What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-03-11 compared with 2024-12-10 · 142 added, 122 removed, 385 unchanged (41% of the section changed)

41 unchanged sentences

The proportion of our cloud services revenues relative to our total revenues has increased and we expect this trend to continue.

Cloud services revenues represented 42% of our total revenues for each of the three- and six-month periods ended November 30, 2024, and 37% of our total revenues for each of the three- and six-month periods ended November 30, 2023.

Cloud services revenues represented 44% and 43% of our total revenues for the three- and nine-month periods ended February 28, 2025, respectively, and 38% and 37% of our total revenues for the three- and nine-month periods ended February 29, 2024, respectively.

Our cloud and license business’ revenue growth is affected by many factors, including the strength of general economic and business conditions;

13 unchanged sentences

Our cloud and license business’ margin has historically trended upward over the course of the four quarters within a particular fiscal year due to the historical upward trend of our cloud and license business’ revenues over those quarterly periods and because the majority of our costs for this business are generally fixed in the short term.

The historical upward trend of our cloud and license business’ revenues over the course of the four quarters within a particular fiscal year is primarily due to the addition of new cloud services and license support contracts to the customer contract base that we generally recognize as revenues ratably or based upon customer usage over the respective contractual terms and the renewal of existing customers’ cloud services and license support contracts over the course of each fiscal year that we generally recognize as revenues in a similar manner;

The historical upward trend of our cloud and license business’ revenues over the course of the four quarters within a particular fiscal year is primarily due to the addition of new cloud services and license support contracts to the customer contract base, which we generally recognize as revenues ratably or based upon customer usage over the respective contractual terms and the renewal of existing customers’ cloud services and license support contracts over the course of each fiscal year, which we generally recognize as revenues in a similar manner;

and the historical upward trend of our cloud license and on-premise license revenues, which we generally recognize at a point in time upon delivery;

19 unchanged sentences

the percentage of our hardware support contract customer base that renews its support contracts;

and the close association between hardware products, which have a finite life, and customer demand for related hardware support as hardware products age;

the close association between hardware products, which have a finite life, and customer demand for related hardware support as hardware products age;

customer decisions to either maintain or upgrade their existing hardware infrastructure to newly developed technologies that are available;

19 unchanged sentences

From time to time since 2017, we have made investments in Ampere Computing Holdings LLC (Ampere), a related party entity, in the form of equity and convertible debt instruments.

The total carrying value of our investments in Ampere, after accounting for losses under the equity method of accounting, was $1.5 billion as of November 30, 2024.

The total carrying value of our investments in Ampere, after accounting for losses under the equity method of accounting, was $1.5 billion as of February 28, 2025.

We currently expect Ampere to continue to generate net losses in future periods, but we remain confident in the long-term potential of Ampere’s server chips.

Our equity investments in Ampere represent an ownership interest of approximately 29% as of November 30, 2024.

Our equity investments in Ampere represent an ownership interest of approximately 29% as of February 28, 2025.

We also own convertible debt investments in Ampere 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 six months ended November 30, 2024, we invested an aggregate of $135 million in convertible debt instruments issued by Ampere.

During the nine months ended February 28, 2025, we invested an aggregate of $225 million in convertible debt instruments issued by Ampere.

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 $450 million to $1.5 billion, respectively, to acquire additional equity interests in Ampere from our co-investors through January 2027.

1 unchanged sentence

Critical Accounting Estimates

Our consolidated financial statements are prepared in accordance with U.S.

generally accepted accounting principles (GAAP), which requires us to make certain estimates, judgments and assumptions that can affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosure.

Our consolidated financial statements are prepared in accordance with United States (U.S.) generally accepted accounting principles (GAAP), which requires us to make certain estimates, judgments and assumptions that can affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosures.

Critical accounting estimates are those estimates that involve a significant level of estimation uncertainty and have had, or are reasonably likely to have, a material impact on our financial condition or results of operations.

14 unchanged sentences

We also utilize these inputs to calculate and present a segment margin for each of our three businesses in the discussion below.

Consistent with our internal management reporting processes, research and development expenses, general and administrative expenses, stock-based compensation expenses, amortization of intangible assets, certain other expense allocations, acquisition related and other expenses, restructuring expenses, interest expense, non-operating income (expenses), net and provision for income taxes are not attributed to our three operating segments

because our management does not view the performance of our three businesses including such items and/or it is impracticable to do so.

non-operating (expenses) income, net and provision for income taxes are not attributed to our three operating segments because our management does not view the performance of our three businesses including such items and/or it is impracticable to do so.

Refer to “Supplemental Disclosure Related to Certain Charges” below for additional discussion of certain of these items and Note 8 of Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for a reconciliation of the summations of total segment margin as presented in the discussion below to total income before income taxes as presented per our condensed consolidated statements of operations for all periods presented.

7 unchanged sentences

Dollars at constant exchange rates (i.e., the rates in effect on May 31, 2024, which was the last day of our prior fiscal year) rather than the actual exchange rates in effect during the respective periods.

For example, if an entity reporting in Euros had revenues of 1.0 million Euros from products sold on November 30, 2024 and 2023, our financial statements would reflect reported revenues of $1.06 million in the first half of fiscal 2025 (using 1.06 as the applicable average exchange rate for the period) and $1.10 million in the first half of fiscal 2024 (using 1.10 as the applicable average exchange rate for the period).

The constant currency presentation, however, would translate the results for each of the first half of fiscal 2025 and 2024 using the May 31, 2024 exchange rate and indicate, in this example, no change in revenues between the periods compared.

For example, if an entity reporting in Euros had revenues of 1.0 million Euros from products sold on February 28, 2025 and February 29, 2024, our financial statements would reflect reported revenues of $1.05 million in the first nine months of fiscal 2025 (using 1.05 as the applicable average exchange rate for the period) and $1.08 million in the first nine months of fiscal 2024 (using 1.08 as the applicable average exchange rate for the period).

The constant currency presentation, however, would translate the results for each of the first nine months of fiscal 2025 and 2024 using the May 31, 2024 exchange rate and indicate, in this example, no change in revenues between the periods compared.

In each of the tables below, we present the percent change based on actual, unrounded results in reported currency and in constant currency.

