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Oracle Reports Q3 GAAP EPS Up 30% to 26 Cents, Non-GAAP EPS Up 23% to 30 cents

Database and Middleware New License Revenues Up 20%, Total GAAP Revenues Up 21%

REDWOOD SHORES, Calif., March 26 /PRNewswire-FirstCall/ -- Oracle Corporation today announced fiscal 2008 Q3 GAAP earnings per share were up 30% to $0.26, compared to the same quarter last year. Third quarter total GAAP revenues were up 21% to $5.3 billion, while quarterly GAAP operating income was up 35% to $1.9 billion and GAAP net income was up 30% to $1.3 billion. Total GAAP software revenues were up 21% to $4.2 billion with GAAP new software license revenues up 16% to $1.6 billion. Database and middleware new license revenues were up 20% and applications new license revenues were up 7%. GAAP software license updates and product support revenues were up 25% to $2.6 billion. Service revenues were up 21% to $1.1 billion, compared to the same quarter last year.

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Third quarter non-GAAP earnings per share were up 23% to $0.30, and non- GAAP net income was up 22% to $1.6 billion, compared to the same quarter last year.

"Oracle delivered another quarter of strong financial results and earnings growth. In Q3, we once again exceeded our non-GAAP EPS growth target of 20%," said Oracle President and CFO, Safra Catz. "For the first three quarters of this year we have grown our operating cash flow 55%, 3 times faster than at this point in the past five years."

"Database and middleware new software license revenues growth accelerated to 20% in the third quarter," said Oracle President, Charles Phillips. "We continue to grow faster and take market share from IBM."

"Software license updates and product support revenues were up 23% on a non-GAAP basis to $2.6 billion. By next quarter we expect to pass $10 billion for the year," said Oracle CEO, Larry Ellison. "Our non-GAAP operating income grew to $2.2 billion with our margins increasing nearly 200 basis points to 41% up from 39% in Q3 of last year. Our operating margins are now substantially higher than our competitors, including Microsoft, reflecting the unique leverage in our business."

Q3 Earnings Announcement

Oracle will hold a conference call and web broadcast today to discuss these results at 2:00 p.m. (PDT) / 5:00 p.m. (EDT). To access the live web broadcast of this event, please visit the Oracle Investor Relations website at http://www.oracle.com/investor. Please hold down your control key while pressing refresh to ensure that the weblink is visible.

About Oracle

Oracle is the world's largest enterprise software company. For more information about Oracle, including supplemental financial information, please visit http://www.oracle.com/investor or call Investor Relations at (650) 506-4073.

Trademarks

Oracle is a registered trademark of Oracle Corporation and/or its affiliates. Other names may be trademarks of their respective owners.

"Safe Harbor" Statement: Statements in this press release relating to Oracle's future plans and prospects are "forward-looking statements" and are subject to material risks and uncertainties. Many factors could affect our current expectations and our actual results, and could cause actual results to differ materially. We presently consider the following to be among the important factors that could cause actual results to differ materially from expectations: (1) Economic, political and market conditions could adversely affect our revenue growth and profitability through reductions in IT budgets and expenditures. (2) We may fail to achieve our financial forecasts due to such factors as delays or size reductions in transactions, fewer large transactions in a particular quarter, unanticipated fluctuations in currency exchange rates, delays in delivery of new products or releases, or a decline in our renewal rates for software license updates and product support. (3) We cannot assure market acceptance of new products or new versions of existing or acquired products. (4) We have an active acquisition program (including our recently announced proposed acquisition of BEA Systems, Inc.) and our acquisitions may not be successful, may involve unanticipated costs or other integration issues, or may disrupt our existing operations. (5) Periodic changes to our pricing model and sales organization could temporarily disrupt operations and cause a decline or delay in sales. (6) Intense competitive forces demand rapid technological advances and frequent new product introductions, and could require us to reduce prices. A detailed discussion of these factors and other risks that affect our business is contained in our SEC filings, including our most recent reports on Form 10-K and Form 10-Q, particularly under the heading "Risk Factors." Copies of these filings are available online from the SEC or by contacting Oracle Corporation's Investor Relations Department at (650) 506-4073 or by clicking on SEC Filings on Oracle's Investor Relations website at http://www.oracle.com/investor. All information set forth in this release is current as of March 26, 2008. Oracle undertakes no duty to update any statement in light of new information or future events.

