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What changed in Oracle Corporation's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Oracle Corporation's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+374 added−370 removedSource: 10-K (2023-06-20) vs 10-K (2022-06-21)

Top changes in Oracle Corporation's 2023 10-K

374 paragraphs added · 370 removed · 295 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

90 edited+17 added−14 removed79 unchanged
Biggest changeWe are proud to be recognized for our progress and commitment to D&I, including being named a Best Place to Work for LGBTQ+ Equality in 2022 by the Human Rights Campaign Foundation, a 2021 Best Place to Work for Disability Inclusion by the Disability Equality Index, and a 2022 Top Supporter of Historically Black College and University Engineering Schools by Career Communications Group.
Biggest changeExamples of recognition received include being named one of the World’s Top Female-Friendly Companies and one of America’s Best Employers For Women by Forbes in 2022 and one of America’s Best Employers For Diversity by Forbes in 2023; a Best Place to Work by the Disability Equality Index in 2022 for the fifth consecutive year; a 2022 Best Place to Work for LGBTQ+ Equality 13 Table of Contents Index to Financial Statements by the Human Rights Campaign; a 2023 5-Star Employer by VETS Indexes; and a 2023 Top Supporter of Historically Black College and University Engineering Schools by Career Communications Group.
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, including our acquisition of Cerner Corporation in June 2022 (see Note 2 of Notes to Consolidated Financial Statements included elsewhere in this Annual Report for additional information).
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, including our acquisition of Cerner Corporation (Cerner) in June 2022 (see Note 2 of Notes to Consolidated Financial Statements included elsewhere in this Annual Report for additional information).
Oracle Autonomous Database Oracle Autonomous Database is designed to deliver performance and scale for enterprise database workloads with automated database operations and policy-driven optimization by combining certain Oracle infrastructure technologies including the Oracle Database, Oracle’s Next-Generation Cloud Infrastructure, Oracle Exadata, and native machine learning capabilities, among others.
Oracle Autonomous Database Oracle Autonomous Database is designed to deliver performance and scale for enterprise database workloads with automated database operations and policy- and machine learning-driven optimization by combining certain Oracle infrastructure technologies, including the Oracle Database, Oracle’s Next-Generation Cloud Infrastructure, Oracle Exadata, and native machine learning capabilities, among others.
We continue to evolve hardware support processes that are intended to proactively identify and solve quality issues and to increase the amount of new and renewed hardware support contracts sold in connection with the sales of our hardware products. Hardware support contracts are generally priced as a percentage of the net hardware products fees .
We continue to evolve hardware support processes that are intended to proactively identify and solve quality issues and to increase the amount of new and renewed hardware support contracts sold in connection with sales of our hardware products. Hardware support contracts are generally priced as a percentage of net hardware products fees.
Available Information Our Annual Report 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.
Available Information 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.
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: • market adoption of cloud-based IT offerings including SaaS and cloud infrastructure offerings; • the ease of deployment, use, transacting for and maintenance of our products and services offerings; • compatibility between Oracle products and services deployed within local IT environments and public cloud IT environments, including our Oracle Cloud environments; • the adoption of commodity servers and microprocessors; • the broader “platform” competition between our industry standard Java technology platform and the .NET programming environment of Microsoft; 16 Table of Contents Index to Financial Statements • operating system competition among our Oracle Solaris and Linux operating systems, with alternatives including Microsoft’s Windows Server, and other UNIX and Linux operating systems ; • the adoption of open source alternatives to commercial software by enterprise software customers; • products, features and functionality developed internally by customers and their IT staff; • products, features and functionality customized and implemented for customers by consultants, systems integrators or other third parties; and • the attractiveness of offerings from business processing outsourcers.
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: • market adoption of cloud-based IT offerings, including SaaS and cloud infrastructure offerings; • the ease of deployment, use, transacting for and maintenance of our products and services offerings; • compatibility between Oracle products and services deployed within local IT environments and public cloud IT environments, including our Oracle Cloud environments; • the adoption of commodity servers and microprocessors; • the broader “platform” competition between our industry standard Java technology platform and the .NET programming environment of Microsoft; • operating system competition among our Oracle Solaris and Linux operating systems, with alternatives including Microsoft’s Windows Server and other UNIX and Linux operating systems; • the adoption of open source alternatives to commercial software by enterprise software customers; • products, features and functionality developed internally by customers and their IT staff; 15 Table of Contents Index to Financial Statements • products, features and functionality customized and implemented for customers by consultants, systems integrators or other third parties; and • the attractiveness of offerings from business processing outsourcers.
Our SaaS offerings are also designed to natively incorporate advanced technologies such as Internet-of-Things (IoT), artificial intelligence, machine learning, blockchain, digital assistants and advances in the “human interface” and how users interact with Oracle Cloud SaaS offerings within a business context or to augment human capabilities to enhance productivity.
Our SaaS offerings are also designed to natively incorporate advanced technologies such as Internet-of-Things (IoT), artificial intelligence (AI), machine learning, blockchain, digital assistants and advances in the “human interface” and how users interact with Oracle Cloud SaaS offerings within a business context or to augment human capabilities to enhance productivity.
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 Amazon.com, Inc., Microsoft Corporation, International Business Machines Corporation (IBM), Intel Corporation, Cisco Systems, Inc., Adobe Systems Incorporated, Alphabet Inc., salesforce.com, inc. and SAP SE, as well as other companies like Hewlett-Packard Enterprise and Workday, Inc.
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 Amazon.com, Inc., Microsoft Corporation, International Business Machines Corporation, Intel Corporation, Cisco Systems, Inc., Adobe Systems Incorporated, Alphabet Inc., Salesforce, Inc. and SAP SE, as well as other companies like Hewlett-Packard Enterprise and Workday, Inc.
Oracle Autonomous Database is designed to be self-driving, automating routine database administration tasks including maintenance, tuning, patching, 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 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.
Our SaaS offerings represent an industry leading business innovation platform, leveraging Oracle’s Next-Generation Cloud Infrastructure, and include a broad suite of modular, next generation cloud software applications spanning all core business functions including, among others: • Oracle Fusion Cloud Enterprise Resource Planning (ERP), which is designed to be a complete, global and integrated ERP solution to help organizations improve decision making and workforce productivity, and to optimize back-office operations by utilizing a single data and security model with a common user interface; • Oracle Fusion Cloud Enterprise Performance Management (EPM), which is designed to analyze financial performance, drive accurate and agile financial plans, optimize the financial close and consolidation process, streamline account reconciliation and satisfy an organization’s reporting requirements; 6 Table of Contents Index to Financial Statements • O racle Fusion Cloud Supply Chain and Manufacturing Management (SCM), which is designed to help organizations create, optimize and digitize their supply chains and innovate products quickly ; • Oracle Fusion Cloud Human Capital Management (HCM), which is designed to help organizations find, develop and retain their talent, enable collaboration, provide complete workforce insights, improve business process efficiency, and enable users to connect to an integrated suite of HCM applications from any device; • Oracle Fusion Sales, Service and Marketing, which are modules that are designed to be complete and integrated solutions to help organizations deliver consistent and personalized customer experiences across their customer channels, touch points and interactions; • NetSuite Applications Suite, which is designed to be a unified, cloud-based applications suite to run a company’s entire business and includes financials and ERP, customer relationship management, human resources, professional services and commerce, among others.
Our SaaS offerings represent an industry leading business innovation platform, leveraging Oracle’s Next-Generation Cloud Infrastructure, and include a broad suite of modular, next-generation cloud software applications spanning all core business functions, including, among others: • Oracle Fusion Cloud Enterprise Resource Planning (ERP), which is designed to be a complete, global and integrated ERP solution to help organizations improve decision making and workforce productivity, and to optimize back-office operations by utilizing a single data and security model with a common user interface; • Oracle Fusion Cloud Enterprise Performance Management (EPM), which is designed to analyze financial performance, drive accurate and agile financial plans, optimize the financial close and consolidation process, streamline account reconciliation and satisfy an organization’s reporting requirements; • Oracle Fusion Cloud Supply Chain and Manufacturing Management (SCM), which is designed to help organizations create, optimize and digitize their supply chains and innovate products quickly; • Oracle Fusion Cloud Human Capital Management (HCM), which is designed to help organizations find, develop and retain their talent, enable collaboration, provide complete workforce insights, improve business process efficiency and enable users to connect to an integrated suite of HCM applications from any device; • Oracle Fusion Sales, Service and Marketing, which are modules that are designed to be complete and integrated solutions to help organizations deliver consistent and personalized customer experiences across their customer channels, touch points and interactions; 5 Table of Contents Index to Financial Statements • NetSuite Applications Suite, which is designed to be a unified, cloud-based applications suite to run a company’s entire business and includes financials and ERP, customer relationship management, human resources, professional services and commerce, among others.
The integration of Oracle Autonomous Database with other Oracle Cloud Services, such as Java Cloud and the Oracle APEX low-code service, along with open interfaces and integrations, is designed to provide developers with a modern, open platform to develop new and innovative applications.
The integration of Oracle Autonomous Database with other Oracle Cloud services, such as Java Cloud and the Oracle APEX low-code 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.
We expect to continue to acquire companies, products, services and technologies to further our corporate strategy. We have three businesses, cloud and license, hardware, and services, and each is comprised of a single operating segment.
We expect to continue to acquire companies, products, services and technologies to further our corporate strategy. We have three businesses: cloud and license; hardware; and services. Each business is comprised of a single operating segment.
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 Cloud@Customer deployment model (described further below).
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).
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 dense I/O workloads and high performance computing. OCI storage offerings include block, object and archive storage services.
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. OCI storage offerings include block, file, object and archive storage services.
Our customers utilize Oracle hardware products and related offerings in their cloud-based, on-premise or hybrid 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 customers use Oracle hardware products and related offerings in their cloud-based, on-premise or hybrid 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.
In addition to the full suite of OCI offerings delivered by dozens of Oracle public cloud regions across the globe, we provide our customers with flexibility by offering certain OCI services within a customer’s own data center to address customer latency requirements and address restrictions imposed upon customers that operate in certain regulated industries, entities or jurisdictions.
In addition to the full suite of OCI offerings delivered by dozens of Oracle public cloud regions across the globe, we provide our customers with flexibility by offering certain OCI services within a customer’s own data center to address customer latency requirements and address restrictions imposed upon customers that operate in certain regulated industries, entities or jurisdictions with our Dedicated Region and Sovereign cloud offerings.
All of which is designed to enable organizations to gain new insights into customer behavior, more accurately anticipate future demand, align workforce deployment with business activity forecasts and accelerate the pace of operations, among other benefits. For transaction processing workloads, Oracle Autonomous Database is designed to enable organizations to safely run a complex mix of high-performance transactions.
All of which is designed to enable organizations to gain new insights into customer behavior, more accurately anticipate future demand, align workforce deployment with business activity forecasts and accelerate the pace of operations, among other benefits. For transaction processing workloads, Oracle Autonomous Database is designed to enable organizations to safely run a mix of high-performance transactions of ranging complexity.
We focus our development efforts on improving the performance, security, operation, integration and cost-effectiveness of our offerings 4 Table of Contents Index to Financial Statements relative to our competitors; facilitating the ease with which organizations are able to deploy, use, manage and maintain our offerings; and incorporating emerging technologies within our offerings to enable leaner business processes, automation and innovation.
We focus our development efforts 3 Table of Contents Index to Financial Statements 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 within our offerings to enable leaner business processes, automation and innovation.
Catz, 60, 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.
Catz, 61, 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.
In addition, we also believe we can market our Oracle SaaS and OCI services 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 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.
Java Licenses Java is the world’s most popular programming language that 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 Licenses 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.
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 a hybrid deployment model.
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.
By offering a range of server sizes and microprocessors, customers are offered the flexibility to choose the types of servers that they believe will be most appropriate and valuable for their particular IT environments.
By offering a range of server sizes and microprocessors, customers have the flexibility to choose the types of servers that they believe will be most appropriate and valuable for their particular IT environments.
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 cloud-based or on-premise IT environments. Substantially all customers, at their option, purchase license support contracts when they purchase an Oracle license.
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 cloud-based or on-premise IT environments. Substantially all customers opt to purchase license support contracts when they purchase an Oracle license.
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 on-premise cloud services, and in other customer IT environments.
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.
Oracle hardware products include Oracle Engineered Systems, servers, storage and industry-specific products, among others. Customers generally opt to purchase hardware support contracts when they purchase Oracle hardware products. Oracle also offers services to assist our customers and partners to maximize the performance of their Oracle purchases.
Oracle hardware products include Oracle Engineered Systems, servers, storage and industry-specific products, among others. Customers generally opt to purchase hardware support contracts when they purchase Oracle hardware products. Oracle also offers professional services to assist our customers and partners to maximize the performance of their investments in Oracle products and services.
We utilize a global, blended 12 Table of Contents Index to Financial Statements delivery model to optimize value for our customers and partners, consisting of consultants from local geographies, industry specialists and consultants from our global delivery and solution centers; and • advanced customer services, which are support services provided by Oracle to a customer on-site or remote to enable increased performance and higher availability of a customer’s Oracle products and services.
We utilize a global, blended delivery model to optimize value for our customers and partners, consisting of consultants from local geographies, industry specialists and consultants from our global delivery and solution centers; and • advanced customer services, which are support services provided by Oracle to a customer on-site or remote to enable increased performance and higher availability of a customer’s Oracle products and services.
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.
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 plan to continue to dedicate a significant amount of resources to research and development efforts to maintain and improve our current products and services offerings. Human Capital Resources 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 plan to continue to dedicate a significant amount of resources to research and development efforts to maintain and improve our current products and services offerings. 12 Table of Contents Index to Financial Statements Human Capital Resources At Oracle, our success is driven by the quality of our people, who we believe are among the best and brightest in the industry.
Our OCI offerings also include cloud-based compute, storage and networking capabilities, among others, and new and innovative services such as Oracle Autonomous Database (described further below), MySQL HeatWave and emerging technologies such as IoT, digital assistant, and blockchain.
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 Oracle Autonomous Database (described further below), MySQL HeatWave, AI Infrastructure offerings and emerging technologies such as IoT, digital assistant and blockchain.
In fiscal 2022, 2021 and 2020, we invested $7.2 billion, $6.5 billion and $6.1 billion, respectively, in research and development to enhance our existing portfolio of offerings and to develop new technologies and services.
In fiscal 2023, 2022 and 2021, we invested $8.6 billion, $7.2 billion and $6.5 billion, respectively, in research and development to enhance our existing portfolio of offerings and to develop new technologies and services.
Customers use OCI to build and operate new 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 from other cloud-based IT environments, among other uses.
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.
Using Oracle technologies, our customers build, deploy, run, manage and support their internal and external products, services and business operations including, for example, a global cloud applications developer that utilizes Oracle Cloud Infrastructure (OCI) to power its software-as-a-service (SaaS) offerings; a multi-national financial institution that runs its banking applications using the Oracle Exadata Database Machine; and a global consumer products company that leverages Oracle Fusion Cloud Enterprise Resource Planning for its accounting processes, consolidation and financial planning functions.
