providing our products and services could result in changes to our business practices or even prevent us from offering certain services in jurisdictions in which we operate Although we have implemented contracts diligence programs policies and procedures designed to address compliance with applicable laws and regulations there can be no assurance that our employees contractors partners suppliers data providers or agents will not violate such laws and regulations or our contracts policies and procedures Additionally public perception and standards related to the privacy of personal information can shift rapidly in ways that may affect our reputation or influence regulators to enact regulations and laws that may limit our ability to provide certain products and services For example numerous jurisdictions including the EU have passed or are considering laws and regulations that would impose additional data privacy and other compliance requirements on the use of AI and could require us to adjust or limit our product offerings in such jurisdictions
We make statements about our use and disclosure of personal information through our privacy policy information provided on our website and press statements Any failure or perceived failure by us to comply with these public statements or with U S federal state or foreign laws and regulations including laws and regulations regulating privacy data security or consumer protection public perception standards self regulatory requirements or legal obligations could result in lost or restricted business proceedings actions or fines brought against us or levied by governmental entities or others or could adversely affect our business and harm our reputation
Third parties have claimed and in the future may claim infringement or misuse of intellectual property rights and or breach of license agreement provisions We periodically receive notices from or have lawsuits filed against us by third parties claiming infringement or other misuse of their intellectual property rights and or breach of our agreements with them These third parties include entities that do not design manufacture or distribute products or services or that acquire intellectual property for the sole purpose of monetization through infringement assertions We expect to continue to receive such claims as
We may not be able to protect our intellectual property rights We rely on copyright trademark patent and trade secret laws confidentiality procedures controls and contractual commitments to protect our intellectual property Despite our efforts these protections may be limited Unauthorized third parties may try to copy or reverse engineer our products or otherwise use our intellectual property Our patents may be invalidated or circumvented Any of our pending or future patent applications may not be issued with the claim scope we seek if at all In addition the laws of some countries do not provide the same level of intellectual property protection as U S laws and courts If we cannot protect our intellectual property against unauthorized copying or use or other misappropriation we may not remain competitive
Adverse litigation results could affect our business We are subject to various legal proceedings Litigation can be lengthy expensive and disruptive to our operations and can divert our management s attention away from running our core business The results of our litigation also cannot be predicted with certainty Even favorable judgments have been and may in the future be subject to appeals leading to protracted litigation additional costs and the prospect that our desired outcome will be overturned An adverse decision could result in monetary damages or injunctive relief that could affect our business operating results or financial condition Additional information regarding certain of the lawsuits we are involved in is discussed under Note 15 of Notes to Consolidated Financial Statements included elsewhere in this Annual Report
We may be subjected to increased taxes due to changes in U S or international tax laws or from adverse resolutions of tax audits and controversies As a multinational corporation we incur income taxes as well as non income based taxes such as payroll sales use property and value added taxes in both the U S and various foreign jurisdictions Significant uncertainties exist with respect to the application of the various taxes to the businesses in which we engage often requiring that we make judgments in determining our tax liabilities and worldwide provision for income taxes We are regularly under audit by tax authorities in the U S and internationally which has led to disagreements regarding our treatment of various items including our intercompany transfer prices and calculations and the applicability of withholding taxes to our cross border transactions Any unfavorable resolution of these tax audits and controversies could cause our tax liabilities to increase and may have a material and adverse impact on our provision for income taxes and effective tax rate Although we believe that our income and non income based tax estimates are reasonable there is no assurance that the final determination of tax audits or disputes will not be different from what is reflected in our historical income tax provisions and tax accruals
Countries around the world continually consider and make changes to relevant tax accounting and other laws treaties regulations guidance and interpretations For example the U S Congress is considering extending tax provisions enacted as part of the 2017 Tax Cuts and Jobs Act as well as making other changes to federal tax law some of which could have an adverse impact on us Various other legislative proposals if enacted could substantially raise U S income taxes on our domestic and international profits Such unfavorable tax proposals create the potential for added volatility in our quarterly provision for income taxes and could have a material adverse impact on our future income tax provisions and effective tax rate
Other countries also continue to consider changes to their tax laws that could negatively affect us by increasing taxes imposed on our international revenue streams operations and cross border transactions including the imposition of taxes targeted at digital technology businesses and changes in withholding tax rules A project led by the Organisation for Economic Co operation and Development OECD an international association comprised of 38 countries including the U S over the last several years has resulted in changes to the basic design of the international tax system including the implementation of a 15 minimum tax in over 50 countries as well as proposed changes that would provide greater taxing rights to market jurisdictions where customers or users are located There can be no assurance that these enacted changes which are subject to ongoing OECD guidance and interpretations by the various adopting countries and any contemplated changes if implemented by countries will not materially increase the level of income tax on our international profits
Our future income tax provisions and effective tax rate could materially increase under the tax changes discussed above or if other changes are made to applicable tax laws and rules in the U S or in other countries in which we do business Our provision for income taxes also could be adversely affected by changes in the mix of income earned or losses incurred in jurisdictions with differing statutory tax rates fluctuations in our stock price and level of stock based compensation expense changes in the valuation of our deferred tax assets or liabilities and by other factors
Our international sales and operations and global customer base subject us to additional risks that can adversely affect our operating results We derive a substantial portion of our revenues from and have significant operations outside of the U S and in both our U S and non U S operations we serve customers based in or with ties to numerous jurisdictions around the world Compliance with international and U S laws and regulations that apply to our international operations increases our cost of doing business These laws and regulations include data privacy requirements labor relations laws tax laws foreign currency related regulations competition antitrust regulations anti bribery laws and other laws prohibiting payments to governmental officials such as the U S Foreign Corrupt Practices Act FCPA market access regulations tariffs and import export and general trade regulations including but not limited to sanctions and embargos Violations of these laws and regulations can result in monetary fines civil and or criminal penalties enforcement actions against us our officers or our employees and prohibitions on the conduct of our business including disgorgement the loss of trade privileges and other remedial measures Any such violations could result in prohibitions on our ability to offer our products and services in one or more countries or territories or to certain entities could delay or prevent potential acquisitions and could also materially damage our reputation our brand our international expansion efforts our ability to attract and retain employees our business and our operating results
Changes to sanctions or export control regulations in the U S and the other jurisdictions where we currently operate or have dealings or in the future may operate or have dealings can require suspension or termination of business including financial transactions in or with certain countries and territories or with certain customers In addition we continue to closely monitor international relations and it is difficult to anticipate the effect geopolitical developments may have on us Compliance with any further sanctions export controls or other regulatory restrictions and any countermeasures thereto taken by the U S or other countries could prevent us from serving certain customers or restrict us or our customers from operating in specific jurisdictions which could have an adverse effect on our operations and results of operations For example the U S enacted a law making it unlawful beginning in January 2025 to provide internet hosting services to TikTok that are used to enable the distribution maintenance or updating of TikTok for users within the U S The President issued executive orders that prohibit enforcement until a future date and also prohibit the imposition of penalties at any time for providing services during the time period covered by the prohibition of enforcement and ordered the Attorney General to notify relevant service providers that continuing to provide services during the prohibition of enforcement does not violate the statute If the prohibition is lifted or expires without a resolution that satisfies relevant legal requirements we may no longer be able to provide those services to TikTok and if we cannot redeploy that capacity in a timely manner our revenues and profits would be adversely impacted
Our success depends in part on our ability to anticipate and manage these risks We monitor our operations and investigate allegations of improprieties relating to transactions and the way in which such transactions are recorded Where warranted we provide information and report our findings to government authorities who may conduct their own investigations and we respond to their requests or demands for information No assurance can be given that such authorities will not take action or that our compliance program will prove effective There is no guarantee that our compliance policies and procedures will be followed at all times or will effectively detect and prevent all violations of laws including economic and financial sanction laws and embargoes In addition we are currently navigating a period of geopolitical and regulatory volatility
As the majority shareholder of Oracle Financial Services Software Limited a publicly traded company in India and Oracle Corporation Japan a publicly traded company in Japan we face several additional risks including being subject to local securities regulations and being unable to exert full control that we would otherwise have if these entities were wholly owned subsidiaries
The healthcare industry is highly regulated and thus we are subject to several laws regulations and industry initiatives non compliance with certain of which could adversely affect our healthcare business As a participant in the healthcare industry certain of our operations and relationships and those of our customers are regulated by several U S federal state local and foreign governmental entities These regulations impact us both directly and indirectly in terms of government program requirements applicable to our customers for the use of health IT Even though we may not be directly regulated by specific healthcare laws and regulations our products and services must be capable of being used by our customers in a way that complies with those laws and regulations There are significant wide ranging and rapidly evolving regulations worldwide covering healthcare fraud information sharing e prescribing medical claims processing and transmission healthcare devices the use of AI in healthcare the security and privacy of patient data and interoperability standards that may be directly or indirectly applicable to our operations and relationships or the business practices of our customers Specific risks include but are not limited to the following
Complying with these regulations globally is expensive and could subject us to unanticipated and significant delays If we fail to comply sufficiently with these and other regulations it could negatively impact our ability to continue to develop distribute and deliver certain of our healthcare products and services and we could suffer fines or penalties
Our sales to local state federal and foreign government customers expose us to business volatility and risks including government budgeting cycles and appropriations government shutdowns procurement regulations governmental policy shifts early termination of contracts audits investigations sanctions and penalties We derive revenues from contracts with the U S government state and local governments and foreign governments and are subject to procurement laws relating to the award administration and performance of those contracts
Governmental entities are variously pursuing policies that affect our ability to sell our products and services Changes in government procurement policy priorities regulations technology initiatives and or requirements may negatively impact our potential for growth in the government sector For example the U S government imposes
evolving cybersecurity requirements including for example the FedRAMP authorization process and the Department of Defense DoD Cybersecurity Maturity Model Certification These requirements may impact our lines of business in the U S federal government market Compliance with these cybersecurity requirements is complex and costly and any failure or alleged failure to meet or delays in meeting the required security controls could result in liability limit our ability to sell products and services directly or indirectly to the DoD and other federal and state government entities that implement similar cybersecurity requirements and adversely affect our reputation and sales
We are also subject to early termination of our contracts Many governmental entities have the right to terminate contracts at any time for a variety of reasons including without cause For example the U S federal government may terminate any of our government contracts and subcontracts at its convenience or for default based on our performance U S federal state and local government and foreign government contracts are generally subject to government funding authorizations appropriations Contracts may also be terminated due to a lack of government funds
There is increased pressure on governments and their agencies both domestically and internationally to reduce spending as governments continue to face significant deficit reduction pressures This may adversely impact spending on government programs and result in termination of government contracts delays in contract awards and pausing of payments during cost efficiency reviews In addition an extended federal government shutdown in the U S could cause delays in approvals and decision making which could negatively impact our results of operations
Government contracts laws and regulations impose certain risks and certain of our government contracts and contracting practices are currently and may in the future be subject to audits and investigations Any violations of law or alleged violations of law could subject us to civil and criminal penalties and administrative sanctions including termination of contracts refund of fees received treble damages settlement payments forfeiture of profits suspension of payments fines and suspensions or debarment from future government business as well as adverse publicity and reputational damage
Environmental and other related laws and regulations subject us to a number of risks and could result in significant liabilities and costs Our cloud and hardware operations are subject to extensive evolving and sometimes inconsistent state federal and international regulations related to ESG matters Some of these regulations establish specific metrics targets and disclosure frameworks for a variety of ESG issues including environmental sustainability supply chain labor practices workforce health and safety proper handling and disposal of certain chemicals and materials and local testing and labeling requirements Regulatory market carbon tax and competitive pressures regarding the greenhouse gas emissions and energy mix for our data center operations have increased and are expected to continue to increase
Compliance with these ever changing and sometimes divergent ESG laws in a timely manner could increase our product design development procurement manufacturing delivery cloud operations insurance premiums and administration costs limit our ability to manage excess and obsolete non compliant inventory change our sales activities or otherwise impact future financial results of our cloud and hardware businesses Failure to comply with these laws can subject us to significant liability including fines penalties and possible prohibition of sales of our products and services in certain regions Additionally new or updated regulated disclosure requirements could result in revisions to our previous ESG related disclosure which could expose us to liability or reputational harm
Our operations can be difficult for us to predict because our quarterly results of operations may fluctuate significantly based on a number of factors Our revenues particularly certain of our cloud license and on premise license revenues and hardware revenues can be difficult to forecast A substantial portion of our cloud license on premise license and hardware contracts is completed in the latter part of a quarter Because a significant portion of our cost structure is largely fixed in the short term sales and revenue shortfalls tend to have a disproportionately negative impact on our profitability We typically have a number of large transactions each quarter which increases the risk of fluctuations in our quarterly results If we lose one or more of our key customers for any reason or we experience a delay in even a small number of these large transactions our quarterly sales revenues and profitability could fall significantly short of our predictions In addition sudden shifts in regional or global economic or political activity may cause our sales forecasts to be inaccurate
In addition we hold a portfolio of marketable and non marketable debt and equity investments including investments in Ampere Computing Holdings LLC Ampere a privately held related party entity in which we had an ownership interest of approximately 29 as of May 31 2025 Any impairment charges and effect of changes in the fair values of certain of these investments are recorded as unrealized gains or losses as a component of consolidated net income in each period The timing and amount of impairment charges or changes in fair value if any of these investments depends on factors beyond our control including the perceived and actual performance of the companies or funds in which we invest and are also subject to the general conditions of public and private equity markets which are uncertain and have in the past varied and may in the future vary materially by period Changes in the fair values of these investments including Ampere have contributed and may in the future contribute to volatility in our net income that is not reflective of our core businesses
