filings.toolsItem 1. Financial Statements (Unaudited)
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Item 1. Financial Statements (Unaudited)
ORACLE CORPORATION
CONDENSED CONSOLIDA****TED BALANCE SHEETS
As of August 31, 2025 and May 31, 2025
(Unaudited)
| (in millions, except per share data) | August 31, 2025 | May 31, 2025 | ||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 10,445 | $ | 10,786 | ||||
| Marketable securities | 560 | 417 | ||||||
| Trade receivables, net of allowances for credit losses of $526 and $557 as of August 31, 2025 and May 31, 2025, respectively | 8,843 | 8,558 | ||||||
| Prepaid expenses and other current assets | 4,786 | 4,818 | ||||||
| Total current assets | 24,634 | 24,579 | ||||||
| Non-current assets: | ||||||||
| Property, plant and equipment, net | 53,194 | 43,522 | ||||||
| Intangible assets, net | 4,167 | 4,587 | ||||||
| Goodwill | 62,211 | 62,207 | ||||||
| Deferred tax assets | 11,734 | 11,877 | ||||||
| Other non-current assets | 24,509 | 21,589 | ||||||
| Total non-current assets | 155,815 | 143,782 | ||||||
| Total assets | $ | 180,449 | $ | 168,361 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Notes payable and other borrowings, current | $ | 9,079 | $ | 7,271 | ||||
| Accounts payable | 8,203 | 5,113 | ||||||
| Accrued compensation and related benefits | 1,794 | 2,243 | ||||||
| Deferred revenues | 12,098 | 9,387 | ||||||
| Other current liabilities | 8,700 | 8,629 | ||||||
| Total current liabilities | 39,874 | 32,643 | ||||||
| Non-current liabilities: | ||||||||
| Notes payable and other borrowings, non-current | 82,236 | 85,297 | ||||||
| Income taxes payable | 10,583 | 10,269 | ||||||
| Operating lease liabilities | 14,094 | 11,536 | ||||||
| Other non-current liabilities | 8,996 | 7,647 | ||||||
| Total non-current liabilities | 115,909 | 114,749 | ||||||
| Commitments and contingencies | ||||||||
| Oracle Corporation stockholders’ equity: | ||||||||
| Preferred stock, $0.01 par value—authorized: 1.0 shares; outstanding: none | — | — | ||||||
| Common stock, $0.01 par value and additional paid in capital—authorized: 11,000 shares; outstanding: 2,841 shares and 2,807 shares as of August 31, 2025 and May 31, 2025, respectively | 39,378 | 37,107 | ||||||
| Accumulated deficit | (14,054 | ) | (15,481 | ) | ||||
| Accumulated other comprehensive loss | (1,170 | ) | (1,175 | ) | ||||
| Total Oracle Corporation stockholders’ equity | 24,154 | 20,451 | ||||||
| Noncontrolling interests | 512 | 518 | ||||||
| Total stockholders’ equity | 24,666 | 20,969 | ||||||
| Total liabilities and stockholders’ equity | $ | 180,449 | $ | 168,361 |
See notes to condensed consolidated financial statements.
ORACLE CORPORATION
CONDENSED CONSOLIDATED S****TATEMENTS OF OPERATIONS
For the Three Months Ended August 31, 2025 and 2024
(Unaudited)
| Three Months Ended August 31, | ||||||||
| (in millions, except per share data) | 2025 | 2024 | ||||||
| Revenues: | ||||||||
| Cloud | $ | 7,186 | $ | 5,623 | ||||
| Software | 5,721 | 5,766 | ||||||
| Hardware | 670 | 655 | ||||||
| Services | 1,349 | 1,263 | ||||||
| Total revenues | 14,926 | 13,307 | ||||||
| Operating expenses: | ||||||||
| Cloud and software(1) | 3,607 | 2,597 | ||||||
| Hardware(1) | 178 | 162 | ||||||
| Services(1) | 1,099 | 1,147 | ||||||
| Sales and marketing(1) | 2,063 | 2,036 | ||||||
| Research and development | 2,491 | 2,306 | ||||||
| General and administrative | 376 | 358 | ||||||
| Amortization of intangible assets | 420 | 624 | ||||||
| Acquisition related and other | 13 | 13 | ||||||
| Restructuring | 402 | 73 | ||||||
| Total operating expenses | 10,649 | 9,316 | ||||||
| Operating income | 4,277 | 3,991 | ||||||
| Interest expense | (923 | ) | (842 | ) | ||||
| Non-operating income, net | 73 | 20 | ||||||
| Income before income taxes | 3,427 | 3,169 | ||||||
| Provision for income taxes | 500 | 240 | ||||||
| Net income | $ | 2,927 | $ | 2,929 | ||||
| Earnings per share: | ||||||||
| Basic | $ | 1.04 | $ | 1.06 | ||||
| Diluted | $ | 1.01 | $ | 1.03 | ||||
| Weighted average common shares outstanding: | ||||||||
| Basic | 2,826 | 2,761 | ||||||
| Diluted | 2,909 | 2,851 |
(1)
Exclusive of amortization of intangible assets, which is shown separately.
See notes to condensed consolidated financial statements.
ORACLE CORPORATION
CONDENSED CONSOLIDATED STATEM****ENTS OF COMPREHENSIVE INCOME
For the Three Months Ended August 31, 2025 and 2024
(Unaudited)
| Three Months Ended August 31, | ||||||||
| (in millions) | 2025 | 2024 | ||||||
| Net income | $ | 2,927 | $ | 2,929 | ||||
| Other comprehensive income, net of tax: | ||||||||
| Net foreign currency translation gains | 28 | 220 | ||||||
| Net unrealized losses on cash flow hedges | (24 | ) | (116 | ) | ||||
| Other, net | 1 | — | ||||||
| Total other comprehensive income, net | 5 | 104 | ||||||
| Comprehensive income | $ | 2,932 | $ | 3,033 |
See notes to condensed consolidated financial statements.