Using Oracle technologies, our customers build, deploy, run, manage and support their internal and external products, services and business operations, including, for example, a global cloud applications developer that utilizes Oracle Cloud Infrastructure (OCI) to power its software-as-a-service (SaaS) offerings; a multi-national 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 for its accounting processes, risk management, supply chain and financial planning functions.
In addition, our OCI offerings include networking, connectivity, and edge services that help connect customer data centers and third-party clouds, such as Microsoft Azure, with our OCI services for the creation of distributed and multi-cloud architectures.
In addition, our OCI offerings include networking, connectivity and edge services that help connect customers’ data centers and third-party clouds, such as Microsoft Azure, with our OCI services for the creation of distributed and multicloud architectures.
We believe that we can market and sell our Oracle SaaS and OCI offerings together to help new and existing customers migrate their extensive installed base of on-premise and cloud-based applications and infrastructure 5 Table of Contents Index to Financial Statements 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.
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.
We have invested in the expansion of the Oracle Cloud by increasing existing data center capacity and adding additional data centers in new geographic locations to meet current and expected customer demand. We expect this trend will continue.
We have invested in the expansion of the Oracle Cloud by increasing existing data center capacity and adding additional data centers in new geographic locations to meet current and expected customer demand.
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.
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 6 Table of Contents Index to Financial Statements enhancements, which current license support customers are entitled to receive.
OCI machine learning features 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, the stocking of retailer store shelves, and the financial modeling to stay within a business’ forecasts.
OCI AI services 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, the stocking of retailer store shelves, credit fraud detection and the financial modeling to stay within a business’ forecasts.
Our Talent Review process, run on Oracle Fusion Cloud HCM, provides the mechanism for leaders to review and discuss opportunities and action plans to develop employees. 24% of our open non-entry level positions were filled internally in fiscal 2022, providing growth opportunities and retaining critical knowledge and talent.
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 2023, providing growth opportunities and retaining critical knowledge and talent.
Substantially all of our customers opt to purchase license support contracts when they purchase Oracle applications and infrastructure licenses to run within the Oracle Cloud or other cloud-based and on-premise IT environments.
We provide customers the option to purchase license support contracts in connection with the purchase of Oracle Applications licenses. Substantially all of our customers opt to purchase license support contracts when they purchase Oracle applications and infrastructure licenses to run within the Oracle Cloud or other cloud-based and on-premise IT environments.
Helping our employees learn and apply new skills is key to retaining them and critical to our ability to innovate and rapidly evolve. We support employees with anytime, everywhere learning resources to help build skills for today and the future.
We believe that helping our employees learn and apply new skills is key to retaining them and critical to our ability to innovate and rapidly evolve. We support employees with easily accessible learning resources to help build skills for today and the future.
Oracle Database may be deployed in various IT 9 Table of Contents Index to Financial Statements environments including Oracle Cloud, Oracle Cloud@Customer and Dedicated Region Cloud@Customer environments, 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.
Oracle Database may be deployed in various IT environments, including Oracle Cloud, Oracle Exadata Cloud@Customer and OCI Dedicated Region environments, 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.
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.
To address customer demand and enable customer choice, 4 Table of Contents Index to Financial Statements 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.
Our infrastructure cloud services and license support revenues represented 58%, 59% and 60% of our total cloud services and license support revenues during fiscal 2022, 2021 and 2020, respectively. 8 Table of Contents Index to Financial Statements Oracle Cloud Infrastructure (OCI) OCI offerings are based upon Oracle’s Next-Generation Cloud Infrastructure and are designed to deliver our infrastructure technologies as a service including compute, storage and networking services.
Our infrastructure cloud services and license support revenues represented 53%, 58% and 59% of our total cloud services and license support revenues during fiscal 2023, 2022 and 2021, respectively. Oracle Cloud Infrastructure (OCI) OCI offerings are based upon Oracle’s Next-Generation Cloud Infrastructure and are designed to deliver our infrastructure technologies, including compute, storage and networking services, as a service.
Our approximate employee counts by lines of business are: 38,000 Sales and marketing 25,000 Services 21,000 Cloud services and license support operations 44,000 Research and development 3,000 Hardware 12,000 General and administrative The average tenure of our employees is approximately seven years and 27% of our employees have been employed with Oracle for ten or more years.
Our approximate employee counts by lines of business are: 27,000 Cloud services and license support operations 39,000 Services 35,000 Sales and marketing 47,000 Research and development 3,000 Hardware 13,000 General and administrative The average tenure of our employees is approximately eight years and 27% of our employees have been employed with Oracle for ten or more years.
Our infrastructure technologies are designed to be flexible, cost-effective, standards-based, secure and high-performance in order to facilitate the development, running, integration, management and extension across an organization’s cloud-based, on-premise and hybrid IT environments.
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.
Oracle storage products combine flash, disk, tape 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 storage products combine flash, disk, tape 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.
In the United States (U.S.), our sales and services employees are based in our headquarters and other facilities 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.
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.
Oracle Industry-Specific Hardware Offerings We offer hardware products and services designed for certain specific industries including, among others, our point-of-sale terminals and related hardware that are designed for managing businesses within the food and beverage, hotel and retail industries; and hardware products and services for communications networks including network signaling, policy control and subscriber data management solutions, and session border control technology.
Certain of our storage products provide integration with Oracle Cloud Services for backup and archiving. 10 Table of Contents Index to Financial Statements Oracle Industry-Specific Hardware Offerings We offer hardware products and services designed for certain specific industries, including, among others, our point-of-sale terminals and related hardware that are designed for managing businesses within the food and beverage, hotel and retail industries; hardware products for the healthcare industry; and hardware products and services for communications networks, including network signaling, policy control and subscriber data management solutions, and session border control technology.
Our cloud and license business’ infrastructure technologies include the Oracle Database, which is the world’s most popular enterprise database; Java, which is the computer industry’s most widely-used software development language; and middleware including development tools, among others.
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.
Sales and Marketing We directly market and sell our cloud, license, hardware, support and services offerings globally to businesses of many sizes and in many industries, government agencies and educational institutions. We also market and sell our offerings globally through indirect channels.
Sales and Marketing We directly market and sell our cloud, license, hardware, support and services offerings globally to businesses of many sizes and in many industries, government agencies and educational institutions. We also market and sell our offerings globally through indirect channels. In the United States (U.S.), our sales and services employees are based throughout the country.
For example, the Oracle Autonomous Database is designed to deliver transformational infrastructure as an OCI offering that utilizes machine learning capabilities.
For example, the Oracle Autonomous Database is designed to deliver transformational infrastructure as an OCI offering that uses machine learning capabilities to automate many traditionally manual functions.
Oracle Cloud Services are designed to be rapidly deployable to enable customers shorter time to innovation; intuitive for casual and experienced users; easily maintainable to reduce upgrade, integration and testing work; connectable among differing deployment models to enable interchangeability and extendibility between IT environments; compatible to easily move workloads between the Oracle Cloud and other IT environments; cost-effective by requiring lower upfront customer investment; and secure, standards-based and reliable.
Oracle Cloud Services are designed to be rapidly deployable to enable customers shorter time to innovation; intuitive for casual and experienced users; easily maintainable to reduce upgrade, integration and testing work; connectable among differing deployment models to enable interoperability and extensibility to easily move workloads among the Oracle Cloud and other IT and cloud environments; cost-effective by lowering upfront customer investments and implementing usage-based resource consumption costs; and highly secure, standards-based and reliable.
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.
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 License Support Oracle license support offerings are marketed and sold as a part of our cloud and license business.
Our programs are supported by Oracle leaders across the company with strategic sponsorship from Oracle’s Executive Diversity Council, which is led by Safra Catz, our Chief Executive Officer, and extend through the actions we are taking globally on Oracle’s five Diversity and Inclusion (D&I) Imperatives: • driving insight and accountability with data; • recruiting with an intention on diversity; • embedding inclusion into talent development; • inspiring an inclusive culture through community; and • investing in the future diversity of our industry. 14 Table of Contents Index to Financial Statements In addition to global, regional and local programs, Oracle Human Resources partners with business leaders to create and implement D&I plans to embed targeted strategies into organizations across Oracle.
Our programs are supported by Oracle leaders across the company with strategic sponsorship from Oracle’s Executive Diversity Council, which is led by Safra Catz, our Chief Executive Officer, and extend through the actions we are taking globally on Oracle’s five D&I Imperatives: • driving insight and accountability with data; • recruiting with an intention on diversity; • embedding inclusion into talent development; • inspiring an inclusive culture through community; and • investing in the future diversity of our industry.
OCI is designed to be differentiated from other cloud vendors to provide better security by separating cloud control code computers from customer data compute nodes.
OCI is designed to be differentiated from other cloud 7 Table of Contents Index to Financial Statements vendors to provide better security by separating cloud control code computers from customer compute nodes.
In addition to the Oracle Database, we 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 and an on-premise offering.
We also offer Oracle Database as a cloud service, such as with OCI’s Exadata Database Service and Base Database Service. 8 Table of Contents Index to Financial Statements In addition to the Oracle Database, we 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 MySQL HeatWave or as an on-premise offering.
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 at their option.
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 9 Table of Contents Index to Financial Statements enterprises to manage the end-to-end lifecycle of user identities across all enterprise resources.
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 and indirectly through the Oracle Partner Network.
Accordingly, we offer choice and flexibility to our customers and facilitate the product, service and deployment combinations that best suit our customers’ needs. 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 and indirectly through the Oracle Partner Network.
We expect these trends to continue. Oracle Applications Technologies Oracle applications technologies are marketed, sold, delivered and supported through our cloud and license business. Our applications cloud services and license support revenues represented 42%, 41% and 40% of our total cloud services and license support revenues during fiscal 2022, 2021 and 2020, respectively.
The proportion of our cloud services revenues relative to our total revenues has increased and our cloud services revenues represented 32%, 25% and 22% of our total revenues during fiscal 2023, 2022 and 2021, respectively. We expect these trends to continue. Oracle Applications Technologies Oracle applications technologies are marketed, sold, delivered and supported through our cloud and license business.
Manufacturing We rely on third-party manufacturing partners to produce the substantial majority 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.
We expect this trend will continue. 11 Table of Contents Index to Financial Statements Manufacturing 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.
Homeland Security Advisory Council. 17 Table of Contents Index to Financial Statements Mr. Henley, 7 7 , 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.
Homeland Security Advisory Council. Mr. Henley, 78, 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.
He served as our Executive Vice President and Chief Financial Officer from March 1991 to July 2004. Mr. Screven, 57, has been Executive Vice President, Chief Corporate Architect since May 2015. He served as our Senior Vice President, Chief Corporate Architect from November 2006 to April 2015 and as Vice President, Chief Corporate Architect from January 2003 to November 2006.
Mr. Screven, 58, has been Executive Vice President, Chief Corporate Architect since May 2015. He served as our Senior Vice President, Chief Corporate Architect from November 2006 to April 2015 and as Vice President, Chief 16 Table of Contents Index to Financial Statements Corporate Architect from January 2003 to November 2006.
Oracle applications and infrastructure offerings are marketed and sold through our cloud and license, hardware, and services businesses and are delivered through the Oracle Cloud, or through other IT deployment models including cloud-based, hybrid and on-premise deployments. We believe Oracle applications and infrastructure offerings enable flexibility, interoperability and choice to best meet customer IT needs.
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 through other IT deployment models, including cloud-based, hybrid and on-premise deployments. We believe that our Oracle Cloud Services offerings are opportunities for us to continue to expand our cloud and license business.
Our Chief Executive Officer is a woman and forty percent of our Board members are women and/or come from a diverse background. We endeavor to hire employees from a broad pool of talent with diverse backgrounds, perspectives and abilities and we believe Oracle’s leaders serve as role models for our diverse and inclusive workforce.
We endeavor to hire employees from a broad pool of talent with diverse backgrounds, perspectives and abilities and we believe Oracle’s leaders serve as role models for our diverse and inclusive workforce.
Catz Chief Executive Officer and Director Jeffrey O. Henley Vice Chairman of the Board of Directors Edward Screven Executive Vice President, Chief Corporate Architect Dorian E. Daley Executive Vice President and General Counsel William Corey West Executive Vice President, Chief Accounting Officer Mr. Ellison, 77, has been our Chairman of the Board and Chief Technology Officer since September 2014.
Catz Chief Executive Officer and Director Jeffrey O. Henley Vice Chairman of the Board of Directors Edward Screven Executive Vice President, Chief Corporate Architect Stuart Levey Executive Vice President, Chief Legal Officer Maria Smith Executive Vice President, Chief Accounting Officer Mr. Ellison, 78, has been our Chairman of the Board and Chief Technology Officer since September 2014.
Our NetSuite applications are generally marketed to small to medium-sized organizations; and • Oracle Advertising, which enables organizations to leverage their own data and consumer data to inform and measure marketing strategies and programs.
Our NetSuite applications are generally marketed to small to medium-sized organizations; • Oracle Cerner healthcare, which is designed to enable medical professionals to deliver better healthcare to individual patients and communities; and • Oracle Advertising, which is designed to enable organizations to leverage their own data and consumer data to inform and measure marketing strategies and programs.
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 . 13 Table of Contents Index to Financial Statements Research and Development We develop the substantial majority of our products and services offerings internally utilizing the skills and diversity of a global workforce.
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.
Oracle Cloud@Customer is designed to enable customers to run Oracle Autonomous Database or Oracle Database in their own data centers behind their firewalls while having the services managed by Oracle. Oracle Dedicated Region Cloud@Customer is designed to enable customers to bring a self-contained OCI instance into their data centers while accessing a substantial portfolio of OCI and Oracle SaaS offerings.
Oracle Exadata Cloud@Customer is designed to enable customers to run Oracle Autonomous Database and Oracle Database securely in their own data centers behind their firewalls while having the services managed by Oracle.
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.
Research and Development 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.
It is also designed to enable organizations to efficiently support dynamic workloads, conduct real-time analysis of transactional data and lower administration costs.
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.
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 OCI’s Exadata Cloud Service and Database Cloud Service.
As described above, customers may elect to purchase license support for Oracle Database licenses.
We offer certain of our Oracle Engineered Systems, including the Oracle Exadata Database Machine, among others, through flexible deployment options, including on-premise, as a cloud offering in OCI, and as a hybrid cloud offering in customer data centers. 11 Table of Contents Index to Financial Statements Oracle Servers 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 offer some of our Oracle Engineered Systems, including the Oracle Exadata Database Machine, among others, through flexible deployment options, including on-premise, as a cloud offering in OCI, and as a hybrid cloud offering in customer data centers.
We have programs and resources to help our employees explore, build and achieve their career goals. We also promote regular career conversations between leaders and employees. These are separate from performance feedback conversations and are focused on helping employees identify and take steps to grow their careers.
These are separate from performance feedback conversations and are focused on helping employees identify and take steps to grow their careers.
None of our employees in the U.S. is represented by a labor union; however, in certain foreign subsidiaries, labor unions or workers’ councils represent some of our employees. Diversity and Inclusion We believe that innovation starts with inclusion. Our focus on diversity and inclusion is reflected throughout our organization, starting at the highest level.
