Oracle 2007 Annual Report Download - page 50

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Table of Contents
On Demand expenses were adversely impacted by 5 percentage points of unfavorable currency variations
during fiscal 2007. 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 IT related costs to support the expansion of our customer base. On Demand expense growth also
reflects a full year of expenses from Siebel 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 IT related
expenditures for 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.
Education: Education revenues are earned by providing instructor led, media based and internet based
training in the use of our database and middleware software products as well as applications software
products. Education expenses primarily consist of personnel related expenditures, facilities and external
contractor costs.
Year Ended May 31,
Percent Change Percent Change
(Dollars in millions) 2008 Actual Constant 2007 Actual Constant 2006
Education Revenues:
Americas $ 181 10% 8% $ 164 9% 8% $ 151
EMEA 159 20% 9% 132 13% 6% 117
Asia Pacific 76 22% 14% 63 16% 14% 54
Total revenues 416 16% 10% 359 11% 8% 322
Expenses:
Cost of services(1) 325 15% 8% 283 15% 11% 246
Stock-based compensation 1 -17% -17% 2 * * —
Total expenses 326 15% 8% 285 16% 12% 246
Total Margin $ 90 21% 16% $ 74 -2% -5% $ 76
Total Margin % 22% 21% 24%
% Revenues by Geography:
Americas 44% 46% 47%
EMEA 38% 37% 36%
Asia Pacific 18% 17% 17%
(1) Excluding stock-based compensation
* Not meaningful
Fiscal 2008 Compared to Fiscal 2007: Education revenue growth was positively affected by foreign
currency rate fluctuations of 6 percentage points in fiscal 2008. Excluding the effect of currency rate
fluctuations, education revenues increased in fiscal 2008 due primarily to an increase in customer training on
the use of our applications products, including recently acquired products. BEA contributed $2 million to our
revenue growth in fiscal 2008. Excluding the effect of currency rate fluctuations, the Americas contributed
39%, EMEA contributed 36% and Asia Pacific contributed 25% to the increase in education revenues.
Excluding the effect of unfavorable currency rate fluctuations of 7 percentage points, education expenses
increased due to higher personnel related expenses during the first half of fiscal 2008 and were partially offset
by lower personnel related expenses in the second half of fiscal 2008 as a result of restructuring actions taken.
Education expenses also increased due to third party contractor expenses and royalty fees associated with
increased revenues and included $2 million of incremental expenses from BEA. Education margin as a
percentage of revenues increased slightly in fiscal 2008 as revenue growth exceeded expense growth.
45
Source: ORACLE CORP, 10-K, July 02, 2008 Powered by Morningstar® Document Research℠