ORACLE CORPORATION
CONDENSED CONSOLIDATED STATEMEN****TS OF STOCKHOLDERS’ EQUITY
For the Three Months Ended August 31, 2025 and 2024
(Unaudited)
| Three Months Ended August 31, | ||||||||
| (in millions, except per share data) | 2025 | 2024 | ||||||
| Common stock and additional paid in capital | ||||||||
| Balance, beginning of period | $ | 37,107 | $ | 32,764 | ||||
| Common stock issued | 1,170 | 179 | ||||||
| Stock-based compensation | 1,124 | 1,007 | ||||||
| Repurchases of common stock | (6 | ) | (13 | ) | ||||
| Shares repurchased for tax withholdings upon vesting of restricted stock-based awards | (17 | ) | (851 | ) | ||||
| Other, net | — | (3 | ) | |||||
| Balance, end of period | $ | 39,378 | $ | 33,083 | ||||
| Accumulated deficit | ||||||||
| Balance, beginning of period | $ | (15,481 | ) | $ | (22,628 | ) | ||
| Repurchases of common stock | (87 | ) | (137 | ) | ||||
| Cash dividends declared | (1,413 | ) | (1,103 | ) | ||||
| Net income | 2,927 | 2,929 | ||||||
| Balance, end of period | $ | (14,054 | ) | $ | (20,939 | ) | ||
| Other stockholders’ equity, net | ||||||||
| Balance, beginning of period | $ | (657 | ) | $ | (897 | ) | ||
| Other comprehensive income, net | 5 | 104 | ||||||
| Other, net | (6 | ) | (82 | ) | ||||
| Balance, end of period | $ | (658 | ) | $ | (875 | ) | ||
| Total stockholders’ equity | $ | 24,666 | $ | 11,269 | ||||
| Cash dividends declared per common share | $ | 0.50 | $ | 0.40 |
See notes to condensed consolidated financial statements.
ORACLE CORPORATION
CONDENSED CONSOLIDATED S****TATEMENTS OF CASH FLOWS
For the Three Months Ended August 31, 2025 and 2024
(Unaudited)
| Three Months Ended August 31, | ||||||||
| (in millions) | 2025 | 2024 | ||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 2,927 | $ | 2,929 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation | 1,351 | 804 | ||||||
| Amortization of intangible assets | 420 | 624 | ||||||
| Deferred income taxes | 515 | (151 | ) | |||||
| Stock-based compensation | 1,124 | 1,007 | ||||||
| Other, net | 164 | 130 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Increase in trade receivables, net | (245 | ) | (81 | ) | ||||
| Decrease in prepaid expenses and other assets | 59 | 367 | ||||||
| Decrease in accounts payable and other liabilities | (334 | ) | (531 | ) | ||||
| (Decrease) increase in income taxes payable | (391 | ) | 24 | |||||
| Increase in deferred revenues | 2,550 | 2,305 | ||||||
| Net cash provided by operating activities | 8,140 | 7,427 | ||||||
| Cash flows from investing activities: | ||||||||
| Purchases of marketable securities and other investments | (471 | ) | (477 | ) | ||||
| Proceeds from sales and maturities of marketable securities and other investments | 255 | 15 | ||||||
| Capital expenditures | (8,502 | ) | (2,303 | ) | ||||
| Net cash used for investing activities | (8,718 | ) | (2,765 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Payments for repurchases of common stock | (95 | ) | (150 | ) | ||||
| Proceeds from issuances of common stock | 1,170 | 179 | ||||||
| Shares repurchased for tax withholdings upon vesting of restricted stock-based awards | (17 | ) | (851 | ) | ||||
| Payments of dividends to stockholders | (1,413 | ) | (1,103 | ) | ||||
| Repayments of commercial paper, net | (238 | ) | (396 | ) | ||||
| Proceeds from issuances of term loan credit agreements | — | 5,627 | ||||||
| Repayments of senior notes and other borrowings | (1,052 | ) | (7,630 | ) | ||||
| Other financing activities, net | 1,855 | (261 | ) | |||||
| Net cash provided by (used for) financing activities | 210 | (4,585 | ) | |||||
| Effect of exchange rate changes on cash and cash equivalents | 27 | 85 | ||||||
| Net (decrease) increase in cash and cash equivalents | (341 | ) | 162 | |||||
| Cash and cash equivalents at beginning of period | 10,786 | 10,454 | ||||||
| Cash and cash equivalents at end of period | $ | 10,445 | $ | 10,616 | ||||
| Non-cash investing activities: | ||||||||
| Unpaid capital expenditures | $ | 4,010 | $ | 1,582 |
See notes to condensed consolidated financial statements.
ORACLE CORPORATION
NOTES TO CONDENSED CONSOLID****ATED FINANCIAL STATEMENTS
August 31, 2025
(Unaudited)
1.
BASIS OF PRESENTATION, RECENT ACCOUNTING PRONOUNCEMENTS AND OTHER
Basis of Presentation
We have prepared the condensed consolidated financial statements included herein pursuant to the rules and regulations of the U.S. Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP) have been condensed or omitted pursuant to such rules and regulations. However, we believe that the disclosures herein are adequate to ensure the information presented is not misleading. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended May 31, 2025.