On March 19 2025 SoftBank Group Corp announced that it had entered into an agreement with Ampere and certain of its equity holders to acquire all of the equity interests of Ampere the Ampere Acquisition The transaction is subject to customary closing conditions including regulatory approvals that are beyond our control If the Ampere Acquisition closes we will cease to be an investor in Ampere During the period prior to closing the Ampere Acquisition the amount of our investments in Ampere could increase for a variety of reasons and we will continue to recognize our share of loss in Ampere s net earnings until the closure of the acquisition If the Ampere Acquisition does not close we will continue to be exposed to the risk associated with our investments in Ampere as discussed above
Changes in currency exchange rates can adversely affect customer demand and our revenue and profitability We conduct a significant number of transactions and hold cash in currencies other than the U S Dollar Changes in the values of major foreign currencies particularly the Australian Dollar British Pound Brazilian Real Canadian Dollar Euro Indian Rupee Japanese Yen and Saudi Riyal relative to the U S Dollar can significantly affect our total assets revenues operating results and cash flows which are reported in U S Dollars Fluctuations in foreign currency rates including the strengthening of the U S Dollar against the Euro and most other major international currencies adversely affects our revenue growth by reducing the U S Dollar value of our foreign currency earnings and affecting actual demand for our products and services as they may become relatively more expensive for foreign currency based enterprises to purchase Currency variations can also negatively impact profit margins on sales of our products in countries outside of the U S Generally a stronger U S Dollar adversely affects and a weaker U S Dollar favorably affects our reported revenues and operating results In addition our reported assets generally are adversely affected when the dollar strengthens relative to other currencies as a portion of our consolidated cash and bank deposits among other assets are held in foreign currencies and reported in U S Dollars
In addition we incur foreign currency transaction gains and losses primarily related to sublicense fees and other intercompany agreements among us and our subsidiaries that we expect to cash settle in the near term which are charged to earnings in the period incurred We have a program which primarily utilizes foreign currency forward contracts designed to offset the risks associated with certain foreign currency exposures We may suspend the program from time to time As part of this program we enter into foreign currency forward contracts so that increases or decreases in our foreign currency exposures are offset at least in part by gains or losses on the foreign currency forward contracts in an effort to mitigate the risks and volatility associated with our foreign currency transaction gains or losses A large portion of our consolidated operations is international and we expect that we will continue to realize gains or losses with respect to our foreign currency exposures net of gains or losses from our foreign currency forward contracts including the cost to obtain such contracts For example we experience foreign currency gains and losses when it is not possible or cost effective to hedge our foreign currency exposures our hedging efforts are ineffective or we suspend our foreign currency forward contract program Our ultimate realized loss or gain with respect to currency fluctuations will generally depend on the size and type of cross currency exposures that we enter into the currency exchange rates associated with these exposures and changes in those rates whether we have entered into foreign currency forward contracts to offset these exposures and any related fees paid to purchase such contracts and other factors All of these factors can from time to time materially impact our results of operations financial position and cash flows
There are risks associated with our outstanding and future indebtedness As of May 31 2025 we had an aggregate of 92 6 billion of outstanding indebtedness that will mature between calendar year 2025 and calendar year 2065 Our ability to pay interest and repay the principal for our indebtedness is dependent upon our ability to manage our
We have been refinancing portions of our outstanding debt as it matures and we may continue to do so in the future There is a risk that we may not be able to refinance existing debt or that the terms of any refinancing may not be as favorable as the terms of our existing debt Furthermore if prevailing interest rates or other factors at the time of refinancing result in higher interest rates upon refinancing then the interest expense relating to that refinanced indebtedness would increase
Should we incur future increases in interest expense our ability to utilize certain of our foreign tax credits to reduce our U S federal income tax could be limited which could unfavorably affect our provision for income taxes and effective tax rate In addition changes to our outlook or credit rating or a withdrawal by any rating agency could negatively affect the value of both our debt and equity securities and increase the interest amounts we pay on certain outstanding or future debt These risks could adversely affect our financial condition and results of operations
Our stock price could become more volatile and your investment could lose value All of the factors discussed within this Risk Factors section could affect our stock price The timing of announcements in the public market by us or by our competitors regarding new cloud services AI advancements products product enhancements technological advances data center capacity acquisitions or major transactions could also affect our stock price Changes in the amounts and frequency of stock repurchases or dividends could affect our stock price Our stock price could also be affected by factors some of which are beyond our control including among others speculation in the press social media and the analyst community changes in recommendations or earnings related estimates by financial analysts changes in investors or analysts valuation measures for our stock negative analyst surveys or channel check surveys earnings announcements where our financial results differ from our guidance or investors expectations our credit ratings dissemination of inaccurate information or misinformation about our business and results of operations including through the malicious use of generative AI tools the enforcement or non enforcement of laws and regulations and market trends unrelated to our performance The stock market in general and the market for technology companies in particular has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies A significant drop in our stock price could also expose us to the risk of securities class action lawsuits which could result in substantial costs and divert management s attention and resources which could adversely affect our business
We cannot guarantee that our stock repurchase program will be fully implemented or that it will enhance long term stockholder value Our repurchase program does not have an expiration date and we are not obligated to repurchase a specified number or dollar value of shares Further our stock repurchase program may be accelerated suspended delayed or discontinued at any time Our stock repurchase program may not enhance long term stockholder value
Economic political and market conditions can adversely affect our business results of operations and financial condition including our revenue growth and profitability which in turn could adversely affect our stock price Our business is influenced by a range of factors that are beyond our control and that we have no comparative advantage in forecasting These include
Macroeconomic developments such as the global or regional economic effects resulting from elevated inflation and interest rates limited liquidity adverse developments affecting financial institutions the current wars evolving trade policies between the U S and international trade partners including the imposition of tariffs and other trade measures or restrictions or the occurrence of similar events in other countries that lead to uncertainty or instability in economic political or market conditions could negatively affect our business operating results financial condition and outlook which in turn could adversely affect our stock price Any general weakening of and related declining
corporate confidence in the global economy or the curtailment of government or corporate spending could cause current or potential customers to reduce or eliminate their IT budgets and spending which could cause customers to delay decrease or cancel purchases of our products and services or cause customers not to pay us or to delay paying us for previously purchased products and services If any parties with whom we conduct business or invest our cash or cash equivalents are unable to meet their obligations to us our business could be adversely affected Bank failures or issues in the broader U S or global financial systems may have an impact on the broader capital markets and in turn our ability to access those markets
In addition international regional or domestic political unrest and the related potential impact on global stability trade wars terrorist attacks and the potential for other hostilities in various parts of the world public health crises and natural disasters continue to contribute to a climate of economic and political uncertainty that could adversely affect our results of operations and financial condition including our revenue growth and profitability These factors generally have the strongest effect on our sales of cloud license and on premise license hardware and related services and to a lesser extent also may affect our renewal rates for license support and our subscription based cloud offerings
Business disruptions could adversely affect our operating results A significant portion of our critical business operations are concentrated in a few geographic areas some of which include emerging market international locations that may be less stable relative to running such business operations solely within the U S We are a highly automated business and a disruption or failure of our systems supply chains and processes could cause delays in completing sales providing services including some of our cloud offerings and enabling a seamless customer experience with respect to our customer facing back office processes Although the Oracle Cloud is designed to automatically redirect traffic to an alternate facility in the event of a severe impact to one facility a major natural disaster political social or other disruption to infrastructure that supports our operations or other catastrophic event or the effects of climate change such as increased storm severity drought and pandemics that results in the destruction or disruption of any of our critical business operations supply chains or IT systems could severely affect our ability to conduct normal business operations and as a result our future operating results could be materially and adversely affected
Our overall information security risk management approach is designed to enable us to assess identify and manage major risk exposures including from material risks from cybersecurity threats in a timely manner As part of our information security risk management program we perform risk assessments in which we map and prioritize information security risks identified through the processes described below These assessments inform our information security risk management strategies and oversight processes and we view cybersecurity risks as one of the key risk categories we face
We believe that Oracle is a target for computer hackers cyber threats and other bad actors because our products and services store retrieve process and manage large amounts of data including sensitive data We and our vendors are regularly subject to attempts by third parties to identify and exploit product and service vulnerabilities penetrate or bypass our security measures and gain unauthorized access to our or our customers partners and suppliers software hardware and cloud offerings networks and systems
If a large scale cyberattack or other major security incident results in unauthorized access to or modification or exfiltration of a significant amount of our customers or suppliers data other external data our own data or our IT systems or if the services we provide to our customers are disrupted or if our products or services are reported to have or are perceived as having security vulnerabilities we could incur significant expenses and suffer substantial damage to our brand and reputation and this could result in a material impact on our business Refer to Data Privacy Cybersecurity and Intellectual Property Risks in Risk Factors included in Item 1A within this Annual Report for additional discussion of the challenges we encounter with respect to cybersecurity risks
Our corporate security and information security programs are designed to help us prevent prepare for detect respond to and recover from cybersecurity threats We leverage industry standard security frameworks to evaluate our security controls Relevant personnel collaborate with subject matter experts throughout the process to identify and assess material cybersecurity threats evaluate their severity and explore ways to mitigate a potential security incident We continually conduct security and privacy reviews to pinpoint risks associated with our products services and enterprise We also employ various monitoring tools to track suspicious or anomalous activity across our networks systems and data and we simulate cyber threats to proactively address vulnerabilities Finally we routinely train our employees on cybersecurity matters
This program includes processes for triaging assessing the severity of escalating containing investigating and remediating information security events as well as meeting legal obligations and minimizing customer impact and brand and reputational damage In addition we maintain insurance to protect against potential losses arising from a cybersecurity incident Periodic tabletop exercises are conducted to test and reinforce our incident response controls with incident severity and priority assessed on an ongoing basis
We also conduct external and internal risk management audits to assess and report on our internal incident response preparedness and help identify areas for continued focus and improvement We conduct periodic penetration testing to identify vulnerabilities in our products services and systems We also undergo security related industry certifications and attestations by external auditors including System and Organization Controls SOC 1 SOC 2 International Organization for Standardization ISO 27001 27017 and 27018 Cloud Security Alliance Security Trust Assurance and Risk CSA STAR Payment Card Industry Data Security Standard PCI DSS and other compliance frameworks Additionally our vendor risk management program identifies and mitigates risks associated with third party service providers including those within our supply chain and those with access to our customer or employee data or systems We use the findings from these and other processes to review our information security practices procedures and technologies
Cybersecurity is an important area of focus for our Board Our information security risk management program is designed to allow our Board to establish a mutual understanding with management of the effectiveness of our information security risk management practices and capabilities including the division of responsibilities for reviewing our information security risk exposure and risk tolerance tracking emerging information risks and ensuring proper escalation of certain key risks for periodic review by the Board of Directors and its committees As
part of its broader risk oversight activities the Board oversees risks from cybersecurity risks both directly and through the Finance and Audit Committee of the Board the F A Committee As reflected in its charter the F A Committee assists the Board with the management and assessment of privacy and data security risk and is responsible for reviewing and discussing with management privacy and data security risk exposures including among other things the potential impacts of those exposures on our business financial results operations and reputation The F A Committee also oversees our internal controls over financial reporting including with respect to financial reporting related information systems
As an element of its information security risk management oversight activities the F A Committee reviews the results of our incident response control tests external and internal audits and penetration testing and oversees our vendor risk management program The F A Committee also receives quarterly updates regarding cybersecurity matters from senior management In turn the F A Committee reports to the full Board on a quarterly basis regarding the F A Committee s cybersecurity risk oversight activities We also have Board members with expansive knowledge and expertise in the area of cybersecurity In addition to these regularly scheduled updates our Chief Privacy Officer and Senior Vice President Cloud Security and Head of Global Information Security may also report to the F A Committee on how certain information security risks are being managed and progress towards agreed mitigation goals as well as any potential material risks from cybersecurity threats that have been detected by the information security team
Robert Duhart Senior Vice President Cloud Security and Head of Global Information Security is responsible for the day to day identification assessment and management of the information security risks we face Our Senior Vice President Cloud Security and Head of Global Information Security has extensive experience in managing cybersecurity and has served in various leadership roles in information technology and cybersecurity at several large public companies the U S Department of Defense and the Federal Bureau of Investigation Most recently he served as the Chief Information Security Officer eCommerce and Deputy Chief Information Security Officer at a major retailer Our Senior Vice President Cloud Security and Head of Global Information Security earned a master s degree in technology management from George Mason University Costello College of Business and a Chief Information Security Officer Executive Certificate from Carnegie Mellon University Heinz College of Information Systems and Public Policy
Our Senior Vice President Cloud Security and Head of Global Information Security is supported by team members who have relevant educational and industry experience These team members provide regular reports to the Senior Vice President Cloud Security and Head of Global Information Security and work closely with our Chief Privacy Officer and include personnel dedicated to information security product security and physical security Informed by the processes and practices discussed under Risk Management and Strategy above team members escalate cybersecurity threats and incidents to the Senior Vice President Cloud Security and Head of Global Information Security who assesses the severity of such threats and incidents for inclusion in quarterly update to the F A Committee where appropriate In addition to the ordinary course Board and F A Committee reporting and oversight described above we also maintain disclosure controls and procedures designed for prompt reporting to the Board and timely public disclosure as appropriate of material events covered by our risk management framework including cybersecurity risks