ORACLE CORPORATION Q3 FISCAL 2008 FINANCIAL RESULTS CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except per share data) Three Months Ended %Increase ------------------------------------ %Increase (Decrease) February 29, % of February 28, % of (Decrease) in Constant 2008 Revenues 2007 Revenues in US $ Currency(1) ------------------------------------------------------------ REVENUES New software licenses $1,616 30% $1,390 31% 16% 9% Software license updates and product support 2,624 49% 2,108 48% 25% 18% -------------------------------------- Software Revenues 4,240 79% 3,498 79% 21% 15% -------------------------------------- Services 1,109 21% 916 21% 21% 14% -------------------------------------- Total Revenues 5,349 100% 4,414 100% 21% 15% -------------------------------------- OPERATING EXPENSES Sales and marketing 1,083 20% 967 22% 12% 6% Software license updates and product support 254 5% 210 5% 22% 16% Cost of services 989 19% 820 18% 21% 14% Research and development 682 13% 570 13% 20% 17% General and administrative 206 4% 175 4% 18% 12% Amortization of intangible assets 292 5% 222 5% 32% 31% Acquisition related and other (2) (40) (1%) 53 1% (176%) (178%) Restructuring 8 0% 3 0% 134% 125% -------------------------------------- Total Operating Expenses 3,474 65% 3,020 68% 15% 10% -------------------------------------- OPERATING INCOME 1,875 35% 1,394 32% 35% 24% Interest expense (82) (2%) (82) (2%) 0% 0% Non-operating income, net 84 2% 94 2% (11%) (13%) -------------------------------------- INCOME BEFORE PROVISION FOR INCOME TAXES 1,877 35% 1,406 32% 33% 23% -------------------------------------- Provision for income taxes 537 10% 373 9% 44% 40% -------------------------------------- NET INCOME $1,340 25% $1,033 23% 30% 17% ====================================== EARNINGS PER SHARE: Basic $0.26 $0.20 Diluted $0.26 $0.20 WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: Basic 5,148 5,159 Diluted 5,235 5,257 (1) We compare the percent change in the results from one period to another period using constant currency disclosure. We present constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the exchange rate in effect on May 31, 2007, which was the last day of our prior fiscal year, rather than the actual exchange rates in effect during the respective periods. The United States dollar weakened relative to major international currencies in the three months ended February 29, 2008 compared with the corresponding prior year period, contributing 6 percentage points of revenue, 5 percentage points of operating expense and 11 percentage points of operating income growth. (2) Acquisition related and other expenses for the three months ended February 29, 2008 include a gain on property sale of $57 million. Please see Appendix A for further discussion. ORACLE CORPORATION Q3 FISCAL 2008 FINANCIAL RESULTS RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1) (in millions, except per share data) % Increase (Decrease) Three Months Ended in US $ ----------------------------------------------------------------- February February February February 29, 2008 29, 2008 28, 2007 28, 2007 Non- GAAP Adj. Non-GAAP GAAP Adj. Non-GAAP GAAP GAAP ----------------------------------------------------------------- TOTAL REVENUES(2) $5,349 $22 $5,371 $4,414 $35 $4,449 21% 21% TOTAL SOFTWARE REVENUES(2) $4,240 $22 $4,262 $3,498 $35 $3,533 21% 21% New software licenses 1,616 - 1,616 1,390 - 1,390 16% 16% Software license updates and product support(2) 2,624 22 2,646 2,108 35 2,143 25% 23% TOTAL OPERATING EXPENSES $3,474 $(322) $3,152 $3,020 $(326) $2,694 15% 17% Stock-based compens- ation(3) 62 (62) - 48 (48) - 30% * Amortization of intangible assets (4) 292 (292) - 222 (222) - 32% * Acquisition related and other (40) 40 - 53 (53) - (176%) * Restructuring 8 (8) - 3 (3) - 134% * OPERATING INCOME $1,875 $344 $2,219 $1,394 $361 $1,755 35% 26% OPERATING MARGIN % 35% 41% 32% 39% 11% 5% INCOME TAX EFFECTS ON ABOVE ADJUSTMENTS(5)$537 $98 $635 $373 $93 $466 44% 36% NET INCOME $1,340 $246 $1,586 $1,033 $268 $1,301 30% 22% DILUTED EARNINGS PER SHARE(6) $0.26 $0.30 $0.20 $0.25 30% 23% DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTAND- ING(6) 5,235 5,235 5,257 5 5,262 0% (1%) (1) This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our condensed consolidated financial statements prepared in accordance with GAAP. For a detailed explanation of the adjustments made to comparable GAAP measures, the reasons why management uses these measures, the usefulness of these measures and the material limitations on the usefulness of these measures, please see Appendix A. (2) As of February 29, 2008, approximately $9 million in estimated revenues related to assumed support contracts will not be recognized in fiscal 2008 due to business combination accounting rules. (3) Stock-based compensation is included in the following GAAP operating expense categories: Three Months Ended Three Months Ended February 29, 2008 February 28, 2007 ----------------------- ----------------------- GAAP Adj. Non-GAAP GAAP Adj. Non-GAAP ----------------------- ----------------------- Sales and marketing $12 $(12) $- $9 $(9) $- Software license updates and product support 1 (1) - 3 (3) - Cost of services 2 (2) - 3 (3) - Research and development 31 (31) - 21 (21) - General and administrative 16 (16) - 12 (12) - ------ ------ ------ ------ ------ ------ Subtotal 62 (62) - 48 (48) - ------ ------ ------ ------ ------ ------ Acquisition related and other 3 (3) - - - - ------ ------ ------ ------ ------ ------ Total stock-based compensation $65 $(65) $- $48 $(48) $- ====== ====== ====== ====== ====== ====== (4) Estimated future annual amortization expense related to intangible assets as of February 29, 2008 is as follows: Remainder of Fiscal 2008 $317 Fiscal 2009 1,153 Fiscal 2010 1,029 Fiscal 2011 799 Fiscal 2012 660 Fiscal 2013 306 Thereafter 1,142 ------ Total $5,406 ====== (5) The income tax provision was calculated reflecting an effective tax rate of 28.6% and 26.5% in the third quarter of fiscal 2008 and 2007, respectively. (6) Non-GAAP