We believe that all necessary adjustments, which consisted only of normal recurring items, have been included in the accompanying financial statements to present fairly the results of the interim periods. The results of operations for the interim periods presented are not necessarily indicative of the operating results to be expected for any subsequent interim period or for the fiscal year ending May 31, 2026. We reclassed certain revenues and other related disclosures to conform to the current period’s presentation for all periods presented in our condensed consolidated statements of operations. Such reclassifications did not affect total revenue, income from operations or net income.
There have been no changes to our significant accounting policies as disclosed in our Annual Report on Form 10-K for the fiscal year ended May 31, 2025 that had a significant impact on our condensed consolidated financial statements or notes thereto as of and for the three months ended August 31, 2025.
Cash, Cash Equivalents and Restricted Cash
Restricted cash that was included within cash and cash equivalents as presented within our condensed consolidated balance sheets as of August 31, 2025 and May 31, 2025 and our condensed consolidated statements of cash flows for the three months ended August 31, 2025 and 2024 was immaterial.
Remaining Performance Obligations from Contracts with Customers
Trade receivables, net of allowance for credit losses, and deferred revenues are reported net of related uncollected deferred revenues in our condensed consolidated balance sheets as of August 31, 2025 and May 31, 2025. The revenues recognized during the three months ended August 31, 2025 and 2024 that were included in the opening deferred revenues balances as of May 31, 2025 and 2024 were approximately $4.0 billion and $3.9 billion, respectively. Revenues recognized from performance obligations satisfied in prior periods and impairment losses recognized on our receivables were immaterial in each of the three months ended August 31, 2025 and 2024.
Remaining performance obligations were $455.3 billion as of August 31, 2025, of which we expect to recognize approximately 10% as revenues over the next twelve months, 25% over the subsequent month 13 to month 36, 34% over the subsequent month 37 to month 60 and the remainder thereafter. We have elected the optional exemption to not disclose the variable consideration for contracts in which the variable consideration expected to be received over the duration of the contract is allocated entirely to the wholly unsatisfied performance obligations. Refer to Note 1 of Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended May 31, 2025 for more information about our remaining performance obligations.
Sales of Financing Receivables
We offer certain of our customers the option to acquire certain of our products and services offerings through separate long-term payment contracts. We generally sell these contracts that we have financed for our customers on a non-recourse basis to financial institutions within 90 days of the contracts’ dates of execution. We record the
ORACLE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
August 31, 2025
(Unaudited)
transfers of amounts due from customers to financial institutions as sales of financing receivables because we are considered to have surrendered control of these financing receivables. Financing receivables sold to financial institutions were $756 million and $595 million for the three months ended August 31, 2025 and 2024, respectively.
Non-Marketable Investments
As of each of August 31, 2025 and May 31, 2025, our non-marketable debt investments and equity securities and related instruments totaled $2.1 billion, and are included in other non-current assets in the accompanying condensed consolidated balance sheets and are subject to periodic credit losses and impairment reviews. Certain of these non-marketable equity securities and related instruments are adjusted for observable price changes from orderly transactions. The majority of the non-marketable debt and equity investments held as of these dates were with Ampere Computing Holdings LLC (Ampere), an equity method investee in which we have an ownership interest of approximately 29% as of August 31, 2025. Our debt investments in Ampere are in the form of convertible debt which, under the terms of an agreement with Ampere and other co-investors, will mature in June 2026 and are convertible into equity securities at the holder’s option under certain circumstances. During the three months ended August 31, 2025, we invested an aggregate of $90 million in convertible debt instruments issued by Ampere. We follow the equity method of accounting for our investment in Ampere and our share of loss under the equity method of accounting is recorded in the non-operating income, net line item in our condensed consolidated statements of operations. The total carrying value of our investments in Ampere after accounting for losses under the equity method of accounting was $1.7 billion as of August 31, 2025. In accordance with the terms of an agreement with other co-investors, we are also a counterparty to certain put (exercisable by a co-investor) and call (exercisable by Oracle) options at prices of approximately $500 million to $1.5 billion, respectively, to acquire additional equity interests in Ampere from our co-investors through January 2027. On March 19, 2025, SoftBank Group Corp. announced that it had entered into an agreement with Ampere and its equity holders to acquire all of the equity interests of Ampere (the Ampere Acquisition). The transaction is subject to customary closing conditions, including regulatory approvals. When the Ampere Acquisition closes, we will cease to be an investor in Ampere. During the period prior to the closing of the Ampere Acquisition, we will continue to recognize our share of loss in Ampere’s net earnings until the closure of the acquisition.
Acquisition Related and Other Expenses
Acquisition related and other expenses primarily consist of personnel-related costs for transitional and certain other employees, certain business combination adjustments, including adjustments after the measurement period has ended, and certain other operating items, net.
| Three Months Ended August 31, | ||||||||
| (in millions) | 2025 | 2024 | ||||||
| Transitional and other employee-related costs | $ | — | $ | 2 | ||||
| Business combination adjustments, net | 5 | (5 | ) | |||||
| Other, net | 8 | 16 | ||||||
| Total acquisition related and other expenses | $ | 13 | $ | 13 |
Non-Operating Income, net
Non-operating 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 losses related to marketable and non-marketable investments, including losses attributable to equity method investments (primarily Ampere) and net other income and expenses, including net gains and losses from our investment portfolio related to our deferred compensation plan, for which
ORACLE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
August 31, 2025
(Unaudited)
an equal and offsetting amount was recorded to our operating expenses during the same period, and non-service net periodic pension income and losses.
| Three Months Ended August 31, | ||||||||
| (in millions) | 2025 | 2024 | ||||||
| Interest income | $ | 103 | $ | 133 | ||||
| Foreign currency losses, net | (31 | ) | (50 | ) | ||||
| Noncontrolling interests in income | (47 | ) | (43 | ) | ||||
| Losses from marketable and non-marketable investments, net | (52 | ) | (69 | ) | ||||
| Other income, net | 100 | 49 | ||||||
| Total non-operating income, net | $ | 73 | $ | 20 |
Recent Accounting Pronouncements
Income Taxes**:** In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09), which enhances the disclosures required for income taxes in our annual consolidated financial statements. ASU 2023-09 is effective for us for our annual reporting for fiscal 2026 on a prospective basis. Both early adoption and retrospective application are permitted. We are currently evaluating the impact of our pending adoption of ASU 2023-09 on our consolidated financial statements.