None of our employees in the U.S. are represented by labor unions; however, in certain foreign subsidiaries, labor unions or workers’ councils represent some of our employees. Diversity and Inclusion We believe that D&I powers innovation and that the diversity of our workforce is critical to helping our customers solve difficult problems.
Oracle Middleware is designed to protect customers’ IT investments and work with both Oracle and non-Oracle database, middleware and applications software through an open architecture and adherence to industry standards.
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.
Employee satisfaction on the importance of D&I at Oracle and their manager’s encouragement of diverse ideas and perspectives ranks high in our employee engagement surveys.
In addition to global, regional and local programs, Oracle Human Resources partners with business leaders to create and implement D&I plans to embed targeted strategies into organizations across Oracle. Employee satisfaction on the importance of D&I at Oracle and their manager’s encouragement of diverse ideas and perspectives ranks high in our employee engagement surveys.
We also offer certain of our middleware capabilities as a part of our OCI offerings.
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.
Leaders Who Listen We believe that an important aspect of creating a culture and environment that supports employee, customer and business success is listening to employee feedback. We share the results of our annual employee engagement survey with leaders who receive direct observations from employees about areas critical to Oracle’s strategic priorities, including the employee and customer experience.
We share the results of our annual employee engagement survey with leaders who receive direct observations from employees about areas critical to Oracle’s strategic priorities, including the employee and customer experience. The results of the survey are also discussed with our Board of Directors and committees thereof. In fiscal 2023, 81% of our employees participated in the annual survey.
We have a number of U.S. and foreign patents and pending applications that relate to various aspects of our products and technology. While we believe that our patents have value, no single patent is essential to us or to any of our principal businesses.
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.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe are also subject to a variety of other risks and challenges in managing an organization operating globally, including those related to: • general economic conditions in each country or region; • political unrest, terrorism, war and the potential for other hostilities, including but not limited to, the current Russia-Ukraine conflict, the economic impact thereof and the potential to subject our business to materially adverse consequences should the situation escalate beyond its current scope, including, among other potential impacts, the geographic proximity of the situation relative to the rest of Europe, where a material portion of our business is carried out ; • public health risks, social risks and supporting infrastructure stability risks, particularly in areas in which we have significant operations; 28 Table of Contents Index to Financial Statements • fluctuations in currency exchange rates and related impacts on customer demand and our operating results; • difficulties in transferring funds from or converting currencies in certain countries that could lead to a devaluation of our net assets, in particular our cash assets, in that country’s currency; • regulatory changes, including government austerity measures in certain countries that we may not be able to sufficiently plan for or avoid that may unexpectedly impair bank deposits or other cash assets that we hold in these countries or that impose additional taxes that we may be required to pay in these countries; • common local business behaviors that are in direct conflict with our business ethics, practices and conduct policies; • natural disasters; • the effects of climate change (such as sea level rise, drought, flooding, wildfires and increased storm sensitivity); • longer payment cycles and difficulties in collecting accounts receivable; • overlapping tax regimes; and • reduced protection for intellectual property rights in some countries.
Biggest changeWe are also subject to a variety of other risks and challenges in managing an organization operating globally, including those related to: • general economic conditions in each country or region; • political unrest, terrorism and war, including but not limited to the current Russia-Ukraine war, the economic impact thereof and the potential to subject our business to materially adverse consequences should the situation escalate beyond its current scope, including, among other potential impacts, the geographic proximity of the situation relative to the rest of Europe, where a material portion of our business is carried out; • the potential for other hostilities, including but not limited to escalating tensions between China and Taiwan; • public health risks, social risks and supporting infrastructure stability risks, particularly in areas in which we have significant operations; • fluctuations in currency exchange rates and related impacts on customer demand and our operating results; • difficulties in accessing or transferring funds from or converting currencies in certain countries that could lead to a devaluation of our net assets, in particular our cash assets, in that country’s currency; • regulatory changes, including government austerity measures in certain countries that we may not be able to sufficiently plan for or avoid that may unexpectedly impair bank deposits or other cash assets that we hold in these countries or that impose additional taxes that we may be required to pay in these countries; • common local business behaviors or regulatory requirements that conflict with our business ethics, practices and conduct policies; • longer payment cycles and difficulties in collecting accounts receivable; • overlapping tax regimes; and • reduced protection for intellectual property rights in some countries.
Taken together, the changes in 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.
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.
If a cyber-attack or other security incident results in unauthorized access to or modification 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 significant damage to our brand and reputation.
If a cyber-attack or other security incident results in unauthorized access to or modification 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.
Our ability to pay interest and repay the principal for our indebtedness is dependent upon our ability to manage our business operations, generate sufficient cash flows to service such debt and the other factors discussed in this section. There can be no assurance that we will be able to manage any of these risks successfully.
Our ability to pay interest and repay the principal for our indebtedness is dependent upon our ability to manage our business operations, generate sufficient cash flows to service such debt and the other factors discussed in this Risk Factors section. There can be no assurance that we will be able to manage any of these risks successfully.
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 may also incur increased cloud delivery expenses as we expand our cloud operations and update our infrastructure, all of which could reduce our revenues and/or profitability.
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 may also incur increased cloud delivery expenses as we expand our cloud operations and update our infrastructure, all of which could reduce our revenues and profitability.
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.
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.
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, others claiming infringement or other misuse of their intellectual property rights and/or breach of our agreements with them.
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.
The timing of announcements in the public market by us or by our competitors regarding new cloud services, products, product enhancements, technological advances, acquisitions or major transactions could also affect our stock price. Changes in the amounts and frequency of share repurchases or dividends could affect our stock price.
The timing of announcements in the public market by us or by our competitors regarding new cloud services, products, product enhancements, technological advances, 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.
Risks we may face in connection with our acquisition program, such as our recent acquisition of Cerner, include: • our ongoing business may be disrupted and our management’s attention may be diverted by acquisition, transition or integration activities; • we may have difficulties (1) managing an acquired company’s technologies or lines of business; (2) entering new markets where we have no, or limited, direct prior experience or where competitors may have stronger market positions; or (3) retaining key personnel from the acquired companies; • an acquisition may not further our business strategy as we expected, we may not integrate an acquired company or technology as successfully as we expected, we may impose our business practices or alter go-to-market strategies that adversely impact the acquired business or we may overpay for, or otherwise not realize the expected return on our investments, each or all of which could adversely affect our business or operating results and potentially cause impairment to assets that we recorded as a part of an acquisition, including intangible assets and goodwill; • our operating results or financial condition may be adversely impacted by (1) claims or liabilities that we assume from an acquired company or technology or that are otherwise related to an acquisition; (2) pre-existing contractual relationships that we assume from an acquired company, the termination or modification of which may be costly or disruptive to our business; and (3) unfavorable revenue recognition or other accounting treatment as a result of an acquired company’s business practices; • we may fail to identify or assess the magnitude of certain liabilities, shortcomings or other circumstances prior to acquiring a company or technology; • we may not realize any anticipated increase in our revenues from an acquisition for a number of reasons, including (1) if a larger than predicted number of customers decline to renew their contracts with the acquired company; (2) if we are unable to sell the acquired products or service offerings to our customer base; (3) if acquired customers do not elect to purchase our technologies due to differing business practices; or (4) if contract models utilized by an acquired company do not allow us to recognize revenues in a manner that is consistent with our current accounting practices; • we may have difficulty integrating acquired technologies, products, services and their related supply chain operations with our existing lines of business and related infrastructures; • we may have multiple product lines or services offerings as a result of our acquisitions that are offered, priced, delivered and supported differently, which could cause customer confusion and delays; • we may incur higher than anticipated costs (1) to support, develop and deliver acquired products or services; (2) for general and administrative functions that support new business models; or (3) to comply with regulations applicable to an acquired business that are more complicated than we had anticipated; • we may be unable to obtain timely approvals from, or may otherwise have certain limitations, restrictions, penalties or other sanctions imposed on us by worker councils or similar bodies under applicable employment laws as a result of an acquisition; • we may be unable to obtain required approvals from governmental authorities under competition and antitrust laws on a timely basis, if at all, and we may need to divest or dispose of assets or businesses or take other actions in order to obtain such approvals; • our use of cash to pay for acquisitions may limit other potential uses of our cash; • we recently incurred additional debt to finance our acquisition of Cerner and in the future, we may have to incur additional debt to pay for other acquisitions or have to delay or not proceed with a substantial acquisition if we cannot obtain the necessary funding to complete the acquisition in a timely manner or on favorable terms; and 23 Table of Contents Index to Financial Statements • we may experience additional or unexpected changes in how we are required to account for our acquisitions pursuant to U.S. generally accepted accounting principles, including arrangements that we may assume in an acquisition .
Risks we may face in connection with our acquisition program include: • our ongoing business may be disrupted and our management’s attention may be diverted by acquisition, transition or integration activities; • we may have difficulties (1) managing an acquired company’s technologies or lines of business; (2) entering new markets where we have no, or limited, direct prior experience or where competitors may have stronger market positions; or (3) retaining key personnel from the acquired companies; • an acquisition may not further our business strategy as we expected, we may not integrate an acquired company or technology as successfully as we expected, we may impose our business practices or alter 21 Table of Contents Index to Financial Statements go-to-market strategies that adversely impact the acquired business or we may overpay for, or otherwise not realize the expected return on our investments, each or all of which could adversely affect our business or operating results and potentially cause impairment to assets that we recorded as a part of an acquisition, including intangible assets and goodwill; • our operating results or financial condition may be adversely impacted by (1) claims or liabilities that we assume from an acquired company or technology or that are otherwise related to an acquisition; (2) pre-existing contractual relationships that we assume from an acquired company, the termination or modification of which may be costly or disruptive to our business; and (3) unfavorable revenue recognition or other accounting treatment as a result of an acquired company’s business practices; • we may fail to identify or assess the magnitude of certain liabilities, shortcomings or other circumstances prior to acquiring a company or technology; • we may not realize any anticipated increase in our revenues from an acquisition for a number of reasons, including (1) if a larger than predicted number of customers decline to renew or terminate their contracts with the acquired company; (2) if we are unable to sell the acquired products or service offerings to our customer base; (3) if acquired customers do not elect to purchase our technologies due to differing business practices; or (4) if contract models utilized by an acquired company do not allow us to recognize revenues in a manner that is consistent with our current accounting practices; • we may have difficulty integrating acquired technologies, products, services and their related supply chain operations with our existing lines of business and related infrastructures; • we may have multiple product lines or services offerings as a result of our acquisitions that are offered, priced, delivered and supported differently, which could cause customer confusion and delays; • we may incur higher than anticipated costs (1) to support, develop and deliver acquired products or services; (2) for general and administrative functions that support new business models; or (3) to comply with regulations applicable to an acquired business that are more complicated than we had anticipated; • we may be unable to obtain timely approvals from, or may otherwise have certain limitations, restrictions, penalties or other sanctions imposed on us by worker councils or similar bodies under applicable employment laws as a result of an acquisition; • we may be unable to obtain required approvals from governmental authorities under competition and antitrust laws on a timely basis, if at all, and we may need to divest or dispose of assets or businesses or take other actions in order to obtain such approvals; • our use of cash to pay for acquisitions may limit other potential uses of our cash; • we incurred additional debt to finance our acquisition of Cerner in fiscal 2023 and in the future, we may have to incur additional debt to pay for other acquisitions or have to delay or not proceed with an acquisition if we cannot obtain the necessary funding to complete the acquisition in a timely manner or on favorable terms; and • we may experience additional or unexpected changes in how we are required to account for our acquisitions pursuant to U.S. generally accepted accounting principles, including arrangements that we may assume in an acquisition.
In addition, cyber-attacks and other security incidents could lead to significant investigation and remediation costs, loss or destruction of information, interruption of our operations, inappropriate use of proprietary and sensitive data, lawsuits, indemnity obligations, regulatory investigations and financial penalties, and claims and increased legal liability, including in some cases contractual costs related to customer notification and fraud monitoring.
In addition, cyber-attacks and other security incidents could lead to considerable investigation and remediation costs, loss or destruction of information, interruption of our operations, inappropriate use of proprietary and sensitive data, lawsuits, indemnity obligations, regulatory investigations and financial penalties, and claims and increased legal liability, including in some cases contractual costs related to customer notification and fraud monitoring.
We believe that Oracle in particular is a target for computer hackers and other bad actors because Oracle stores and processes large amounts of data, including in customer sectors involving particularly sensitive data such as health sciences, financial services, retail, hospitality and the government.
We believe that Oracle in particular is a target for computer hackers and other bad actors because Oracle stores and processes large amounts of data, including in customer sectors involving particularly sensitive data such as health sciences (including patient health information), financial services, retail, hospitality and the government.
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.
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.
Our cloud and license, and hardware indirect channel network is comprised primarily of resellers, system integrators/implementers, consultants, education providers, internet service providers, network integrators and independent software vendors. Our relationships with these channel participants are important elements of our cloud, software and hardware marketing and sales efforts.
Our cloud and license, and hardware indirect channel networks are comprised primarily of resellers, system integrators/implementers, consultants, education providers, internet service providers, network integrators and independent software vendors. Our relationships with these channel participants are important elements of our cloud, software and hardware marketing and sales efforts.
In connection with these investments, we entered, and expect to continue to enter, into long-term operating lease commitments with third party data center providers that generally require us to pay fees to early exit such obligations should our strategies change, which could adversely impact our profitability and cash flows.
In connection with these investments, we entered, and expect to continue to enter, into long-term operating lease commitments with third party data center providers that generally require us to pay significant contract termination fees to early exit such obligations should our strategies change, which could adversely impact our profitability and cash flows.
Renewals of these contracts are important to the growth of our business. 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. We have continued to refresh and release new offerings of our cloud products and services.
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. We have continued to refresh and release new offerings of our cloud products and services.
In addition, U.S. and 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 and share personal and other information that is integral to certain services we provide.
In addition, U.S. and 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.
A major earthquake or fire, 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.
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.
Such unfavorable tax legislation resulting from the shifting U.S. political landscape and economic environment 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. For example, in November 2021, the U.S.
Such unfavorable tax legislation resulting from the shifting U.S. political landscape and economic environment 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.
Any such violations could result in prohibitions on our ability to offer our products and services in one or more countries, 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.
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.
A failure by the ESC to identify and assess these risks could adversely affect our reputation, business, financial performance and growth. We publish an annual Corporate Citizenship Report, which includes disclosure of our Environmental, Social and Governance (ESG) matters and goals.
A failure by the ESC to identify and assess these risks could adversely affect our reputation, business, financial performance and growth. We publish an annual Social Impact Report, which includes disclosure of our Environmental, Social and Governance (ESG) matters and goals.
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 are faced with 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.
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.
In the wake of the European Union (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.
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.
Financial Risks Our quarterly results of operations may fluctuate significantly based on a number of factors that make our results of operations difficult for us to predict. Our revenues, particularly certain of our cloud license and on-premise license revenues and hardware revenues, can be difficult to forecast.
Financial Risks 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.