diluted earnings per share and non-GAAP diluted weighted average shares outstanding were calculated excluding the effects of expensing stock options under Statement 123R. * Not meaningful ORACLE CORPORATION Q3 FISCAL 2008 YEAR TO DATE FINANCIAL RESULTS CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except per share data) Nine Months Ended % Increase -------------------------------------- % Increase (Decrease) February 29, % of February 28, % of (Decrease) in Constant 2008 Revenues 2007 Revenues in US $ Currency(1) -------------------------------------------------------------- REVENUES New software licenses $4,371 29% $3,401 28% 29% 22% Software license updates and product support 7,497 49% 6,056 50% 24% 18% ------------------------------------------ Software Revenues 11,868 78% 9,457 78% 25% 20% ------------------------------------------ Services 3,323 22% 2,710 22% 23% 16% ------------------------------------------ Total Revenues 15,191 100% 12,167 100% 25% 19% ------------------------------------------ OPERATING EXPENSES Sales and marketing 3,153 21% 2,632 21% 20% 14% Software license updates and product support 729 5% 613 5% 19% 13% Cost of services 2,911 19% 2,419 20% 20% 14% Research and development 2,007 13% 1,596 13% 26% 23% General and administrative 608 4% 503 4% 21% 16% Amortization of intangible assets 867 6% 623 5% 39% 39% Acquisition related and other(2) 28 0% 65 1% (57%) (60%) Restructuring 14 0% 23 0% (41%) (44%) ------------------------------------------ Total Operating Expenses 10,317 68% 8,474 69% 22% 17% ------------------------------------------ OPERATING INCOME 4,874 32% 3,693 31% 32% 24% Interest expense (265) (2%) (248) (2%) 7% 7% Non-operating income, net 284 2% 277 2% 2% 0% ------------------------------------------ INCOME BEFORE PROVISION FOR INCOME TAXES 4,893 32% 3,722 31% 31% 23% ------------------------------------------ Provision for income taxes 1,409 9% 1,052 9% 34% 31% ------------------------------------------ NET INCOME $3,484 23% $2,670 22% 30% 20% ========================================== EARNINGS PER SHARE: Basic $0.68 $0.51 Diluted $0.67 $0.51 WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: Basic 5,128 5,186 Diluted 5,228 5,284 (1) We compare the percent change in the results from one period to another period using constant currency disclosure. We present constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the exchange rate in effect on May 31, 2007, which was the last day of our prior fiscal year, rather than the actual exchange rates in effect during the respective periods. The United States dollar weakened relative to major international currencies in the nine months ended February 29, 2008 compared with the corresponding prior year period, contributing 6 percentage points of revenue, 5 percentage points of operating expense and 8 percentage points of operating income growth. (2) Acquisition related and other expenses for the nine months ended February 29, 2008 include a gain on property sale of $57 million. Acquisition related and other expenses for the nine months ended February 28, 2007 include a benefit of $52 million related to the settlement of a pre-acquisition lawsuit against PeopleSoft, Inc. Please see Appendix A for further discussion. ORACLE CORPORATION Q3 FISCAL 2008 YEAR TO DATE FINANCIAL RESULTS RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1) (in millions, except per share data) % Increase (Decrease) Nine Months Ended in US $ ----------------------------------------------------------------- February February February February 29, 2008 29, 2008 28, 2007 28, 2007 Non- GAAP Adj. Non-GAAP GAAP Adj. Non-GAAP GAAP GAAP ----------------------------------------------------------------- TOTAL REVENUES(2) $15,191 $138 $15,329 $12,167 $158 $12,325 25% 24% TOTAL SOFTWARE REVENUES(2) $11,868 $138 $12,006 $9,457 $158 $9,615 25% 25% New software licenses 4,371 - 4,371 3,401 - 3,401 29% 29% Software license updates and product support(2) 7,497 138 7,635 6,056 158 6,214 24% 23% TOTAL OPERATING EXPENSES $10,317 $(1,103) $9,214 $8,474 $(856) $7,618 22% 21% Stock-based compen- sation(3) 194 (194) - 145 (145) - 34% * Amortization of intangible assets(4) 867 (867) - 623 (623) - 39% * Acquisition related and other 28 (28) - 65 (65) - (57%) * Restructuring 14 (14) - 23 (23) - (41%) * OPERATING INCOME $4,874 $1,241 $6,115 $3,693 $1,014 $4,707 32% 30% OPERATING MARGIN % 32% 40% 31% 38% 6% 4% INCOME TAX EFFECTS ON ABOVE ADJUST- MENTS(5) $1,409 $357 $1,766 $1,052 $287 $1,339 34% 32% NET INCOME $3,484 $884 $4,368 $2,670 $727 $3,397 30% 29% DILUTED EARNINGS PER SHARE(6) $0.67 $0.84 $0.51 $0.64 32% 30% DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTAND- ING(6) 5,228 1 5,229 5,284 9 5,293 (1%) (1%) (1) This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our condensed consolidated financial statements prepared in accordance with GAAP. For a detailed explanation of the adjustments made to comparable GAAP measures, the reasons why management uses these measures, the usefulness of these measures and the material limitations on the usefulness of these measures, please see Appendix A. (2) As of February 29, 2008, approximately $9 million in estimated revenues related to assumed support contracts will not be recognized in fiscal 2008 due to business combination accounting rules. (3) Stock-based compensation is included in the following GAAP operating expenses: Nine Months Ended Nine Months Ended February 29, 2008 February 28, 2007 --------------------- ------------------- GAAP Adj. Non-GAAP GAAP Adj. Non-GAAP --------------------- ------------------- Sales and marketing $38 $(38) $- $27 $(27) $- Software license updates and product support 8 (8) - 8 (8) - Cost of services 9 (9) - 11 (11) - Research and development 84 (84) - 63 (63) - General and administrative 55 (55) - 36 (36) - ------ ------ ------ ------ ------ ------ Subtotal 194 (194) - 145 (145) - ------ ------ ------ ------ ------ ------ Acquisition related and other 39 (39) - 1 (1) - ------ ------ ------ ------ ------ ------ Total stock-based