Income Statement**:** In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses and also issued subsequent guidance clarifying the effective date of the initial guidance (collectively, Subtopic 220-40), which enhances the disclosures required for expense disaggregation in our annual and interim consolidated financial statements. This guidance is effective for us for our annual reporting for fiscal 2028 and for interim period reporting beginning in fiscal 2029 on a prospective basis. Both early adoption and retrospective application are permitted. We are currently evaluating the impact of our pending adoption of Subtopic 220-40 on our consolidated financial statements.
2.
FAIR VALUE MEASUREMENTS
We perform fair value measurements in accordance with FASB Accounting Standards Codification (ASC) 820, Fair Value Measurement (ASC 820). ASC 820 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at their fair values, we consider the principal or most advantageous market in which we would transact and consider assumptions that market participants would use when pricing the assets or liabilities, such as inherent risk, transfer restrictions and risk of nonperformance.
ASC 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. An asset’s or a liability’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 establishes three levels of inputs that may be used to measure fair value:
Level 1: quoted prices in active markets for identical assets or liabilities;
Level 2: inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; or
ORACLE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
August 31, 2025
(Unaudited)
Level 3: unobservable inputs that are supported by little or no market activity and that are significant to the fair values of the assets or liabilities.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
Our assets and liabilities measured at fair value on a recurring basis consisted of the following (Level 1 and Level 2 inputs are defined above):
| August 31, 2025 | May 31, 2025 | |||||||||||||||||||||||
| Fair Value Measurements Using Input Types | Fair Value Measurements Using Input Types | |||||||||||||||||||||||
| (in millions) | Level 1 | Level 2 | Total | Level 1 | Level 2 | Total | ||||||||||||||||||
| Assets: | ||||||||||||||||||||||||
| Money market funds | $ | 2,965 | $ | — | $ | 2,965 | $ | 2,220 | $ | — | $ | 2,220 | ||||||||||||
| Time deposits and other | 86 | 656 | 742 | 59 | 526 | 585 | ||||||||||||||||||
| Derivative financial instruments | — | 30 | 30 | — | 54 | 54 | ||||||||||||||||||
| Total assets | $ | 3,051 | $ | 686 | $ | 3,737 | $ | 2,279 | $ | 580 | $ | 2,859 | ||||||||||||
| Liabilities: | ||||||||||||||||||||||||
| Derivative financial instruments | $ | — | $ | — | $ | — | $ | — | $ | 26 | $ | 26 |
Our cash equivalents and marketable securities investments consist of money market funds, time deposits and marketable equity securities. Marketable securities as presented per our condensed consolidated balance sheets included debt securities with original maturities at the time of purchase greater than three months and the remainder of the debt securities were included in cash and cash equivalents. We classify our marketable debt securities as available-for-sale debt securities at the time of purchase and reevaluate such classification as of each balance sheet date. As of August 31, 2025 and May 31, 2025, all of our marketable debt securities investments mature within one year. Our valuation techniques used to measure the fair values of our instruments that were classified as Level 1 in the table above were derived from quoted market prices and active markets for these instruments that exist. Our valuation techniques used to measure the fair values of Level 2 instruments listed in the table above were derived from the following: non-binding market consensus prices that were corroborated by observable market data, quoted market prices for similar instruments, or pricing models, such as discounted cash flow techniques, with all significant inputs derived from or corroborated by observable market data including reference rate yield curves, among others.
Based on the trading prices of the $89.3 billion and $90.3 billion of senior notes and other long-term borrowings and the related fair value hedges, if any, that we had outstanding as of August 31, 2025 and May 31, 2025, respectively, the estimated fair values of the senior notes and other long-term borrowings and the related fair value hedges, if any, using Level 2 inputs at August 31, 2025 and May 31, 2025 were $81.1 billion and $81.3 billion, respectively.
3.
RESTRUCTURING ACTIVITIES
Fiscal 2026 Oracle Restructuring Plan
During the first quarter of fiscal 2026, our management approved, committed to and initiated plans to restructure and further improve efficiencies in our operations due to our acquisitions and certain other operational activities (2026 Restructuring Plan). The total estimated restructuring costs associated with the 2026 Restructuring Plan are up to $1.6 billion and will be recorded to the restructuring expense line item within our condensed consolidated statements of operations as they are incurred through the end of the plan. We recorded $415 million of restructuring expenses in connection with the 2026 Restructuring Plan during the three months ended August 31, 2025. Any changes to the estimates of executing the 2026 Restructuring Plan will be reflected in our future results of operations.