Our properties consist of owned and leased office facilities for cloud operations sales support research and development services manufacturing and administrative and other functions Our headquarters facility consists of approximately 0 9 million square feet in Austin Texas all of which we own We also own or lease offices and certain other facilities for current use consisting of approximately 26 9 million square feet in various other locations in the U S and abroad Approximately 10 4 million square feet or 37 of our total owned and leased offices and certain other facilities are sublet or are being actively marketed for sublease or disposition We lease our principal internal manufacturing facility for our hardware products in Hillsboro Oregon Additionally our cloud operations deliver our Oracle Cloud Services through the use of global data centers substantially all of which were leased through colocation suppliers We believe that our facilities are in good condition and suitable for the conduct of our business
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 graph below compares the cumulative total stockholder return on our common stock with the cumulative total return of the S P 500 Index and the Dow Jones U S Technology Total Return Index for each of the last five fiscal years ended May 31 2025 assuming an investment of 100 at the beginning of such period and the reinvestment of any dividends The comparisons in the graphs below are based upon historical data and are not indicative of nor intended to forecast future performance of our common stock
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 for fiscal 2025 compared to fiscal 2024 A discussion regarding our financial condition and results of operations for fiscal 2024 compared to fiscal 2023 can be found in Management s Discussion and Analysis of Financial Condition and Results of Operations in Part II Item 7 of our Annual Report on Form 10 K for the fiscal year ended May 31 2024 as filed with the SEC on June 20 2024 which is available free of charge on the SEC s website at www sec gov and on our Investor Relations website at www oracle com investor
Oracle provides products and services that address enterprise 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 7 Management s Discussion and Analysis of Financial Condition and Results of Operations and the information contained within Item 1 Business and Note 13 of Notes to Consolidated Financial Statements included elsewhere in this Annual 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
Our cloud and license business which represented 86 and 84 of our total revenues in fiscal 2025 and 2024 respectively 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 43 37 and 32 of our total revenues during fiscal 2025 2024 and 2023 respectively
Our cloud and license business revenue growth is affected by many factors including the strength of general economic and business conditions including the effects of inflation tariffs and trade policy geopolitical conditions and other macroeconomic factors on customer demand 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
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 which 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 which 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 Our margin for this business may be adversely impacted due to increases in supply chain and energy costs the impact of tariffs and trade policy and other factors
Our hardware business which represented 5 and 6 of our total revenues in fiscal 2025 and 2024 respectively 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
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 and cost effectively manufacture or deliver a few large hardware transactions our strategy for and the pricing and 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 including the effects of inflation tariffs and trade policy geopolitical conditions and other macroeconomic factors on customer demand 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 the effect of tariffs and other trade barriers on our costs and our ability to pass such costs on to customers the geographic locations of our customers 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
Our services business which represented 9 and 10 of our total revenues in fiscal 2025 and 2024 respectively 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
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
From time to time since 2017 we have made investments in 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 6 billion and 1 5 billion as of May 31 2025 and 2024 respectively
Our equity investments in Ampere represent an ownership interest of approximately 29 as of May 31 2025 and 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 fiscal year ended May 31 2025 we invested an aggregate of 341 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 500 million to 1 5 billion respectively to acquire additional equity interests in Ampere from our co investors through January 2027
On March 19 2025 SoftBank Group Corp announced that it had entered into an agreement with Ampere and its equity holders to acquire all of the equity interests of Ampere The transaction is subject to customary closing conditions including regulatory approvals When the Ampere Acquisition closes we will cease to be an investor in Ampere During the period prior to the closing of the Ampere Acquisition the amount of our investments in Ampere could increase for a variety of reasons and we will continue to recognize our share of loss in Ampere s net earnings until the closure of the acquisition
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 disclosures 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 income taxes and non marketable investments Refer to Note 1 of Notes to Consolidated Financial Statements included elsewhere in this Annual Report for more discussion of our significant accounting policies
Judgment is required in determining our worldwide income tax provision In the ordinary course of a global business there are many transactions and calculations where the ultimate tax outcome is uncertain Some of these uncertainties arise as a consequence of revenue sharing and cost reimbursement arrangements among related entities the process of identifying items of revenues and expenses that qualify for preferential tax treatment and the segregation of foreign and domestic earnings and expenses to avoid double taxation Although we believe that our estimates are reasonable the final tax outcome of these matters could be different from that which is reflected in our historical income tax provisions and accruals Such differences could have a material effect on our income tax provision and net income in the period in which such determination is made
We record a valuation allowance to reduce our deferred tax assets to the amount that is more likely than not to be realized In order for us to realize our deferred tax assets we must be able to generate sufficient taxable income in those jurisdictions where the deferred tax assets are located We consider future growth forecasted earnings future taxable income the mix of earnings in the jurisdictions in which we operate historical earnings taxable income in prior years if carryback is permitted under the law and prudent and feasible tax planning strategies in determining the need for a valuation allowance In the event we were to determine that we would not be able to realize all or part of our net deferred tax assets in the future an adjustment to the deferred tax assets valuation allowance would be charged to earnings in the period in which we make such a determination or goodwill would be adjusted at our final determination of the valuation allowance related to an acquisition within the measurement period If we later determine that it is more likely than not that the net deferred tax assets would be realized we would reverse the applicable portion of the previously provided valuation allowance as an adjustment to our provision for income taxes at such time
We calculate our current and deferred tax provision based on estimates and assumptions that could differ from the actual results reflected in income tax returns filed during the subsequent year Adjustments based on filed returns are generally recorded in the period when the global tax implications are known which can materially impact our effective tax rate
We account for uncertain tax issues pursuant to the Financial Accounting Standards Board s Accounting Standards Codification ASC 740 Income Taxes which contains a two step approach to recognizing and measuring uncertain tax positions taken or expected to be taken in a tax return The first step is to determine if the weight of available evidence indicates that it is more likely than not that the tax position will be sustained in an audit including resolution of any related appeals or litigation processes The second step is to measure the tax benefit as the largest amount that is more than 50 likely to be realized upon ultimate settlement Although we believe that we have adequately reserved for our uncertain tax positions no assurance can be given with respect to the final outcome of these matters We adjust reserves for our uncertain tax positions due to changing facts and circumstances such as the closing of a tax audit judicial rulings and refinement of estimates or realization of earnings or deductions that differ from our estimates To the extent that the final outcome of these matters is different than the amounts recorded such differences generally will impact our provision for income taxes in the period in which such a determination is made Our provisions for income taxes include the impact of reserve provisions and changes to reserves that are considered appropriate and also include the related interest and penalties
We assess our non marketable debt and equity investments for credit losses and impairment on a quarterly basis and as facts and circumstances change Our analysis includes an assessment of various qualitative and quantitative factors including the investee s historical financial results current financial projections rate of cash usage and assumptions regarding product acceptance and opportunity within the market This analysis requires significant judgment in evaluating underlying factors In some instances investee specific information available to us to make this assessment may be limited or may be available on a delayed basis If the investment is determined to be impaired we adjust the carrying amount of such investment to its estimated fair value by recognizing a charge which is included in non operating income expenses net in our consolidated statements of operations Estimating the fair value of an investment upon impairment involves a significant level of estimation uncertainty and judgment We may incur future losses due to impairments which could have a material impact on our results of operations and financial position
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 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 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 13 of Notes to Consolidated Financial Statements included elsewhere in this Annual 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 consolidated statements of operations for fiscal 2025 and 2024
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 Annual 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 May 31 2025 and 2024 our financial statements would reflect reported revenues of 1 13 million in fiscal 2025 using 1 13 as the applicable average exchange rate for the period and 1 09 million in fiscal 2024 using 1 09 as the applicable average exchange rate for the period The constant currency presentation however would translate the fiscal 2025 results using the fiscal 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 increased by 4 4 billion in reported currency in fiscal 2025 relative to fiscal 2024 due to a 4 8 billion increase in cloud and license revenues partially offset by a 198 million decrease in services revenues and a 130 million decrease in hardware revenues in each case during fiscal 2025 relative to fiscal 2024 Excluding the unfavorable effects of foreign currency rate fluctuations of 1 in fiscal 2025 on total revenues the constant currency increase in our cloud and license business revenues 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 In constant currency applications cloud services and license support and infrastructure cloud services and license support contributed 26 and 74 respectively of the growth in cloud services and license support revenues in fiscal 2025 In our hardware business the constant currency decrease in revenues in 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 fiscal 2025 was attributable to a decrease in revenues from each of our primary services offerings The Americas the EMEA and the Asia Pacific regions contributed 74 19 and 7 respectively to the constant currency total revenue growth during fiscal 2025
Total GAAP operating expenses increased by 2 1 billion in reported currency in fiscal 2025 relative to fiscal 2024 The increase in GAAP operating expenses in reported currency during fiscal 2025 relative to fiscal 2024 was primarily due to a 2 1 billion increase in cloud services and license support expenses primarily due to higher infrastructure expenses and higher employee related expenses including higher expenses relating to stock based compensation that were incurred to support the growth in our cloud services revenues a 945 million increase in research and development expenses primarily due to an 813 million increase in employee related expenses including higher stock based compensation expenses and a 112 million increase in infrastructure expenses a 377 million increase in sales and marketing expenses and a 54 million increase in general and administrative expenses primarily due to higher employee related expenses including higher stock based compensation expenses These increases in GAAP operating expenses in reported currency during fiscal 2025 relative to fiscal 2024 were partially offset by a 703 million decrease in expenses for the amortization of intangible assets as certain of our assets were fully amortized a 249 million decrease in services expenses primarily due to decreases in external contractor and employee related expenses a 239 million decrease in acquisition related and other expenses due to lower asset impairment and litigation related charges a 109 million decrease in hardware expenses due to lower hardware product and support costs and a 105 million decrease in restructuring expenses
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 and include 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
Our cloud and license business total revenues increased by 4 8 billion in reported currency in fiscal 2025 relative to fiscal 2024 primarily due to a 4 7 billion increase in cloud services revenues as customers purchased our applications and infrastructure technologies and renewed their related cloud contracts and a 120 million increase in cloud license and on premise license revenues These increases were partially offset by an 86 million decrease in license support revenues in fiscal 2025 relative to fiscal 2024 In constant currency applications cloud services and license support and infrastructure cloud services and license support contributed 26 and 74 respectively of the growth in cloud services and license support revenues in fiscal 2025 The Americas the EMEA and the Asia Pacific regions contributed 75 19 and 6 respectively to the constant currency revenue growth for this business during fiscal 2025
Total cloud and license business expenses increased by 2 4 billion in reported currency in fiscal 2025 relative to fiscal 2024 Excluding the favorable effects of currency rate fluctuations of less than 1 in fiscal 2025 the constant currency increase in expenses in fiscal 2025 relative to fiscal 2024 was primarily due to a 1 6 billion increase in infrastructure expenses a 359 million increase in employee related expenses for employees engaged in cloud services delivery and a 350 million increase in sales and marketing 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 2026 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 fiscal 2025 relative to fiscal 2024 due to increases in total revenues for this business Total margin as a percentage of revenues in constant currency decreased in fiscal 2025 relative to fiscal 2024 due to an increase in total expenses for this 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
Total hardware revenues decreased by 130 million in reported currency in fiscal 2025 relative to fiscal 2024 Excluding the unfavorable impact of currency rate fluctuations of less than 1 in fiscal 2025 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 declines in all regions in fiscal 2025
Total hardware expenses decreased by 133 million in reported currency in fiscal 2025 relative to fiscal 2024 The decrease in hardware expenses aligned with lower hardware revenues Excluding the favorable currency rate fluctuations effect of 1 in fiscal 2025 the constant currency decrease in hardware expenses during fiscal 2025 relative to fiscal 2024 was due to a 106 million decrease in hardware product and support costs and an 18 million decrease in sales and marketing expenses
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
Total services revenues decreased by 198 million in reported currency in fiscal 2025 relative to fiscal 2024 Excluding the effects of unfavorable currency rate fluctuations of 1 in fiscal 2025 the decrease in total services revenues in fiscal 2025 relative to fiscal 2024 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 a constant currency increase in services revenues in the EMEA and the Asia Pacific regions in fiscal 2025
Total services expenses decreased by 275 million in reported currency in fiscal 2025 relative to fiscal 2024 Excluding the favorable effects of currency rate fluctuations of less than 1 in fiscal 2025 the constant currency decrease in services expenses in fiscal 2025 relative to fiscal 2024 was primarily due to a 158 million decrease in external contractor expenses and an 81 million decrease in employee related expenses
Total research and development expenses increased by 945 million in reported currency in fiscal 2025 relative to fiscal 2024 Excluding the favorable effects of currency rate fluctuations of less than 1 in fiscal 2025 the increase in research and development expenses was primarily due to an increase in employee related expenses including higher stock based compensation expenses
Total general and administrative expenses increased by 54 million in reported currency in fiscal 2025 relative to fiscal 2024 Excluding the favorable effects of currency rate fluctuations of 1 in fiscal 2025 the increase in general and administrative expenses was primarily due to higher stock based compensation expenses
Amortization of Intangible Assets Substantially all 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 5 of Notes to Consolidated Financial Statements included elsewhere in this Annual Report for additional information regarding our intangible assets and related amortization
Acquisition related and other expenses decreased by 239 million in reported currency in fiscal 2025 relative to fiscal 2024 due to a 209 million decrease in other expenses related to certain asset impairment and litigation related charges and a 30 million total decrease in transitional and other employee related costs and business combination adjustments net
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 7 of Notes to Consolidated Financial Statements included elsewhere in this Annual Report
Restructuring expenses in fiscal 2025 and 2024 primarily related to the 2024 Restructuring Plan which is substantially complete 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
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 marketable and non marketable 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
Our non operating income expenses net increased by 158 million in reported currency in fiscal 2025 relative to fiscal 2024 primarily due to a 127 million increase in interest income an 81 million decrease in foreign currency losses and a 25 million decrease in losses from marketable and non marketable investments These contributors to the increase in non operating income expenses net were partially offset by a 77 million decrease in other income net which was primarily attributable to lower gains associated with an investment portfolio that we held for our employee deferred compensation plan and for which an equal and offsetting amount was recorded to our operating expenses during the same period
