Oracle 2011 Annual Report Download - page 63

Consulting: Consulting revenues are earned by providing services to customers in the design, implementation,
deployment and upgrade of our database and middleware software products as well as applications software
products. The cost of providing consulting services consists primarily of personnel related expenditures.
Year Ended May 31,
Percent Change Percent Change
(Dollars in millions) 2011 Actual Constant 2010 Actual Constant 2009
Consulting Revenues:
Americas ....................... $ 1,552 12% 11% $ 1,390 -15% -16% $ 1,639
EMEA ......................... 860 -9% -9% 943 -18% -18% 1,152
Asia Pacific ..................... 502 30% 21% 387 -15% -20% 456
Total revenues ............... 2,914 7% 6% 2,720 -16% -17% 3,247
Expenses:
Services(1) ...................... 2,439 0% 0% 2,431 -13% -14% 2,781
Stock-based compensation ......... 7 12% 12% 7 1% 1% 6
Amortization of intangible assets(2) . . 39 0% 0% 38 -5% -5% 40
Total expenses ............... 2,485 0% 0% 2,476 -12% -13% 2,827
Total Margin ................... $ 429 77% 68% $ 244 -42% -44% $ 420
Total Margin % ................. 15% 9% 13%
% Revenues by Geography:
Americas ....................... 53% 51% 51%
EMEA ......................... 30% 35% 35%
Asia Pacific ..................... 17% 14% 14%
(1) Excluding stock-based compensation
(2) Included as a component of ‘Amortization of Intangible Assets’ in our consolidated statements of operations
Fiscal 2011 Compared to Fiscal 2010: Excluding the effect of currency rate fluctuations, the increase in our
consulting revenues in fiscal 2011 was due to revenue increases in the Americas and Asia Pacific regions and
revenue contributions from our recently acquired companies, which were partially offset by a reduction in
consulting revenues in the EMEA region.
On a constant currency basis, our expenses remained relatively flat in fiscal 2011 as a reduction in salary and
related expenses from reduced headcount was offset primarily by increases in external contractor expenses and
variable compensation.
Excluding the effect of currency rate fluctuations, total margin and total margin as a percentage of revenues
increased during fiscal 2011 as our total revenues increased while our expenses remained relatively flat.
Fiscal 2010 Compared to Fiscal 2009: Excluding the effect of currency rate fluctuations, we believe the
decline in our consulting revenues in fiscal 2010 was generally due to weaker demand resulting from reduced IT
spending on services by our customers as a result of the deterioration of global economic conditions.
Excluding the effect of currency rate fluctuations, consulting expenses decreased primarily due to a reduction in
employee related expenses resulting from reduced headcount, including salaries, variable compensation and
travel and entertainment and a reduction in external contractor related expenses.
On a constant currency basis, consulting margin and margin as a percentage of revenues decreased in fiscal 2010
as our revenues declined at a greater rate than our expenses.
Cloud Services: Cloud Services, which was formerly named On Demand, includes certain of our Oracle Cloud
Services and our Advanced Customer Services offerings. As a result of our acquisition of Sun, we increased the
volume and breadth of our Cloud Services offerings. Oracle Cloud Services’ managed services are designed to
provide comprehensive software and hardware management and maintenance services for customers hosted at
our Oracle data center facilities, select partner data centers or physically on-site at customer facilities. Advanced
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