ORACLE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
August 31, 2025
(Unaudited)
Summary of All Plans
| Accrued | Three Months Ended August 31, 2025 | Accrued | Total Costs | Total Expected | ||||||||||||||||||||||||||||
| (in millions) | May 31, 2025**(2)** | Initial Costs**(3)** | Adj. to Cost**(4)** | Cash Payments | Others**(5)** | August 31, 2025**(2)** | Accrued to Date | Program Costs | ||||||||||||||||||||||||
| 2026 Restructuring Plan(1) | ||||||||||||||||||||||||||||||||
| Cloud and software | $ | — | $ | 119 | $ | — | $ | (13 | ) | $ | — | $ | 106 | $ | 119 | $ | 484 | |||||||||||||||
| Hardware | — | 16 | — | (1 | ) | — | 15 | 16 | 67 | |||||||||||||||||||||||
| Services | — | 36 | — | (3 | ) | — | 33 | 36 | 326 | |||||||||||||||||||||||
| Other | — | 244 | — | (45 | ) | — | 199 | 244 | 737 | |||||||||||||||||||||||
| Total 2026 Restructuring Plan | $ | — | $ | 415 | $ | — | $ | (62 | ) | $ | — | $ | 353 | $ | 415 | $ | 1,614 | |||||||||||||||
| Total other restructuring plans(6) | $ | 212 | $ | — | $ | (13 | ) | $ | (55 | ) | $ | 3 | $ | 147 | ||||||||||||||||||
| Total restructuring plans | $ | 212 | $ | 415 | $ | (13 | ) | $ | (117 | ) | $ | 3 | $ | 500 |
(1)
Restructuring costs recorded to each of the operating segments presented primarily related to employee severance costs. Other restructuring costs represented employee severance costs not related to our operating segments and certain other restructuring plan costs.
(2)
As of August 31, 2025, $427 million and $73 million were recorded in other current liabilities and other non-current liabilities, respectively, within our condensed consolidated balance sheets. As of May 31, 2025, substantially all restructuring liabilities have been recorded in other current liabilities within our condensed consolidated balance sheets.
(3)
Costs recorded for the respective restructuring plans during the period presented.
(4)
All plan adjustments were changes in estimates whereby increases and decreases in costs were generally recorded to operating expenses in the period of adjustments.
(5)
Represents foreign currency translation and certain other non-cash adjustments.
(6)
Other restructuring plans presented in the table above included condensed information for other Oracle based plans and other plans associated with certain of our acquisitions whereby we continued to make cash outlays to settle obligations under these plans during the periods presented but for which the periodic impact to our condensed consolidated statements of operations was not significant.
4.
DEFERRED REVENUES
Deferred revenues consisted of the following:
| (in millions) | August 31, 2025 | May 31, 2025 | ||||||
| Cloud | $ | 3,944 | $ | 2,959 | ||||
| Software | 7,062 | 5,350 | ||||||
| Hardware | 584 | 614 | ||||||
| Services | 508 | 464 | ||||||
| Deferred revenues, current | 12,098 | 9,387 | ||||||
| Deferred revenues, non-current (in other non-current liabilities) | 1,264 | 1,346 | ||||||
| Total deferred revenues | $ | 13,362 | $ | 10,733 |
Deferred cloud revenues, deferred software revenues and deferred hardware revenues substantially represent customer payments made in advance for cloud or support contracts that are typically billed in advance with corresponding revenues generally being recognized ratably or based upon customer usage over the respective contractual periods. Deferred services revenues include prepayments for our services business and revenues for these services are generally recognized as the services are performed.
ORACLE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
August 31, 2025
(Unaudited)
5.
LEASES
We have operating and finance leases that primarily relate to certain of our data centers and facilities.
The components of lease expense were as follows:
| Three Months Ended August 31, | ||||||||
| (in millions) | 2025 | 2024 | ||||||
| Operating lease cost | $ | 575 | $ | 362 | ||||
| Finance lease cost: | ||||||||
| Amortization of ROU assets | $ | 59 | $ | — | ||||
| Interest on lease liabilities | 48 | — | ||||||
| Total finance lease cost | $ | 107 | $ | — |
Supplemental balance sheet information related to leases was as follows:
| (in millions) | August 31, 2025 | May 31, 2025 | ||||||
| Operating leases: | ||||||||
| Operating lease ROU assets | $ | 15,979 | $ | 13,145 | ||||
| Operating lease liabilities: | ||||||||
| Operating lease liabilities, current | $ | 2,196 | $ | 1,914 | ||||
| Operating lease liabilities, non-current | 14,094 | 11,536 | ||||||
| Total operating lease liabilities | $ | 16,290 | $ | 13,450 | ||||
| Finance leases: | ||||||||
| Finance lease ROU assets | $ | 3,937 | $ | 2,874 | ||||
| Finance lease liabilities: | ||||||||
| Finance lease liabilities, current | $ | 337 | $ | 257 | ||||
| Finance lease liabilities, non-current | 3,680 | 2,677 | ||||||
| Total finance lease liabilities | $ | 4,017 | $ | 2,934 |
Supplemental cash flow information related to leases was as follows:
| Three Months Ended August 31, | ||||||||
| (in millions) | 2025 | 2024 | ||||||
| Cash paid for amounts included in the measurement of lease liabilities: | ||||||||
| Operating leases | $ | 567 | $ | 312 | ||||
| Finance leases | $ | 86 | $ | — |
As of August 31, 2025, we had $99.8 billion of additional lease commitments, substantially all for data centers, that are generally expected to commence between the second quarter of fiscal 2026 and fiscal 2028 and for terms of ten to sixteen years that were not reflected on our condensed consolidated balance sheets as of August 31, 2025.
Subsequent to August 31, 2025, we entered into $6.6 billion of additional lease commitments for data centers that are generally expected to commence between fiscal 2027 and fiscal 2028 and for terms of fourteen to fifteen years.
ORACLE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
August 31, 2025
(Unaudited)
6.
STOCKHOLDERS’ EQUITY
Common Stock Repurchases
Our Board of Directors (the Board) has approved a program for us to repurchase shares of our common stock. As of August 31, 2025, approximately $6.3 billion remained available for stock repurchases pursuant to our stock repurchase program. We repurchased 0.4 million shares for $93 million during the three months ended August 31, 2025 and 1.1 million shares for $150 million during the three months ended August 31, 2024 under the stock repurchase program.