Provision for Income Taxes Our effective income tax rates for each of the periods presented were the result of the mix of income earned and losses incurred in various tax jurisdictions that apply a broad range of income tax rates Refer to Note 12 of Notes to Consolidated Financial Statements included elsewhere in this Annual 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
Provision for income taxes increased in fiscal 2025 relative to fiscal 2024 primarily due to an unfavorable jurisdictional mix of earnings of 380 million the absence of the realization of a one time tax attribute of 238 million higher income before provision for income taxes of 195 million and the absence of the revaluation benefit of net deferred tax assets due to a change in tax rate of 105 million partially offset by a combination of the absence of changes in unrecognized tax benefits of 233 million and an increase in tax benefits related to stock based compensation of 223 million
Working capital The increase in working capital as of May 31 2025 in comparison to May 31 2024 was primarily due to favorable impacts from net income and proceeds from the issuance of senior notes net of issuance costs of 13 9 billion refer to Note 6 of Notes to Consolidated Financial Statements included elsewhere in this Annual Report for additional information during fiscal 2025 This increase was partially offset by 21 2 billion of cash used for capital expenditures 4 9 billion of long term borrowings that were reclassified to current liabilities 4 7 billion of cash used to pay dividends to our stockholders 600 million of cash used for repurchases of our common stock 294 million of cash used for purchases net of sales and maturities of non current investments and 247 million of net cash used for our employee stock programs during 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 primarily of time deposits with original maturities at the time of purchase greater than 90 days The increase in cash cash equivalents and marketable securities as of May 31 2025 in comparison to May 31 2024 was primarily due to cash inflows from our operations proceeds from the issuance of senior notes net of issuance
costs of 13 9 billion and the issuance of commercial paper net of repayments of 1 9 billion during fiscal 2025 refer to Note 6 of Notes to Consolidated Financial Statements included elsewhere in this Annual Report for additional information and 1 1 billion of cash inflows from other financing activities net This increase was partially offset by 21 2 billion of cash used for capital expenditures 10 2 billion of cash used for scheduled repayments of borrowings 4 7 billion of cash used to pay dividends to our stockholders 600 million of cash used for repurchases of our common stock 496 million of cash used for purchases net of sales and maturities of investments and 247 million of net cash used for our employee stock programs during fiscal 2025 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
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
Cash flows from investing activities The changes in cash flows from investing activities primarily relate to our investments in capital assets primarily to support the growth in our cloud and license business and acquisitions purchases maturities and sales of our investments in marketable securities and other instruments
Net cash provided by financing activities was 1 1 billion in fiscal 2025 compared to the net cash used for financing activities of 10 6 billion in fiscal 2024 The increase in net cash provided by financing activities in fiscal 2025 relative to fiscal 2024 was primarily due to proceeds from the issuance of senior notes net of issuance costs of 13 9 billion higher issuances of commercial paper notes of 2 1 billion net of repayments lower net cash used for our employee stock programs of 1 1 billion higher net cash provided by other financing activities of 1 1 billion and lower net cash used for repurchases of common stock of 602 million These increases were partially offset by higher scheduled repayments of borrowings of 6 7 billion and higher dividend payments of 352 million Further during fiscal 2025 we refinanced our term loan credit agreement that we entered into in fiscal 2023 Term Loan Credit Agreement which 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
Cash Dividends In fiscal 2025 we declared and paid aggregate cash dividends of 1 70 per share of outstanding common stock that totaled 4 7 billion In June 2025 our Board declared a quarterly cash dividend of 0 50 per share of our outstanding common stock payable on July 24 2025 to stockholders of record as of the close of business on July 10 2025 Future declarations of dividends and the establishment of future record and payment dates are subject to the final determination of our Board
Term Loan Credit Agreements On June 10 2024 we terminated the Term Loan Credit Agreement 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 2 executed on the same date In fiscal 2025 we made scheduled repayments totaling 211 million of the Term Loan Credit Agreement 2 Refer to Note 6 of Notes to Consolidated Financial Statements included elsewhere in this Annual Report for additional details about our borrowings including the repayment terms of the Term Loan Credit Agreement 2 Any remaining unpaid principal balance under the Term Loan Credit Agreement 2 will become fully due and payable on August 16 2027 unless the termination date of the Term Loan Credit Agreement 2 is extended
We issued the senior notes to repay all or a portion of senior notes due between November 2024 and July 2026 and to pay accrued interest and any related premiums fees and expenses in connection therewith to make scheduled payments of principal and interest on borrowings under our Term Loan Credit Agreement 2 to repay all or a portion of commercial paper notes outstanding and to use any remaining net proceeds from the borrowing for general corporate purposes which may include stock repurchases payment of cash dividends on our common stock repayment of other indebtedness and future acquisitions Refer to Note 6 of Notes to Consolidated Financial Statements included elsewhere in this Annual Report for additional information
Common Stock Repurchase Program Our Board has approved a program for us to repurchase shares of our common stock As of May 31 2025 approximately 6 4 billion remained available for stock repurchases pursuant to our stock repurchase program We repurchased 3 9 million shares for 600 million 10 6 million shares for 1 2 billion and 17 0 million shares for 1 3 billion in fiscal 2025 2024 and 2023 respectively 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
In addition as of May 31 2025 we had 12 0 billion of gross unrecognized income tax benefits including related interest and penalties recorded on our consolidated balance sheet the nature of which is uncertain with respect to settlement or release with the relevant tax authorities although we believe it is reasonably possible that certain of these liabilities could be settled or released during fiscal 2026 We are involved in claims and legal proceedings which are inherently uncertain with respect to outcomes estimates and assumptions that we make as of each reporting period are inherently unpredictable and many aspects are out of our control Notes 6 9 12 and 15 of Notes to Consolidated Financial Statements included elsewhere in this Annual Report include additional information regarding our most material contractual obligations and contingencies
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
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 2022 has been an annualized rate of 1 7 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 May 31 2025 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 partially 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 May 31 2025 the maximum potential dilution from all outstanding stock based awards regardless of when granted and regardless of whether vested or unvested was 5 6
During fiscal 2025 the Compensation Committee reviewed and approved the annual organization wide stock based award grants to selected employees all stock based award grants to senior officers and any individual grant of RSUs with a value of 5 million or greater Each member of a separate executive officer committee referred to as the Plan Committee was allocated a fiscal 2025 equity budget that could be used throughout the fiscal year to grant equity subject to certain limitations established by the Compensation Committee
Our non marketable equity and convertible debt investments totaled 2 1 billion and 2 0 billion as of May 31 2025 and 2024 respectively Our non marketable equity investments in privately owned companies not accounted for under the equity method are adjusted to fair value for observable transactions for identical or similar investments of the same issuer or for impairment Our investments accounted for under the equity method generally do not fluctuate based on market price changes However these investments could be impaired if the carrying value exceeds the fair value and is not expected to recover The timing and amounts of changes in fair values of our non marketable equity investments depend on factors beyond our control including the perceived and actual performance of the companies in which we invest For additional disclosure regarding the impact to our quarterly results of operations from investment volatility please refer to Item 1A Risk Factors included elsewhere in this
As described under Constant Currency Presentation above our international operations have provided and are expected to continue to provide a significant portion of our consolidated revenues and expenses that we report in U S Dollars As a result our consolidated revenues and expenses are affected and will continue to be affected by changes in the U S Dollar against major foreign currencies Fluctuations in foreign currencies impact the amount of total assets liabilities earnings and cash flows that we report for our foreign subsidiaries upon the translation of these amounts into U S Dollars for and as of the end of each reporting period For example the strengthening of the U S Dollar will reduce the reported amount of our foreign subsidiaries cash cash equivalents trade receivables deferred revenues current and non current liabilities total revenues and total expenses that we translate into U S Dollars and report in our consolidated financial statements for and as of the end of each reporting period
We transact business in various foreign currencies Our foreign currency exposures primarily arise from various intercompany transactions Our principal currency exposures include the Australian Dollar Brazilian Real British Pound Euro Indian Rupee Japanese Yen and Saudi Riyal We have established a program that primarily utilizes foreign currency forward contracts to partially offset the risks that arise from the aforementioned transactions Under this program our strategy is to enter into foreign currency forward contracts for currencies in which we have significant exposure so that increases or decreases in our foreign currency exposures are offset by gains or losses on the foreign currency forward contracts which mitigate the risks and volatility associated with our foreign currency transactions We may suspend this program from time to time Our foreign currency forward contracts are generally short term in duration and we do not use them for trading purposes
Realized gains or losses with respect to our foreign currency exposures net of gains or losses from our foreign currency forward contracts including costs incurred to enter into these foreign currency forward contracts are included in non operating income expenses net in our consolidated financial statements Our ultimate realized gain or loss with respect to foreign currency exposures will generally depend on the size and type of cross currency transactions that we enter into the currency exchange rates associated with these exposures and changes in those rates the net realized gain or loss on our foreign currency forward contracts and other factors Furthermore as a large portion of our consolidated operations are international we could experience additional foreign currency volatility in the future in which the amounts and timing are unknown Refer to Note 1 of Notes to Consolidated Financial Statements included elsewhere in this Annual Report for additional details about our foreign currency forward contracts
The following table sets forth the hypothetical potential losses that we consider to be the most material to the reported fair values and or future earnings of our foreign currency influenced holdings prior to any income tax effects resulting from hypothetical changes in relevant market rates as of or for the reporting periods below
As of the end of the period covered by this Annual Report on Form 10 K we carried out an evaluation under the supervision and with the participation of our Disclosure Committee and our management including our Principal Executive and Financial Officer of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rules 13a 15 e and 15d 15 e
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 report our Principal Executive and Financial Officer has concluded that our disclosure controls and procedures were effective as of May 31 2025 to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is i recorded processed summarized and reported within the time periods specified in the SEC rules and forms and ii accumulated and communicated to our management including our Principal Executive and Financial Officer as appropriate to allow timely decisions regarding required disclosure
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Exchange Act Rules 13a 15 f and 15d 15 f Under the supervision and with the participation of our management including our Principal Executive and Financial Officer we conducted an evaluation of the effectiveness of our internal control over financial reporting as of May 31 2025 based on the guidelines established in Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission s 2013 framework Our internal control over financial reporting includes policies and procedures that provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with U S GAAP
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
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
We have audited the accompanying consolidated balance sheets of Oracle Corporation the Company as of May 31 2025 and 2024 the related consolidated statements of operations comprehensive income stockholders equity and cash flows for each of the three years in the period ended May 31 2025 and the related notes collectively referred to as the consolidated financial statements In our opinion the consolidated financial statements present fairly in all material respects the financial position of the Company at May 31 2025 and 2024 and the results of its operations and its cash flows for each of the three years in the period ended May 31 2025 in conformity with U S generally accepted accounting principles
We also have audited in accordance with the standards of the Public Company Accounting Oversight Board United States PCAOB the Company s internal control over financial reporting as of May 31 2025 based on criteria established in Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission 2013 framework and our report dated June 18 2025 expressed an unqualified opinion thereon
These financial statements are the responsibility of the Company s management Our responsibility is to express an opinion on the Company s financial statements based on our audits We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U S federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB
We conducted our audits in accordance with the standards of the PCAOB Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement whether due to error or fraud Our audits included performing procedures to assess the risks of material misstatement of the financial statements whether due to error or fraud and performing procedures that respond to those risks Such procedures included examining on a test basis evidence regarding the amounts and disclosures in the financial statements Our audits also included evaluating the accounting principles used and significant estimates made by management as well as evaluating the overall presentation of the financial statements We believe that our audits provide a reasonable basis for our opinion
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that 1 relates to accounts or disclosures that are material to the financial statements and 2 involved our especially challenging subjective or complex judgments The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements taken as a whole and we are not by communicating the critical audit matter below providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates
As discussed in Note 12 of the consolidated financial statements the Company recognizes uncertain tax positions and measures unrecognized tax benefits related to various domestic and foreign matters The Company uses significant judgment in the accounting for uncertain tax positions related to certain intercompany transfer prices and calculations including the interpretation and application of tax laws and legal rulings in various jurisdictions
We obtained an understanding evaluated the design and tested the operating effectiveness of the controls over management s process to assess the technical merits of the Company s tax positions related to certain intercompany transfer prices and calculations including ongoing monitoring activities and management s process to measure the benefit of those tax positions
To test management s assessment of these uncertain tax positions we performed audit procedures that included among others evaluating management s assumptions and analysis which detailed the basis and technical merits of the uncertain tax positions We involved our tax subject matter professionals in assessing the technical merits of these positions and used our knowledge of relevant tax laws and experience with related taxing authorities
We have audited Oracle Corporation s internal control over financial reporting as of May 31 2025 based on criteria established in Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission 2013 framework the COSO criteria In our opinion Oracle Corporation the Company maintained in all material respects effective internal control over financial reporting as of May 31 2025 based on the COSO criteria
We also have audited in accordance with the standards of the Public Company Accounting Oversight Board United States PCAOB the consolidated balance sheets of the Company as of May 31 2025 and 2024 the related consolidated statements of operations comprehensive income stockholders equity and cash flows for each of the three years in the period ended May 31 2025 and the related notes and our report dated June 18 2025 expressed an unqualified opinion thereon
The Company s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management s Report on Internal Control over Financial Reporting Our responsibility is to express an opinion on the Company s internal control over financial reporting based on our audit We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U S federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB
Our audit included obtaining an understanding of internal control over financial reporting assessing the risk that a material weakness exists testing and evaluating the design and operating effectiveness of internal control based on the assessed risk and performing such other procedures as we considered necessary in the circumstances We believe that our audit provides a reasonable basis for our opinion
A company s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles A company s internal control over financial reporting includes those policies and procedures that 1 pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company 2 provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company and 3 provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition use or disposition of the company s assets that could have a material effect on the financial statements
Because of its inherent limitations internal control over financial reporting may not prevent or detect misstatements Also projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate
Oracle Corporation provides products and services that substantially address enterprise information technology IT needs including applications and infrastructure technologies We deliver our products and services to customers worldwide through a variety of flexible and interoperable IT deployment models These models include on premise cloud based and hybrid deployments Oracle Cloud Applications and Oracle Cloud Infrastructure collectively Oracle Cloud Services offerings provide comprehensive and integrated applications and infrastructure services enabling our customers to choose the best option that meets their specific business needs Customers may also elect to purchase Oracle software licenses and hardware products and related services to manage their own cloud based or on premise IT environments Customers that purchase our software licenses may elect to purchase license support contracts which provide our customers with rights to unspecified license upgrades and enhancements during the term of the support period as well as technical support assistance Customers that purchase our hardware products may elect to purchase hardware support contracts which provide customers with software updates and can include product repairs maintenance services and technical support services We also offer customers a broad set of services offerings that are designed to improve customer utilization of their investments in Oracle applications and infrastructure technologies
The consolidated financial statements include our accounts and the accounts of our wholly and majority owned subsidiaries Noncontrolling interest positions of certain of our consolidated entities are reported as a separate component of consolidated equity from the equity attributable to Oracle s stockholders for all periods presented The noncontrolling interests in our net income were not significant to our consolidated results for the periods presented and therefore have not been presented separately and instead are included as a component of non operating income expenses net in our consolidated statements of operations Intercompany transactions and balances have been eliminated Certain prior year balances have been reclassified to conform to the current year presentation Such reclassifications did not affect revenue income from operations or net income
Our consolidated financial statements are prepared in accordance with United States U S generally accepted accounting principles GAAP as set forth in the Financial Accounting Standards Board s FASB Accounting Standards Codification ASC and we consider various staff accounting bulletins and other applicable guidance issued by the U S Securities and Exchange Commission These accounting principles require us to make certain estimates judgments and assumptions 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 These estimates judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented To the extent that there are differences between these estimates judgments or assumptions and actual results our consolidated financial statements will be affected In many cases the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require management s judgment in its application There are also areas in which management s judgment in selecting among available alternatives would not produce a materially different result
During the first quarter of fiscal 2025 we completed an assessment of the useful lives of our servers and networking equipment and increased the estimate of the useful lives from five years to six years effective at the beginning of fiscal 2025 Based on the carrying value of our servers and networking equipment as of May 31 2024 this change in accounting estimate decreased our total operating expenses by 733 million and increased our net income by 573 million or 0 21 per basic and 0 20 per diluted share during fiscal 2025
During the first quarter of fiscal 2023 we completed an assessment of the useful lives of our servers and increased the estimate of the useful lives from four years to five years effective at the beginning of fiscal 2023 Based on the carrying value of our servers as of May 31 2022 this change in accounting estimate decreased our total operating expenses by 434 million during fiscal 2023
Cloud services revenues include revenues from Oracle Cloud Services offerings which deliver applications and infrastructure technologies via cloud based deployment models that we develop functionality for provide unspecified updates and enhancements for deploy host manage upgrade and support and that customers access by entering into a subscription agreement with us for a stated period
Cloud license and on premise license revenues primarily represent amounts earned from granting customers perpetual licenses to use our database middleware application and industry specific software products which our customers use for cloud based on premise and other IT environments The vast majority of our cloud license and on premise license arrangements include license support contracts which are entered into at the customer s option
License support revenues are typically generated through the sale of license support contracts related to cloud license and on premise licenses purchased by our customers at their option License support contracts provide customers with rights to unspecified software product upgrades maintenance releases and patches released during the term of the support period and include internet access to technical content as well as internet and telephone access to technical support personnel License support contracts are generally priced as a percentage of the net cloud license and on premise license fees Substantially all of our customers elect to purchase and renew their license support contracts annually
Revenues from the sale of hardware products represent amounts earned primarily from the sale of our Oracle Engineered Systems computer servers storage and industry specific hardware Our hardware support offerings generally provide customers with software updates for the software components that are essential to the functionality of the hardware products purchased and can also include product repairs maintenance services and technical support services Hardware support contracts are generally priced as a percentage of the net hardware products fees
Our services are offered to customers as standalone arrangements or as a part of arrangements to customers buying other products and services Our consulting services are designed to help our customers to among others deploy architect integrate upgrade and secure their investments in Oracle applications and infrastructure technologies Our advanced customer services are designed to provide supplemental support services performance services and higher availability for Oracle products and services
We apply the provisions of ASC 606 Revenue from Contracts with Customers ASC 606 as a single standard for revenue recognition that applies to all of our cloud license hardware and services arrangements and generally require revenues to be recognized upon the transfer of control of promised goods or services provided to our customers reflecting the amount of consideration we expect to receive for those goods or services Pursuant to ASC 606 revenues are recognized upon the application of the following steps
The timing of revenue recognition may differ from the timing of invoicing to our customers We record an unbilled receivable which is included within accounts receivable on our consolidated balance sheets when revenue is recognized prior to invoicing We record deferred revenues on our consolidated balance sheets when revenues are to be recognized subsequent to cash collection for an invoice Our standard payment terms are generally net 30 days but may vary Invoices for cloud license and on premise licenses and hardware products are generally issued when the license is made available for customer use or upon delivery to the customer of the hardware product Invoices for license support and hardware support contracts are generally invoiced annually in advance Cloud applications and cloud infrastructure contracts are generally invoiced annually quarterly or monthly in advance Services are generally invoiced in advance or as the services are performed Most contracts that contain a financing component are contracts financed through our Oracle financing division The transaction price for a contract that is financed through our Oracle financing division is adjusted to reflect the time value of money and interest revenue is recorded as a component of non operating income expenses net within our consolidated statements of operations based on market rates in the country in which the transaction is being financed
Our revenue arrangements generally include standard warranty or service level provisions that our arrangements will perform and operate in all material respects as defined in the respective agreements the financial impacts of which have historically been and are expected to continue to be insignificant Our arrangements generally do not include a general right of return relative to the delivered products or services We recognize revenues net of any taxes collected from customers which are subsequently remitted to governmental authorities
Revenues from cloud services provided on a subscription basis are generally recognized ratably over the contractual period that the cloud services are delivered beginning on the date our service is made available to a customer We recognize revenue ratably because the customer receives and consumes the benefits of the cloud services throughout the contract period Revenues from cloud services that are provided on a consumption basis such as metered services are generally recognized based on the utilization of the services by the customer
Oracle s primary performance obligations with respect to license support contracts and hardware support contracts are to provide customers with technical support as needed and unspecified software product upgrades maintenance releases and patches during the term of the support period if and when they are available and hardware product repairs as applicable Oracle is obligated to make the license and hardware support services available continuously throughout the contract period Therefore revenues for license support contracts and hardware support contracts are generally recognized ratably over the contractual periods that the support services are provided
Revenues from distinct cloud license and on premise license performance obligations are generally recognized upfront at the point in time when the software is made available to the customer to download and use Revenues from usage based royalty arrangements for distinct cloud licenses and on premise licenses are recognized at the point in time when the software end user usage occurs For usage based royalty arrangements with a fixed minimum guarantee amount the minimum amount is generally recognized upfront when the software is made available to the royalty customer
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 and ownership is transferred to the customer
Services revenues are generally recognized over time as the services are performed Revenues for fixed price services are generally recognized over time applying input methods to estimate progress to completion Revenues for consumption based services are generally recognized as the services are performed
Many of our contracts include multiple performance obligations Judgment is required in determining whether each performance obligation is distinct Oracle products and services generally do not require a significant amount of integration or interdependency therefore our products and services are generally not combined We allocate the transaction price for each contract to each performance obligation based on the relative standalone selling price SSP for each performance obligation within each contract
We use judgment in determining the SSP for products and services For substantially all performance obligations except cloud licenses and on premise licenses we are able to establish the SSP based on the observable prices of products or services sold separately in comparable circumstances to similar customers We typically establish an SSP range for our products and services which is reassessed on a periodic basis or when facts and circumstances change Our cloud licenses and on premise licenses have not historically been sold on a standalone basis as the vast majority of all customers elect to purchase license support contracts at the time of a cloud license and on premise license purchase License support contracts are generally priced as a percentage of the net fees paid by the customer to access the license We are unable to establish the SSP for our cloud licenses and on premise licenses based on observable prices given the same products are sold for a broad range of amounts that is the selling price is highly variable and a representative SSP is not discernible from past transactions or other observable evidence As a result the SSP for a cloud license and an on premise license included in a contract with multiple performance obligations is generally determined by applying a residual approach whereby all other performance obligations within a contract are first allocated a portion of the transaction price based upon their respective SSPs with any residual amount of transaction price allocated to cloud license and on premise license revenues
Trade receivables net of allowance for credit losses and deferred revenues are reported net of related uncollected deferred revenues in our consolidated balance sheets as of May 31 2025 and 2024 The revenues recognized during the year ended May 31 2025 and 2024 that were included in the opening deferred revenues balances as of May 31 2024 and 2023 were approximately 9 3 billion and 9 0 billion respectively Revenues recognized from performance obligations satisfied in prior periods and impairment losses recognized on our receivables were immaterial during each year ended May 31 2025 2024 and 2023
Remaining performance obligations represent contracted revenues that had not yet been recognized and include deferred revenues invoices that have been issued to customers but were uncollected and have not been recognized as revenues and amounts that will be invoiced and recognized as revenues in future periods We have elected the optional exemption to not disclose the variable consideration for contracts in which the variable consideration expected to be received over the duration of the contract is allocated entirely to the wholly unsatisfied performance obligations The volumes and amounts of customer contracts that we book and total revenues that we recognize are impacted by a variety of seasonal factors and the timing of booking of large contracts In each fiscal year the amounts and volumes of contracting activity other than the impact of booking of large contracts and our total revenues are typically highest in our fourth fiscal quarter and lowest in our first fiscal quarter These seasonal impacts and the timing of booking of large contracts influence how our remaining performance obligations change over time and combined with foreign exchange rate fluctuations and other factors influence the amount of remaining performance obligations that we report at a point in time As of May 31 2025 our remaining performance obligations were 137 8 billion of which we expect to recognize approximately 33 as revenues over the next twelve months 41 over the subsequent month 13 to month 36 23 over the subsequent month 37 to month 60 and the remainder thereafter
We offer certain of our customers the option to acquire certain of our cloud and license hardware and services offerings through separate long term payment contracts We generally sell these contracts that we have financed for our customers on a non recourse basis to financial institutions within 90 days of the contracts dates of execution We record the transfers of amounts due from customers to financial institutions as sales of financing receivables because we are considered to have surrendered control of these financing receivables During fiscal 2025 2024 and 2023 1 6 billion 1 4 billion and 2 0 billion respectively of our financing receivables were sold to financial institutions
We apply the provisions of ASC 805 Business Combinations ASC 805 in accounting for our acquisitions ASC 805 requires that we evaluate whether a transaction pertains to an acquisition of assets or to an acquisition of a business A business is defined as an integrated set of assets and activities that is capable of being conducted and managed for the purpose of providing a return to investors Asset acquisitions are accounted for by allocating the cost of the acquisition to the individual assets and liabilities assumed on a relative fair value basis whereas the acquisition of a business requires us to recognize goodwill separately from the assets acquired and the liabilities assumed at the acquisition date fair values Goodwill as of the business acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed While we use our best estimates and assumptions to accurately value assets acquired and liabilities assumed at the business acquisition date as well as any contingent consideration where applicable our estimates are inherently uncertain and subject to refinement As a result during the measurement period which may be up to one year from the business acquisition date we record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill Upon the conclusion of a business acquisition s measurement period or final determination of the values of assets acquired or liabilities assumed whichever comes first any subsequent adjustments are recorded to our consolidated statements of operations Costs to exit or restructure certain activities of an acquired company or our internal operations are accounted for as termination and exit costs pursuant to ASC 420 Exit or Disposal Cost Obligations and are accounted for separately from the business combination A liability
For a given business acquisition we may identify certain pre acquisition contingencies as of the acquisition date and may extend our review and evaluation of these pre acquisition contingencies throughout the measurement period in order to obtain sufficient information to assess whether we include these contingencies as a part of the fair value estimates of assets acquired and liabilities assumed and if so to determine their estimated amounts If we cannot reasonably determine the fair value of a non income tax related pre acquisition contingency by the end of the measurement period which is generally the case given the nature of such matters we will recognize an asset or a liability for such pre acquisition contingency if 1 it is probable that an asset existed or a liability had been incurred at the business acquisition date and 2 the amount of the asset or liability can be reasonably estimated Subsequent to the measurement period or final determination of the net asset values for the business combination whichever comes first changes in our estimates of such contingencies will affect earnings and could have a material effect on our results of operations and financial position
In addition uncertain tax positions and tax related valuation allowances assumed in a business combination are initially estimated as of the acquisition date We reevaluate these items quarterly based upon facts and circumstances that existed as of the business acquisition date with any adjustments to our preliminary estimates being recorded to goodwill if identified within the measurement period Subsequent to the measurement period or our final determination of the tax allowance s or contingency s estimated value whichever comes first changes to these uncertain tax positions and tax related valuation allowances will affect our provision for income taxes in our consolidated statement of operations and could have a material impact on our results of operations and financial position
In accordance with ASC 320 Investments Debt Securities and based on our intentions regarding these instruments we classify substantially all of our marketable debt securities investments as available for sale We carry these securities at fair value and report the unrealized gains and losses net of taxes as a component of stockholders equity except for unrealized losses if any determined to be related to credit losses which we record within non operating income expenses net in the accompanying consolidated statements of operations We periodically evaluate our investments to determine if impairment charges are required All of our marketable debt securities investments are classified as current based on the nature of the investments and their availability for use in current operations
