v3.22.2
SEGMENT INFORMATION
 12 Months Ended
May 31, 2022
Segment Reporting [Abstract]  
SEGMENT INFORMATION

14.

SEGMENT INFORMATION

ASC 280, Segment Reporting, establishes standards for reporting information about operating segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. Our chief operating decision makers (CODMs) are our Chief Executive Officer and Chief Technology Officer. We are organized by line of business and geographically. While our CODMs evaluate results in a number of different ways, the line of business management structure is the primary basis for which the allocation of resources and financial results are assessed. The tabular information below presents financial information that is provided to our CODMs for their review and assists our CODMs with evaluating the company’s performance and allocating company resources.

We have three businesses—cloud and license, hardware and services—each of which is comprised of a single operating segment. All three of our businesses market and sell our offerings globally to businesses of many sizes, government agencies, educational institutions and resellers with a worldwide sales force positioned to offer the combinations that best meet customer needs.

Our cloud and license business engages in the sale, marketing and delivery of our enterprise applications and infrastructure technologies through cloud and on-premise deployment models including our cloud services and license support offerings; and our cloud license and on-premise license offerings. Cloud services and license support revenues are generated from offerings that are typically contracted with customers directly, billed to customers in advance, delivered to customers over time with our revenue recognition occurring over the contractual terms, and renewed by customers upon completion of the contractual terms. Cloud services and license support contracts provide customers with access to the latest updates to the applications and infrastructure technologies as they become available and for which the customer contracted and also include

related technical support services over the contractual term. Cloud license and on-premise license revenues represent fees earned from granting customers licenses, generally on a perpetual basis, to use our database and middleware and our applications software products within cloud and on-premise IT environments. We generally recognize revenues at the point in time the software is made available to the customer to download and use, which typically is immediate upon signature of the license contract. In each fiscal year, our cloud and license business’ contractual activities are typically highest in our fourth fiscal quarter and the related cash flows are typically highest in the following quarter (i.e., in the first fiscal quarter of the next fiscal year) as we receive payments from these contracts.

Our hardware business provides infrastructure technologies including Oracle Engineered Systems, servers, storage, industry-specific hardware, operating systems, virtualization, management and other hardware-related software to support diverse IT environments. Our hardware business also offers hardware support, which provides customers with software updates for the software components that are essential to the functionality of their hardware products and can also include product repairs, maintenance services and technical support services that are typically delivered and recognized ratably over the contractual term.

Our services business provides services to customers and partners to help maximize the performance of their investments in Oracle applications and infrastructure technologies.

We do not track our assets for each business. Consequently, it is not practical to show assets by operating segment.

The following table presents summary results for each of our three businesses for each of fiscal 2022, 2021 and 2020:

 

 

 

Year Ended May 31,

 

(in millions)

 

2022

 

 

2021

 

 

2020

 

Cloud and license:

 

 

 

 

 

 

 

 

 

 

 

 

Revenues(1)

 

$

36,052

 

 

$

34,101

 

 

$

32,523

 

Cloud services and license support expenses

 

 

4,915

 

 

 

4,133

 

 

 

3,803

 

Sales and marketing expenses

 

 

7,054

 

 

 

6,799

 

 

 

7,159

 

Margin(2)

 

$

24,083

 

 

$

23,169

 

 

$

21,561

 

Hardware:

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

3,183

 

 

$

3,359

 

 

$

3,443

 

Hardware products and support expenses

 

 

944

 

 

 

945

 

 

 

1,084

 

Sales and marketing expenses

 

 

361

 

 

 

388

 

 

 

456

 

Margin(2)

 

$

1,878

 

 

$

2,026

 

 

$

1,903

 

Services:

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

3,205

 

 

$

3,021

 

 

$

3,106

 

Services expenses

 

 

2,539

 

 

 

2,393

 

 

 

2,656

 

Margin(2)

 

$

666

 

 

$

628

 

 

$

450

 

Totals:

 

 

 

 

 

 

 

 

 

 

 

 

Revenues(1)

 

$

42,440

 

 

$

40,481

 

 

$

39,072

 

Expenses

 

 

15,813

 

 

 

14,658

 

 

 

15,158

 

Margin(2)

 

$

26,627

 

 

$

25,823

 

 

$

23,914

 

 

(1)

Cloud and license revenues and total revenues presented for management reporting for fiscal 2021 and fiscal 2020 included revenues related to cloud and license obligations that would have otherwise been recorded by the acquired businesses as independent entities but were not recognized in our consolidated statements of operations due to business combination accounting rules that were applicable to acquisitions closed prior to fiscal 2022. The table below provides a reconciliation of our total operating segment revenues to our total revenues as reported in our consolidated statements of operations for all periods presented.

(2)

The margins reported reflect only the direct controllable costs of each line of business and do not include allocations of research and development, general and administrative and certain other allocable expenses, net. Additionally, the margins reported above do not reflect amortization of intangible assets, acquisition related and other expenses, restructuring expenses, stock-based compensation, interest expense or certain other non-operating expenses or income, net. Refer to the table below for a reconciliation of our total margin for operating segments to our income before income taxes as reported per our consolidated statements of operations.