Our financial results could be adversely affected if: • our contracts with channel participants were terminated or our relationships with channel participants were to deteriorate; • any of our competitors enter into strategic relationships with or acquire a significant channel participant; • the financial condition or operations of our channel participants were to weaken; or 22 Table of Contents Index to Financial Statements • the level of demand for our channel participants’ products and services were to decrease.
Our financial results could be adversely affected if: • our contracts with channel participants were terminated or our relationships with channel participants were to deteriorate; • any of our competitors enter into strategic relationships with or acquire a significant channel participant; • the financial condition or operations of our channel participants were to weaken; or • the level of demand for our channel participants’ products and services were to decrease.
We expect to continue to receive such claims as: • we continue to expand into new businesses and acquire companies; • the number of products and competitors in our industry segments grows; • the use and support of third-party code (including open source code) becomes more prevalent in the industry; • the volume of issued patents continues to increase; and • non-practicing entities continue to assert intellectual property infringement in our industry segments.
We expect to continue to receive such claims as: • we continue to expand into new businesses and acquire companies; • the number of products and competitors in our industry segments grows; • the use and support of third-party code (including open source code) becomes more prevalent in the industry; • the volume of issued patents continues to increase; and 24 Table of Contents Index to Financial Statements • non-practicing entities continue to assert intellectual property infringement in our industry segments.
Errors in our cloud, license or hardware offerings could affect their ability to properly function, integrate or operate with other cloud, license or hardware offerings, could result in service interruptions, delays or outages of our cloud offerings, could create security vulnerabilities in our products or services, could delay the development or release of new products or services or new versions of products or services, and could adversely affect market acceptance 19 Table of Contents Index to Financial Statements of our products or services.
Errors in our cloud, license or hardware offerings could affect their ability to properly function, integrate or operate with other cloud, license or hardware offerings, could result in service interruptions, delays or outages of our cloud offerings, could create security vulnerabilities in our products or services, could delay the development or release of new products or services or new versions of products or services, and could adversely affect market acceptance of our products or services.
The U.S. Federal Trade Commission continues to fine companies for unfair and deceptive data protection practices, and these fines may increase in size.
Federal Trade Commission continues to fine companies for unfair and deceptive data protection practices, and these fines may increase in size.
We may be unable to respond quickly enough to accommodate short-term increases in customer demand for support services or may be inefficient in our 20 Table of Contents Index to Financial Statements resolution of customer support issues. Increased customer demand for these services, without corresponding revenues, could increase costs and adversely affect our operating results.
We may be unable to respond quickly enough to accommodate short-term increases in customer demand for support services or may be inefficient in our resolution of customer support issues. 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 a market perception that we do not maintain high-quality technical support, could adversely affect our reputation, our ability to sell and renew our applications and infrastructure offerings to existing and prospective customers, and our business, operating results, and financial position .
Any failure to maintain high-quality technical support, or a market perception that we do not maintain high-quality technical support, could adversely affect our reputation, 19 Table of Contents Index to Financial Statements our ability to sell and renew our applications and infrastructure offerings to existing and prospective customers, and our business, operating results, and financial position.
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 26 Table of Contents Index to Financial Statements U.S. laws and courts.
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.
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 31 Table of Contents Index to Financial Statements and effective tax rate.
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.
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 .
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 18 Table of Contents Index to Financial Statements 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 violations of law are found, they could result in civil and criminal penalties and administrative 29 Table of Contents Index to Financial Statements sanctions, including termination of contracts, refund of a portion of fees received, forfeiture of profits, suspension of payments, fines and suspensions or debarment from future government business.
If violations of law are found, they could result in civil and criminal penalties and administrative sanctions, including termination of contracts, refund of a portion of fees received, forfeiture of profits, suspension of payments, fines and suspensions or debarment from future government business.
In addition, we outfit these data centers with equipment and improvements that we typically depreciate over their estimated useful lives, which could be shortened should our cloud strategies change, which could adversely affect our profitability. We might experience significant coding, manufacturing or configuration errors in our cloud, license and hardware offerings.
In addition, we outfit these data centers with equipment and improvements that we typically depreciate 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.
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. Our cloud and license, and hardware indirect sales channels could affect our future operating results.
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 recent acquisition of Cerner also subjects us to additional 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 treatment of patient information, healthcare fraud and healthcare information sharing.
Our acquisition of Cerner during fiscal 2023 also subjects us to additional 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.
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.
Although we believe that our income and non-income based 25 Table of Contents Index to Financial Statements 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.
In addition, international, regional or domestic political unrest and the related potential impact on global stability, terrorist attacks and the potential for other hostilities in various parts of the world, public health crises such as the COVID-19 pandemic, and natural disasters continue to contribute to a climate of economic and political 32 Table of Contents Index to Financial Statements uncertainty that could adversely affect our results of operations and financial condition, including our revenue growth and profitability.
In addition, international, regional or domestic political unrest and the related potential impact on global stability, 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.
For example, we will experience foreign currency gains and losses in certain instances if it is not possible or cost-effective to hedge our foreign currency exposures, if our hedging efforts are ineffective, or should we suspend our foreign currency forward contract program.
For example, we will experience 29 Table of Contents Index to Financial Statements foreign currency gains and losses in certain instances if it is not possible or cost-effective to hedge our foreign currency exposures, if our hedging efforts are ineffective, or should we suspend our foreign currency forward contract program.
Attempts of this nature typically involve IT-related viruses, worms, and other malicious software programs that attack networks, systems, products and services, exploit potential 24 Table of Contents Index to Financial Statements security vulnerabilities of networks, systems, products and services, create system disruptions and cause shutdowns or denials of service.
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.
Our sales to government clients expose us to business volatility and risks, including government budgeting cycles and appropriations, procurement regulations, governmental policy shifts, early termination of contracts, audits, investigations, sanctions and penalties.
Our sales to local, state, federal and foreign government customers expose us to business volatility and risks, including government budgeting cycles and appropriations, procurement regulations, governmental policy shifts, early termination of contracts, audits, investigations, sanctions and penalties.
On June 8, 2022, we closed the acquisition of Cerner Corporation (“Cerner”). We continue to review and consider strategic acquisitions of companies, products, services and technologies. We have a selective and active acquisition program and we expect to continue to make acquisitions in the future because acquisitions have been an important element of our overall corporate strategy.
We review and consider strategic acquisitions of companies, products, services and technologies. We have a selective and active acquisition program and we expect to continue to make acquisitions in the future because acquisitions have been an important element of our overall corporate strategy.
Macroeconomic developments such as the global or regional economic effects resulting from the current Russia-Ukraine conflict, increasing inflation rates and related economic curtailment initiatives, the COVID-19 pandemic, the United Kingdom leaving the EU (Brexit), evolving trade policies between the U.S. and international trade partners, 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.
Macroeconomic developments such as the global or regional economic effects resulting from increasing inflation rates, limited liquidity, adverse developments affecting financial institutions, the current Russia-Ukraine war and related economic curtailment initiatives, evolving trade policies between the U.S. and international trade partners, 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.
Our future income tax provisions and effective tax rate could materially increase if any of the foregoing potential tax changes are implemented 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 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.
In addition, our business may be adversely affected if: • we do not continue to develop and release new or enhanced products and services within the anticipated time frames; 18 Table of Contents Index to Financial Statements • infrastructure costs to deliver new or enhanced products and services take longer or result in greater costs than anticipated; • we are unable to increase our existing data center capacity or establish data centers in new geographic locations in a timely manner to meet current or expected customer demand; • there is a delay in market acceptance of and difficulty in transitioning new and existing customers to new, enhanced or acquired product lines or services; • there are changes in information technology (IT) trends that we do not adequately anticipate or address with our product development efforts; • we do not optimize complementary product lines and services in a timely manner; or • we fail to adequately integrate, support or enhance acquired product lines or services.
In addition, our business may be adversely affected if: • we do not continue to develop and release new or enhanced products and services within the anticipated time frames; • infrastructure costs to deliver new or enhanced products and services take longer or result in greater costs than anticipated; • we are unable to increase our existing data center capacity or establish data centers in new geographic locations in a timely manner to meet current or expected customer demand; • we fail to meet our contractual service level commitments; • there is a delay in market acceptance of and difficulty in transitioning new and existing customers to new, enhanced or acquired product lines or services; • sanctions, export controls or other regulatory, legislative or other barriers prevent us from serving certain customers or restrict our customers from operating in specific jurisdictions; • there are changes in IT trends that we do not adequately anticipate or timely address with our product development efforts; • we do not optimize complementary product lines and services in a timely manner; or 17 Table of Contents Index to Financial Statements • we fail to adequately integrate, support or enhance acquired product lines or services.
Countries around the world continually consider and make changes to relevant tax, accounting and other laws, treaties, regulations, guidance and interpretations. In the U.S., various legislative proposals, if enacted, would substantially raise U.S. income taxes on our domestic and international profits.
Countries around the world continually consider and make changes to relevant tax, accounting and other laws, treaties, regulations, guidance and interpretations. In the U.S., certain enacted and proposed legislation may substantially raise U.S. income taxes on our domestic and international profits.
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 that are less favorable to us, or offer other favorable terms in order to compete successfully.
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, in order to compete successfully. Any such changes may reduce revenues and margins and could adversely affect operating results.
We rely on hiring qualified employees and the continued service of our senior management, including our Chairman of the Board of Directors, Chief Technology Officer and founder; our Chief Executive Officer; other members of our executive team; and other key employees.
We may lose key employees or may be unable to hire enough qualified employees. We rely on hiring qualified employees and the continued service of our senior management, including our Chairman of the Board of Directors, Chief Technology Officer and founder; our Chief Executive Officer; other members of our executive team; and other key employees.
Violations of these laws and regulations could result in fines and penalties, criminal sanctions against us, our officers or our employees, and prohibitions on the conduct of our business, including the loss of trade privileges.
Violations of these laws and regulations could 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.
Compliance with these cybersecurity requirements is complex and costly, and failure to meet, or delays in meeting, the required security controls could 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. We are also subject to early termination of our contracts.
Compliance with these cybersecurity requirements is complex and costly, and failure to meet, or delays in meeting, the required security controls could limit our ability to sell 27 Table of Contents Index to Financial Statements products and services, directly or indirectly, to the DoD and other federal and state government entities that implement similar cybersecurity requirements.
We are regularly under audit by tax authorities in the U.S. and internationally, which can lead to disagreements such as regarding our intercompany transfer prices and calculations and on the applicability of withholding taxes to our cross-border transactions.
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.
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 these changes as new threats emerge.
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 these changes as new threats emerge. We may not discover any security breach and loss of information for a significant period of time after the security breach.
While we believe this may help us engage with a wider pool of talent and may help to retain employees who want or need more flexibility, it may fail to yield these desired benefits and could also lead to increased employee burnout or negatively impact employee productivity, and it may present cybersecurity risks and additional risks for our real estate portfolio and strategy.
While we believe this has helped us engage with a wider pool of talent and may help to retain employees who want or need more flexibility, it may fail 20 Table of Contents Index to Financial Statements to yield these desired benefits and it may present cybersecurity risks and additional risks for our real estate portfolio and strategy.
Data Privacy, Cybersecurity and Intellectual Property Risks 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.
Additional impacts and risks that we are not currently aware of may arise, and the COVID-19 pandemic may also heighten other risks described in this Risk Factors section. 22 Table of Contents Index to Financial Statements Data Privacy, Cybersecurity and Intellectual Property Risks 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 supply chain operations have been, and likely will continue to be, negatively impacted by the COVID-19 pandemic and could also be disrupted by industry consolidation and component constraints or shortages, natural disasters, political unrest, other public health crises, changes to trade policies, port stoppages or other transportation disruptions or slowdowns, or other factors affecting the countries or regions where these single source component vendors are located or where the products are being shipped.
Our supply chain operations could be disrupted by industry consolidation and component constraints or shortages, natural disasters, political unrest, public health crises, changes to trade laws or regulations, port stoppages or other transportation disruptions or slowdowns, or other factors affecting the countries or regions where these single source component vendors are located or where the products are being shipped (such as the tensions between China and Taiwan).
Many governmental entities have the right to terminate contracts at any time, 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.
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.
We are currently restructuring our workforce and in the past we have restructured or made other adjustments to our workforce in response to management changes, product changes, performance issues, changes in strategies, acquisitions and other internal 21 Table of Contents Index to Financial Statements and external considerations.
Our periodic workforce restructurings and reorganizations can be disruptive. We are currently restructuring our workforce and in the past we have restructured or made other adjustments to our workforce in response to management changes, product changes, performance issues, changes in strategies, acquisitions and other internal and external considerations.
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 Euro, Japanese Yen, Saudi Arabian Riyal, Indian Rupee and British Pound, relative to the U.S.
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.
Government contracts laws and regulations impose certain risks, and contracts are generally subject to audits and investigations.
This may adversely impact spending on government programs. Government contracts laws and regulations impose certain risks, and contracts are generally subject to audits and investigations.
Machine learning and artificial intelligence are increasingly driving innovations in technology, but if they fail to operate as anticipated or our other products do not perform as promised, our business and reputation may be harmed. During fiscal 2022, we held many of our major customer events in a virtual format.
Machine learning and AI are increasingly driving innovations in technology, but if they fail to operate as anticipated or our other products do not perform as promised, our business and reputation may be harmed.
Our operations have been and may in the future be negatively affected by a range of external factors related to the COVID-19 pandemic that are not within our control.
Our operations have been and may in the future be negatively affected by a range of external factors related to the COVID-19 pandemic that are not within our control, including preventative measures and other related governmental measures. If we are not able to respond to and manage future impacts of the COVID-19 pandemic effectively, our business will be harmed.
Our Oracle Cloud strategy, including our Oracle Cloud Software-as-a-Service and Oracle Cloud Infrastructure (SaaS and OCI, respectively, and collectively, Oracle Cloud Services) offerings, may adversely affect our revenues and profitability. We provide our cloud and other offerings to customers worldwide via a variety of deployment models, including via our cloud-based SaaS and OCI offerings.
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 SaaS and OCI offerings.
We could incur future losses in emerging market countries and other countries where we do business should their currencies become designated as highly inflationary. There are risks associated with our outstanding and future indebtedness.
We could incur future losses in emerging market countries and other countries where we do business should their currencies become designated as highly inflationary. There are risks associated with our outstanding and future indebtedness. As of May 31, 2023, we had an aggregate of $90.5 billion of outstanding indebtedness that will mature between calendar year 2023 and calendar year 2061.
Contracts may be terminated based upon 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.
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.
These laws can require suspension or termination of business, including financial transactions, in certain countries, territories or with certain customers and any such action in the future could adversely affect our business, financial condition and results of operations.
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 certain countries, territories or with certain customers and any such action in the future could adversely affect our business, financial condition and results of operations.
If there is a security vulnerability in one of these components, and if there is a security exploit targeting it, we could face 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.
Our products operate in conjunction with and are dependent on a wide variety of third-party products, components and services. If there is a security vulnerability in one of these components, and if there is a security exploit targeting it, we could face increased costs, liability claims, customer dissatisfaction, reduced revenue, or harm to our reputation or competitive position.
Our international sales and operations 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. Compliance with international and U.S. laws and regulations that apply to our international operations increases our cost of doing business in foreign jurisdictions.