Our stock repurchase authorization does not have an expiration date and the pace of our repurchase activity will depend on factors such as our working capital needs, our cash requirements for acquisitions and dividend payments, our debt repayment obligations or repurchases of our debt, our stock price and economic and market conditions. Our stock repurchases may be effected from time to time through open market purchases or pursuant to a Rule 10b5-1 trading plan. Our stock repurchase program may be accelerated, suspended, delayed or discontinued at any time.
Dividends on Common Stock
In September 2025, the Board declared a quarterly cash dividend of $0.50 per share of our outstanding common stock. The dividend is payable on October 23, 2025 to stockholders of record as of the close of business on October 9, 2025. Future declarations of dividends and the establishment of future record and payment dates are subject to the final determination of the Board.
Fiscal 2026 Stock‑Based Awards Activity and Compensation Expense
During the first quarter of fiscal 2026, we issued 2 million restricted stock-based units (RSUs) and stock options (SOs) for 1 million shares of common stock, all of which are subject to service-based vesting restrictions. These fiscal 2026 stock-based award issuances were partially offset by stock-based award forfeitures and cancellations of 11 million shares during the first quarter of fiscal 2026.
The SOs were granted at not less than fair market value, become exercisable generally 25% annually over four years of service, and generally expire ten years from the date of grant. We estimated the fair values of our SOs that were solely subject to service-based vesting requirements using the Black-Scholes-Merton option-pricing model, which was developed for use in estimating the fair values of SOs. Option valuation models, including the Black-Scholes-Merton option-pricing model, require the input of assumptions, including stock price volatility. Changes in the input assumptions can affect the fair value estimates and ultimately how much we recognize as stock-based compensation expense. The RSUs that were granted during the three months ended August 31, 2025 generally vest 25% annually over four years of service and were valued using methodologies of a similar nature as those described in Note 11 of Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended May 31, 2025.
ORACLE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
August 31, 2025
(Unaudited)
Stock-based compensation expense is included in the following operating expense line items in our condensed consolidated statements of operations:
| Three Months Ended August 31, | ||||||||
| (in millions) | 2025 | 2024 | ||||||
| Cloud and software | $ | 156 | $ | 141 | ||||
| Hardware | 7 | 6 | ||||||
| Services | 49 | 43 | ||||||
| Sales and marketing | 177 | 162 | ||||||
| Research and development | 647 | 569 | ||||||
| General and administrative | 88 | 86 | ||||||
| Total stock-based compensation | $ | 1,124 | $ | 1,007 |
7.
INCOME TAXES
Our effective tax rates for each of the periods presented are the result of the mix of income earned and losses incurred in various tax jurisdictions that apply a broad range of income tax rates. Our provision for income taxes varied from the tax computed at the U.S. federal statutory income tax rate for the periods presented primarily due to earnings in foreign operations, state taxes, the U.S. research and development tax credit, settlements with tax authorities, the tax effects of stock-based compensation, the Foreign Derived Intangible Income deduction and the tax effect of Global Intangible Low-Taxed Income. Our effective tax rates were 14.6% and 7.6% for the three months ended August 31, 2025 and 2024, respectively.
Our net deferred tax assets were $9.8 billion and $10.2 billion as of August 31, 2025 and May 31, 2025, respectively. We believe that it is more likely than not that the net deferred tax assets will be realized in the foreseeable future. Realization of our net deferred tax assets is dependent upon our generation of sufficient taxable income in future years in appropriate tax jurisdictions to obtain benefit from the reversal of temporary differences, net operating loss carryforwards and tax credit carryforwards. The amount of net deferred tax assets considered realizable is subject to adjustment in future periods if estimates of future taxable income change.
Domestically, U.S. federal and state taxing authorities are currently examining income tax returns of Oracle and various acquired entities for years through fiscal 2022. Our U.S. federal income tax returns have been examined for all years prior to fiscal 2013 and, with some exceptions, we are no longer subject to audit for those periods. Our U.S. state income tax returns, with some exceptions, have been examined for all years prior to fiscal 2010, and we are no longer subject to audit for those periods.
Internationally, tax authorities for numerous non-U.S. jurisdictions are also examining or have examined returns of Oracle and various acquired entities for years through fiscal 2024. Many of the relevant tax years are at an advanced stage in examination or subsequent controversy resolution processes. With some exceptions, we are generally no longer subject to tax examinations in non-U.S. jurisdictions for years prior to fiscal 2001.
We are under audit by the IRS and various other domestic and foreign tax authorities with regards to income tax and indirect tax matters and are involved in various challenges and litigation in a number of countries, including, in particular, Australia, Brazil, Canada, Egypt, India, Indonesia, Israel, Italy, Pakistan, Saudi Arabia, South Korea and Spain, where the amounts under controversy are significant. In some, although not all, cases, we have reserved for potential adjustments to our provision for income taxes and accrual of indirect taxes that may result from examinations by, or any negotiated agreements with, these tax authorities or final outcomes in judicial proceedings and we believe that the final outcome of these examinations, agreements or judicial proceedings will not have a material effect on our results of operations. If events occur which indicate payment of these amounts is unnecessary, the reversal of the liabilities would result in the recognition of benefits in the period we determine the liabilities are
ORACLE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
August 31, 2025
(Unaudited)
no longer necessary. If our estimates of the federal, state and foreign income tax liabilities and indirect tax liabilities are less than the ultimate assessment, it could result in a further charge to expense.
We believe that we have adequately provided under GAAP for outcomes related to our tax audits. However, there can be no assurances as to the possible outcomes or any related financial statement effect thereof.
