Oracle(ORCL) - 2025 Q2 - Quarterly Report

Revenue Performance - The cloud and license business accounted for 85% of total revenues on a trailing 4-quarter basis, with cloud services revenues representing 42% of total revenues for the three- and six-month periods ended November 30, 2024 [80]. - Cloud services revenues increased from 37% of total revenues for the three- and six-month periods ended November 30, 2023, indicating a growing trend in cloud adoption [80]. - Total revenues for the three months ended November 30, 2024, were $14,059 million, representing a 9$12,941 million for the same period in 2023 [96]. - Cloud and license revenues reached $12,001 million for the three months ended November 30, 2024, reflecting an 11$10,817 million in the prior year [96]. - Cloud and license business total revenues increased by $1.2 billion (14$2.2 billion (11%) in the first half of fiscal 2025 compared to the prior year periods [104]. Expense and Margin Analysis - Total operating expenses increased by $520 million in the second quarter of fiscal 2025 compared to the same period in the previous year, primarily due to higher cloud services and license support expenses [98]. - Total operating margin for the three months ended November 30, 2024, was$4,220 million, with an operating margin percentage of 30% [96]. - Total margin for the cloud and license business was $7.558 billion (63$6.915 billion (64% margin) in the prior year [104]. - Total margin for the hardware business increased to $498 million (68$474 million (63% margin) in the prior year [107]. - Total expenses decreased by $86 million (7$166 million (7%) in the first half of fiscal 2025 compared to the prior year periods [115]. Investment and Development - The company has invested $1.5 billion in Ampere Computing Holdings LLC, holding approximately 29$1,577 million, while Asia Pacific saw an 8% increase to $176 million in Q2 2025 [111]. Cash Flow and Capital Expenditures - Cash, cash equivalents, and marketable securities increased to$11.311 billion as of November 30, 2024, a 6% increase from $10.661 billion on May 31, 2024 [129]. - The company incurred$6.3 billion in cash for capital expenditures during the first half of fiscal 2025 [128]. - Net cash provided by operating activities increased by $1.6 billion, reaching$8.731 billion for the first half of fiscal 2025, a 23% increase compared to $7.117 billion in the same period of fiscal 2024 [131]. - Net cash used for investing activities rose by$3.7 billion to $6.553 billion in the first half of fiscal 2025, primarily due to increased capital expenditures [131]. - Free cash flow for the trailing four quarters ended November 30, 2024, was$9.542 billion, a 6% decrease from $10.104 billion in the previous year [131]. Tax and Interest Expenses - Effective tax rates for the second quarter of fiscal 2025 were reported at 20.1$239 million in the second quarter of fiscal 2025 compared to $217 million in the same quarter of fiscal 2024 [127]. - Interest expense decreased to$1.708 billion in the first half of fiscal 2025, down from $1.760 billion in the same period of fiscal 2024, primarily due to$4.0 billion in scheduled repayments of senior notes [123]. Restructuring and Operational Efficiency - The company initiated the 2024 Restructuring Plan to improve operational efficiencies, focusing on cloud-based offerings [122]. - The company completed an assessment increasing the estimated useful lives of servers from five years to six years, effective at the beginning of fiscal 2025 [90]. - Research and development expenses increased by $245 million in the second quarter of fiscal 2025 compared to the prior year, driven by higher employee-related costs [98]. Hardware Business Performance - The hardware business represented 5$28 million (-4%) in Q2 2025 and $87 million (-6$52 million (-18%) in Q2 2025 and $115 million (-20%) in the first half of fiscal 2025 compared to the prior year periods [109].