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.
Item 1A. Risk Factors 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.
Item 1A. R isk Factors 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.
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.
If 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.
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 or non-competition agreements with our employees.
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 or non-competition 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.
These types of restructurings have resulted , and may in the future result, in increased restructuring costs and temporary reduced productivity while the employees adjusted to their new roles and responsibilities. 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 the expected timeframe.
These types of restructurings have resulted, and may in the future result, in increased restructuring costs and temporary reduced productivity while the employees adjusted to their new roles and responsibilities. These types of restructurings may also lead to a shortage of sufficiently skilled employees in certain roles.
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.
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. 23 Table of Contents Index to Financial Statements 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.
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 continually focus on improving our cost structure by hiring personnel in countries where advanced technical expertise 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.
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.
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 the 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.
The COVID-19 pandemic has affected how we and our customers are operating our respective businesses, and the duration and extent to which this will impact our future results of operations remains uncertain. The COVID-19 pandemic and efforts to control its spread have affected how we and our customers, partners and suppliers are operating our businesses.
The COVID-19 pandemic and efforts to control its spread have affected, and any spread or resurgence of COVID-19 variants may in the future affect, how we and our customers, partners and suppliers operate our businesses.
This is true in the U.S. where, for example, California, Colorado, Connecticut, Utah and Virginia have enacted privacy laws, the U.S. Congress is considering several privacy bills at 25 Table of Contents Index to Financial Statements the federal level, and a number of other state legislatures are considering privacy laws.
This is true in the U.S. where, for example, California, Colorado, Connecticut, Utah and Virginia have enacted privacy laws, the U.S.
Use of our competitors’ technologies influences a customer’s purchasing decision or creates an environment that makes it less efficient to utilize or migrate to Oracle products and services.
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.
These laws and regulations include data privacy requirements, labor relations laws, tax laws, foreign currency-related regulations, competition 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 economic sanctions and embargos.
Foreign Corrupt Practices Act (FCPA), market access regulations, tariffs, and import, export and general trade regulations, including but not limited to economic sanctions and embargos.
Where circumstances warrant, we provide information and report our findings to government authorities, and in some circumstances such authorities conduct their own investigations and we respond to their requests or demands for information. No assurance can be given that action will not be taken by such authorities or that our compliance program will prove effective.
No assurance can be given that action will not be taken by such authorities or that our compliance program will prove effective.
More fundamentally, 137 countries, including the U.S., in a global effort led by the Organization for Economic Cooperation and Development, have politically committed to implementing tax changes that would provide 27 Table of Contents Index to Financial Statements greater taxing rights to market jurisdictions where customers or users are located and impose minimum taxes on corporate profits.
The Organization for Economic Cooperation and Development (OECD) and the G20 have developed a two-pillar framework that would provide greater taxing rights to market jurisdictions where customers or users are located and implement a 15% global minimum tax on multinational corporate groups.

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Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed1 unchanged
Biggest changeWe also own or lease other facilities for current use consisting of approximately 23.1 million square feet in various other locations in the U.S. and abroad. Approximately 4.7 million square feet, or 20%, of our total owned and leased space is sublet or is being actively marketed for sublease or disposition.
Biggest changeWe also own or lease other facilities for current use consisting of approximately 29.2 million square feet in various other locations in the U.S. and abroad. Approximately 9.6 million square feet, or 32%, of our total owned and leased space is sublet or is being actively marketed for sublease or disposition.
Item 2. Properties Our properties consist of owned and leased office facilities for sales, support, research and development, services, manufacturing, cloud operations and administrative and other functions. Our headquarters facility consists of approximately 0.9 million square feet in Austin, Texas, all of which we own.
Item 2. P roperties Our properties consist of owned and leased office facilities for sales, support, research and development, services, manufacturing, cloud operations and administrative and other functions. Our headquarters facility consists of approximately 0.9 million square feet in Austin, Texas, all of which we own.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeMine Safety Disclosures Not applicable. 33 Table of Contents Index to Financial Statements PART II
Biggest changeMine Saf ety Disclosures Not applicable. 32 Table of Contents Index to Financial Statements PART II
Item 3. Legal Proceedings The material set forth in Note 13 (pertaining to information regarding contingencies related to our income taxes) and Note 16 (pertaining to information regarding legal contingencies) of Notes to Consolidated Financial Statements in Item 15 of this Annual Report on Form 10-K is incorporated herein by reference. Item 4.
Item 3. Lega l Proceedings The material set forth in Note 13 (pertaining to information regarding contingencies related to our income taxes) and Note 16 (pertaining to information regarding legal contingencies) of Notes to Consolidated Financial Statements in Item 15 of this Annual Report on Form 10-K is incorporated herein by reference. Item 4.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe following table summarizes the stock repurchase activity for the three months ended May 31, 2022 and the approximate dollar value of shares that may yet be purchased pursuant to our stock repurchase program: (in millions, except per share amounts) Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Program Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program March 1, 2022—March 31, 2022 2.8 $ 79.24 2.8 $ 9,831.4 April 1, 2022—April 30, 2022 2.4 $ 79.28 2.4 $ 9,642.4 May 1, 2022—May 31, 2022 2.7 $ 71.06 2.7 $ 9,448.5 Total 7.9 $ 76.41 7.9 34 Table of Contents Index to Financial Statements Stock Performance Graph and Cumulative Total Return 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 S&P Information Technology Index for each of the last five fiscal years ended May 31, 2022, assuming an investment of $100 at the beginning of such period and the reinvestment of any dividends.
Biggest changeThe following table summarizes the stock repurchase activity for the three months ended May 31, 2023 and the approximate dollar value of shares that may yet be purchased pursuant to our stock repurchase program: (in millions, except per share amounts) Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Program Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program March 1, 2023—March 31, 2023 0.6 $ 87.46 0.6 $ 8,258.5 April 1, 2023—April 30, 2023 0.5 $ 94.72 0.5 $ 8,214.0 May 1, 2023—May 31, 2023 0.5 $ 98.90 0.5 $ 8,162.4 Total 1.6 $ 93.29 1.6 33 Table of Contents Index to Financial Statements Stock Performance Graph and Cumulative Total Return The graph below compares the cumulative total stockholder return on our common stock with the cumulative total return of the S&P 500 Index, the S&P Information Technology Index and the Dow Jones U.S.
Our stock repurchases may be effected from time to time through open market purchases or pursuant to a Rule 10b5-1 plan. Our stock repurchase program may be accelerated, suspended, delayed or discontinued at any time.
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.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock is traded on the New York Stock Exchange under the symbol “ORCL.” According to the records of our transfer agent, we had 7,706 stockholders of record as of May 31, 2022.
Item 5. Ma rket for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock is traded on the New York Stock Exchange under the symbol “ORCL.” According to the records of our transfer agent, we had 7,297 stockholders of record as of May 31, 2023.
For equity compensation plan information, please refer to Item 12 in Part III of this Annual Report. Stock Repurchase Program Our Board of Directors has approved a program for us to repurchase shares of our common stock.
For equity compensation plan information, please refer to Item 12 in Part III of this Annual Report. Stock Repurchase Program Our Board of Directors has approved a program for us to repurchase shares of our common stock. As of May 31, 2023, approximately $8.2 billion remained available for stock repurchases pursuant to our stock repurchase program.
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. *$100 INVESTED ON MAY 31, 2017 IN STOCK OR INDEX-INCLUDING REINVESTMENT OF DIVIDENDS 5/17 5/18 5/19 5/20 5/21 5/22 Oracle Corporation 100.0 104.6 115.1 124.5 185.3 171.7 S&P 500 Index 100.0 114.4 118.7 134.0 188.0 187.4 S&P Information Technology Index 100.0 128.2 133.8 185.3 264.3 269.4
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. *$100 INVESTED ON MAY 31, 2018 IN STOCK OR INDEX-INCLUDING REINVESTMENT OF DIVIDENDS 5/18 5/19 5/20 5/21 5/22 5/23 Oracle Corporation 100.0 110.1 119.0 177.2 164.2 246.2 S&P 500 Index 100.0 103.8 117.1 164.3 163.8 168.6 S&P Information Technology Index 100.0 104.4 144.5 206.1 210.2 250.8 Dow Jones U.S.
Removed
On December 9, 2021, we announced that our Board of Directors approved an expansion of our stock repurchase program by an additional $10.0 billion. As of May 31, 2022, approximately $9.4 billion remained available for stock repurchases pursuant to our stock repurchase program.
Added
Technology Total Return Index for each of the last five fiscal years ended May 31, 2023, assuming an investment of $100 at the beginning of such period and the reinvestment of any dividends. We have elected to replace the S&P Information Technology Index with the Dow Jones U.S.
Added
Technology Total Return Index because we believe the new index represents a more diversified group of companies across the technology industry and is more aligned with our peer group. In this transition year, the stock performance graph below includes the new index and the previously reported index.
Added
Technology Total Return Index 100.0 103.1 143.4 212.3 203.7 242.2 Item 6. [Rese rved] 34 Table of Contents Index to Financial Statements

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeInterest Expense : Year Ended May 31, Percent Change (Dollars in millions) 2022 Actual Constant 2021 Interest expense $ 2,755 10% 10% $ 2,496 Interest expense increased in fiscal 2022 compared to fiscal 2021 primarily due to higher average borrowings during fiscal 2022 that resulted from our issuance of $15.0 billion of senior notes in March 2021 partially offset by lower interest expense that resulted from $8.3 billion of scheduled repayments made during fiscal 2022. 52 Table of Contents Index to Financial Statements Non- Operating (Expenses) Income , net : Non-operating (expenses) income, 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 gains and losses related to equity investments including losses attributable to equity method investments 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 .
Biggest changeNon-Operating Expenses, net : Non-operating expenses, net consists primarily of interest income, net foreign currency exchange losses, the noncontrolling interests in the net profits of our majority-owned subsidiaries (primarily Oracle Financial Services Software Limited and Oracle Corporation Japan), net losses related to equity investments including losses attributable to equity method investments 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. 50 Table of Contents Index to Financial Statements Year Ended May 31, Percent Change (Dollars in millions) 2023 Actual Constant 2022 Interest income $ 285 204% 214% $ 94 Foreign currency losses, net (249 ) 25% 27% (199 ) Noncontrolling interests in income (165 ) -11% -11% (184 ) Losses from equity investments, net (327 ) 122% 123% (147 ) Other losses, net (6 ) -92% -92% (86 ) Total non-operating expenses, net $ (462 ) -12% -12% $ (522 ) Our non-operating expenses, net decreased during fiscal 2023 relative to fiscal 2022 primarily due to higher interest income due to higher average interest rates that were applicable to our cash, cash equivalent and marketable securities balances; and lower other losses, net, which was primarily attributable to higher unrealized investment gain associated with certain marketable equity securities that we held for employee benefit plans, and for which an equal and offsetting amount was recorded to our operating expenses during the same period.
Business Overview Oracle provides products and services that address enterprise information technology (IT) environments. 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 deployments, cloud-based deployments, and hybrid deployments (an approach that combines both on-premise and cloud-based deployments).
Business Overview Oracle provides products and services that address enterprise information technology (IT) environments. 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).
Critical Accounting Policies and Estimates Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (GAAP) as set forth in the Financial Accounting Standards Board’s Accounting Standards Codification (ASC), and we consider the various staff accounting bulletins and other applicable guidance issued by the SEC.
Critical Accounting Policies and Estimates Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (GAAP) as set forth in the Financial Accounting Standards Board’s Accounting Standards Codification (ASC), and we consider various staff accounting bulletins and other applicable guidance issued by the SEC.
We consider the litigation related charges that are included in this line item to be outside our ordinary course of business based on the following considerations: (i) the unprecedented nature of the litigation related charges including the nature and size of the damages awarded; (ii) the dissimilarity of this litigation and related charges to recurring litigation of which we are a party in the normal course of business, for which any and all such charges are included in our GAAP operating results and are not separately quantified and disclosed within this line item or any other line in the table presented above; (iii) the complexity of the case; (iv) the counterparty involved; and (v) our expectation that litigation related charges of this nature will not recur in future periods; among other factors.
We consider the litigation related charges that are included in this line item to be outside our ordinary course of business based on the following considerations: (i) the unprecedented nature of the litigation related charges including the nature and size of the damages awarded; (ii) the dissimilarity of this litigation and related charges to recurring litigation of which we are a party in our normal business course for which any and all such charges are included in our GAAP operating results and are not separately quantified and disclosed within this line item or any other line in the table presented above; (iii) the complexity of the case; (iv) the counterparty involved; and (v) our expectation that litigation related charges of this nature will not recur in future periods; among other factors.
Revenue streams included in our cloud and license business are: • Cloud services and license support revenues, which include: o license support revenues, which are earned by providing Oracle license support services to customers that have elected to purchase support services in connection with the purchase of Oracle applications and infrastructure software licenses for use in cloud, on-premise and other IT environments.
Revenue streams included in our cloud and license business are: • Cloud services and license support revenues, which include: o license support revenues, which are earned by providing Oracle license support services to customers that have elected to purchase support services in connection with the purchase of Oracle applications and infrastructure licenses for use in cloud, on-premise and other IT environments.
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 37 Table of Contents Index to Financial Statements customer contract base that we generally recognize as revenues ratably or based upon customer usage over the respective contractual terms and the renewal of existing customers’ cloud services and license support contracts over the course of each fiscal year that we generally recognize as revenues in a similar manner; and the historical upward trend of our cloud license and on-premise license revenues, which we generally recognize at a point in time upon delivery; in each case over those four fiscal quarterly periods .
The historical upward trend of our cloud and license business’ revenues over the course of the four quarters within a particular fiscal year is primarily due to the addition of new cloud services and license support contracts to the customer contract base that we generally recognize as revenues ratably or based upon customer usage over the respective contractual terms and the renewal of existing customers’ cloud services and license support contracts over the course of each fiscal year that we generally recognize as revenues in a similar manner; and the historical 36 Table of Contents Index to Financial Statements 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.
Also excludes certain other GAAP-based expenses, which were not allocated to our operating segment results for purposes of reporting to and review by our CODMs, as further described under “Presentation of Operating Segments and Other Financial Information” above.
Also excludes certain other GAAP-based expenses, which were not allocated to our operating segment results for purposes of reporting to and review by our CODMs, as further described under “Presentation of Operating Segment Results and Other Financial Information” above.
Cash flows from investing activities : The changes in cash flows from investing activities primarily relate to the timing of our purchases, maturities and sales of our investments in marketable securities, and investments in capital and other assets, including certain intangible assets, to support our growth.
Cash flows from investing activities : The changes in cash flows from investing activities primarily relate to our acquisitions, the timing of our purchases, maturities and sales of our investments in marketable securities, and investments in capital and other assets, including certain intangible assets, to support our growth.
A discussion regarding our financial condition and results of operations for fiscal 2021 compared to fiscal 2020 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, 2021, as filed with the SEC on June 21, 2021, 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.
A discussion regarding our financial condition and results of operations for fiscal 2022 compared to fiscal 2021 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, 2022, as filed with the SEC on June 21, 2022, 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.