Investments in equity securities other than any equity method investments are generally recorded at their fair values if the fair values are readily determinable Non marketable equity securities for which the fair values are not readily determinable and where we do not have control of nor significant influence in the investee are recorded at cost less any impairment adjusted for observable price changes from orderly transactions for identical or similar investments of the same issuer with any gains or losses recorded as a component of non operating income expenses net as of and for each reporting period For investments through which we have significant influence in but not control of the investee we account for such investments pursuant to the equity method of accounting whereby we record our proportionate share of the investee s earnings or losses amortization of differences between our investment basis and underlying equity in net assets of the investee excluding the component representing goodwill and impairment if any as a component of non operating income expenses net for each reporting period
Our non marketable debt investments and equity securities and related instruments totaled 2 1 billion and 2 0 billion as of May 31 2025 and 2024 respectively and are included in other non current assets in the accompanying consolidated balance sheets and are subject to periodic credit losses and impairment reviews The majority of the non marketable debt and equity investments held as of these dates were with Ampere Computing Holdings LLC Ampere a related party entity in which we have an ownership interest of approximately 29 as of May 31 2025 and 2024 Our debt investments in Ampere are in the form of convertible debt 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 fiscal year ended May 31 2025 we invested an aggregate of 341 million in convertible debt instruments issued by Ampere We follow the equity method of accounting for our investment in Ampere and our share of loss under the equity method of accounting is recorded in the non operating income expenses net line item in our consolidated statements of operations The total carrying value of our investments in Ampere after accounting for losses under the equity method of accounting was 1 6 billion and 1 5 billion as of May 31 2025 and 2024 respectively 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 500 million to 1 5 billion respectively to acquire additional equity interests in Ampere from our co investors through January 2027 On March 19 2025 SoftBank Group Corp announced that it had entered into an agreement with Ampere and its equity holders to acquire all of the equity interests of Ampere the Ampere Acquisition The transaction is subject to customary closing conditions including regulatory approvals When the Ampere Acquisition closes we will cease to be an investor in Ampere During the period prior to the closing of the Ampere Acquisition we will continue to recognize our share of loss in Ampere s net earnings until the closure of the acquisition
We record allowances for credit losses based upon a specific review of all significant outstanding invoices For those invoices not specifically reviewed provisions are provided at differing rates based upon the age of the receivable collection history and current and expected future economic conditions We write off a receivable and charge it against its recorded allowance when we have exhausted our collection efforts without success
Financial instruments that are potentially subject to concentrations of credit risk consist primarily of cash and cash equivalents marketable securities derivatives trade receivables and non marketable investments Our cash and cash equivalents are generally held with large diverse financial institutions worldwide to reduce the amount of exposure to any single financial institution Investment policies have been implemented that limit purchases of marketable debt securities to investment grade securities Our derivative contracts are transacted with various financial institutions with high credit standings and any exposure to counterparty credit related losses in these contracts is largely mitigated with collateral security agreements that provide for collateral to be received or posted when the net fair values of these contracts fluctuate from contractually established thresholds We generally do not require collateral to secure accounts receivable The risk with respect to trade receivables is mitigated by credit evaluations we perform on our customers the short duration of our payment terms for the significant majority of our customer contracts and by the diversification of our customer base No single customer accounted for 10 or more of our total revenues in fiscal 2025 2024 or 2023 Refer to Marketable and Non Marketable Investments above for additional information on our non marketable investments
We outsource the manufacturing assembly and delivery of the substantial majority of our hardware products that we sell to our customers as well as use internally to deliver our cloud services to a variety of companies many of which are located outside the U S Further we have simplified our supply chain processes by reducing the number of third party manufacturing partners and the number of locations where these third party manufacturers build our hardware products Any inability of these third party manufacturing partners to deliver the contracted services for our hardware products could adversely impact future operating results of our cloud and license and hardware businesses
Inventories are stated at the lower of cost or net realizable value We evaluate our ending inventories for estimated excess quantities and obsolescence This evaluation includes analysis of sales levels by product and projections of future demand within specific time horizons Inventories in excess of future demand are written down and charged to hardware expenses In addition we assess the impact of changing technology to our inventories and we write down inventories that are considered obsolete At the point of loss recognition a new lower cost basis for that inventory is established and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis Inventories are included in prepaid expenses and other current assets in our consolidated balance sheets and totaled 303 million and 334 million as of May 31 2025 and 2024 respectively
Other receivables represent value added tax and sales tax receivables associated with the sale of our products and services to third parties Other receivables are included in prepaid expenses and other current assets in our consolidated balance sheets and totaled 855 million and 821 million as of May 31 2025 and 2024 respectively
We defer sales commissions earned by our sales force that are considered to be incremental and recoverable costs of obtaining a cloud license support and hardware support contract Initial sales commissions for the majority of these aforementioned contracts are generally deferred and amortized on a straight line basis over a period of benefit that we estimate to be four years We determine the period of benefit by taking into consideration the historical and expected durations of our customer contracts the expected useful lives of our technologies and other factors Sales commissions for renewal contracts relating to certain of our cloud based arrangements are generally deferred and then amortized on a straight line basis over the related contractual renewal period which is generally one to three years Amortization of deferred sales commissions is included as a component of sales and marketing expenses in our consolidated statements of operations and asset balances for deferred sales commissions are included in other current assets and other non current assets in our consolidated balance sheets
Property plant and equipment are stated at cost less accumulated depreciation Depreciation is computed using the straight line method based on estimated useful lives of the assets which range from one to 40 years Finance lease Right of Use ROU assets are amortized over the lease term Leasehold improvements are amortized over the lesser of the estimated useful lives of the improvements or the lease terms as appropriate Property plant and equipment are periodically reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable at an appropriate asset or asset group level We did not recognize any significant property impairment charges in fiscal 2025 2024 or 2023
Goodwill represents the excess of the purchase price in a business combination over the fair value of net tangible and intangible assets acquired Intangible assets that are not considered to have an indefinite useful life are itemized in Note 5 below and are amortized over their useful lives which generally range from one to 10 years At least annually we assess the useful lives of our finite lived intangible assets and may adjust the period over which these assets are amortized whenever events or changes in circumstances indicate that a shorter amortization period is more reflective of the period in which these assets contribute to our cash flows
The carrying amounts of our goodwill and intangible assets are reviewed for impairment annually and whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable When goodwill is assessed for impairment we have the option to perform an assessment of qualitative factors of impairment optional assessment prior to necessitating a quantitative impairment test Should the optional assessment be used for any given fiscal year qualitative factors considered for a reporting unit include cost factors financial performance legal regulatory contractual political business or other factors entity specific factors
industry and market considerations macroeconomic conditions and other relevant events and factors affecting the reporting unit If we determine in the qualitative assessment that it is more likely than not that the fair value of the reporting unit is less than its carrying value a quantitative test is then performed Otherwise no further testing is required For those reporting units tested using a quantitative approach we compare the fair value of each reporting unit with the carrying amount of the reporting unit including goodwill To determine the fair value of each reporting unit we utilize estimates judgments and assumptions including estimated future cash flows the reporting unit is expected to generate on a discounted basis the discount rate used as a part of the discounted cash flow analysis future economic and market conditions and market comparables of peer companies among others If as per the quantitative test the estimated fair value of the reporting unit is less than the carrying amount of the reporting unit impairment is recognized for the difference limited to the amount of goodwill recognized for the reporting unit Our most recent goodwill impairment analysis was performed on March 1 2025 and did not result in a goodwill impairment charge We did not recognize impairment charges in fiscal 2024 or 2023
Recoverability of finite lived intangible assets is evaluated by comparison of the carrying amount of the asset to the future undiscounted cash flows that are expected to be generated by the lowest level associated asset grouping Recoverability of indefinite lived intangible assets is evaluated by comparison of the carrying amount of the asset to its fair value If the asset is considered to be impaired the amount of any impairment is measured as the difference between the carrying value and the fair value of the impaired asset We did not recognize any intangible asset impairment charges in fiscal 2025 2024 or 2023
During fiscal 2025 2024 and 2023 we used derivative financial instruments to manage foreign currency and interest rate risks We do not use derivative financial instruments for trading purposes We account for these instruments in accordance with ASC 815 Derivatives and Hedging ASC 815 which requires that every derivative instrument be recorded on the balance sheet as either an asset or liability measured at its fair value as of each reporting date ASC 815 also requires that changes in our derivatives fair values be recognized in earnings unless specific hedge accounting and documentation criteria are met i e the instruments are accounted for as certain types of hedges
The accounting for changes in the fair value of a derivative depends on the intended use of the derivative and the resulting designation For a derivative instrument designated as a fair value hedge loss or gain attributable to the risk being hedged is recognized in earnings in the period of change with a corresponding earnings offset recorded to the item for which the risk is being hedged For a derivative instrument designated as a cash flow hedge during each reporting period we record the change in fair value of the derivative to accumulated other comprehensive loss AOCL in our consolidated balance sheets and the change is reclassified to earnings in the period the hedged item affects earnings
We apply the provisions of ASC 842 Leases ASC 842 in accounting for our leases Accordingly we determine if an arrangement is a lease at its inception Lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term We generally use our incremental borrowing rate based on the information available at the lease commencement date in determining the present value of future payments because the implicit rate of the lease is generally not known ROU assets related to our leases are measured at lease inception based on the initial measurement of the lease liability plus any prepaid lease payments and less any lease incentives Our lease terms that are used in determining our lease liabilities at lease inception may include options to extend or terminate the leases when it is reasonably certain that we will exercise such options For operating leases we generally recognize the lease expense on a straight line basis over the lease term and classify both the ROU assets amortization and imputed interest as operating expenses For finance leases ROU assets are amortized on a straight line basis over the lease term and are classified as operating expense and imputed interest is classified as interest expense We have lease agreements with lease and non lease components and in such cases we generally account for the components as a single lease component We do not recognize lease assets and lease liabilities for any lease with an original lease term of less than one year Abandoned operating leases are accounted for as ROU asset impairment charges pursuant to ASC 842
ROU assets related to operating and finance leases are included in other non current assets and property plant and equipment net respectively short term operating and finance lease liabilities are included in other current liabilities and long term operating and finance lease liabilities are included in operating lease liabilities and other non current liabilities respectively in our consolidated balance sheets
Cash flow movements related to operating lease activities are included in operating cash flows and those related to finance leases are included in operating cash flows for the portion related to interest and in financing cash flows for the portion related to principal in our consolidated statements of cash flows for the years ended May 31 2025 2024 and 2023 Note 9 below provides additional information regarding our leases
We are currently involved in various claims and legal proceedings Quarterly we review the status of each significant matter and assess our potential financial exposure Descriptions of our accounting policies associated with contingencies assumed as a part of a business combination are provided under Business Combinations above For legal and other contingencies that are not a part of a business combination or related to income taxes we accrue a liability for an estimated loss if the potential loss from any claim or legal proceeding is considered probable and the amount can be reasonably estimated Note 15 below provides additional information regarding certain of our legal contingencies
We transact business in various foreign currencies In general the functional currency of a foreign operation is the local country s currency Consequently revenues and expenses of operations outside the U S are translated into U S Dollars using weighted average exchange rates while assets and liabilities of operations outside the U S are translated into U S Dollars using exchange rates at the balance sheet dates The effects of foreign currency translation adjustments are included in stockholders equity as a component of AOCL in the accompanying consolidated balance sheets and related periodic movements are summarized as a line item in our consolidated statements of comprehensive income Net foreign exchange transaction losses included in non operating income expenses net in the accompanying consolidated statements of operations were 147 million 228 million and 249 million in fiscal 2025 2024 and 2023 respectively
We account for share based payments to employees including grants of service based restricted stock unit RSU awards service based employee stock options performance based stock options PSOs and purchases under employee stock purchase plans in accordance with ASC 718 Compensation Stock Compensation which requires that share based payments to the extent they are compensatory be recognized in our consolidated statements of operations based on their fair values We account for forfeitures of stock based awards as they occur
For our PSOs we recognize stock based compensation expense on a straight line basis for tranches that are probable of achievement over the longer of the a estimated implicit service period for performance metric achievement or b derived service period for market based metric achievement applicable for each tranche During our interim and annual reporting periods stock based compensation expense is recorded based on expected attainment of performance targets Changes in our estimates of the expected attainment of performance targets that result in a change in the number of shares that are expected to vest or changes in our estimates of implicit service periods may cause the amount of stock based compensation expense that we record for each interim reporting period to vary Any changes in estimates that impact our expectation of the number of shares that are expected to vest are reflected in the amount of stock based compensation expense that we recognize for each PSO tranche on a cumulative catch up basis during each interim reporting period in which such estimates are altered Changes in estimates of the implicit service periods are recognized prospectively
We record deferred tax assets for stock based compensation awards that result in deductions on certain of our income tax returns based on the amount of stock based compensation recognized in each reporting period and the fair values attributable to the vested portion of stock awards assumed in connection with a business combination at the statutory tax rates in the jurisdictions that we are able to recognize such tax deductions The impacts of the actual tax deductions for stock based awards that are realized in these jurisdictions are generally recognized in the reporting period that a restricted stock based award vests or a stock option is exercised with any shortfall windfall relative to the deferred tax asset established and recorded as a discrete detriment benefit to our provision for income taxes in such period Note 11 below provides additional information regarding our stock based compensation plans and related expenses
Research and development costs are generally expensed as incurred in accordance with ASC 730 Research and Development Software development costs required to be capitalized under ASC 985 20 Costs of Software to be Sold Leased or Marketed and under ASC 350 40 Internal Use Software were not material to our consolidated financial statements in fiscal 2025 2024 and 2023
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 marketable and non marketable 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
We account for income taxes in accordance with ASC 740 Income Taxes ASC 740 Deferred income taxes are recorded for the expected tax consequences of temporary differences between the tax bases of assets and liabilities for financial reporting purposes and amounts recognized for income tax purposes We record a valuation allowance to reduce our deferred tax assets to the amount of future tax benefit that is more likely than not to be realized