Total Revenues and Operating Expenses

Three Months Ended November 30,

Six Months Ended November 30,

Three Months Ended

Nine Months Ended

Percent Change

13 unchanged sentences

(1) Comprised of Europe, the Middle East and Africa

Total revenues increased by $1.1 billion and $2.0 billion in reported currency in the second quarter and the first half of fiscal 2025, respectively, relative to the corresponding prior year periods, due to a $1.2 billion and a $2.2 billion increase in cloud and license revenues, partially offset by a $28 million and an $87 million decrease in hardware

revenues and a $38 million and a $157 million decrease in services revenues, in each case during the second quarter and the first half of fiscal 2025, respectively, relative to the corresponding prior year periods.

Excluding the unfavorable effects of foreign currency rate fluctuations of less than 1% in the second quarter of fiscal 2025 and 1% in the first half of fiscal 2025, the increase in our cloud and license business revenues was primarily due to growth in our cloud services revenues as customers purchased our applications and infrastructure technologies and also renewed their related cloud contracts to continue to gain access to the latest versions of our technologies.

In constant currency, applications cloud services and license support contributed 25% and 28% and infrastructure cloud services and license support contributed 75% and 72% of the growth in cloud services and license support revenues, in each case in the second quarter and the first half of fiscal 2025, respectively.

Total revenues increased by $850 million and $2.8 billion in reported currency in the third quarter and the first nine months of fiscal 2025, respectively, relative to the corresponding prior year periods, due to a $917 million and a $3.1 billion increase in cloud and license revenues, partially offset by a $51 million and a $138 million decrease in hardware revenues and a $16 million and a $173 million decrease in services revenues, in each case during the third quarter and the first nine months of fiscal 2025, respectively, relative to the corresponding prior year periods.

Excluding the unfavorable effects of foreign currency rate fluctuations of 2% in the third quarter of fiscal 2025 and 1% in the first nine months of fiscal 2025, the increase in our cloud and license business revenues was primarily due to growth in our cloud services revenues as customers purchased our applications and infrastructure technologies and also renewed their related cloud contracts to continue to gain access to the latest versions of our technologies.

In constant currency, applications cloud services and license support contributed 23% and 26% and infrastructure cloud services and license support contributed 77% and 74% of the growth in cloud services and license support revenues, in each case in the third quarter and the first nine months of fiscal 2025, respectively.

In our hardware business, the constant currency decrease in revenues in the fiscal 2025 periods presented was due to the emphasis we placed on the marketing and sale of our growing cloud-based infrastructure technologies.

In our services business, the constant currency decrease in revenues in the fiscal 2025 periods presented was attributable to a decrease in revenues from each of our primary services offerings.

The Americas region contributed 82% and 74%, the EMEA region contributed 15% and 18% and the Asia Pacific region contributed 3% and 8% to the constant currency total revenue growth during the second quarter and the first half of fiscal 2025, respectively.

Total GAAP operating expenses increased by $520 million and $679 million in reported currency in the second quarter and the first half of fiscal 2025, respectively, relative to the corresponding prior year periods.

The increase in GAAP operating expenses in reported currency was primarily due to a $472 million and an $892 million increase in cloud services and license support expenses primarily due to higher infrastructure expenses and higher employee related expenses, including higher expenses relating to stock-based compensation, that were incurred to support the growth in our cloud services revenues;

In our services business, the constant currency increase in revenues in the third quarter of fiscal 2025 was attributable to an increase in our consulting services revenues, partially offset by a decrease in our advanced customer services revenues, while the constant currency decrease in services business revenues in the first nine months of fiscal 2025 was attributable to a decrease in revenues from each of our primary services offerings.

The Americas region contributed 75% and 74% and the Asia Pacific region contributed 7% and 8% to the constant currency total revenue growth during the third quarter and the first nine months of fiscal 2025, respectively, and the EMEA region contributed 18% to the constant currency total revenue growth during each of the fiscal 2025 periods presented.

Total GAAP operating expenses increased by $242 million and $920 million in reported currency in the third quarter and the first nine months of fiscal 2025, respectively, relative to the corresponding prior year periods.

The increase in GAAP operating expenses in reported currency was primarily due to a $430 million and a $1.3 billion increase in cloud services and license support expenses primarily due to higher infrastructure expenses and higher employee related expenses, including higher expenses relating to stock-based compensation, that were incurred to support the growth in our cloud services revenues;

a $181 million and a $517 million increase in research and development expenses primarily due to higher employee related expenses, including higher stock-based compensation expenses;

and a $97 million and a $108 million increase in sales and marketing expenses, in each case during the second quarter and the first half of fiscal 2025, respectively, relative to the corresponding prior year periods.

and a $77 million and a $184 million increase in sales and marketing expenses, in each case during the third quarter and the first nine months of fiscal 2025, respectively, relative to the corresponding prior year periods.

These increases in GAAP operating expenses in reported currency were partially offset by a $201 million and a $504 million decrease in expenses for the amortization of intangible assets as certain of our assets were fully amortized;

an $86 million and a $151 million decrease in services expenses primarily due to lower bad debt expenses and lower external contractor expenses;

and a $41 million and a $99 million decrease in hardware expenses due to lower hardware product and support costs, in each case during the second quarter and the first half of fiscal 2025, respectively, relative to the corresponding prior year periods.

A $65 million decrease in restructuring expenses, relative to the corresponding prior year period, further offset the increase in operating expenses in the first half of fiscal 2025.

a $127 million and a $142 million decrease in acquisition related and other expenses primarily due to lower impairment charges on certain assets;

an $84 million and a $235 million decrease in services expenses primarily due to decreases in external contractor and employee related expenses;

a $20 million and a $119 million decrease in hardware expenses due to lower hardware product and support costs;

and a $27 million and a $91 million decrease in restructuring expenses, in each case during the third quarter and the first nine months of fiscal 2025, respectively, relative to the corresponding prior year periods.

In constant currency, our total operating margin and total operating margin as a percentage of revenues increased in the fiscal 2025 periods presented, relative to the corresponding prior year periods, due to higher revenues.

3 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

(in millions)

6 unchanged sentences

(1) Represents the amortization of intangible assets, all of which were acquired in connection with our acquisitions.

