Oracle 2006 Annual Report Download - page 48

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Table of Contents
Fiscal 2007 Compared to Fiscal 2006: Excluding the effect of currency rate fluctuations, On Demand
revenues increased due to higher Advanced Customer Services revenues, and the expansion of our
subscription base in both Oracle On Demand and CRM On Demand services. Advanced Customer Services
revenues contributed 46% of the growth, while Oracle On Demand and CRM On Demand contributed 33%
and 21%, respectively. Excluding the effect of currency rate fluctuations, the Americas contributed 55%,
EMEA contributed 32% and Asia Pacific contributed 13% to the increase in On Demand revenues. Advanced
Customer Services revenues included $50 million of incremental revenues from Siebel in fiscal 2007 while
CRM On Demand revenues included $31 million.
Excluding the effect of currency rate fluctuations, On Demand expenses increased due to higher personnel
related expenditures, higher amortization expenses resulting from intangible assets, as well as higher
technology infrastructure related costs to support the expansion of our customer base. CRM On Demand
expense growth reflects a full year of expenses related to our Siebel CRM On Demand employees (in
comparison to only four months in fiscal 2006). Total On Demand margin as a percentage of revenues
decreased, primarily driven by more rapid growth in personnel related expenses in comparison to revenues,
and to a lesser extent, growth in technology infrastructure related expenditures in Oracle On Demand and
CRM On Demand as well as amortization of intangible assets. Advanced Customer Services operating
margins remained flat compared with the prior year while operating losses in both Oracle On Demand and
CRM On Demand increased.
Fiscal 2006 Compared to Fiscal 2005: On Demand revenues increased in fiscal 2006 due to the expansion of
our subscription base in Oracle On Demand services, including incremental revenues from Siebel of
$9 million, as well as higher revenues from Advanced Customer Services, including incremental revenues
from Siebel of $17 million and PeopleSoft of $9 million. Excluding the effect of currency rate fluctuations,
the Americas contributed 65% to the increase in On Demand revenues, EMEA contributed 30% and Asia
Pacific contributed 5%.
On Demand expenses increased due to higher personnel related expenditures in both our Oracle On Demand
and Advanced Customer Services businesses as a result of additional resources acquired from Siebel as well
as higher computer and technology related charges and external contractor costs in our Oracle On Demand
business. The total On Demand margin as a percentage of revenues declined due to lower margins associated
with the CRM On Demand offering as well as additional expenditures incurred to support planned future
growth.
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Source: ORACLE CORP, 10-K, June 29, 2007 Powered by Morningstar® Document Research℠