Pursuant to the U.S. One, Big, Beautiful Bill Act that was signed into law on July 4, 2025, we recorded a net tax expense of $958 million during the first quarter of fiscal 2026, primarily related to the remeasurement of a deferred tax liability previously recorded during fiscal 2021 as part of the partial realignment of our legal entity structure.
8.
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, including information on segment revenues, significant segment expenses categories and amounts on a segment basis and included within each reported measure of a segment's profit or loss, that is regularly provided to our CODMs for their review and assists our CODMs with evaluating the company’s performance and allocating company resources.
We have three businesses—cloud and software (formerly referred to as 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 software 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 offerings and our software offerings, which include software license offerings and software support offerings. Cloud revenues are generated from offerings that are typically contracted with customers directly, billed to customers either in advance or in arrears, 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 revenues are generated from applications and infrastructure offerings that are typically contracted with customers directly, billed to customers either in advance or in arrears, delivered to customers over time with our revenue recognition occurring over the contractual terms and renewed by customers upon completion of the contractual terms. Our cloud contracts provide customers with access to the latest technological updates as they become available and for which the customer contracted together with related technical support services over the contractual term. Software revenues represent (1) fees earned from granting customers software licenses, generally on a perpetual basis, to use our database and middleware and our applications software products within cloud and on-premise information technology (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; and (2) software support revenues, which 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. Software support contracts provide customers with technical support services and unspecified license upgrades and enhancements during the term of the support period. In each fiscal year, our cloud and software business’ contractual activities, excluding the impact of timing of booking of large contracts, are typically highest in our fourth fiscal quarter, and the related cash flows are typically highest in the following quarter (i.e., in the first fiscal quarter of the next fiscal year) as we receive payments from these contracts.
ORACLE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
August 31, 2025
(Unaudited)
Costs associated with our cloud and software business are largely personnel- and infrastructure-related, including the cost of providing our cloud and software offerings, salaries and commissions earned by our sales force for the sale of our cloud and software offerings and marketing program costs.
Our hardware business provides infrastructure technologies including Oracle Engineered Systems, servers, storage, industry-specific hardware, operating systems, virtualization, management and other hardware-related software to support diverse IT environments. Our hardware business also offers hardware support, which provides customers with software updates for the software components that are essential to the functionality of their hardware products and can also include product repairs, maintenance services and technical support services that are typically delivered and recognized ratably over the contractual term. Costs associated with our hardware business include the cost of hardware products, which consists of expenses for materials and labor used to produce these products by our internal manufacturing operations or by third-party manufacturers; the cost of materials used to repair customer products with eligible support contracts; the cost of labor and infrastructure to provide support services; and sales and marketing expenses, which are largely personnel-related and include variable compensation earned by our sales force for the sales of our hardware offerings.
Our services business provides services to customers and partners to help maximize the performance of their investments in Oracle applications and infrastructure technologies. Costs associated with our services business consist primarily of personnel-related expenses, technology infrastructure expenditures, facilities expenses and external contractor expenses.
We 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:
| Three Months Ended August 31, | ||||||||
| (in millions) | 2025 | 2024 | ||||||
| Cloud and software: | ||||||||
| Revenues | $ | 12,907 | $ | 11,389 | ||||
| Cloud and software expenses | 3,418 | 2,422 | ||||||
| Sales and marketing expenses | 1,798 | 1,771 | ||||||
| Margin(1) | $ | 7,691 | $ | 7,196 | ||||
| Hardware: | ||||||||
| Revenues | $ | 670 | $ | 655 | ||||
| Hardware products and support expenses | 169 | 152 | ||||||
| Sales and marketing expenses | 54 | 65 | ||||||
| Margin(1) | $ | 447 | $ | 438 | ||||
| Services: | ||||||||
| Revenues | $ | 1,349 | $ | 1,263 | ||||
| Services expenses | 1,017 | 1,066 | ||||||
| Margin(1) | $ | 332 | $ | 197 | ||||
| Totals: | ||||||||
| Revenues | $ | 14,926 | $ | 13,307 | ||||
| Expenses | 6,456 | 5,476 | ||||||
| Margin(1) | $ | 8,470 | $ | 7,831 |
(1)
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
ORACLE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
August 31, 2025
(Unaudited)
intangible assets, acquisition related and other expenses, restructuring expenses, stock-based compensation, interest expense or certain other non-operating 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 condensed consolidated statements of operations.
The following table reconciles total margin for operating segments to income before income taxes:
| Three Months Ended August 31, | ||||||||
| (in millions) | 2025 | 2024 | ||||||
| Total margin for operating segments | $ | 8,470 | $ | 7,831 | ||||
| Research and development | (2,491 | ) | (2,306 | ) | ||||
| General and administrative | (376 | ) | (358 | ) | ||||
| Amortization of intangible assets | (420 | ) | (624 | ) | ||||
| Acquisition related and other | (13 | ) | (13 | ) | ||||
| Restructuring | (402 | ) | (73 | ) | ||||
| Stock-based compensation for operating segments | (389 | ) | (352 | ) | ||||
| Expense allocations and other, net | (102 | ) | (114 | ) | ||||
| Interest expense | (923 | ) | (842 | ) | ||||
| Non-operating income, net | 73 | 20 | ||||||
| Income before income taxes | $ | 3,427 | $ | 3,169 |
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 condensed consolidated statements of operations.