As of November 30, 2024, estimated future amortization related to intangible assets was as follows (in millions):

As of February 28, 2025, estimated future amortization related to intangible assets was as follows (in millions):

Remainder of fiscal 2025

5 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

Cloud services and license support

5 unchanged sentences

(5) For all periods presented, the applicable jurisdictional tax rates applied to our income before income taxes after excluding the tax effects of items within the table above such as for stock-based compensation, amortization of intangible assets, restructuring, and certain acquisition related and other items, and after excluding the net deferred tax effects associated with a previously recorded income tax benefit that resulted from a partial realignment of our legal entity structure.

These adjustments resulted in effective tax rates of 20.1% and 19.5%, instead of 7.1% and 7.3%, respectively, for the second quarter and the first half of fiscal 2025 and 18.8% for each of the second quarter and the first half of fiscal 2024, instead of 8.0% and 3.4%, respectively, for the second quarter and the first half of fiscal 2024, which in each case represented our effective tax rates as derived per our condensed consolidated statements of operations.

These adjustments resulted in effective tax rates of 19.9% and 19.7%, instead of 14.9% and 9.9%, respectively, for the third quarter and the first nine months of fiscal 2025 and 18.9% and 18.8%, instead of 16.2% and 8.0%, respectively, for the third quarter and the first nine months of fiscal 2024, which in each case represented our effective tax rates as derived per our condensed consolidated statements of operations.

Cloud and License Business

11 unchanged sentences

We also continue to market certain of our offerings through indirect channels.

Costs associated with our cloud and

license business are included in cloud services and license support expenses and sales and marketing expenses.

Costs associated with our cloud and license business are included in cloud services and license support expenses and sales and marketing expenses.

These costs are largely personnel and infrastructure related and include the cost of providing our cloud services and license support offerings, salaries and commissions earned by our sales force for the sale of our cloud and license offerings and marketing program costs.

Three Months Ended November 30,

Six Months Ended November 30,

Three Months Ended

Nine Months Ended

Percent Change

19 unchanged sentences

Also excludes amortization of intangible assets and certain other GAAP-based expenses, which were not allocated to our operating segment results for purposes of reporting to and review by our CODMs, as further described under “Presentation of Operating Segment Results and Other Financial Information” above.

Our cloud and license business’ total revenues increased by $1.2 billion and $2.2 billion in reported currency in the second quarter and the first half of fiscal 2025, respectively, relative to the corresponding prior year periods, primarily due to a $1.2 billion and a $2.1 billion increase in cloud services revenues as customers purchased our applications and infrastructure technologies and renewed their related cloud contracts to continue to gain access to the latest versions of our technologies for which we delivered such cloud services during the periods presented.

In constant currency, applications cloud services and license support contributed 25% and 28% and infrastructure cloud services and license support contributed 75% and 72% of the growth in cloud services and license support revenues in the second quarter and the first half of fiscal 2025, respectively.

The Americas region contributed 83% and 77%, the EMEA region contributed 14% and 16% and the Asia Pacific region contributed 3% and 7% to the constant currency revenue growth for this business during the second quarter and the first half of fiscal 2025, respectively.

Total cloud and license business’ expenses increased by $541 million and $909 million in reported currency in the second quarter and the first half of fiscal 2025, respectively, relative to the corresponding prior year periods.

Excluding the favorable effects of currency rate fluctuations of less than 1% in each of the second quarter and the first half of fiscal 2025, the increase in expenses was primarily due to a $307 million and a $561 million increase in infrastructure expenses, a $108 million and a $184 million increase in employee related expenses for employees engaged in cloud services delivery and a $93 million and a $92 million increase in sales and marketing expenses, in

each case in the second quarter and the first half of fiscal 2025, respectively, relative to the corresponding prior year periods, to support the increase in our cloud services revenues.

Our cloud and license business’ total revenues increased by $917 million and $3.1 billion in reported currency in the third quarter and the first nine months of fiscal 2025, respectively, relative to the corresponding prior year periods, primarily due to a $1.2 billion and a $3.3 billion increase in cloud services revenues as customers purchased our applications and infrastructure technologies and renewed their related cloud contracts to continue to gain access to the latest versions of our technologies for which we delivered such cloud services during the periods presented.

The increase in cloud services revenues in the third quarter and the first nine months of fiscal 2025 was partially offset by a $239 million and a $172 million total decrease, respectively, in cloud license and on-premise license and license support revenues, relative to the corresponding prior year periods.

In constant currency, applications cloud services and license support contributed 23% and 26% and infrastructure cloud services and license support contributed 77% and 74% of the growth in cloud services and license support revenues in the third quarter and the first nine months of fiscal 2025, respectively.

The Americas region contributed 74% and 76%, the EMEA region contributed 20% and 17% and the Asia Pacific region contributed 6% and 7% to the constant currency revenue growth for this business during the third quarter and the first nine months of fiscal 2025, respectively.

Total cloud and license business’ expenses increased by $461 million and $1.4 billion in reported currency in the third quarter and the first nine months of fiscal 2025, respectively, relative to the corresponding prior year periods.

Excluding the favorable effects of currency rate fluctuations of 2% in the third quarter of fiscal 2025 and less than 1% in the first nine months of fiscal 2025, the constant currency increase in expenses was primarily due to a $399 million and a $961 million increase in infrastructure expenses, an $81 million and a $265 million increase in employee related expenses for employees engaged in cloud services delivery and a $96 million and a $187 million increase in sales and marketing expenses, in each case in the third quarter and the first nine months of fiscal 2025, respectively, relative to the corresponding prior year periods, to support the increase in our cloud services revenues.

Our cloud services and license support expenses have grown in recent periods, and we expect this trend to continue during fiscal 2025 as we increase our existing data center capacity and establish data centers in new geographic locations in order to meet current and expected customer demand.

Excluding the effects of currency rate fluctuations, our cloud and license business’ total margin increased in the fiscal 2025 periods presented, relative to the corresponding prior year periods, due to increases in total revenues for this business.

In constant currency, total margin as a percentage of revenues decreased in the fiscal 2025 periods presented, relative to the corresponding prior year periods, due to an increase in total expenses for this business.

Total margin as a percentage of revenues in constant currency decreased in the fiscal 2025 periods presented, relative to the corresponding prior year periods, due to an increase in total expenses for this business.

Hardware Business

8 unchanged sentences

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.

Three Months Ended November 30,

Six Months Ended November 30,

Three Months Ended

Nine Months Ended

Percent Change

10 unchanged sentences

Total hardware revenues decreased by $28 million and $87 million in reported currency in the second quarter and the first half of fiscal 2025, respectively, relative to the corresponding prior year periods.