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, 2021, which was the last day of our prior fiscal year) rather than the actual exchange rates in effect during the respective periods.
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, 2022, which was the last day of our prior fiscal year) rather than the actual exchange rates in effect during the respective periods.
This maximum potential dilution will only result if all stock-based awards vest and, if applicable, are exercised. Of the outstanding stock options at May 31, 2022, which generally have a ten-year exercise period, all have exercise prices lower than the market price of our common stock on such date.
This maximum potential dilution will only result if all stock-based awards vest and, if applicable, are exercised. Of the outstanding stock options at May 31, 2023, which generally have a ten-year exercise period, all have exercise prices lower than the market price of our common stock on such date.
This overview is followed by a summary of our critical accounting policies and estimates that we believe are important to understanding the 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 2022 compared to fiscal 2021.
This overview is followed by a summary of our critical accounting policies and estimates that we believe are important to understanding the 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 2023 compared to fiscal 2022.
During fiscal 2022, the Compensation Committee of the Board of Directors 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 restricted stock units of 62,500 or greater.
During fiscal 2023, the Compensation Committee of the Board of Directors 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 restricted stock units of 62,500 or greater.
In addition, as of May 31, 2022, we had $8.9 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 2023.
In addition, as of May 31, 2023, we had $9.4 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 2024.
Oracle Cloud Services arrangements are generally billed in advance of the cloud services being performed; generally have durations of one to three years; are generally renewed at the customer’s option; and are generally recognized as revenues ratably over the contractual period of the cloud contract or, in the case of usage model contracts, as the cloud services are consumed over time . • Cloud license and on-premise license revenues, which include revenues from the licensing of our software products including Oracle Applications, Oracle Database, Oracle Middleware and Java, among others, which our customers deploy within cloud-based, on-premise and other IT environments.
Oracle Cloud Services arrangements are generally billed in advance of the cloud services being performed; generally have durations of one to three years; are generally renewed at the customer’s option; and are generally 35 Table of Contents Index to Financial Statements recognized as revenues ratably over the contractual period of the cloud contract or, in the case of usage model contracts, as the cloud services are consumed over time. • Cloud license and on-premise license revenues, which include revenues from the licensing of our software products including Oracle Applications, Oracle Database, Oracle Middleware and Java, among others, which our customers deploy within cloud-based, on-premise or other IT environments.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations We begin Management’s Discussion and Analysis of Financial Condition and Results of Operations with an overview of our businesses and significant trends.
Item 7. Management’s Discussion and Analysis o f Financial Condition and Results of Operations We begin Management’s Discussion and Analysis of Financial Condition and Results of Operations with an overview of our businesses and significant trends.
Hardware Business Our hardware business, which represented 7% and 8% of our total revenues in fiscal 2022 and 2021, 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.
Hardware Business Our hardware business, which represented 6% and 7% of our total revenues in fiscal 2023 and 2022, 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.
Services Business Our services business, which represented 8% of our total revenues in each of fiscal 2022 and 2021, 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.
Services Business Our services business, which represented 11% and 8% of our total revenues in fiscal 2023 and 2022, 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.
License support contracts are generally priced as a percentage of the net fees paid by the customer to purchase a cloud license and/or on-premise license; are generally billed in advance of the support services being performed; are generally renewed at the customer’s option; and are generally recognized as revenues ratably over the contractual period that the support services are provided, which is generally one year; and o cloud services revenues, which provide customers access to Oracle Cloud applications and infrastructure technologies via cloud-based deployment models that Oracle develops, provides unspecified updates and enhancements for, deploys, hosts, manages and supports and that 36 Table of Contents Index to Financial Statements customers access by entering into a subscription agreement with us for a stated period.
License support contracts are generally priced as a percentage of the net fees paid by the customer to purchase a cloud license and/or on-premise license; are generally billed in advance of the support services being performed; are generally renewed at the customer’s option; and are generally recognized as revenues ratably over the contractual period that the support services are provided, which is generally one year; and o cloud services revenues, which are earned by providing customers access to Oracle Cloud applications and infrastructure technologies via cloud-based deployment models that Oracle develops, provides unspecified updates and enhancements for, deploys, hosts, manages and supports and that customers access by entering into a subscription agreement with us for a stated period.
Excluding the effects of currency rate fluctuations, our cloud and license business’ total margin increased in fiscal 2022 compared to fiscal 2021 due to fiscal 2022 increases in total revenues for this business, while total fiscal 2022 margin as a percentage of revenues for this business decreased slightly due to expenses growth.
Excluding the effects of currency rate fluctuations, our cloud and license business’ total margin increased in fiscal 2023 compared to fiscal 2022 due to increases in total revenues for this business. Total margin as a percentage of revenues for this business decreased in fiscal 2023 compared to fiscal 2022 due to expenses growth.
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.
Subsequent 39 Table of Contents Index to Financial Statements 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.
Consistent with these dual goals, our cumulative potential dilution since June 1, 2019 has been a weighted-average annualized rate of 1.3% 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.
Consistent with these dual goals, our cumulative potential dilution since June 1, 2020 has been an annualized rate of 1.8% 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.
Refer to “Supplemental Disclosure Related to Certain Charges” below for additional discussion of certain of these items and Note 14 of Notes to Consolidated Financial Statements included elsewhere in this Annual Report for a 43 Table of Contents Index to Financial Statements 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 2022 and 2021 .
Refer to “Supplemental Disclosure Related to Certain Charges” below for additional discussion of certain of these items and Note 14 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 2023 and 2022.
Cloud and License Business Our cloud and license business, which represented 85% and 84% of our total revenues in fiscal 2022 and 2021, respectively, markets, sells and delivers a broad spectrum of enterprise applications and infrastructure technologies through our cloud and license offerings.
Cloud and License Business Our cloud and license business, which represented 83% and 85% of our total revenues in fiscal 2023 and 2022, respectively, markets, sells and delivers a broad spectrum of enterprise applications and infrastructure technologies through our cloud and license offerings.
Presentation of Operating Segment Results and Other Financial Information In our fiscal 2022 compared to fiscal 2021 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.
Presentation of Operating Segment Results and Other Financial Information In our results of operations discussion below, we provide an overview of our total consolidated revenues, total consolidated operating expenses and total consolidated operating margin, all of which are presented on a GAAP basis.
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 41 Table of Contents Index to Financial Statements treatment, and the segregation of foreign and domestic earnings and expenses to avoid double taxation.
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.
As of May 31, 2022, the maximum potential dilution from all outstanding stock-based awards, regardless of when granted and regardless of whether vested or unvested, was 8.4%.
As of May 31, 2023, the maximum potential dilution from all outstanding stock-based awards, regardless of when granted and regardless of whether vested or unvested, was 8.0%.
In addition, 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 expenses or income, net and (provision for) benefit from income taxes are not attributed to our three operating segments because our management does not view the performance of our three businesses including such items and/or it is impracticable to do so.
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 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.
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.
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 40 Table of Contents Index to Financial Statements the need for a valuation allowance.
For additional information regarding our restructuring plans, see Note 8 of Notes to Consolidated Financial Statements included elsewhere in this Annual Report. Year Ended May 31, Percent Change (Dollars in millions) 2022 Actual Constant 2021 Restructuring expenses $ 191 -56% -56% $ 431 Restructuring expenses in fiscal 2022 primarily related to our 2022 Restructuring Plan.
For additional information regarding our restructuring plans, see Note 8 of Notes to Consolidated Financial Statements included elsewhere in this Annual Report. Year Ended May 31, Percent Change (Dollars in millions) 2023 Actual Constant 2022 Restructuring expenses $ 490 157% 151% $ 191 Restructuring expenses in fiscal 2023 and 2022 primarily related to our 2022 Restructuring Plan.
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; 38 Table of Contents Index to Financial Statements governmental budgetary constraints; personnel reductions in our customers’ IT departments; tighter controls over customer discretionary spending; and foreign currency rate fluctuations .
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. 37 Table of Contents Index to Financial Statements Acquisitions Our selective and active acquisition program is another important element of our corporate strategy.
Our senior management has reviewed our critical accounting policies and related disclosures with the Finance and Audit Committee of the Board of Directors. Note 1 of Notes to Consolidated Financial Statements included elsewhere in this Annual Report includes additional information about our critical and other accounting policies.
Our senior management has reviewed our critical accounting policies and related disclosures with the Finance and Audit Committee of the Board of Directors. Refer to Note 1 of Notes to Consolidated Financial Statements included elsewhere in this Annual Report for more discussion of our critical and other accounting policies.
We also periodically review these intangible assets for potential impairment based upon relevant facts and circumstances. Note 6 of Notes to Consolidated Financial Statements included elsewhere in this Annual Report has additional information regarding our intangible assets and related amortization.
We amortize our intangible assets over, and monitor the appropriateness of, the estimated useful lives of these assets. We also periodically review these intangible assets for potential impairment based upon relevant facts and circumstances. Refer to Note 6 of Notes to Consolidated Financial Statements included elsewhere in this Annual Report for additional information regarding our intangible assets and related amortization.
Services Business Our services offerings are designed to help maximize the performance of customer investments in Oracle applications and infrastructure technologies and substantially include our consulting services and advanced customer services offerings. Services revenues are generally recognized over time as the services are performed.
Services Business Our services offerings are designed to help maximize the performance of customer investments in Oracle applications and infrastructure technologies and substantially include our consulting services and advanced customer services offerings.
Our cloud services and license support expenses have grown in recent periods and we expect this growth to continue to accelerate in 48 Table of Contents Index to Financial Statements fiscal 2023 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 .
Our cloud services and license support expenses have grown in recent periods, and we expect this growth to continue during fiscal 2024 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.
In constant currency, our total cloud and license business’ expenses increased in fiscal 2022 compared to fiscal 2021 due to higher cloud services and license support expenses, primarily due to higher employee related expenses due to higher headcount and higher technology infrastructure expenses to support the increase in our cloud and license business’ revenues; and higher sales and marketing expenses, primarily due to higher employee related expenses from higher headcount.
In constant currency, our total cloud and license business’ expenses increased in fiscal 2023 compared to fiscal 2022 primarily due to higher employee related expenses due to higher headcount; higher technology infrastructure expenses to support the increase in our cloud and license business’ revenues; and additional operating expenses due to our Cerner acquisition.
Year Ended May 31, (Dollars in millions) 2022 Change 2021 Net cash provided by operating activities $ 9,539 -40% $ 15,887 Net cash provided by (used for) investing activities $ 11,220 * $ (13,098 ) Net cash used for financing activities $ (29,126 ) 181% $ (10,378 ) * Not meaningful 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 license support agreements.
Year Ended May 31, (Dollars in millions) 2023 Change 2022 Net cash provided by operating activities $ 17,165 80% $ 9,539 Net cash (used for) provided by investing activities $ (36,484 ) * $ 11,220 Net cash provided by (used for) financing activities $ 7,910 * $ (29,126 ) * Not meaningful 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 license support agreements.
Additional information regarding certain of our restructuring plans is provided in management’s discussion below under “Restructuring Expenses,” and in Note 8 of Notes to Consolidated Financial Statements included elsewhere in this Annual Report. 46 Table of Contents Index to Financial Statements ( 5 ) Stock-based compensation was included in the following operating expense line items of our consolidated statements of operations (in millions): Year Ended May 31, 2022 2021 Cloud services and license support $ 205 $ 134 Hardware 15 11 Services 67 55 Sales and marketing 448 313 Stock-based compensation, operating segments 735 513 Research and development 1,633 1,188 General and administrative 245 136 Total stock-based compensation $ 2,613 $ 1,837 ( 6 ) For fiscal 2022, the applicable jurisdictional tax rates applied to our income before income taxes after excluding the tax effects of items within the table above such as for stock-based compensation, amortization of intangible assets, restructuring, and certain acquisition related and other items, and after excluding the net deferred tax effects associated with a previously recorded income tax benefit that resulted from a partial realignment of our legal entity structure, resulted in an effective tax rate of 16.3%, instead of 12.2%, which represented our effective tax rate as derived per our consolidated statement of operations.
(4) Stock-based compensation was included in the following operating expense line items of our consolidated statements of operations (in millions): Year Ended May 31, 2023 2022 Cloud services and license support $ 435 $ 205 Hardware 18 15 Services 137 67 Sales and marketing 611 448 Stock-based compensation, operating segments 1,201 735 Research and development 1,983 1,633 General and administrative 363 245 Total stock-based compensation $ 3,547 $ 2,613 (5) For fiscal 2023 and 2022, the applicable jurisdictional tax rates applied to our income before income taxes after excluding the tax effects of items within the table above such as for stock-based compensation, amortization of intangible assets, restructuring, and certain acquisition related and other items, and after excluding the net deferred tax effects associated with a previously recorded income tax benefit that resulted from a partial 44 Table of Contents Index to Financial Statements realignment of our legal entity structure resulted in an effective tax rate of 16.3%, instead of 6.8%, for fiscal 2023 and 16.3%, instead of 12.2%, for fiscal 2022, which in each case represented our effective tax rates as derived per our consolidated statement of operations.
In constant currency, total margin as a percentage of total services revenues was flat during fiscal 2022 relative to fiscal 2021 . Research and Development Expenses : Research and development expenses consist primarily of personnel related expenditures.
In constant currency, total margin as a percentage of revenues decreased in fiscal 2023 relative to fiscal 2022 due to expenses growth. Research and Development Expenses : Research and development expenses consist primarily of personnel related expenditures.
Unanticipated events and circumstances may occur that may affect the accuracy or validity of such assumptions, estimates or actual results. 40 Table of Contents Index to Financial Statements 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.
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.
Constant Currency Presentation Our international operations have provided and are expected to continue to provide a significant portion of each of our businesses’ revenues and expenses. As a result, each of our businesses’ revenues and expenses and our total revenues and expenses will continue to be affected by changes in the U.S. Dollar against major international currencies.
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 constant currency, total services expenses increased in fiscal 2022 compared to fiscal 2021 primarily due to higher employee related expenses due to higher headcount and higher external contractor expenses. In constant currency, our services business’ total margin increased during fiscal 2022 relative to fiscal 2021 due to higher total revenues for this business.
In constant currency, total services expenses increased in fiscal 2023 compared to fiscal 2022 primarily due to additional operating expenses due to our acquisition of Cerner and other higher employee related expenses due to higher headcount. In constant currency, our services business’ total margin increased in fiscal 2023 relative to fiscal 2022 due to higher total revenues for this business.
As of May 31, 2022, estimated future amortization related to intangible assets was as follows (in millions): Fiscal 2023 $ 750 Fiscal 2024 508 Fiscal 2025 148 Fiscal 2026 24 Fiscal 2027 6 Thereafter 4 Total intangible assets, net $ 1,440 ( 3 ) Acquisition related and other expenses consisted of personnel related costs for transitional and certain other employees, certain business combination adjustments including certain adjustments after the measurement period has ended, and certain other operating items, net.