A two step approach is applied pursuant to ASC 740 in the recognition and measurement of uncertain tax positions taken or expected to be taken in a tax return The first step is to determine if the weight of available evidence indicates that it is more likely than not that the tax position will be sustained in an audit including resolution of any related appeals or litigation processes The second step is to measure the tax benefit as the largest amount that is more than 50 likely to be realized upon ultimate settlement We recognize interest and penalties related to uncertain tax positions in our provision for income taxes line of our consolidated statements of operations
Income Taxes In December 2023 the FASB issued ASU 2023 09 Income Taxes Topic 740 Improvements to Income Tax Disclosures ASU 2023 09 which enhances the disclosures required for income taxes in our annual consolidated financial statements ASU 2023 09 is effective for us for our annual reporting for fiscal 2026 on a prospective basis Both early adoption and retrospective application are permitted We are currently evaluating the impact of our pending adoption of ASU 2023 09 on our consolidated financial statements
Income Statement In November 2024 the FASB issued ASU 2024 03 Income Statement Reporting Comprehensive Income Expense Disaggregation Disclosures Subtopic 220 40 Disaggregation of Income Statement Expenses ASU 2024 03 and also issued subsequent guidance clarifying the effective date of the initial guidance collectively Subtopic 220 40 which enhances the disclosures required for expense disaggregation in our annual and interim consolidated financial statements This guidance is effective for us for our annual reporting for fiscal 2028 and for interim period reporting beginning in fiscal 2029 on a prospective basis Both early adoption and retrospective application are permitted We are currently evaluating the impact of our pending adoption of Subtopic 220 40 on our consolidated financial statements
The amortized principal amounts of our cash cash equivalents and marketable securities approximated their fair values at May 31 2025 and 2024 We use the specific identification method to determine any realized gains or losses from the sale of our marketable securities classified as available for sale Such realized gains and losses were insignificant for fiscal 2025 2024 and 2023 The following table summarizes the components of our cash equivalents and marketable securities held substantially all of which were classified as available for sale
As of May 31 2025 and 2024 all of our marketable debt securities investments mature within one year Our investment portfolio is subject to market risk due to changes in interest rates As described above we limit purchases of marketable debt securities to investment grade securities which have high credit ratings and also limit the amount of credit exposure to any one issuer As stated in our investment policy we are averse to principal loss and seek to preserve our invested funds by limiting default risk and market risk
We perform fair value measurements in accordance with ASC 820 ASC 820 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date When determining the fair value measurements for assets and liabilities required to be recorded at their fair values we consider the principal or most advantageous market in which we would transact and consider assumptions that market participants would use when pricing the assets or liabilities such as inherent risk transfer restrictions and risk of nonperformance
ASC 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value An asset s or a liability s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement ASC 820 establishes three levels of inputs that may be used to measure fair value
Our valuation techniques used to measure the fair values of our instruments that were classified as Level 1 in the table above were derived from quoted market prices and active markets for these instruments that exist Our valuation techniques used to measure the fair values of Level 2 instruments listed in the table above were derived from the following non binding market consensus prices that were corroborated by observable market data quoted market prices for similar instruments or pricing models such as discounted cash flow techniques with all significant inputs derived from or corroborated by observable market data including reference rate yield curves among others
Based on the trading prices of the 90 3 billion and 86 5 billion of senior notes and other long term borrowings and the related fair value hedges refer to Note 6 for additional information that we had outstanding as of May 31 2025 and 2024 respectively the estimated fair values of the senior notes and other long term borrowings and the related fair value hedges using Level 2 inputs at May 31 2025 and 2024 were 81 3 billion and 77 2 billion respectively
Interest is payable semi annually for the senior notes listed in the above table except for the Euro Notes for which interest is payable annually and the floating rate senior notes for which interest is payable quarterly We may redeem some or all of the senior notes of each series prior to their maturity subject to certain restrictions and the payment of an applicable make whole premium in certain instances except for the floating rate senior notes which may not be redeemed prior to their maturity
The senior notes rank pari passu with all existing and future notes issued pursuant to our commercial paper program see additional discussion regarding our commercial paper program below and all existing and future unsecured senior indebtedness of Oracle Corporation including the Revolving Credit Agreement and the Term Loan Credit Agreement 2 each as defined and described further below All existing and future liabilities of the subsidiaries of Oracle Corporation are or will be effectively senior to the senior notes and Commercial Paper Notes defined below borrowings under the Term Loan Credit Agreement 2 defined below and any future borrowings pursuant to the Revolving Credit Agreement We were in compliance with all debt related covenants at May 31 2025
Our Revolving Credit Agreement provides for an unsecured 6 0 billion five year revolving credit facility the Revolving Facility to be used for our working capital purposes and for other general corporate purposes Subject to certain conditions stated in the Revolving Credit Agreement we may borrow prepay and reborrow amounts under the Revolving Facility during the term of the Revolving Credit Agreement All amounts borrowed under the Revolving Credit Agreement will become due on March 8 2027 unless the commitments are terminated earlier either at our request or if an event of default occurs by the lenders or automatically in the case of certain bankruptcy related events Interest is based on either a a Term SOFR based formula plus a margin of 87 5 basis points to 150 0 basis points depending on the credit rating assigned to our long term senior unsecured debt or b a Base Rate formula plus a margin up to 50 0 basis points depending on the same such credit rating each as set forth in the Revolving Credit Agreement As of May 31 2025 and 2024 we did not have any outstanding borrowing under the Revolving Credit Agreement
During fiscal 2023 pursuant to a term loan credit agreement Term Loan Credit Agreement providing for an aggregate term loan commitment of 5 6 billion we borrowed 4 7 billion under term loan 1 facility Term Loan 1 Facility and 960 million under term loan 2 facility Term Loan 2 Facility and together with the Term Loan 1 Facility the Term Loan Facilities
Interest was based on either a a Term SOFR based formula plus a margin of 147 5 basis points to 197 5 basis points depending on the credit rating assigned to our long term senior unsecured debt or b a Base Rate formula plus a margin of 47 5 basis points to 97 5 basis points depending on the same such credit rating each as set forth in the Term Loan Credit Agreement
On June 10 2024 we terminated our Term Loan Credit Agreement 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 2 executed on the same date The critical terms of the Term Loan Credit Agreement 2 are similar to the critical terms of the Term Loan Credit Agreement except for terms related to the interest the consolidation of two term loan facilities under Term Loan Credit Agreement into a single facility under the Term Loan Credit Agreement 2 and the options to extend the Term Loan Credit Agreement 2 Interest is based on either a a Term SOFR based formula plus a margin of 112 5 basis points to 162 5 basis points depending on the credit rating assigned to our long term senior unsecured debt or b a Base Rate formula plus a margin of 12 5 basis points to 62 5 basis points depending on the same such credit rating each as set forth in the Term Loan Credit Agreement 2
Our existing 6 0 billion commercial paper program allows us to issue and sell unsecured short term promissory notes Commercial Paper Notes pursuant to a private placement exemption from the registration requirements under federal and state securities laws pursuant to dealer agreements with various banks and an Issuing and Paying Agency Agreement with Deutsche Bank Trust Company Americas
During fiscal 2024 our management approved committed to and initiated plans to restructure and further improve efficiencies in our operations due to our acquisitions and certain other operational activities 2024 Restructuring Plan In fiscal 2025 our management supplemented the 2024 Restructuring Plan to reflect additional actions that we expected to take Restructuring costs associated with the 2024 Restructuring Plan were recorded to the restructuring expense line item within our consolidated statements of operations as they were incurred We recorded 314 million and 432 million of restructuring expenses in connection with the 2024 Restructuring Plan in fiscal 2025 and 2024 respectively Actions pursuant to the 2024 Restructuring Plan were substantially complete as of May 31 2025
During fiscal 2022 our management approved committed to and initiated plans to restructure and further improve efficiencies in our operations due to our acquisitions and certain other operational activities 2022 Restructuring Plan In fiscal 2023 our management supplemented the 2022 Restructuring Plan to reflect additional actions that
we expected to take Restructuring costs associated with the 2022 Restructuring Plan were recorded to the restructuring expense line item within our consolidated statements of operations as they were incurred We recorded 493 million of restructuring expenses in connection with the 2022 Restructuring Plan in fiscal 2023 The total costs recorded in our consolidated statements of operations in connection with the 2022 Restructuring Plan were 716 million Actions pursuant to the 2022 Restructuring Plan were substantially complete as of May 31 2023
Deferred cloud services and license support revenues and deferred hardware revenues substantially represent customer payments made in advance for cloud or support contracts that are typically billed in advance with corresponding revenues generally being recognized ratably or based upon customer usage over the respective contractual periods Deferred services revenues include prepayments for our services business and revenues for these services are generally recognized as the services are performed Deferred cloud license and on premise license revenues typically resulted from customer payments that related to undelivered products and services or specified enhancements
As of May 31 2025 ROU assets net of 55 million of accumulated depreciation current lease liabilities and non current lease liabilities for our finance leases were 2 9 billion 257 million and 2 7 billion respectively In fiscal 2025 we recorded finance lease ROU assets of 2 9 billion in exchange for finance lease obligations Cash paid for amounts included in the measurement of finance lease liabilities was 27 million in fiscal 2025 As of May 31 2025 the weighted average remaining lease term for finance leases was approximately fifteen years and the weighted average discount rate used for calculating finance lease obligations was 5 5 We had no finance leases for the year ended and as of May 31 2024
As of May 31 2025 we have 43 4 billion of additional lease commitments primarily for data centers that are generally expected to commence between fiscal 2026 and fiscal 2028 and for terms of ten to sixteen years that were not reflected on our consolidated balance sheet as of May 31 2025 or in the maturities table above
In the ordinary course of business we enter into certain unconditional purchase obligations with our suppliers which are agreements that are enforceable and legally binding and specify terms including fixed or minimum quantities to be purchased fixed minimum or variable price provisions and the approximate timing of the payment Certain routine arrangements that are entered into in the ordinary course of business are not included in the amounts below as they are generally entered into in order to secure pricing or other negotiated terms and are difficult to quantify in a meaningful way or are for terms of less than one year
Our cloud license and hardware sales agreements generally include certain provisions for indemnifying customers against liabilities if our products infringe a third party s intellectual property rights To date we have not incurred any material costs as a result of such indemnifications and have not accrued any material liabilities related to such obligations in our consolidated financial statements Certain of our sales agreements also include provisions indemnifying customers against liabilities in the event we breach confidentiality or service level requirements It is not possible to determine the maximum potential amount under these indemnification agreements due to our limited and infrequent history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement
generally include a warranty that our products will substantially operate as described in the applicable program documentation for a period of one year after delivery We also warrant that services we perform will be provided in a manner consistent with industry standards for a period of 90 days from performance of the services
Our Board of Directors the Board has approved a program for us to repurchase shares of our common stock As of May 31 2025 approximately 6 4 billion remained available for stock repurchases pursuant to our stock repurchase program We repurchased 3 9 million shares for 600 million 10 6 million shares for 1 2 billion and 17 0 million shares for 1 3 billion in fiscal 2025 2024 and 2023 respectively under the 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
In June 2025 the Board declared a quarterly cash dividend of 0 50 per share of our outstanding common stock The dividend is payable on July 24 2025 to stockholders of record as of the close of business on July 10 2025 Future declarations of dividends and the establishment of future record and payment dates are subject to the final determination of the Board
In fiscal 2021 we adopted the 2020 Equity Incentive Plan to replace the Amended and Restated 2000 Long Term Equity Incentive Plan the 2000 Plan which provides for the issuance of long term performance awards including restricted stock based awards non qualified stock options and incentive stock options as well as stock purchase rights and stock appreciation rights to our eligible employees officers and directors who are also employees or consultants independent consultants and advisers In fiscal 2022 and 2024 our stockholders upon the recommendation of the Board approved the adoption of the Amended and Restated 2020 Equity Incentive Plan as amended and restated the 2020 Plan and together with the 2000 Plan the Plans which increased the number of authorized shares of stock that may be issued under the 2020 Plan by 300 million shares and 350 million shares respectively Approximately 381 million shares of common stock were available for future awards under the 2020 Plan as of May 31 2025 Under the 2020 Plan for each share granted as a full value award in the form of a RSU or a performance based restricted stock award an equivalent of 2 5 shares is deducted from our pool of shares available for grant
As of May 31 2025 113 million unvested restricted stock units RSUs 34 million PSOs of which 12 million shares were vested and service based stock options SOs to purchase 7 million shares of common stock substantially all of which were vested were outstanding under the Plans To date we have not issued any stock purchase rights or stock appreciation rights under either of the Plans
The vesting schedule for all awards granted under the Plans is established by the Compensation Committee of the Board the Compensation Committee RSUs generally require service based vesting of 25 annually over four years SOs were previously granted under the 2000 Plan at not less than fair market value become exercisable generally 25 annually over four years of service and generally expire 10 years from the date of grant
PSOs granted under the 2000 Plan to our Chief Executive Officer and Chief Technology Officer in fiscal 2018 consisted of seven numerically equivalent vesting tranches that potentially could vest One tranche which was based solely on the attainment of a market based metric was achieved and vested in fiscal 2022 Each of the remaining six tranches required the attainment of both a performance metric and a market capitalization metric by May 31 2022 which was subsequently extended by three additional fiscal years to May 31 2025 via an amendment approved by the Compensation Committee during fiscal 2022 Stock based compensation expense was recognized starting at the time each vesting tranche becomes probable of achievement over the longer of the estimated implicit service period or derived service period Stock based compensation associated with a vesting tranche where vesting is no longer determined to be probable is reversed on a cumulative basis and is no longer prospectively recognized in the period when such a determination is made
The 1993 Directors Stock Plan the Directors Plan provides for the issuance of RSUs and other stock based awards including non qualified stock options to non employee directors The Directors Plan has from time to time been amended and restated Under the terms of the Directors Plan 10 million shares of common stock are reserved for issuance including a fiscal 2013 amendment to increase the number of shares of our common stock reserved for issuance by 2 million shares Currently we only grant RSUs that vest fully on the one year anniversary of the date
of grant In fiscal 2016 the Directors Plan was amended to permit the Compensation Committee to determine the amount and form of automatic grants of stock awards if any to each non employee director upon first becoming a director and thereafter on an annual basis as well as automatic grants for chairing certain Board committees subject to certain stockholder approved limitations set forth in the Directors Plan In fiscal 2020 the Compensation Committee reduced the maximum value of the annual automatic RSU grants to each non employee director to 350 000 and eliminated all equity grants for chairing Board committees As of May 31 2025 approximately 21 000 unvested RSUs were outstanding under the Directors Plan As of May 31 2025 approximately 1 million shares were available for future stock awards under this plan
The total grant date fair values of restricted stock based awards that were vested and issued in fiscal 2025 2024 and 2023 were 4 0 billion 3 5 billion and 2 9 billion respectively As of May 31 2025 total unrecognized stock based compensation expense related to non vested restricted stock based awards was 9 3 billion and is expected to be recognized over the remaining weighted average vesting period of 2 69 years
Total cash received as a result of stock option exercises was approximately 448 million 545 million and 1 0 billion for fiscal 2025 2024 and 2023 respectively The total aggregate intrinsic value of restricted stock based awards that vested and were issued and stock options that were exercised was 9 0 billion 7 4 billion and 5 1 billion for fiscal 2025 2024 and 2023 In connection with the vesting and issuance of restricted stock based awards and stock options that were exercised the tax benefits realized by us were 2 1 billion 1 7 billion and 1 2 billion for fiscal 2025 2024 and 2023 respectively