Excluding the unfavorable

impact of currency rate fluctuation of 1% in each of the second quarter and the first half of fiscal 2025, the decrease in hardware revenues was primarily due to our continued emphasis on the marketing and sale of our cloud-based infrastructure technologies, which resulted in reduced sales volumes of certain of our hardware product lines and also impacted the volume of hardware support contracts sold in recent periods.

Geographically, we experienced constant currency hardware revenue declines in all regions in the fiscal 2025 periods presented, relative to the corresponding prior year periods.

Total hardware expenses decreased by $52 million and $115 million in reported currency in the second quarter and the first half of fiscal 2025, respectively, relative to the corresponding prior year periods.

Excluding the favorable currency rate fluctuations effect of less than 1% in each of the second quarter and the first half of fiscal 2025, the constant currency decrease in hardware expenses aligned with lower hardware revenues and was due to a $41 million and a $99 million decrease in hardware product and support costs and an $8 million and a $13 million decrease in sales and marketing expenses, in each case during the second quarter and the first half of fiscal 2025, respectively, relative to the corresponding prior year periods.

In constant currency, our hardware business’ total margin and total margin as a percentage of revenues increased in the fiscal 2025 periods presented, relative to the corresponding prior year periods, due to lower total expenses for this business.

Total hardware revenues decreased by $51 million and $138 million in reported currency in the third quarter and the first nine months of fiscal 2025, respectively, relative to the corresponding prior year periods.

Excluding the unfavorable impact of currency rate fluctuations of 2% in the third quarter of fiscal 2025 and 1% in the first nine months of fiscal 2025, the decrease in hardware revenues was primarily due to our continued emphasis on the marketing and sale of our cloud-based infrastructure technologies, which resulted in reduced sales volumes of certain of our hardware product lines and also impacted the volume of hardware support contracts sold in recent periods.

Geographically, we experienced constant currency hardware revenue declines in all regions in the fiscal 2025 periods presented.

Total hardware expenses decreased by $27 million and $143 million in reported currency in the third quarter and the first nine months of fiscal 2025, respectively, relative to the corresponding prior year periods.

The decrease in hardware expenses aligned with lower hardware revenues.

Excluding the favorable currency rate fluctuations effect of 2% in the third quarter of fiscal 2025 and 1% in the first nine months of fiscal 2025, the constant currency decrease in hardware expenses was due to a $17 million and a $116 million decrease in hardware product and support costs and a $4 million and a $17 million decrease in sales and marketing expenses, in each case during the third quarter and the first nine months of fiscal 2025, respectively, relative to the corresponding prior year periods.

In constant currency, our hardware business’ total margin decreased in the third quarter of fiscal 2025 due to lower total revenues for this business, while our hardware business’ total margin in the first nine months of fiscal 2025 increased due to lower total expenses for this business, in each case relative to the corresponding prior year period.

In constant currency, our hardware business’ total margin as a percentage of revenues increased in the fiscal 2025 periods presented, relative to the corresponding prior year periods, due to lower total expenses for this business.

Services Business

2 unchanged sentences

The cost of providing our services consists primarily of personnel related expenses, technology infrastructure expenditures, facilities expenses and external contractor expenses.

Three Months Ended November 30,

Six Months Ended November 30,

Three Months Ended

Nine Months Ended

Percent Change

8 unchanged sentences

Also excludes certain other GAAP-based expenses, which were not allocated to our operating segment results for purposes of reporting to and review by our CODMs, as further described under “Presentation of Operating Segment Results and Other Financial Information” above.

Total services revenues decreased by $38 million and $157 million in reported currency in the second quarter and the first half of fiscal 2025, respectively, relative to the corresponding prior year periods.

Excluding the effects of unfavorable currency rate fluctuations of less than 1% in the second quarter of fiscal 2025 and 1% in the first half of fiscal 2025, the decrease in total services revenues was due to a decrease in revenues in each of our primary services offerings, relative to the corresponding prior year periods.

The constant currency decrease in services revenues in the Americas and the EMEA regions was partially offset by a constant currency increase in services revenues in the Asia Pacific region in the second quarter of fiscal 2025, while a constant currency decrease in services revenues in the Americas region was partially offset by a constant currency increase in services revenues in the EMEA and the Asia Pacific regions in the first half of fiscal 2025.

Total services expenses decreased by $86 million and $166 million in reported currency in the second quarter and the first half of fiscal 2025, respectively, relative to the corresponding prior year periods.

Excluding the favorable effects of currency rate fluctuations of less than 1% in each of the second quarter and the first half of fiscal 2025, the decrease in services expenses was primarily due to a decrease in bad debt expenses of $56 million and $33 million and a decrease in external contractor expenses of $41 million and $105 million, in each case in the second quarter and the first half of fiscal 2025, respectively, relative to the corresponding prior year periods.

The constant currency decrease in services expenses for the second quarter of fiscal 2025 was partially offset by an increase in employee related expenses of $25 million.

Total services revenues decreased by $16 million and $173 million in reported currency in the third quarter and the first nine months of fiscal 2025, respectively, relative to the corresponding prior year periods.

Excluding the effects of unfavorable currency rate fluctuation of 2% in the third quarter of fiscal 2025, the increase in total services revenues was due to growth in our consulting services revenues, partially offset by a decrease in our advanced customer services revenues, relative to the corresponding prior year period.

Excluding the effects of unfavorable currency rate fluctuation of 1% in the first nine months of fiscal 2025, the decrease in total services revenues was due to a decrease in revenues in each of our primary services offerings, relative to the corresponding prior year period.

The constant currency increase in services revenues in the EMEA and the Asia Pacific regions was partially offset by a constant currency decrease in services revenues in the Americas region in the third quarter of fiscal 2025, while a constant currency decrease in services revenues in the Americas region was partially offset by a constant currency increase in services revenues in the EMEA and the Asia Pacific regions in the first nine months of fiscal 2025.

Total services expenses decreased by $91 million and $257 million in reported currency in the third quarter and the first nine months of fiscal 2025, respectively, relative to the corresponding prior year periods.