The following table is a summary of our total revenues by geographic region:
| Three Months Ended August 31, | ||||||||
| (in millions) | 2025 | 2024 | ||||||
| Americas | $ | 9,662 | $ | 8,372 | ||||
| EMEA(1) | 3,481 | 3,228 | ||||||
| Asia Pacific | 1,783 | 1,707 | ||||||
| Total revenues | $ | 14,926 | $ | 13,307 |
(1)
Comprised of Europe, the Middle East and Africa
The following table presents our software revenues by offerings:
| Three Months Ended August 31, | ||||||||
| (in millions) | 2025 | 2024 | ||||||
| Software license | $ | 766 | $ | 870 | ||||
| Software support | 4,955 | 4,896 | ||||||
| Total software revenues | $ | 5,721 | $ | 5,766 |
ORACLE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
August 31, 2025
(Unaudited)
The following table presents our cloud revenues by offerings:
| Three Months Ended August 31, | ||||||||
| (in millions) | 2025 | 2024 | ||||||
| Cloud applications | $ | 3,839 | $ | 3,469 | ||||
| Cloud infrastructure | 3,347 | 2,154 | ||||||
| Total cloud revenues | $ | 7,186 | $ | 5,623 |
9.
EARNINGS PER SHARE
Basic earnings per share is computed by dividing net income for the period by the weighted-average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income for the period by the weighted-average number of common shares outstanding during the period, plus the dilutive effect of outstanding restricted stock-based awards, stock options and shares issuable under the employee stock purchase plan as applicable pursuant to the treasury stock method. The following table sets forth the computation of basic and diluted earnings per share:
| Three Months Ended August 31, | ||||||||
| (in millions, except per share data) | 2025 | 2024 | ||||||
| Net income | $ | 2,927 | $ | 2,929 | ||||
| Weighted-average common shares outstanding | 2,826 | 2,761 | ||||||
| Dilutive effect of employee stock plans | 83 | 90 | ||||||
| Dilutive weighted-average common shares outstanding | 2,909 | 2,851 | ||||||
| Basic earnings per share | $ | 1.04 | $ | 1.06 | ||||
| Diluted earnings per share | $ | 1.01 | $ | 1.03 | ||||
| Anti-dilutive stock awards excluded from calculation(1) | 2 | 24 |
(1)
These stock awards primarily relate to contingently issuable shares pursuant to performance stock option arrangements. Such shares could be dilutive in the future.
10.
LEGAL PROCEEDINGS
Netherlands Privacy Class Action
On August 14, 2020, The Privacy Collective (TPC), a foundation having its registered office in Amsterdam, filed a purported class action lawsuit against Oracle Nederland B.V, Oracle Corporation and Oracle America, Inc. (the Oracle Defendants), Salesforce.com, Inc. and SFDC Netherlands B.V. in the District Court of Amsterdam. TPC alleges that the Oracle Defendants’ Data Management Platform product violates certain articles of the European Union Charter of Fundamental Rights, the General Data Protection Regulation (GDPR) and the Dutch Telecommunications Act (Telecommunicatiewet). TPC claims damages under a number of categories, including: “immaterial damages” (at a fixed amount of €500 per Dutch internet user); “material damages” (in that the costs of loss of control over personal data should be equated to the market value of the personal data for parties like the Oracle Defendants); compensation for losses suffered due to an alleged data breach (at a fixed amount of €100 per Dutch internet user); and compensation for the costs of the litigation funder (10% to 25% of the compensation awarded); and the (actual) cost of the proceedings and extrajudicial costs.
We filed our defense on March 3, 2021, and on December 29, 2021, the District Court issued a judgment, holding that all of TPC’s claims were deemed inadmissible because of fundamental procedural flaws. TPC filed an appeal
ORACLE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
August 31, 2025
(Unaudited)
with the Court of Appeal in Amsterdam challenging the District Court’s judgment, except for the claims regarding the alleged data breach, which were dropped. On June 18, 2024, the Court of Appeal overturned the District Court’s decision regarding admissibility, thus permitting the case to proceed. We requested that the Court of Appeal permit an interim appeal to the Dutch Supreme Court and/or the European Court of Justice. On September 24, 2024, the Court of Appeal issued a judgment confirming that TPC’s claims are admissible and referred the matter back to the District Court of Amsterdam for a decision on the merits of TPC’s claims, including TPC’s claims for damages under article 82 of the GDPR. The Court of Appeal also granted Oracle’s request for an interim appeal to the Supreme Court, appealing the June 18 and September 24, 2024 judgments.
Oracle filed its statement of appeal with the Dutch Supreme Court on December 20, 2024, and TPC appeared in the proceedings on January 31, 2025. The filing of the Supreme Court appeal effectively suspended proceedings before the District Court pursuant to applicable procedural rules. TPC filed its statement of defense in response to our Supreme Court appeal and a counter appeal on February 27, 2025. Oracle filed its statement of defense to the counter appeal on March 28, 2025. TPC and Oracle filed their written submissions setting out their detailed arguments on July 18, 2025. The parties filed their respective further written replies and rejoinders on August 28, 2025. The matter is scheduled to be heard on September 26, 2025, when a date will be set for the issuance of the opinion of the Advocate-General to the Dutch Supreme Court.
We believe that we have meritorious defenses against this action, including defenses to the quantum of damages claimed, and we will continue to vigorously defend it.
While the final outcome of this matter cannot be predicted with certainty and we cannot estimate a range of loss at this time, we do not believe that it will have a material impact on our financial position or results of operations.
Other Litigation
We are party to various other legal proceedings and claims, either asserted or unasserted, which arise in the ordinary course of business, including proceedings and claims that relate to acquisitions we have completed or to companies we have acquired or are attempting to acquire. While the outcome of these matters cannot be predicted with certainty, we do not believe that the outcome of any of these matters, individually or in the aggregate, will result in losses that are materially in excess of amounts already recognized, if any.
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