compensation $233 $(233) $- $146 $(146) $- ====== ====== ====== ====== ====== ====== (4) Estimated future amortization expense related to intangible assets as of February 29, 2008 is as follows: Remainder of Fiscal 2008 $317 Fiscal 2009 1,153 Fiscal 2010 1,029 Fiscal 2011 799 Fiscal 2012 660 Fiscal 2013 306 Thereafter 1,142 ------ Total $5,406 ====== (5) The income tax provision was calculated reflecting a tax rate of 28.8% and 28.3% in the first nine months of fiscal 2008 and 2007, respectively. (6) Non-GAAP diluted earnings per share and non-GAAP diluted weighted average shares outstanding were calculated excluding the effects of expensing stock options under Statement 123R. * Not meaningful ORACLE CORPORATION Q3 FISCAL 2008 FINANCIAL RESULTS CONDENSED CONSOLIDATED BALANCE SHEETS ($ in millions) February 29, May 31, 2008 2007 ------------------------- ASSETS Current Assets: Cash and cash equivalents $8,409 $6,218 Marketable securities 2,097 802 Trade receivables, net 3,235 4,074 Deferred tax assets 964 968 Other current assets 1,026 821 ------------------------- Total Current Assets 15,731 12,883 Non-Current Assets: Property, net 1,570 1,603 Intangible assets, net 5,406 5,964 Goodwill 13,677 13,479 Deferred tax assets 257 48 Other assets 675 595 ------------------------- Total Non-Current Assets 21,585 21,689 ------------------------- TOTAL ASSETS $37,316 $34,572 ========================= LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Commercial paper and other short-term borrowings $1 $1,358 Accounts payable 383 315 Income taxes payable - 1,237 Accrued compensation and related benefits 1,292 1,349 Accrued restructuring 168 201 Deferred revenues 3,683 3,492 Other current liabilities 1,303 1,435 ------------------------- Total Current Liabilities 6,830 9,387 Non-Current Liabilities: Notes payable, non-current 6,237 6,235 Income taxes payable 1,522 - Deferred tax liabilities 742 1,121 Accrued restructuring 229 258 Deferred revenues 257 93 Minority interests 341 316 Other long-term liabilities 343 243 ------------------------- Total Non-Current Liabilities 9,671 8,266 Stockholders' Equity 20,815 16,919 ------------------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $37,316 $34,572 ========================= ORACLE CORPORATION Q3 FISCAL 2008 FINANCIAL RESULTS CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS ($ in millions) Nine Months Ended -------------------------------- February 29, 2008 February 28, 2007 --------------------------------- Cash Flows From Operating Activities: Net income $3,484 $2,670 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 202 184 Amortization of intangible assets 867 623 Deferred income taxes (130) (20) Minority interests in income 45 52 Stock-based compensation 233 146 Tax benefit on the exercise of stock options 492 259 Excess tax benefits from stock-based compensation (403) (204) In-process research and development 7 95 Other gains, net (64) (20) Changes in operating assets and liabilities, net of effects from acquisitions: Decrease in trade receivables, net 980 501 Decrease (increase) in prepaid expenses and other assets 61 (33) Decrease in accounts payable and other liabilities (482) (817) Decrease in income taxes payable (273) (110) Increase (decrease) in deferred revenues 88 (21) ------------------------ Net cash provided by operating activities 5,107 3,305 ------------------------- Cash Flows From Investing Activities: Purchases of marketable securities and other investments (3,629) (4,686) Proceeds from maturities and sales of marketable securities and other investments 2,532 4,653 Acquisitions, net of cash acquired (700) (2,290) Capital expenditures (195) (183) Proceeds from sale of property 153 2 ------------------------- Net cash used for investing activities (1,839) (2,504) ------------------------- Cash Flows From Financing Activities: Payments for repurchases of common stock (1,520) (2,933) Proceeds from issuance of common stock 1,047 684 Payments of debt (1,362) (175) Excess tax benefits from stock-based compensation 403 204 Distributions to minority interests (49) (46) ------------------------- Net cash used for financing activities (1,481) (2,266) ------------------------- Effect of exchange rate changes on cash and cash equivalents 404 56 ------------------------- Net increase (decrease) in cash and cash equivalents 2,191 (1,409) ------------------------- Cash and cash equivalents at beginning of period 6,218 6,659 ------------------------- Cash and cash equivalents at end of period $8,409 $5,250 ========================= ORACLE CORPORATION Q3 FISCAL 2008 FINANCIAL RESULTS FREE CASH FLOW - TRAILING 4-QUARTERS (1) ($ in millions) Fiscal 2007 Fiscal 2008 ---------------------------------------------------------- Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 ---------------------------------------------------------- GAAP Operating Cash Flow $4,706 $4,651 $4,984 $5,520 $6,598 $6,957 $7,322 Capital Expenditures(2) (233) (256) (258) (319) (357) (369) (331) ---------------------------------------------------------- Free Cash Flow $4,473 $4,395 $4,726 $5,201 $6,241 $6,588 $6,991 ========================================================== % Growth over prior year 32% 32% 29% 21% 40% 50% 48% ---------------------------------------------------------- GAAP Net Income $3,532 $3,702 $3,970 $4,274 $4,444 $4,781 $5,088 Free Cash Flow as a % of Net Income 127% 119% 119% 122% 140% 138% 137% (1) 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 flow generated from operations. We believe free cash flow is also useful as one of the bases for comparing our performance with our competitors. The presentation of non-GAAP free cash flow is not meant to be considered in isolation or as an alternative to net income as an indicator of our performance, or as an alternative to cash flows from operating activities as a measure of liquidity. (2) Represents capital expenditures as reported in cash flows from investing activities on our cash flow statements presented in accordance with GAAP. ORACLE CORPORATION Q3 FISCAL 2008 