Excluding the favorable effects of currency rate fluctuations of 2% in the third quarter of fiscal 2025 and less than 1% in the first nine months of fiscal 2025, the constant currency decrease in services expenses was due to a decrease in external contractor expenses of $25 million and $130 million and a decrease in employee related expenses of $32 million and $73 million, in each case in the third quarter and the first nine months of fiscal 2025, respectively, relative to the corresponding prior year periods.

In constant currency, our services business’ total margin and total margin as a percentage of revenues increased in the fiscal 2025 periods presented, relative to the corresponding prior year periods, due to lower total expenses for this business.

2 unchanged sentences

We intend to continue to invest significantly in our research and development efforts because, in our judgment, they are essential to maintaining our competitive position.

Three Months Ended November 30,

Six Months Ended November 30,

Three Months Ended

Nine Months Ended

Percent Change

6 unchanged sentences

(1) Excluding stock-based compensation

Total research and development expenses increased by $245 million and $335 million in reported currency in the second quarter and the first half of fiscal 2025, respectively, relative to the corresponding prior year periods, primarily due to higher employee related expenses, including higher stock-based compensation expenses.

Total research and development expenses increased by $181 million and $517 million in reported currency in the third quarter and the first nine months of fiscal 2025, respectively, relative to the corresponding prior year periods, primarily due to higher employee related expenses, including higher stock-based compensation expenses.

General and Administrative Expenses :

General and administrative expenses primarily consist of personnel related expenditures for IT, finance, legal and human resources support functions.

Three Months Ended November 30,

Six Months Ended November 30,

Three Months Ended

Nine Months Ended

Percent Change

6 unchanged sentences

(1) Excluding stock-based compensation

Fiscal Second Quarter 2025 Compared to Fiscal Second Quarter 2024 :

Total general and administrative expenses increased by $12 million in reported currency in the second quarter of fiscal 2025, relative to the corresponding prior year period, primarily due to an increase in employee related expenses, including higher stock-based compensation expenses.

First Half of Fiscal 2025 Compared to First Half of Fiscal 2024 :

Total general and administrative expenses decreased by $24 million in reported currency in the first half of fiscal 2025, relative to the corresponding prior year period, primarily due to a decrease in facilities and related expenses, partially offset by an increase in employee related expenses, including higher stock-based compensation expenses.

Fiscal Third Quarter 2025 Compared to Fiscal Third Quarter 2024 :

Total general and administrative expenses increased by $13 million in reported currency in the third quarter of fiscal 2025, relative to the corresponding prior year period.

Excluding the favorable effects of currency rate fluctuations of 2% in the third quarter of fiscal 2025, the increase in general and administrative expenses was primarily due to a $13 million increase in professional fees and a $10 million increase in employee related expenses, including higher stock-based compensation expenses.

First Nine Months Fiscal 2025 Compared to First Nine Months Fiscal 2024 :

Total general and administrative expenses decreased by $11 million in reported currency in the first nine months of fiscal 2025, relative to the corresponding prior year period.

Excluding the favorable effects of currency rate fluctuations of 1% in the first nine months of fiscal 2025, the decrease in general and administrative expenses was primarily due to a $35 million decrease in facilities and related expenses, partially offset by a $15 million increase in stock-based compensation expenses.

Amortization of Intangible Assets :

3 unchanged sentences

Refer to Note 6 of Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended May 31, 2024 for additional information regarding our intangible assets and related amortization.

Three Months Ended November 30,

Six Months Ended November 30,

Three Months Ended

Nine Months Ended

Percent Change

5 unchanged sentences

Total amortization of intangible assets

Amortization of intangible assets decreased by $164 million and $303 million in reported currency in the second quarter and the first half of fiscal 2025, respectively, relative to the corresponding prior year periods, due to a reduction in expenses associated with certain of our intangible assets that became fully amortized.

Amortization of intangible assets decreased by $201 million and $504 million in reported currency in the third quarter and the first nine months of fiscal 2025, respectively, relative to the corresponding prior year periods, due to a reduction in expenses associated with certain of our intangible assets that became fully amortized.

Acquisition Related and Other Expenses :

Acquisition related and other expenses 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 November 30,

Six Months Ended November 30,

Three Months Ended

Nine Months Ended

Percent Change

5 unchanged sentences

Not meaningful

Acquisition related and other expenses decreased by $16 million and $14 million in reported currency in the second quarter and the first half of fiscal 2025, respectively, relative to the corresponding prior year periods.

The decrease in the second quarter of fiscal 2025 and the first half of fiscal 2025 was due to a $13 million and an $18 million decrease, respectively, in business combination adjustments, net and a $5 million and a $9 million decrease, respectively, in transitional and other employee related costs, partially offset by a $2 million and a $13 million increase, respectively, in other expenses primarily related to certain asset impairment charges, in each case relative to the corresponding prior year period.

Acquisition related and other expenses decreased by $127 million and $142 million in reported currency in the third quarter and the first nine months of fiscal 2025, respectively, relative to the corresponding prior year periods, primarily due to a $119 million and a $107 million decrease, respectively, in other expenses primarily related to asset impairment charges.

The decrease in the first nine months of fiscal 2025 was also due to a $21 million decrease in business combination adjustments, net, relative to the corresponding prior year period.

Restructuring Expenses :

2 unchanged sentences

For additional information regarding our restructuring plans, see Note 4 of Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report and Note 8 of Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended May 31, 2024.

Three Months Ended November 30,

Six Months Ended November 30,

Three Months Ended

Nine Months Ended

Percent Change

8 unchanged sentences

Interest Expense :

Three Months Ended November 30,

Six Months Ended November 30,

Three Months Ended

Nine Months Ended

Percent Change

2 unchanged sentences

Interest expense

Interest expense decreased in the fiscal 2025 periods presented, relative to the corresponding prior year periods, primarily due to $4.0 billion and $3.5 billion of scheduled repayments of senior notes made during the first half of fiscal 2025 and full year of fiscal 2024, respectively, partially offset by higher interest expense that resulted from the issuance of $6.3 billion of senior notes in September 2024.

Refer to Note 3 of Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for additional information.

Non-Operating Income (Expenses), net :

Non-operating income (expenses), net consists primarily of interest income, net foreign currency exchange losses, the noncontrolling interests in the net profits of our majority-owned subsidiaries (primarily Oracle Financial Services Software Limited and Oracle Corporation Japan), net losses related to equity investments, including losses attributable to equity method investments (primarily Ampere) and net other income and expenses, including net unrealized gains and losses from our investment portfolio related to our deferred compensation plan and non-service net periodic pension income and losses.