 

The following table reconciles total operating segment revenues to total revenues as well as total operating segment margin to income before income taxes:

 

 

 

Year Ended May 31,

 

(in millions)

 

2022

 

 

2021

 

 

2020

 

Total revenues for operating segments

 

$

42,440

 

 

$

40,481

 

 

$

39,072

 

Cloud and license revenues(1)

 

 

—

 

 

 

(2

)

 

 

(4

)

Total revenues

 

$

42,440

 

 

$

40,479

 

 

$

39,068

 

 

Total margin for operating segments

 

$

26,627

 

 

$

25,823

 

 

$

23,914

 

Cloud and license revenues(1)

 

 

—

 

 

 

(2

)

 

 

(4

)

Research and development

 

 

(7,219

)

 

 

(6,527

)

 

 

(6,067

)

General and administrative

 

 

(1,317

)

 

 

(1,254

)

 

 

(1,181

)

Amortization of intangible assets

 

 

(1,150

)

 

 

(1,379

)

 

 

(1,586

)

Acquisition related and other

 

 

(4,713

)

 

 

(138

)

 

 

(56

)

Restructuring

 

 

(191

)

 

 

(431

)

 

 

(250

)

Stock-based compensation for operating segments

 

 

(735

)

 

 

(513

)

 

 

(436

)

Expense allocations and other, net

 

 

(376

)

 

 

(366

)

 

 

(438

)

Interest expense

 

 

(2,755

)

 

 

(2,496

)

 

 

(1,995

)

Non-operating (expenses) income, net

 

 

(522

)

 

 

282

 

 

 

162

 

Income before income taxes

 

$

7,649

 

 

$

12,999

 

 

$

12,063

 

 

(1)

Cloud and license revenues presented for management reporting for fiscal 2021 and fiscal 2020 included revenues related to cloud and license obligations that would have otherwise been recorded by the acquired businesses as independent entities but were not recognized in our consolidated statements of operations due to business combination accounting rules that were applicable to acquisitions closed prior to fiscal 2022. This table includes a reconciliation of our total operating segment revenues to our total revenues as reported in our consolidated statements of operations for all periods presented.

Disaggregation of Revenues

We have considered information that is regularly reviewed by our CODMs in evaluating financial performance, and disclosures presented outside of our financial statements in our earnings releases and used in investor presentations to disaggregate revenues to depict how the nature, amount, timing and uncertainty of revenues and cash flows are affected by economic factors. The principal category we use to disaggregate revenues is the nature of our products and services as presented in our consolidated statements of operations, the total of which is reconciled to revenues from our reportable segments as per the preceding tables of this footnote.

The following table is a summary of our total revenues by geographic region:

 

 

Year Ended May 31,

 

(in millions)

 

2022

 

 

2021

 

 

2020

 

Americas

 

$

23,679

 

 

$

21,828

 

 

$

21,563

 

EMEA(1)

 

 

12,011

 

 

 

11,894

 

 

 

11,035

 

Asia Pacific

 

 

6,750

 

 

 

6,757

 

 

 

6,470

 

Total revenues

 

$

42,440

 

 

$

40,479

 

 

$

39,068

 

 

(1)

Comprised of Europe, the Middle East and Africa  

 

The following table presents our cloud services and license support revenues by applications and infrastructure ecosystems:

 

 

Year Ended May 31,

 

(in millions)

 

2022

 

 

2021

 

 

2020

 

Applications cloud services and license support

 

$

12,612

 

 

$

11,712

 

 

$

11,015

 

Infrastructure cloud services and license support

 

 

17,562

 

 

 

16,988

 

 

 

16,377

 

Total cloud services and license support revenues

 

$

30,174

 

 

$

28,700

 

 

$

27,392

 

 

Geographic Information

Disclosed in the table below is geographic information for each country that comprised greater than three percent of our total revenues for any of fiscal 2022, 2021 or 2020:

 

 

 

As of and for the Year Ended May 31,

 

 

 

2022

 

 

2021

 

 

2020

 

(in millions)

 

Revenues

 

 

Long-Lived

Assets(1)

 

 

Revenues

 

 

Long-Lived

Assets(1)

 

 

Revenues

 

 

Long-Lived

Assets(1)

 

United States

 

$

20,246

 

 

$

10,300

 

 

$

18,734

 

 

$

6,826

 

 

$

18,428

 

 

$

6,012

 

United Kingdom

 

 

2,335

 

 

 

805

 

 

 

2,110

 

 

 

685

 

 

 

1,904

 

 

 

472

 

Japan

 

 

1,847

 

 

 

788

 

 

 

1,988

 

 

 

650

 

 

 

1,977

 

 

 

655

 

Germany

 

 

1,799

 

 

 

813

 

 

 

1,744

 

 

 

561

 

 

 

1,510

 

 

 

418

 

Canada

 

 

1,347

 

 

 

298

 

 

 

1,281

 

 

 

199

 

 

 

1,162

 

 

 

169

 

Other countries

 

 

14,866

 

 

 

3,140

 

 

 

14,622

 

 

 

2,464

 

 

 

14,087

 

 

 

1,977

 

Total

 

$

42,440

 

 

$

16,144

 

 

$

40,479

 

 

$

11,385

 

 

$

39,068

 

 

$

9,703

 

 

(1)

Long-lived assets exclude goodwill, intangible assets, equity investments and deferred taxes, which are not allocated to specific geographic locations as it is impracticable to do so.