FINANCIAL RESULTS SUPPLEMENTAL ANALYSIS OF GAAP REVENUES AND HEADCOUNT (1) (in millions, except headcount data) Fiscal 2007 ---------------------------------------- Q1 Q2 Q3 Q4 TOTAL ---------------------------------------- REVENUES New software licenses $804 $1,207 $1,390 $2,481 $5,882 Software license updates and product support 1,941 2,007 2,108 2,272 8,329 ---------------------------------------- Software Revenues 2,745 3,214 3,498 4,753 14,211 Consulting 640 716 694 819 2,869 On Demand 125 140 142 151 557 Education 81 93 80 105 359 ---------------------------------------- Services Revenues 846 949 916 1,075 3,785 ---------------------------------------- Total Revenues $3,591 $4,163 $4,414 $5,828 $17,996 ======================================== AS REPORTED REVENUE GROWTH RATES New software licenses 28% 14% 27% 17% 20% Software license updates and product support 29% 29% 24% 21% 25% Software Revenues 29% 23% 25% 19% 23% Consulting 33% 42% 38% 30% 35% On Demand 49% 61% 48% 16% 40% Education 13% 14% 8% 10% 11% Services Revenues 33% 41% 36% 26% 33% Total Revenues 30% 26% 27% 20% 25% CONSTANT CURRENCY GROWTH RATES New software licenses 26% 10% 23% 13% 17% Software license updates and product support 27% 25% 20% 17% 22% Software Revenues 27% 19% 21% 15% 20% Consulting 31% 37% 34% 24% 31% On Demand 47% 56% 43% 12% 37% Education 11% 11% 4% 6% 8% Services Revenues 31% 36% 32% 20% 29% Total Revenues 28% 23% 23% 16% 22% ---------------------------------------- GEOGRAPHIC REVENUES REVENUES Americas $1,956 $2,170 $2,315 $3,018 $9,460 Europe, Middle East & Africa 1,140 1,422 1,484 1,992 6,037 Asia Pacific 495 571 615 818 2,499 ---------------------------------------- Total Revenues $3,591 $4,163 $4,414 $5,828 $17,996 ======================================== HEADCOUNT (2) GEOGRAPHIC AREA Americas 26,798 27,444 27,873 29,830 Europe, Middle East & Africa 14,199 14,640 14,758 15,680 Asia Pacific 24,129 26,350 27,850 29,164 ---------------------------------------- Total Company 65,126 68,434 70,481 74,674 ======================================== Fiscal 2008 ----------------------------------------- Q1 Q2 Q3 Q4 TOTAL ----------------------------------------- REVENUES New software licenses $1,087 $1,668 $1,616 $4,371 Software license updates and product support 2,383 2,491 2,624 7,497 ----------------------------------------- Software Revenues 3,470 4,159 4,240 11,868 Consulting 801 877 843 2,520 On Demand 158 167 174 500 Education 100 110 92 303 ----------------------------------------- Services Revenues 1,059 1,154 1,109 3,323 ----------------------------------------- Total Revenues $4,529 $5,313 $5,349 $15,191 ========================================= AS REPORTED REVENUE GROWTH RATES New software licenses 35% 38% 16% 29% Software license updates and product support 23% 24% 25% 24% Software Revenues 26% 29% 21% 25% Consulting 25% 23% 21% 23% On Demand 27% 20% 23% 23% Education 24% 17% 16% 19% Services Revenues 25% 22% 21% 23% Total Revenues 26% 28% 21% 25% CONSTANT CURRENCY GROWTH RATES New software licenses 32% 31% 9% 22% Software license updates and product support 19% 18% 18% 18% Software Revenues 23% 23% 15% 20% Consulting 20% 15% 14% 16% On Demand 23% 15% 17% 18% Education 20% 10% 9% 13% Services Revenues 21% 15% 14% 16% Total Revenues 22% 21% 15% 19% ----------------------------------------- GEOGRAPHIC REVENUES REVENUES Americas $2,375 $2,674 $2,707 $7,756 Europe, Middle East & Africa 1,530 1,865 1,871 5,265 Asia Pacific 624 774 771 2,170 ----------------------------------------- Total Revenues $4,529 $5,313 $5,349 $15,191 ========================================= HEADCOUNT (2) GEOGRAPHIC AREA Americas 30,455 30,654 30,624 Europe, Middle East & Africa 15,985 16,140 16,383 Asia Pacific 31,212 32,855 33,212 ----------------------------------------- Total Company 77,652 79,649 80,219 ========================================= (1) The sum of the quarterly financial information may vary from year-to-date financial information due to rounding. (2) Headcount has increased primarily due to our acquisitions. ORACLE CORPORATION Q3 FISCAL 2008 FINANCIAL RESULTS SUPPLEMENTAL TOTAL SOFTWARE PRODUCT REVENUE ANALYSIS (1) ($ in millions) Fiscal 2007 ----------------------------------------- Q1 Q2 Q3 Q4 TOTAL ----------------------------------------- APPLICATIONS REVENUES New software licenses $228 $340 $423 $726 $1,716 Software license updates and product support 703 728 769 832 3,032 ----------------------------------------- Software Revenues $931 $1,068 $1,192 $1,558 $4,748 ========================================= AS REPORTED GROWTH RATES New software licenses 80% 28% 57% 13% 32% Software license updates and product support 51% 45% 27% 23% 35% Software Revenues 57% 39% 36% 18% 34% CONSTANT CURRENCY GROWTH RATES New software licenses 78% 25% 52% 10% 29% Software license updates and product support 49% 41% 23% 19% 32% Software Revenues 55% 35% 32% 15% 31% ----------------------------------------- DATABASE & MIDDLEWARE REVENUES New software licenses $576 $867 $967 $1,755 $4,166 Software license updates and product support 1,238 1,279 1,339 1,440 5,297 ----------------------------------------- Software Revenues $1,814 $2,146 $2,306 $3,195 $9,463 ========================================= AS REPORTED GROWTH RATES New software licenses 15% 9% 17% 18% 16% Software license updates and product support 19% 21% 22% 20% 21% Software Revenues 18% 16% 20% 19% 18% CONSTANT CURRENCY GROWTH RATES New software licenses 13% 5% 13% 15% 12% Software license updates and product support 18% 18% 19% 17% 18% Software Revenues 16% 13% 16% 16% 15% Fiscal 2008 ----------------------------------------- Q1 Q2 Q3 Q4 TOTAL ----------------------------------------- APPLICATIONS REVENUES New software licenses $376 $553 $451 $1,380 Software license updates and product support 886 929 974 2,789 ----------------------------------------- Software Revenues $1,262 $1,482 $1,425 $4,169 ========================================= AS REPORTED GROWTH RATES New software licenses 65% 63% 7% 39% Software license updates and product support 26% 28% 27% 27% Software Revenues 36% 39% 20% 31% CONSTANT CURRENCY GROWTH RATES New software licenses 61% 56% 2% 34% Software license updates and product support 22% 21% 20% 21% Software Revenues 32% 32% 14% 25% ----------------------------------------- DATABASE & MIDDLEWARE REVENUES New software licenses $711 $1,115 $1,165 $2,991 Software license updates and product support 1,497 1,562 1,650 4,708 ----------------------------------------- Software Revenues $2,208 $2,677 $2,815 $7,699 ========================================= AS REPORTED GROWTH RATES New software licenses 23% 29% 20% 24% Software license updates and product support 21% 22% 23% 22% Software Revenues 22% 25% 22% 23% CONSTANT CURRENCY GROWTH RATES New software licenses 20% 22% 13% 18% Software license updates and product support 17% 16% 17% 17% Software Revenues 18% 18% 15% 17% (1) The sum of the quarterly financial information may vary from year-to-date financial information due to rounding. ORACLE CORPORATION Q3 FISCAL 2008 FINANCIAL RESULTS SUPPLEMENTAL GEOGRAPHIC NEW SOFTWARE LICENSE REVENUE ANALYSIS (1) (2) ($ in millions) Fiscal 2007 ----------------------------------------- Q1 Q2 Q3 Q4 TOTAL ----------------------------------------- AMERICAS Database & Middleware $232 $333 $383 $795 $1,743 Applications 126 195 250 415 986 ----------------------------------------- New Software License Revenues $358 $528 $633 $1,210 $2,729 ========================================= AS REPORTED GROWTH RATES Database & Middleware 19% 2% 15% 20% 15% Applications 69% 19% 69% 5% 26% New Software License Revenues 33% 8% 31% 14% 19% CONSTANT CURRENCY GROWTH RATES Database & Middleware 18% 2% 15% 19% 14% Applications 69% 19% 69% 4% 26% New Software License Revenues 32% 7% 31% 13% 18% ----------------------------------------- EUROPE / MIDDLE EAST / AFRICA Database & Middleware $184 $341 $363 $619 $1,507 Applications 69 101 124 224 518 ----------------------------------------- New Software License Revenues $253 $442 $487 $843 $2,025 ========================================= AS REPORTED GROWTH RATES Database & Middleware 12% 21% 15% 20% 18% Applications 83% 35% 29% 42% 42% New Software License Revenues 25% 24% 18% 25% 23% CONSTANT CURRENCY GROWTH RATES Database & Middleware 8% 11% 6% 12% 10% Applications 78% 25% 19% 34% 33% New Software License Revenues 21% 14% 9% 18% 15% ----------------------------------------- ASIA PACIFIC Database & Middleware $149 $185 $213 $322 $869 Applications 33 44 49 87 212 ----------------------------------------- New Software License Revenues $182 $229 $262 $409 $1,081 ========================================= AS REPORTED GROWTH RATES Database & Middleware 12% 5% 26% 10% 13% Applications 126% 58% 89% (1%) 36% New Software License Revenues 23% 12% 34% 8% 17% CONSTANT CURRENCY GROWTH RATES Database & Middleware 13% 2% 24% 7% 11% Applications 124% 53% 83% (4%) 33% New Software License Revenues 24% 9% 32% 5% 15% ----------------------------------------- TOTAL COMPANY Database & Middleware $565 $859 $959 $1,736 $4,119 Applications 228 340 423 726 1,716 ----------------------------------------- New Software License Revenues $793 $1,199 $1,382 $2,462 $5,835 ========================================= AS REPORTED GROWTH RATES Database & Middleware 15% 9% 17% 18% 15% Applications 80% 28% 57% 13% 32% New Software License Revenues 28% 14% 27% 17% 20% CONSTANT CURRENCY GROWTH RATES Database & Middleware 13% 5% 13% 14% 12% Applications 78% 25% 52% 10% 29% New Software License Revenues 27% 10% 23% 13% 16% Fiscal 2008 ----------------------------------------- Q1 Q2 Q3 Q4 TOTAL ----------------------------------------- AMERICAS Database & Middleware $286 $438 $476 $1,200 Applications 199 306 252 757 ----------------------------------------- New Software License Revenues $485 $744 $728 $1,957 ========================================= AS REPORTED GROWTH RATES Database & Middleware 23% 32% 24% 27% Applications 58% 57% 1% 33% New Software License Revenues 35% 41% 15% 29% CONSTANT CURRENCY GROWTH RATES Database & Middleware 22% 29% 21% 24% Applications 57% 54% (1%) 31% New Software License Revenues 34% 38% 12% 26% ----------------------------------------- EUROPE / MIDDLE EAST / AFRICA Database & Middleware $253 $420 $446 $1,119 Applications 123 174 141 438 ----------------------------------------- New Software License Revenues $376 $594 $587 $1,557 ========================================= AS REPORTED GROWTH RATES Database & Middleware 38% 23% 23% 26% Applications 77% 72% 14% 49% New Software License Revenues 49% 34% 21% 32% CONSTANT CURRENCY GROWTH RATES Database & Middleware 30% 12% 11% 16% Applications 69% 58% 6% 39% New Software License Revenues 41% 23% 10% 21% ----------------------------------------- ASIA PACIFIC Database & Middleware $155 $244 $231 $630 Applications 54 73 58 185 ----------------------------------------- New Software License Revenues $209 $317 $289 $815 ========================================= AS REPORTED GROWTH RATES Database & Middleware 4% 32% 8% 15% Applications 67% 66% 18% 47% New Software License Revenues 15% 39% 10% 21% CONSTANT CURRENCY GROWTH RATES Database & Middleware 1% 26% 0% 9% Applications 60% 57% 5% 37% New Software License Revenues 12% 32% 1% 14% ----------------------------------------- TOTAL COMPANY Database & Middleware $694 $1,102 $1,153 $2,949 Applications 376 553 451 1,380 ----------------------------------------- New Software License Revenues $1,070 $1,655 $1,604 $4,329 ========================================= AS REPORTED GROWTH RATES Database & Middleware 23% 28% 20% 24% Applications 65% 63% 7% 39% New Software License Revenues 35% 38% 16% 28% CONSTANT CURRENCY GROWTH RATES Database & Middleware 19% 21% 12% 17% Applications 61% 56% 2% 34% New Software License Revenues 31% 31% 9% 22% (1) The sum of the quarterly financial information may vary from year-to-date financial information due to rounding. (2) New Software License Revenues presented exclude documentation and miscellaneous revenues. APPENDIX A ORACLE CORPORATION Q3 FISCAL 2008 FINANCIAL RESULTS EXPLANATION OF NON-GAAP MEASURES

To supplement our financial results presented on a GAAP basis, we use the non-GAAP measures indicated in the table, which exclude certain business combination accounting entries and expenses related to acquisitions as well as other significant expenses including stock-based compensation, that we believe are helpful in understanding our past financial performance and our future results. Our non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. Our management regularly uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our business and make operating decisions. These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. Compensation of our executives is based in part on the performance of our business based on these non-GAAP measures. Our non-GAAP financial measures reflect adjustments based on the following items, as well as the related income tax effects:

-- Support deferred revenue: Business combination accounting rules require us to account for the fair value of support contracts assumed in connection with our acquisitions. Because these are typically one-year contracts, our GAAP revenues for the one-year period subsequent to our acquisitions do not reflect the full amount of software license updates and product support revenues on assumed support contracts that would have otherwise been recorded by the acquired entities. The non-GAAP adjustment is intended to reflect the full amount of such revenues. We believe this adjustment is useful to investors as a measure of the ongoing performance of our business because we have historically experienced high renewal rates on support contracts, although we cannot be certain that customers will renew these contracts.

-- Stock-based compensation expenses: We have excluded the effect of stock-based compensation expenses from our non-GAAP operating expenses and net income. Although stock-based compensation is a key incentive offered to our employees, and we believe such compensation contributed to the revenues earned during the periods presented and also believe it will contribute to the generation of future period revenues, we continue to evaluate our business performance excluding stock-based compensation expenses. Stock-based compensation expenses will recur in future periods.

-- Amortization of intangible assets expenses: We have excluded the effect of amortization of intangibles from our non-GAAP operating expenses and net income. Amortization of intangible assets expense is inconsistent in amount and frequency and is significantly affected by the timing and size of our acquisitions. Investors should note that the use of intangible assets contributed to revenues earned during the periods presented and will contribute to future period revenues as well. Amortization expenses will recur in future periods.

-- Acquisition related and other expenses, and restructuring expenses: We incurred significant expenses in connection with our acquisitions and also incurred certain other operating expenses or income, which we would not have otherwise incurred in the periods presented. Acquisition related and other expenses primarily consist of in-process research and development expenses, integration related professional services, stock-based compensation expenses (in addition to the stock-based compensation expenses described above), personnel related expenses for transitional employees, certain business combination contingency adjustments after the purchase price allocation period has ended, and certain other operating expenses or income. Stock-based compensation expenses included in acquisition related and other expenses primarily resulted from unvested options assumed in acquisitions whose vesting was fully accelerated upon termination of the employees pursuant to the terms of those options. Restructuring expenses consist of Oracle employee severance and other exit costs. We believe it is useful for investors to understand the effect of these items on our total operating expenses. Although acquisition related expenses and restructuring expenses are not recurring with respect to past acquisitions, we will incur these expenses in connection with future acquisitions.

For the three and nine months ended February 29, 2008, acquisition related and other expenses include a gain on property sale of $57 million. For the nine months ended February 28, 2007, acquisition related and other expenses included a $52 million benefit related to the settlement of a lawsuit filed against PeopleSoft, Inc. on behalf of the U.S. government. This lawsuit was filed in October 2003, prior to our acquisition of PeopleSoft and represented a pre-acquisition contingency that we identified and assumed in connection with our acquisition of PeopleSoft. In October 2006, we agreed to pay the U.S. government $98 million to settle this lawsuit. Business combination accounting standards require that after the end of the purchase price allocation period, any adjustment that results from a pre-acquisition contingency should be included as an element of net income in the period of settlement, versus an adjustment to the original purchase price allocation. Since the purchase price allocation period for PeopleSoft ended in the third quarter of fiscal 2006, the favorable difference of $52 million between the estimated exposure recorded for this lawsuit during the purchase price allocation period and the actual settlement amount has been included in our consolidated statement of operations for the nine months ended February 28, 2007 as a component of acquisition related and other expenses.

Oracle Corporation

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