Three Months Ended November 30,

Six Months Ended November 30,

Fiscal Third Quarter 2025 Compared to Fiscal Third Quarter 2024 :

Interest expense increased in the third quarter of fiscal 2025, relative to the corresponding prior year period, primarily due to the issuance of $14.0 billion of senior notes in the first nine months of fiscal 2025, partially offset by lower interest expense due to scheduled repayments of borrowings made during the first nine months of fiscal 2025 and full year of fiscal 2024.

First Nine Months Fiscal 2025 Compared to First Nine Months Fiscal 2024 :

Interest expense decreased in the first nine months of fiscal 2025, relative to the corresponding prior year period, primarily due to scheduled repayments of borrowings made during the first nine months of fiscal 2025 and full year of fiscal 2024, respectively, partially offset by higher interest expense that resulted from the issuance of senior notes mentioned above.

Refer to Note 3 of Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for additional information on the senior notes issued in the first nine months of fiscal 2025.

Non-Operating (Expenses) Income, net :

Non-operating (expenses) income, net consists primarily of interest income, net foreign currency exchange losses, the noncontrolling interests in the net profits of our majority-owned subsidiaries (primarily Oracle Financial Services Software Limited and Oracle Corporation Japan), net 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 unrealized gains and losses from our investment portfolio related to our deferred compensation plan and non-service net periodic pension income and losses.

Three Months Ended

Nine Months Ended

Percent Change

4 unchanged sentences

Noncontrolling interests in income

Losses from equity investments, net

Other income, net

Total non-operating income (expenses), net

Losses from marketable and non-marketable investments, net

Other (expenses) income, net

Total non-operating (expenses) income, net

Not meaningful

Non-operating income, net was $36 million and $57 million in reported currency in the second quarter and the first half of fiscal 2025, respectively, in comparison to non-operating expenses, net of $14 million and $63 million in reported currency in the second quarter and the first half of fiscal 2024, respectively.

Non-operating income, net increased in the second quarter and the first half of fiscal 2025 primarily due to higher other income, net, of $46 million and $44 million, respectively, which was primarily attributable to unrealized investment gains associated with certain marketable equity securities that we held for employee benefit plans, and for which an equal and offsetting amount was recorded to our operating expenses during the same period, a decrease in foreign currency losses of $23 million and $54 million, respectively, and an increase in interest income of $16 million and $14 million, respectively, in each case relative to the corresponding prior year period.

Losses from equity investments increased by $29 million in the second quarter of fiscal 2025 and decreased by $20 million for the first half of fiscal 2025, in each case relative to the corresponding prior year period.

Fiscal Third Quarter 2025 Compared to Fiscal Third Quarter 2024 :

Our non-operating expenses, net increased by $9 million in reported currency in the third quarter of fiscal 2025, relative to the corresponding prior year period, primarily due to an increase in other expenses, net.

The increase in other expenses was primarily attributable to

losses in the third quarter of fiscal 2025, compared to gains in the third quarter of fiscal 2024, associated with an investment portfolio that we held for our employee deferred compensation plan, and for which an equal and offsetting amount was recorded to our operating expenses during the same period.

This increase was partially offset by a $35 million decrease in losses from marketable and non-marketable investments, a $24 million increase in interest income and a $22 million decrease in foreign currency losses.

First Nine Months Fiscal 2025 Compared to First Nine Months Fiscal 2024 :

Our non-operating income, net increased by $111 million in reported currency in the first nine months of fiscal 2025, relative to the corresponding prior year period, primarily due to a $76 million decrease in foreign currency losses, a $54 million decrease in losses from marketable and non-marketable investments and a $38 million increase in interest income.

These increases were partially offset by a $49 million decrease in other income, net, which was primarily attributable to lower gains associated with an investment portfolio that we held for our employee deferred compensation plan as discussed above.

Provision for Income Taxes :

3 unchanged sentences

Future effective tax rates could be adversely affected by an unfavorable shift of earnings weighted to jurisdictions with higher tax rates, by unfavorable changes in tax laws and regulations, by adverse rulings in tax related litigation, or by shortfalls in stock-based compensation realized by employees relative to stock-based compensation that was recorded for book purposes, among others.

Three Months Ended November 30,

Six Months Ended November 30,

Three Months Ended

Nine Months Ended

Percent Change

3 unchanged sentences

Effective tax rate

Fiscal Second Quarter 2025 Compared to Fiscal Second Quarter 2024 :

Provision for income taxes increased during the second quarter of fiscal 2025, relative to the second quarter of fiscal 2024, primarily due to the absence of the revaluation benefit of net deferred tax assets due to a change in tax rate of $105 million and the realization of a one-time tax attribute of $49 million, an unfavorable jurisdictional mix of earnings of $99 million and a higher income before provision for income taxes of $53 million, partially offset by an increase in tax benefits related to stock-based compensation of $295 million.

First Half of Fiscal 2025 Compared to First Half of Fiscal 2024 :

Provision for income taxes increased during the first half of fiscal 2025, relative to the first half of fiscal 2024, primarily due to an unfavorable jurisdictional mix of earnings of $314 million, the absence of the revaluation benefit of net deferred tax assets due to a change in tax rate of $105 million and the realization of a one-time tax attribute of $49 million, partially offset by tax benefits related to stock-based compensation of $168 million and $53 million of tax benefits associated with settlements with taxing authorities and other events.

Fiscal Third Quarter 2025 Compared to Fiscal Third Quarter 2024 :

Provision for income taxes increased during the third quarter of fiscal 2025, relative to the corresponding prior year period, primarily due to the absence of the realization of a one-time tax attribute of $197 million, higher income before provision for income taxes of $95 million and an unfavorable jurisdictional mix of $51 million, partially offset by the absence of changes in unrecognized tax benefits of $154 million and an increase in tax benefits related to stock-based compensation of $143 million.

First Nine Months Fiscal 2025 Compared to First Nine Months Fiscal 2024 :

Provision for income taxes increased during the first nine months of fiscal 2025, relative to the corresponding prior year period, primarily due to an unfavorable jurisdictional mix of earnings of $365 million, the absence of the realization of a one-time tax attribute of $247 million, higher income before provision for income taxes of $133 million and the absence of the revaluation benefit of net deferred tax assets due to a change in tax rate of $105 million, partially offset by an increase in tax benefits related to stock-based compensation of $311 million and the absence of changes in unrecognized tax benefits of $207 million.