As of May 31, 2023, estimated future amortization related to intangible assets was as follows (in millions): Fiscal 2024 $ 2,994 Fiscal 2025 2,283 Fiscal 2026 1,620 Fiscal 2027 664 Fiscal 2028 635 Thereafter 1,641 Total intangible assets, net $ 9,837 (2) Acquisition related and other expenses consist of personnel related costs for transitional and certain other employees, certain business combination adjustments including certain adjustments after the measurement period has ended and certain other operating items, net.
Our stock repurchases may be effected from time to time through open market purchases and pursuant to a Rule 10b5-1 plan.
Our stock repurchases may be effected from time to time through open market purchases and pursuant to a Rule 10b5-1 plan. Our stock repurchase program may be accelerated, suspended, delayed or discontinued at any time.
Judgment is required in determining whether each performance obligation within a customer contract is distinct. Oracle products and services generally function on a standalone basis and do not require a significant amount of integration or interdependency. Therefore, multiple products and services contained within a customer contract are generally considered to be distinct and are not combined for revenue recognition purposes.
Many of our customer contracts include multiple performance obligations. Judgment is required in determining whether each performance obligation within a customer contract is distinct. Oracle products and services generally function on a standalone basis and do not require a significant amount of integration or interdependency.
We believe that our current cash, cash equivalents and marketable securities balances, cash generated from operations, and the Revolving Credit Agreement and the Bridge Credit Agreement will be sufficient to meet our working capital, capital expenditures and contractual obligations requirements.
We believe that our current cash, cash equivalents and marketable securities balances, cash generated from operations, and our $6.0 billion, five-year revolving credit agreement will be sufficient to meet our working capital, 54 Table of Contents Index to Financial Statements capital expenditures and contractual obligations requirements.
For example, if an entity reporting in Euros had revenues of 1.0 million Euros from products sold on May 31, 2022 and 2021, our financial statements would reflect reported revenues of $1.07 million in fiscal 2022 (using 1.07 as the month-end average exchange rate for the period) and $1.22 million in fiscal 2021 (using 1.22 as the month-end average exchange rate for the period).
For example, if an entity reporting in Euros had revenues of 1.0 million Euros from products sold on May 31, 2023 and 2022, our financial statements would reflect reported revenues of $1.08 million in fiscal 2023 (using 1.08 as the month-end average exchange rate for the period) and $1.07 million in fiscal 2022 (using 1.07 as the month-end average exchange rate for the period). 42 Table of Contents Index to Financial Statements The constant currency presentation, however, would translate the fiscal 2023 results using the fiscal 2022 exchange rate and indicate, in this example, no change in revenues during the period.
In constant currency, our hardware business’ total margin and total margin as a percentage of revenues decreased in fiscal 2022 compared to fiscal 2021 primarily due to lower total revenues for this business.
In constant currency, our hardware business’ total margin increased in fiscal 2023 compared to fiscal 2022 due to higher total revenues for this business. In constant currency, total margin as a percentage of revenues remained flat in fiscal 2023 relative to fiscal 2022.
Net cash provided by investing activities was $11.2 billion during fiscal 2022 in comparison to net cash used for investing activities of $13.1 billion during fiscal 2021.
Net cash used for investing activities was $36.5 billion during fiscal 2023 compared to net cash provided by investing activities of $11.2 billion during fiscal 2022.
In addition, we discuss below the fiscal 2022 compared to fiscal 2021 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 .
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.
Cash Dividends : In fiscal 2022, we declared and paid cash dividends of $1.28 per share that totaled $3.5 billion. In June 2022, our Board of Directors declared a quarterly cash dividend of $0.32 per share of our outstanding common stock payable on July 26, 2022 to stockholders of record as of the close of business on July 12, 2022.
In June 2023, our Board of Directors declared a quarterly cash dividend of $0.40 per share of our outstanding common stock payable on July 26, 2023 to stockholders of record as of the close of business on July 12, 2023.
Year Ended May 31, Percent Change (Dollars in millions) 2022 Actual Constant 2021 General and administrative (1) $ 1,072 -4% -3% $ 1,118 Stock-based compensation 245 79% 79% 136 Total expenses $ 1,317 5% 6% $ 1,254 % of Total Revenues 3% 3% (1) Excluding stock-based compensation Excluding the effects of foreign currency rate fluctuations, total general and administrative expenses increased in fiscal 2022 primarily due to higher stock-based compensation expenses.
Year Ended May 31, Percent Change (Dollars in millions) 2023 Actual Constant 2022 General and administrative (1) $ 1,216 13% 17% $ 1,072 Stock-based compensation 363 48% 48% 245 Total expenses $ 1,579 20% 23% $ 1,317 % of Total Revenues 3% 3% (1) Excluding stock-based compensation Excluding the effects of foreign currency rate fluctuations, total general and administrative expenses increased in fiscal 2023 relative to fiscal 2022 primarily due to additional operating expenses due to our acquisition of Cerner and higher stock-based compensation expenses.
We allocate the transaction price for each customer contract to each performance obligation based on the relative SSP (the determination of SSP is discussed below) for each performance obligation within each contract. We recognize the amount of transaction price allocated to each performance obligation within a customer contract as revenue as each performance obligation is satisfied .
We allocate the transaction price for each customer contract to each performance obligation based on the relative SSP (the determination of SSP is discussed below) for each 38 Table of Contents Index to Financial Statements performance obligation within each contract.
The increase in net cash provided by investing activities during fiscal 2022 was primarily due to a decrease in the cash used for the purchases of marketable securities and 54 Table of Contents Index to Financial Statements other investments, partially offset by a decrease in cash proceeds from sales and maturities of marketable securities and other investments and an increase in cash used for capital expenditures, in each case during fiscal 2022 in comparison to fiscal 2021 .
The increase in net cash used for investing activities during fiscal 2023 was primarily due to the cash used for our acquisition of Cerner, an increase in cash used for capital expenditures and a decrease in cash proceeds from sales and maturities of marketable securities and other investments, partially offset by a decrease in cash used for the purchases of marketable securities and other investments, in each case relative to fiscal 2022. 52 Table of Contents Index to Financial Statements Cash flows from financing activities : The changes in cash flows from financing activities primarily relate to borrowings and repayments related to our debt instruments, stock repurchases, dividend payments and net proceeds related to employee stock programs.
Net cash provided by operating activities decreased during fiscal 2022 compared to fiscal 2021 primarily due to lower net income that was primarily the result of cash payments made in connection with certain litigation related charges that we generally do not expect to recur and certain other cash unfavorable working capital changes, net, in each case during fiscal 2022 in comparison to fiscal 2021.
Net cash provided by operating activities increased during fiscal 2023 compared to fiscal 2022 primarily due to higher net income that was primarily due to the absence of certain litigation related charges recorded during fiscal 2022 that we generally do not expect to recur and certain cash favorable working capital changes, net in fiscal 2023 relative to fiscal 2022.
We typically establish an SSP range for our products and services, which is reassessed on a periodic basis or when facts and circumstances change. SSP for our products and services can evolve over time due to changes in our pricing practices that are influenced by intense competition, changes in demand for our products and services, and economic factors, among others.
SSP for our products and services can evolve over time due to changes in our pricing practices that are influenced by intense competition, changes in demand for our products and services, and economic factors, among others.
We also utilize these inputs to calculate and present a segment margin for each of our three businesses in the discussion below.
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.
In constant currency, the Americas, EMEA and Asia Pacific regions contributed 68%, 22% and 10%, respectively, to our total revenue growth during fiscal 2022.
In reported currency, Cerner contributed $5.9 billion to our total revenues during fiscal 2023. In constant currency, the Americas, the EMEA and the Asia Pacific regions contributed 84%, 10% and 6%, respectively, of the constant currency total revenue growth during fiscal 2023.
Revenue Recognition The most critical judgments required in applying ASC 606, Revenue Recognition from Customers , and our revenue recognition policy relate to the determination of distinct performance obligations and the evaluation of the standalone selling price (SSP) for each performance obligation. 39 Table of Contents Index to Financial Statements Many of our customer contracts include multiple performance obligations.
There were no significant changes to our critical accounting policies and estimates from the prior year. Revenue Recognition The most critical judgments required in applying ASC 606, Revenue Recognition from Customers , and our revenue recognition policy relate to the determination of distinct performance obligations and the evaluation of the standalone selling price (SSP) for each performance obligation.
(Provision for) Benefit from Income Taxes : Our effective income tax rates for each of the periods presented were the result of the mix of income earned in various tax jurisdictions that apply a broad range of income tax rates.
These decreases were partially offset by higher net losses associated with equity investments and higher foreign currency losses. Provision for Income Taxes : Our effective income tax rates for each of the periods presented were the result of the mix of income earned in various tax jurisdictions that apply a broad range of income tax rates.
We use historical sales transaction data and judgment, among other factors, 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.
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.
Year Ended May 31, Percent Change (Dollars in millions) 2022 Actual Constant 2021 Developed technology $ 475 -24% -23% $ 621 Cloud services and license support agreements and related relationships 592 -11% -11% 669 Other 83 -7% -7% 89 Total amortization of intangible assets $ 1,150 -17% -17% $ 1,379 Amortization of intangible assets decreased in fiscal 2022 due to a reduction in expenses associated with certain of our intangible assets that became fully amortized, partially offset by a smaller amount of additional amortization from intangible assets that we acquired in connection with our recent acquisitions.
Year Ended May 31, Percent Change (Dollars in millions) 2023 Actual Constant 2022 Developed technology $ 792 67% 67% $ 475 Cloud services and license support agreements and related relationships 1,507 155% 154% 592 Cloud license and on-premise license agreements and related relationships 459 * * 19 Other 824 * * 64 Total amortization of intangible assets $ 3,582 212% 212% $ 1,150 * Not meaningful Amortization of intangible assets increased in fiscal 2023 relative to fiscal 2022 due to additional amortization from intangible assets that we acquired in recent periods, primarily from our acquisition of Cerner, partially offset by a reduction in expenses associated with certain of our intangible assets that became fully amortized.
Year Ended May 31, Percent Change (Dollars in millions) 2022 Actual Constant 2021 Services Revenues : Americas $ 1,527 9% 9% $ 1,397 EMEA 1,046 7% 11% 977 Asia Pacific 632 -2% 1% 647 Total revenues 3,205 6% 8% 3,021 Total Expenses (1) 2,539 6% 8% 2,393 Total Margin $ 666 6% 9% $ 628 Total Margin % 21% 21% % Revenues by Geography : Americas 48% 46% EMEA 32% 32% Asia Pacific 20% 22% (1) Excludes stock-based compensation and certain allocations.
Year Ended May 31, Percent Change (Dollars in millions) 2023 Actual Constant 2022 Services Revenues : Americas $ 3,703 143% 143% $ 1,527 EMEA 1,246 19% 28% 1,046 Asia Pacific 645 2% 12% 632 Total revenues 5,594 75% 81% 3,205 Total Expenses (1) 4,490 77% 84% 2,539 Total Margin $ 1,104 66% 72% $ 666 Total Margin % 20% 21% % Revenues by Geography : Americas 66% 48% EMEA 22% 32% Asia Pacific 12% 20% (1) Excludes stock-based compensation and certain allocations.
Excluding the effects of foreign currency rate fluctuations, our cloud and license business’ total revenues increased in fiscal 2022 relative to fiscal 2021 due to growth in our cloud services and license support revenues and growth in our cloud license and on-premise license revenues as customers purchased our applications and infrastructure technologies via cloud and license deployment models and renewed their related cloud contracts and license support contracts to continue to gain access to the latest versions of our technologies and to receive support for which we delivered such cloud and support services during fiscal 2022.
Excluding the impact of our acquisition of Cerner, the constant currency revenues increase during fiscal 2023 relative to fiscal 2022 in our cloud and license business was attributable to growth in our cloud services and license support revenues as customers purchased our applications and infrastructure technologies via cloud and license deployment models and also renewed their related cloud contracts and license support contracts to continue to gain access to the latest versions of our technologies and to receive support services, partially offset by a decrease in our cloud license and on-premise license revenues.
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 our 2022 Restructuring Plan were effected to implement our continued emphasis in developing, marketing, selling and delivering our cloud-based offerings.
The majority of the initiatives undertaken by our 2022 Restructuring Plan were effected to implement our continued emphasis in developing, marketing, selling and delivering our cloud-based offerings.
Each member of a separate executive officer committee, referred to as the Plan Committee, was allocated a fiscal 2022 equity budget that could be used throughout the fiscal year to grant equity within his or her organization, subject to certain limitations established by the Compensation Committee. 56 Table of Contents Index to Financial Statements S tock-based award s activity from June 1, 201 9 through May 31, 20 2 2 is summarized as follows (shares in millions): Stock-based awards outstanding at May 31, 2019 321 Stock-based awards granted and assumed 169 Stock-based awards vested and issued and, if applicable, exercised (211 ) Forfeitures, cancellations and other, net (54 ) Stock-based awards outstanding at May 31, 2022 225 Weighted-average annualized stock-based awards granted and assumed, net of forfeitures and cancellations 39 Weighted-average annualized stock repurchases (292 ) Shares outstanding at May 31, 2022 2,665 Basic weighted-average shares outstanding from June 1, 2019 through May 31, 2022 2,952 Stock-based awards outstanding as a percent of shares outstanding at May 31, 2022 8.4% Total in the money stock-based awards outstanding (based on the closing price of our common stock on the last trading day of fiscal 2022) as a percent of shares outstanding at May 31, 2022 8.4% Weighted-average annualized stock-based awards granted and assumed, net of forfeitures and cancellations and before stock repurchases, as a percent of weighted-average shares outstanding from June 1, 2019 through May 31, 2022 1.3% Weighted-average annualized stock-based awards granted and assumed, net of forfeitures and cancellations and after stock repurchases, as a percent of weighted-average shares outstanding from June 1, 2019 through May 31, 2022 -8.6% Recent Accounting Pronouncements For information with respect to recent accounting pronouncements, if any, and the impact of these pronouncements on our consolidated financial statements, if any, see Note 1 of Notes to Consolidated Financial Statements included elsewhere in this Annual Report.
Stock-based awards activity from June 1, 2020 through May 31, 2023 is summarized as follows (shares in millions): Stock-based awards outstanding at May 31, 2020 277 Stock-based awards granted and assumed 200 Stock-based awards vested and issued and, if applicable, exercised (212 ) Forfeitures, cancellations and other, net (49 ) Stock-based awards outstanding at May 31, 2023 216 Annualized stock-based awards granted and assumed, net of forfeitures and cancellations 51 Annualized stock repurchases (177 ) Shares outstanding at May 31, 2023 2,713 Basic weighted-average shares outstanding from June 1, 2020 through May 31, 2023 2,780 Stock-based awards outstanding as a percent of shares outstanding at May 31, 2023 8.0% Total in the money stock-based awards outstanding (based on the closing price of our common stock on the last trading day of fiscal 2023) as a percent of shares outstanding at May 31, 2023 8.0% Annualized stock-based awards granted and assumed, net of forfeitures and cancellations and before stock repurchases, as a percent of weighted-average shares outstanding from June 1, 2020 through May 31, 2023 1.8% Annualized stock-based awards granted and assumed, net of forfeitures and cancellations and after stock repurchases, as a percent of weighted-average shares outstanding from June 1, 2020 through May 31, 2023 -4.5% Recent Accounting Pronouncements For information with respect to recent accounting pronouncements, if any, and the impact of these pronouncements on our consolidated financial statements, if any, see Note 1 of Notes to Consolidated Financial Statements included elsewhere in this Annual Report. 55 Table of Contents Index to Financial Statements
The cost of providing our services consists primarily of personnel related expenses, technology infrastructure expenditures, facilities expenses and external contractor expenses.