We have an Employee Stock Purchase Plan Purchase Plan that allows employees to purchase shares of common stock at a price per share that is 95 of the fair market value of Oracle stock as of the end of the semi annual option period As of May 31 2025 34 million shares were reserved for future issuances under the Purchase Plan We issued approximately 1 million shares in fiscal 2025 and 2 million shares in each of fiscal 2024 and 2023 under the Purchase Plan
We offer various defined contribution plans for our U S and non U S employees Total defined contribution plan expense was 485 million 468 million and 470 million for fiscal 2025 2024 and 2023 respectively In the U S regular employees can participate in the Oracle Corporation 401 k Savings and Investment Plan Oracle 401 k Plan Participants can generally contribute up to 40 of their eligible compensation on a per pay period basis as defined by the Oracle 401 k Plan document or by the section 402 g limit as defined by the U S Internal Revenue Service IRS We match a portion of employee contributions currently 50 up to 6 of compensation each pay period subject to maximum aggregate matching amounts Our contributions to the Oracle 401 k Plan net of forfeitures were 206 million 200 million and 198 million in fiscal 2025 2024 and 2023 respectively
We also offer non qualified deferred compensation plans to certain employees whereby they may defer a portion of their annual base and or variable compensation until retirement or a date specified by the employee in accordance with the plans Deferred compensation plan assets and liabilities were each approximately 1 1 billion and approximately 988 million as of May 31 2025 and 2024 respectively and were presented in other non current assets and other non current liabilities in the accompanying consolidated balance sheets
We sponsor certain defined benefit pension plans that are offered primarily by certain of our foreign subsidiaries Many of these plans were assumed through our acquisitions or are required by local regulatory requirements We may deposit funds for these plans with insurance companies third party trustees or into government managed accounts consistent with local regulatory requirements as applicable Our total defined benefit plan pension expenses were 69 million 71 million and 78 million for fiscal 2025 2024 and 2023 respectively The aggregate projected benefit obligation and aggregate net liability funded status which is substantially included in other non current liabilities in our consolidated balance sheets of our defined benefit plans as of May 31 2025 were 1 1 billion and 350 million respectively and as of May 31 2024 were 997 million and 313 million respectively
Our effective tax rates for each of the periods presented are the result of the mix of income earned and losses incurred in various tax jurisdictions that apply a broad range of income tax rates Our provision for income taxes varied from the tax computed at the U S federal statutory income tax rate for fiscal 2025 2024 and 2023 primarily due to earnings in foreign operations state taxes the U S research and development tax credit settlements with tax authorities the tax effects of stock based compensation the Foreign Derived Intangible Income deduction and the tax effect of Global Intangible Low Taxed Income GILTI
We provide for U S income taxes on the undistributed earnings and the other outside basis temporary differences of foreign subsidiaries unless they are considered indefinitely reinvested outside the U S At May 31 2025 the amount of temporary differences related to undistributed earnings and other outside basis temporary differences of investments in foreign subsidiaries upon which U S income taxes have not been provided was approximately 11 0 billion If the undistributed earnings and other outside basis differences were recognized in a taxable transaction they would generate foreign tax credits that would reduce the federal tax liability associated with the foreign dividend or the otherwise taxable transaction At May 31 2025 assuming a full utilization of the foreign tax credits the potential net deferred tax liability associated with these other outside basis temporary differences would be approximately 2 0 billion
Our net deferred tax assets were 10 2 billion and 8 6 billion as of May 31 2025 and 2024 respectively We believe that it is more likely than not that the net deferred tax assets will be realized in the foreseeable future Realization of our net deferred tax assets is dependent upon our generation of sufficient taxable income in future years in appropriate tax jurisdictions to obtain benefit from the reversal of temporary differences net operating loss carryforwards and tax credit carryforwards The amount of net deferred tax assets considered realizable is subject to adjustment in future periods if estimates of future taxable income change
The valuation allowance was 2 0 billion and 1 9 billion as of May 31 2025 and 2024 respectively primarily related to U S state and foreign tax credits and net operating loss carryforwards Any subsequent reduction of the valuation allowance will be recorded to our provision for income taxes unless the conclusion of an acquisition valuation allowance and the recognition of the associated tax benefits is within the measurement period as defined above
At May 31 2025 we had federal net operating loss carryforwards of approximately 270 million which are subject to limitation on their utilization Approximately 180 million of these federal net operating losses expire in various years between fiscal 2026 and fiscal 2038 Approximately 90 million of these federal net operating losses are not currently subject to expiration dates We had state net operating loss carryforwards of approximately 2 1 billion at May 31 2025 which are subject to limitations on their utilization Approximately 2 0 billion of these state net operating losses expire in various years between fiscal 2026 and fiscal 2045 Approximately 98 million of these state net operating losses are not currently subject to expiration dates We had total foreign net operating loss carryforwards of approximately 1 8 billion at May 31 2025 which are subject to limitations on their utilization Approximately 1 7 billion of these foreign net operating losses are not currently subject to expiration dates The remainder of the foreign net operating losses approximately 34 million expire between fiscal 2027 and fiscal 2044 At May 31 2025 we had federal capital loss carryforwards of approximately 134 million which expire between fiscal 2026 and fiscal 2027 We had state capital loss carryforwards of approximately 307 million which expire between fiscal 2026 and fiscal 2037 We had foreign capital loss carryforwards of approximately 164 million which are not currently subject to expiration dates We had tax credit carryforwards of approximately 1 4 billion at May 31 2025 which are subject to limitations on their utilization Approximately 840 million of these tax credit carryforwards are not currently subject to expiration dates The remainder of the tax credit carryforwards approximately 534 million expire in various years between fiscal 2026 and fiscal 2045
As of May 31 2025 2024 and 2023 4 5 billion 4 2 billion and 3 9 billion respectively of unrecognized tax benefits would affect our effective tax rate if recognized We recognized interest and penalties related to uncertain tax positions in our provision for income taxes line of our consolidated statements of operations of 321 million 199 million and 111 million during fiscal 2025 2024 and 2023 respectively Interest and penalties accrued as of May 31 2025 and 2024 were 2 1 billion and 1 8 billion respectively
Domestically U S federal and state taxing authorities are currently examining income tax returns of Oracle and various acquired entities for years through fiscal 2022 Many issues are at an advanced stage in the examination process the most significant of which include issues related to transfer pricing domestic production activity one time transition tax foreign tax credits and research and development credits With respect to all of these domestic audit issues considered in the aggregate we believe that it was reasonably possible that as of May 31 2025 our gross unrecognized tax benefits could decrease whether by payment release or a combination of both in the next 12 months by as much as 651 million 517 million net of offsetting tax benefits Our U S federal income tax returns have been examined for all years prior to fiscal 2013 and with some exceptions we are no longer subject to audit for those periods Our U S state income tax returns with some exceptions have been examined for all years prior to fiscal 2010 and we are no longer subject to audit for those periods
Internationally tax authorities for numerous non U S jurisdictions are also examining or have examined returns of Oracle and various acquired entities for years through fiscal 2024 Many of the relevant tax years are at an advanced stage in examination or subsequent controversy resolution processes the most significant of which include issues
related to transfer pricing and withholding tax The manner in which those issues are resolved and the timing thereof could potentially result in a range of decreases or increases in our unrecognized tax benefits over the next 12 months With respect to all of these international audit issues considered in the aggregate we believe it was reasonably possible that as of May 31 2025 the gross unrecognized tax benefits could decrease whether by payment release or a combination of both in the next 12 months by as much as 807 million 319 million net of offsetting tax benefits We also believe it was reasonably possible that as of May 31 2025 the gross unrecognized tax benefits could increase in the next 12 months by as much as 615 million 107 million net of offsetting U S tax benefits With some exceptions we are generally no longer subject to tax examinations in non U S jurisdictions for years prior to fiscal 2001
We are under audit by the IRS and various other domestic and foreign tax authorities with regards to income tax and indirect tax matters and are involved in various challenges and litigation in a number of countries including in particular Australia Brazil Canada Egypt India Indonesia Israel Italy Pakistan Saudi Arabia South Korea and Spain where the amounts under controversy are significant In some although not all cases we have reserved for potential adjustments to our provision for income taxes and accrual of indirect taxes that may result from examinations by or any negotiated agreements with these tax authorities or final outcomes in judicial proceedings and we believe that the final outcome of these examinations agreements or judicial proceedings will not have a material effect on our results of operations If events occur which indicate payment of these amounts is unnecessary the reversal of the liabilities would result in the recognition of benefits in the period we determine the liabilities are no longer necessary If our estimates of the federal state and foreign income tax liabilities and indirect tax liabilities are less than the ultimate assessment it could result in a further charge to expense
ASC 280 Segment Reporting establishes standards for reporting information about operating segments Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker or decision making group in deciding how to allocate resources and in assessing performance Our chief operating decision makers CODMs are our Chief Executive Officer and Chief Technology Officer We are organized by line of business and geographically While our CODMs evaluate results in a number of different ways the line of business management structure is the primary basis for which the allocation of resources and financial results are assessed The tabular information below presents financial information including information on segment revenues significant segment expenses categories and amounts on a segment basis and included within each reported measure of a segment s profit or loss that is regularly provided to our CODMs for their review and assists our CODMs with evaluating the company s performance and allocating company resources
We have three businesses cloud and license hardware and services each of which is comprised of a single operating segment All three of our businesses market and sell our offerings globally to businesses of many sizes government agencies educational institutions and resellers with a worldwide sales force positioned to offer the combinations that best meet customer needs
Our cloud and license business engages in the sale marketing and delivery of our enterprise applications and infrastructure technologies through cloud and on premise deployment models including our cloud services and license support offerings and our cloud license and on premise license offerings Cloud services and license support revenues are generated from offerings that are typically contracted with customers directly billed to customers in advance delivered to customers over time with our revenue recognition occurring over the contractual terms and renewed by customers upon completion of the contractual terms Cloud services and license support contracts provide customers with access to the latest updates to the applications and infrastructure technologies as they become available and for which the customer contracted and also include related technical support services over the contractual term 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 We generally recognize revenues at the point in time the software is
made available to the customer to download and use which typically is immediate upon signature of the license contract In each fiscal year our cloud and license business contractual activities excluding the impact of timing of booking of large contracts are typically highest in our fourth fiscal quarter and the related cash flows are typically highest in the following quarter i e in the first fiscal quarter of the next fiscal year as we receive payments from these contracts Costs associated with our cloud and license business 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
Our hardware business provides infrastructure technologies including Oracle Engineered Systems servers storage industry specific hardware operating systems virtualization management and other hardware related software to support diverse IT environments Our hardware business also offers hardware support which provides customers with software updates for the software components that are essential to the functionality of their hardware products and can also include product repairs maintenance services and technical support services that are typically delivered and recognized ratably over the contractual term Costs 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
Our services business provides services to customers and partners to help maximize the performance of their investments in Oracle applications and infrastructure technologies Costs associated with our services business consist primarily of personnel related expenses technology infrastructure expenditures facilities expenses and external contractor expenses
We have considered information that is regularly reviewed by our CODMs in evaluating financial performance and disclosures presented outside of our financial statements in our earnings releases and used in investor presentations to disaggregate revenues to depict how the nature amount timing and uncertainty of revenues and cash flows are affected by economic factors The principal category we use to disaggregate revenues is the nature of our products and services as presented in our consolidated statements of operations
Basic earnings per share is computed by dividing net income for the period by the weighted average number of common shares outstanding during the period Diluted earnings per share is computed by dividing net income for the period by the weighted average number of common shares outstanding during the period plus the dilutive effect of outstanding restricted stock based awards stock options and shares issuable under the Purchase Plan as applicable pursuant to the treasury stock method The following table sets forth the computation of basic and diluted earnings per share
On August 14 2020 The Privacy Collective TPC a foundation having its registered office in Amsterdam filed a purported class action lawsuit against Oracle Nederland B V Oracle Corporation and Oracle America Inc the Oracle Defendants Salesforce com Inc and SFDC Netherlands B V in the District Court of Amsterdam TPC alleges that the Oracle Defendants Data Management Platform product violates certain articles of the European Union Charter of Fundamental Rights the General Data Protection Regulation GDPR and the Dutch Telecommunications Act Telecommunicatiewet TPC claims damages under a number of categories including immaterial damages at a fixed amount of 500 per Dutch internet user material damages in that the costs of loss of control over personal data should be equated to the market value of the personal data for parties like the Oracle Defendants compensation for losses suffered due to an alleged data breach at a fixed amount of 100 per Dutch internet user and compensation for the costs of the litigation funder 10 to 25 of the compensation awarded and the actual cost of the proceedings and extrajudicial costs
We filed our defense on March 3 2021 and on December 29 2021 the District Court issued a judgment holding that all of TPC s claims were deemed inadmissible because of fundamental procedural flaws TPC filed an appeal with the Court of Appeal in Amsterdam challenging the District Court s judgment except for the claims regarding the alleged data breach which were dropped On June 18 2024 the Court of Appeal overturned the District Court s decision regarding admissibility thus permitting the case to proceed We requested that the Court of Appeal permit an interim appeal to the Dutch Supreme Court and or the European Court of Justice On September 24 2024 the Court of Appeal issued a judgment confirming that TPC s claims are admissible and referred the matter back to the District Court of Amsterdam for a decision on the merits of TPC s claims including TPC s claims for damages under article 82 of the GDPR The Court of Appeal also granted Oracle s request for an interim appeal to the Supreme Court appealing the June 18 and September 24 2024 judgments
Oracle filed its statement of appeal with the Dutch Supreme Court on December 20 2024 and TPC appeared in the proceedings on January 31 2025 The filing of the Supreme Court appeal effectively suspended proceedings before the District Court pursuant to applicable procedural rules TPC filed its statement of defense in response to our Supreme Court appeal and a counter appeal on February 27 2025 Oracle filed its statement of defense to the counter appeal on March 28 2025 TPC and Oracle are to file written submissions setting out their detailed arguments on or before July 18 2025 and to file their respective written replies and rejoinders on or before August 29 2025
We are party to various other legal proceedings and claims either asserted or unasserted which arise in the ordinary course of business including proceedings and claims that relate to acquisitions we have completed or to companies we have acquired or are attempting to acquire While the outcome of these matters cannot be predicted with certainty we do not believe that the outcome of any of these matters individually or in the aggregate will result in losses that are materially in excess of amounts already recognized if any
Interactive Data Files Pursuant to Rule 405 of Regulation S T formatted in Inline XBRL 1 Consolidated Balance Sheets as of May 31 2025 and 2024 2 Consolidated Statements of Operations for the years ended May 31 2025 2024 and 2023 3 Consolidated Statements of Comprehensive Income for the years ended May 31 2025 2024 and 2023 4 Consolidated Statements of Stockholders Equity for the years ended May 31 2025 2024 and 2023 5 Consolidated Statements of Cash Flows for the years ended May 31 2025 2024 and 2023 and 6 Notes to Consolidated Financial Statements

Company Name	ORACLE CORP Vist SEC web-site
Category	SERVICES-PREPACKAGED SOFTWARE
Trading Symbol	ORCL