Liquidity and Capital Resources

2 unchanged sentences

Cash, cash equivalents and marketable securities

Not meaningful

Working capital :

The increase in working capital as of November 30, 2024 in comparison to May 31, 2024 was primarily due to favorable impacts to our net current assets resulting from net income during the first half of fiscal 2025 and proceeds from the issuance of senior notes in September 2024, net of issuance costs, of $6.2 billion (refer to Note 3 of Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for additional information), partially offset by $6.3 billion of cash used for capital expenditures, $2.2 billion of cash used to pay dividends to our stockholders, €750 million and $1.0 billion of long-term senior notes that were reclassified to current liabilities, $591 million of net cash used for our employee stock programs, $300 million of cash used for repurchases of our common stock and $137 million of cash used for purchases, net of sales and maturities of non-marketable investments during the first half of fiscal 2025.

The increase in working capital as of February 28, 2025 in comparison to May 31, 2024 was primarily due to favorable impacts to our net current assets resulting from net income and proceeds from the issuance of senior notes, net of issuance costs, of $13.9 billion (refer to Note 3 of Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for additional information) during the first nine months of fiscal 2025, partially offset by $12.1 billion of cash used for capital expenditures, $3.3 billion of cash used to pay dividends to our stockholders, €750 million and $1.0 billion of long-term senior notes that were reclassified to current liabilities, $450 million of cash used for repurchases of our common stock, $380 million of net cash used for our employee stock programs and $178 million of cash used for purchases, net of sales and maturities of non-current investments during the first nine months of fiscal 2025.

Our working capital may be impacted by some or all of the aforementioned factors in future periods, the amounts and timing of which are variable.

1 unchanged sentence

Cash and cash equivalents primarily consist of deposits held at major banks, money market funds and other securities with original maturities of 90 days or less.

Marketable securities consist of time deposits, marketable equity securities and certain other securities with original maturities at the time of purchase greater than 90 days.

The increase in cash, cash equivalents and marketable securities as of November 30, 2024 in comparison to May 31, 2024 was primarily due to cash inflows from our operations during the first half of fiscal 2025 and proceeds from the issuance of senior notes in September 2024, net of issuance costs, of $6.2 billion.

This increase was partially offset by $6.3 billion of cash used for capital expenditures, $4.5 billion of cash used for scheduled repayments of borrowings and commercial paper notes, $2.2 billion of cash used to pay dividends to our stockholders, $591 million of net cash used for our employee stock programs, $300 million of cash

used for repurchases of our common stock and $137 million of cash used for purchases, net of sales and maturities of non-marketable investments during the first half of fiscal 2025.

Marketable securities consist primarily of time deposits with original maturities at the time of purchase greater than 90 days.

The increase in cash, cash equivalents and marketable securities as of February 28, 2025 in comparison to May 31, 2024 was primarily due to cash inflows from our operations and proceeds from the issuance of senior notes, net of issuance costs, of $13.9 billion during the first nine months of fiscal 2025.

This increase was partially offset by $12.1 billion of cash used for capital expenditures, $4.5 billion of cash used for scheduled repayments of borrowings and commercial paper notes, $3.3 billion of cash used to pay dividends to our stockholders, $450 million of cash used for repurchases of our common stock, $380 million of net cash used for our employee stock programs and $169 million of cash used for purchases, net of sales and maturities of non-marketable investments during the first nine months of fiscal 2025.

Our cash and cash equivalents may be impacted by some or all of the aforementioned factors in future periods, the amounts and timing of which are variable.

Six Months Ended November 30,

Nine Months Ended

(Dollars in millions)

1 unchanged sentence

Net cash used for investing activities

Net cash used for financing activities

Net cash provided by (used for) financing activities

Not meaningful

Cash flows from operating activities :

3 unchanged sentences

Our primary uses of cash from operating activities are typically for employee related expenditures, material and manufacturing costs related to the production of our hardware products, taxes, interest payments and leased facilities.

Net cash provided by operating activities increased by $1.6 billion in the first half of fiscal 2025, relative to the first half of fiscal 2024, primarily due to higher net income adjusted for certain non-cash charges, partially offset by certain cash unfavorable working capital changes, net.

Net cash provided by operating activities increased by $2.1 billion in the first nine months of fiscal 2025, relative to the first nine months of fiscal 2024, primarily due to higher net income adjusted for certain non-cash charges, partially offset by certain cash unfavorable working capital changes, net.

Cash flows from investing activities :

The changes in cash flows from investing activities primarily relate to our acquisitions, purchases, maturities and sales of our investments in marketable securities and other instruments and investments in capital assets primarily to support the growth in our cloud and license business.

Net cash used for investing activities increased by $3.7 billion in the first half of fiscal 2025, relative to the first half of fiscal 2024, primarily due to the increase in capital expenditures.

The changes in cash flows from investing activities primarily relate to our investments in capital assets primarily to support the growth in our cloud and license business and acquisitions, purchases, maturities and sales of our investments in marketable securities and other instruments.

Net cash used for investing activities increased by $7.9 billion in the first nine months of fiscal 2025, relative to the first nine months of fiscal 2024, primarily due to the increase in capital expenditures.

Cash flows from financing activities :

The changes in cash flows from financing activities primarily relate to borrowings and repayments related to our debt instruments, stock repurchases, dividend payments and net proceeds related to employee stock programs.

Net cash used for financing activities decreased by $4.2 billion in the first half of fiscal 2025, relative to the first half of fiscal 2024, primarily due to proceeds from the issuance of senior notes in September 2024, net of issuance costs, of $6.2 billion, lower net cash used for our employee stock programs of $716 million and lower net cash used for repurchases of common stock of $300 million, partially offset by higher repayments of commercial paper notes of $2.1 billion, net of issuances, higher scheduled repayments of borrowings of $570 million and higher net cash used for other activities of $338 million, in each case in the first half of fiscal 2025 relative to the first half of fiscal 2024.

Further, during the first half of fiscal 2025, we refinanced our Term Loan Credit Agreement (defined below), which resulted in no net impact on financing cash flows for the periods reported.

Net cash provided by financing activities was $4.9 billion in the first nine months of fiscal 2025 compared to the net cash used for financing activities of $8.3 billion in the first nine months of fiscal 2024.