Services revenues are generally recognized over time as the services are performed. 47 Table of Contents Index to Financial Statements The cost of providing our services consists primarily of personnel related expenses, technology infrastructure expenditures, facilities expenses and external contractor expenses.
We intend to continue to invest significantly in our research and development efforts because, in our judgment, they are essential to maintaining our competitive position. 50 Table of Contents Index to Financial Statements Year Ended May 31, Percent Change (Dollars in millions) 2022 Actual Constant 2021 Research and development (1) $ 5,586 5% 5% $ 5,339 Stock-based compensation 1,633 38% 38% 1,188 Total expenses $ 7,219 11% 11% $ 6,527 % of Total Revenues 17% 16% (1) Excluding stock-based compensation On a constant currency basis, total research and development expenses increased in fiscal 2022 compared to fiscal 2021 primarily due to higher employee related expenses due to increased headcount and higher stock-based compensation expenses.
Year Ended May 31, Percent Change (Dollars in millions) 2023 Actual Constant 2022 Research and development (1) $ 6,640 19% 21% $ 5,586 Stock-based compensation 1,983 21% 21% 1,633 Total expenses $ 8,623 19% 21% $ 7,219 % of Total Revenues 17% 17% (1) Excluding stock-based compensation On a constant currency basis, total research and development expenses increased in fiscal 2023 compared to fiscal 2022 primarily due to higher employee related expenses, including higher stock-based compensation and additional operating expenses due to our acquisition of Cerner.
The proportion of our cloud services and license support revenues relative to our cloud license and on-premise license revenues, hardware revenues and services revenues has increased and we expect this trend to continue.
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 32%, 25% and 22% of our total revenues during fiscal 2023, 2022 and 2021, respectively.
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 our competitors.
We believe that free cash flow is also useful as one of the bases for comparing our performance with our competitors.
Our hardware business’ revenues were also adversely impacted during fiscal 2022 and 2021 due to the impacts of the COVID-19 pandemic, including global supply chain shortages for technology components that resulted in certain manufacturing delays, and any such prospective impacts are unknown.
Our hardware business’ revenues were adversely impacted during fiscal 2023 and 2022 due to the impacts of the global supply chain shortages for technology components that resulted in certain manufacturing delays. In constant currency, the Americas, the EMEA and the Asia Pacific regions contributed 75%, 16% and 9%, respectively, to the revenue growth for this business during fiscal 2023.
Our operating results reported pursuant to GAAP included the following business combination accounting adjustments and expenses related to acquisitions and certain other expense and income items that affected our GAAP net income: Year Ended May 31, (in millions) 2022 2021 Cloud services and license support deferred revenues (1) $ — $ 2 Amortization of intangible assets (2) 1,150 1,379 Acquisition related and other (3) 4,713 138 Restructuring (4) 191 431 Stock-based compensation, operating segments (5) 735 513 Stock-based compensation, R&D and G&A (5) 1,878 1,324 Income tax effects (6) (1,723 ) (3,408 ) $ 6,944 $ 379 (1) Due to business combination accounting rules that were applicable to acquisitions closed prior to fiscal 2022, we have estimated the fair values of the cloud services and license support contracts assumed and did not recognize the cloud services and license support revenue amounts presented in the above table for fiscal 2021 that would have otherwise been recorded by the acquired businesses as independent entities upon delivery of the contractual obligations.
Our operating results reported pursuant to GAAP included the following business combination accounting adjustments and expenses related to acquisitions and certain other expense and income items that affected our GAAP net income: Year Ended May 31, (in millions) 2023 2022 Amortization of intangible assets (1) $ 3,582 $ 1,150 Acquisition related and other (2) 190 4,713 Restructuring (3) 490 191 Stock-based compensation, operating segments (4) 1,201 735 Stock-based compensation, R&D and G&A (4) 2,346 1,878 Income tax effects (5) (2,136 ) (1,723 ) $ 5,673 $ 6,944 (1) Represents the amortization of intangible assets, substantially all of which were acquired in connection with our acquisitions.
Our total cloud services revenues increased to $10.8 billion in fiscal 2022 from $8.9 billion in fiscal 2021 due to growth in our Oracle SaaS and OCI offerings. In constant currency, the Americas, EMEA and Asia Pacific regions contributed 71%, 18% and 11%, respectively, of the constant currency revenue growth for this business in fiscal 2022.
In reported currency, Cerner contributed $3.6 billion to our cloud and license business’ revenues during fiscal 2023. In constant currency, the Americas, the EMEA and the Asia Pacific regions contributed 84%, 9% and 7%, respectively, of the constant currency revenue growth for this business during fiscal 2023.
Excluding the effects of currency rate fluctuations, our total services revenues increased in fiscal 2022 relative to fiscal 2021 primarily due to revenue increases in each of our primary services offerings. In constant currency, the Americas, the EMEA and the Asia Pacific regions contributed 53%, 44% and 3%, respectively, to the revenue growth for this business in fiscal 2022.
Excluding the effects of currency rate fluctuations, our total services revenues increased in fiscal 2023 relative to fiscal 2022 due to revenue contributions from our Cerner acquisition and revenue increases in each of our primary services offerings. In reported currency, Cerner contributed $2.2 billion to our services business’ revenues during fiscal 2023.
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.
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. 46 Table of Contents Index to Financial Statements Year Ended May 31, Percent Change (Dollars in millions) 2023 Actual Constant 2022 Hardware Revenues : Americas $ 1,702 9% 10% $ 1,558 EMEA 933 -2% 3% 949 Asia Pacific 639 -5% 3% 676 Total revenues 3,274 3% 6% 3,183 Expenses : Hardware products and support (1) 1,011 7% 10% 944 Sales and marketing (1) 331 -8% -5% 361 Total expenses (1) 1,342 3% 6% 1,305 Total Margin $ 1,932 3% 6% $ 1,878 Total Margin % 59% 59% % Revenues by Geography : Americas 52% 49% EMEA 28% 30% Asia Pacific 20% 21% (1) Excludes stock-based compensation and certain expense allocations.
As additional information becomes available, we reassess the potential liability related to our pending claims and 42 Table of Contents Index to Financial Statements litigation and may revise our estimates. Such revisions in the estimates of the potential liabilities could have a material impact on our results of ope rations and financial position.
As additional information becomes available, we reassess the potential liability related to our pending claims and litigation and may revise our estimates.
In constant currency, our total operating margin and total operating margin as a percentage of total revenues decreased in fiscal 2022, relative to fiscal 2021, substantially due to the unfavorable impact of the fiscal 2022 litigation related charges referenced above, partially offset by higher fiscal 2022 total margin generated by our operating segments and the aforementioned gains from operating asset sales during fiscal 2022.
In constant currency, our total operating margin and total operating margin as a percentage of revenues increased in fiscal 2023, relative to fiscal 2022, primarily due to certain litigation related charges noted above that increased our operating expenses during fiscal 2022.
The decrease in cash, cash equivalents and marketable securities at May 31, 2022 in comparison to May 31, 2021 was primarily due to $16.2 billion of settled repurchases of our common stock, $8.3 billion of debt repayments, $4.7 billion of cash paid for certain litigation related charges that we generally do not expect to recur, payments of cash dividends to our stockholders and cash used for capital expenditures.
The decrease in cash, cash equivalents and marketable securities at May 31, 2023 in comparison to May 31, 2022 was primarily due to the net cash outflows of $27.8 billion for our acquisition of Cerner, $1.6 billion of repayment of senior notes assumed from our acquisition of Cerner, $3.8 billion of repayment of senior notes due October 2022 and February 2023, repurchases of our common stock, payments of cash dividends to our stockholders and cash used for capital expenditures.
In each of the tables below, we present the percent change based on actual, unrounded results in reported currency and in constant currency. 44 Table of Contents Index to Financial Statements Total Revenues and Operating Expenses Year Ended May 31, Percent Change (Dollars in millions) 2022 Actual Constant 2021 Total Revenues by Geography : Americas $ 23,679 8% 8% $ 21,828 EMEA (1) 12,011 1% 5% 11,894 Asia Pacific 6,750 0% 4% 6,757 Total revenues 42,440 5% 7% 40,479 Total Operating Expenses 31,514 25% 26% 25,266 Total Operating Margin $ 10,926 -28% -25% $ 15,213 Total Operating Margin % 26% 38% % Revenues by Geography : Americas 56% 54% EMEA 28% 29% Asia Pacific 16% 17% Total Revenues by Business : Cloud and license $ 36,052 6% 7% $ 34,099 Hardware 3,183 -5% -3% 3,359 Services 3,205 6% 8% 3,021 Total revenues $ 42,440 5% 7% $ 40,479 % Revenues by Business : Cloud and license 85% 84% Hardware 7% 8% Services 8% 8% (1) Comprised of Europe, the Middle East and Africa Excluding the effects of foreign currency rate fluctuations, our total revenues increased in fiscal 2022 due to growth in our cloud and license business’ revenues and services business’ revenues, which were partially offset by a decline in our hardware business’ revenues.
Total Revenues and Operating Expenses Year Ended May 31, Percent Change (Dollars in millions) 2023 Actual Constant 2022 Total Revenues by Geography : Americas $ 31,226 32% 32% $ 23,679 EMEA (1) 12,109 1% 8% 12,011 Asia Pacific 6,619 -2% 8% 6,750 Total revenues 49,954 18% 22% 42,440 Total Operating Expenses 36,861 17% 19% 31,514 Total Operating Margin $ 13,093 20% 28% $ 10,926 Total Operating Margin % 26% 26% % Revenues by Geography : Americas 63% 56% EMEA 24% 28% Asia Pacific 13% 16% Total Revenues by Business : Cloud and license $ 41,086 14% 18% $ 36,052 Hardware 3,274 3% 6% 3,183 Services 5,594 75% 81% 3,205 Total revenues $ 49,954 18% 22% $ 42,440 % Revenues by Business : Cloud and license 83% 85% Hardware 6% 7% Services 11% 8% (1) Comprised of Europe, the Middle East and Africa Excluding the effects of foreign currency rate fluctuations, our total revenues increased across our three businesses during fiscal 2023 relative to fiscal 2022 primarily due to revenue contributions from our acquisition of Cerner.
These cash outflows during fiscal 2022 were partially offset by certain cash inflows generated by our normal business operations, from the sales of certain operating assets, and from stock option exercises during fiscal 2022.
These cash outflows during fiscal 2023 were partially offset by certain cash inflows, primarily due to cash inflows generated by borrowings pursuant to the Term Loan Credit Agreement and the issuance of senior notes and commercial paper notes, as well as cash inflows from our operations and stock option exercises during fiscal 2023.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeSensitivity Analysis 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 interest rate, equity price and 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: Year Ended May 31, (in millions) Hypothetical Change Impact 2022 2021 Equity price risk: Marketable and non-marketable equity investments 25% decrease in market price and fair values Earnings $ (277 ) $ (236 ) Foreign currency risk: Total revenues 10% decrease in foreign exchange rates Earnings $ (2,107 ) $ (2,061 ) Cash, cash equivalents and marketable securities 10% decrease in foreign exchange rates Fair values $ (421 ) $ (650 ) Item 8.
Biggest changeRefer to Note 1 of Notes to Consolidated Financial Statements included elsewhere in this Annual Report for additional details about our foreign currency forward contracts. 56 Table of Contents Index to Financial Statements Sensitivity Analysis 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 equity investments and 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: Year Ended May 31, (in millions) Hypothetical Change Impact 2023 2022 Equity price risk: Marketable and non-marketable equity investments 25% decrease in market price and fair values Earnings $ (243 ) $ (277 ) Foreign currency risk: Total revenues 10% decrease in foreign exchange rates Earnings $ (2,037 ) $ (2,107 ) Cash, cash equivalents and trade receivables, net 10% decrease in foreign exchange rates Fair values $ (1,407 ) $ (1,131 ) Item 8.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk Equity Price Risk Marketable and Non-Marketable Equity Investments Our marketable and non-marketable equity securities investments totaled $1.1 billion and $946 million as of May 31, 2022 and 2021, respectively. Our marketable equity securities investments in publicly traded companies are recorded at fair value, which is subject to market price volatility.
Item 7A. Quantitative and Qualitat ive Disclosures About Market Risk Equity Price Risk Marketable and Non-Marketable Equity Investments Our marketable and non-marketable equity securities investments totaled $972 million and $1.1 billion as of May 31, 2023 and 2022, respectively. Our marketable equity securities investments in publicly traded companies are recorded at fair value, which is subject to market price volatility.
Dollars and report in our consolidated financial statements for, and as of the end of, each reporting period . Foreign Currency Transaction Risk We transact business in various foreign currencies. Our principal currency exposures include the Euro, Japanese Yen, Saudi Arabian Riyal, Indian Rupee and British Pound. Our foreign currency exposures primarily arise from various intercompany transactions.
Dollars and report in our consolidated financial statements for, and as of the end of, each reporting period. Foreign Currency Transaction Risk 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, Euro, Japanese Yen and Saudi Riyal.
We realize gains or losses with respect to our foreign currency exposures, net of gains or losses from our foreign currency forward contracts, and we also incur costs to enter into these foreign currency forward contracts, substantially all of which are included in non-operating expenses or income, net in our consolidated financial statements.
Realized gains or losses with respect to our foreign currency exposures, net of gains or losses from our foreign currency forward contracts, and also costs incurred to enter into these foreign currency forward contracts are included in non-operating expenses or income, net in our consolidated financial statements.
Dollars for, and as of the end of, each reporting period. In particular, the strengthening of 57 Table of Contents Index to Financial Statements the U.S. Dollar generally will reduce the reported amount of our foreign-denominated cash, cash equivalents, marketable securities, total revenues and total expense s that we translate into U.S.
Dollars for, and as of the end of, each reporting period. In particular, the strengthening of the U.S. Dollar generally will reduce the reported amount of our foreign-denominated cash, cash equivalents, trade receivables, total revenues and total expenses that we translate into U.S.
The timing and amounts of changes in fair value, if any, of our marketable and non-marketable equity investments depends on factors beyond our control, including the perceived and actual performance of the companies in which we invest.
The timing and amounts of changes in fair value of our marketable and non-marketable equity investments depends on factors beyond our control, including the perceived and actual performance of the companies in which we invest. Our non-marketable convertible debt investments would be subject to equity price risk in the future when the convertible option is exercised.
Financial Statements and Supplementary Data The response to this item is submitted as a separate section of this Annual Report. See Part IV, Item 15.
Financial Statemen ts and Supplementary Data The response to this item is submitted as a separate section of this Annual Report. See Part IV, Item 15. Item 9. Changes In and Disagreements with Acco untants on Accounting and Financial Disclosure None.
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.
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.

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