The increase in net cash provided by financing activities was primarily due to proceeds from the issuance of senior notes, net of issuance

costs, of $13.9 billion, lower net cash used for our employee stock programs of $1.0 billion and lower net cash used for repurchases of common stock of $600 million, partially offset by higher repayments of commercial paper notes of $1.3 billion, net of issuances, higher scheduled repayments of borrowings of $641 million and higher net cash used for other activities of $384 million, in each case in the first nine months of fiscal 2025 relative to the first nine months of fiscal 2024.

Further, during the first nine months of fiscal 2025, we refinanced our Term Loan Credit Agreement (defined below), which resulted in no net impact on financing cash flows for the periods reported.

Free cash flow :

3 unchanged sentences

We calculate free cash flow as follows:

Trailing 4-Quarters Ended November 30,

Trailing 4-Quarters Ended

(Dollars in millions)

5 unchanged sentences

Recent Financing Activities :

Cash Dividends :

In March 2025, our Board of Directors declared a quarterly cash dividend of $0.50 per share of our outstanding common stock, an increase of $0.10 per share over the dividend declared in December 2024.

The dividend is payable on April 23, 2025 to stockholders of record as of the close of business on April 10, 2025.

Future declarations of dividends and the establishment of future record and payment dates are subject to the final determination of our Board of Directors.

Term Loan Credit Agreements :

4 unchanged sentences

Senior Notes :

In September 2024, we issued $6.3 billion of senior notes comprised of the following:

During the first nine months of fiscal 2025, we issued $14.0 billion of senior notes comprised of the following:

• $500 million of floating rate notes due August 2028;

• $1.5 billion of 4.80% senior notes due August 2028;

• $1.5 billion of 4.20% senior notes due September 2029;

• $1.25 billion of 5.25% senior notes due February 2032;

• $1.75 billion of 4.70% senior notes due September 2034;

• $1.75 billion of 5.50% senior notes due August 2035;

• $1.75 billion of 5.375% senior notes due September 2054;

• $1.75 billion of 6.00% senior notes due August 2055;

• $1.25 billion of 5.50% senior notes due September 2064;

We issued the senior notes to repay all or a portion of $2.0 billion of senior notes due November 2024, $3.5 billion of senior notes due April 2025 and $2.5 billion of senior notes due May 2025 and to pay accrued interest and any related premiums, fees and expenses in connection therewith;

• $1.0 billion of 6.125% senior notes due August 2065.

We issued the senior notes to repay all or a portion of senior notes due between November 2024 and July 2026, and to pay accrued interest and any related premiums, fees and expenses in connection therewith;

to make scheduled payments of principal and interest on borrowings under our Term Loan Credit Agreement;

to repay all or a portion of commercial paper notes outstanding;

and to use any remaining net proceeds from the borrowing for general corporate purposes, which may include stock repurchases, payment of cash dividend on our common stock, repayment of other indebtedness and future acquisitions.

and to use any remaining net proceeds from the borrowing for general corporate purposes, which may include stock repurchases, payment of cash dividends on our common stock, repayment of other indebtedness and future acquisitions.

Refer to Note 3 of Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for additional information.

Contractual Obligations :

During the first half of fiscal 2025, there were no significant changes to our estimates of future payments under our fixed contractual obligations and commitments as presented in Part II, Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended May 31, 2024, other than an increase in our operating lease commitments to $36.7 billion as of November 30, 2024.

Our operating lease commitments, which are primarily for data centers, are generally expected to commence between the remainder of fiscal 2025 and fiscal 2027 and for terms of nine to fifteen years.

We have not recorded these lease commitments on our Condensed Consolidated Balance Sheets as of November 30, 2024.

Refer to Note 10 of Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended May 31, 2024 for more information about our lease commitments.

Additionally, as discussed above, we issued $6.3 billion of senior notes in September 2024 with various maturity dates.

During the first nine months of fiscal 2025, there were no significant changes to our estimates of future payments under our fixed contractual obligations and commitments as presented in Part II, Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended May 31, 2024, other than an increase in our lease commitments as of February 28, 2025.

Refer to Note 1 of Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report and Note 10 of Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended May 31, 2024 for more information about our lease commitments.

Additionally, as discussed above, we issued a total of $14.0 billion of senior notes in the first nine months of fiscal 2025 with various maturity dates.

We believe that our current cash, cash equivalents and marketable securities balances, cash generated from operations, and our borrowing arrangements will be sufficient to meet our working capital, capital expenditures and contractual obligations requirements.

5 unchanged sentences

The potential dilution percentage is calculated as the average annualized new stock-based awards granted and assumed, net of stock-based awards forfeited by employees leaving the company, divided by the weighted-average outstanding shares during the calculation period.

This maximum potential dilution will only result if all stock-based awards vest and, if

applicable, are exercised.

Of the outstanding stock options as of November 30, 2024, which generally have a ten-year exercise period, all have exercise prices lower than the market price of our common stock on such date.

This maximum potential dilution will only result if all stock-based awards vest and, if applicable, are exercised.

Of the outstanding stock options as of February 28, 2025, which generally have a ten-year exercise period, all have exercise prices lower than the market price of our common stock on such date.

In recent years, our stock repurchase program has substantially offset the dilutive effect of our stock-based compensation program.

However, we may modify the levels of our stock repurchases in the future depending on a number of factors, including the amount of cash we have available for acquisitions, to pay dividends, to repay or repurchase indebtedness or for other purposes.

As of November 30, 2024, the maximum potential dilution from all outstanding stock-based awards, regardless of when granted and regardless of whether vested or unvested, was 6.1%.

As of February 28, 2025, the maximum potential dilution from all outstanding stock-based awards, regardless of when granted and regardless of whether vested or unvested, was 5.8%.

Recent Accounting Pronouncements

1 unchanged sentence

Quantitative and Qualitat ive Disclosures About Market Risk

There were no significant changes to our quantitative and qualitative disclosures about market risk during the first half of fiscal 2025.

There were no significant changes to our quantitative and qualitative disclosures about market risk during the first nine months of fiscal 2025.

Please refer to Part II, Item 7A Quantitative and Qualitative Disclosures about Market Risk included in our Annual Report on Form 10-K for the fiscal year ended May 31, 2024 for a more complete discussion of the market risks we encounter.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis