Risk factor changes · ORCL

What changed in Oracle's risk factors

Item 1A (Risk Factors) of Oracle's FY2026 10-K compared with its FY2025 10-K, sentence by sentence.

Newer: 10-K filed 2026-06-22 · Older: 10-K filed 2025-06-18

130new sentences

119reworded

30removed

186unchanged

New in the latest 10-K 130

Additional risks and uncertainties not currently known to us or that we currently deem to be insignificant also may materially and adversely affect our business, financial condition or operating results in the future.
If any of the following risks occur, our business, operating results, financial condition, and prospects could be materially and adversely affected.
Our AI products may not operate as anticipated, which could adversely affect our reputation, revenues and profitability.
If we do not successfully execute our Oracle Cloud strategy, including our offerings of Oracle Cloud, our revenues and profitability may decline.
If we are unable to secure data center capacity at affordable rates or do not accurately plan for and manage our infrastructure capacity requirements, our profitability may decline.
Our cloud offerings and hardware offerings are complex, and if we cannot successfully manage this complexity, including the sourcing of technologies and components, the results of these businesses will suffer.
We may not receive significant revenues from our current research and development efforts for several years, if at all.
Our products and services may not function properly if we experience significant coding, manufacturing or configuration errors in our cloud, software and hardware offerings.
If we are unable to compete effectively, the results of operations and prospects for our business could be harmed.
Any failure to offer high-quality technical support services may adversely affect our relationships with our customers and our financial results.
Our periodic workforce restructurings and reorganizations can be disruptive.
We may lose key employees or may be unable to hire enough qualified employees.
Acquisitions, joint ventures and strategic alliances present many risks and we may not achieve the financial and strategic goals that were contemplated at the time of a transaction.
We are subject to risks with respect to environmental, social and governance (ESG) matters.
Data Privacy, Cybersecurity and Intellectual Property Risks We are subject to business, financial and reputational risks related to cybersecurity incidents and data breaches.
Our business practices with respect to data could give rise to operational interruption, liabilities or reputational harm as a result of governmental regulation, legal requirements or industry standards relating to privacy and data protection.
Third parties have claimed, and in the future may claim, infringement or misuse of intellectual property rights and/or breach of license agreement provisions.
We may not be able to protect our intellectual property rights. 15 Table of Contents Legal and Regulatory Risks Adverse litigation results could affect our business.
We may be subjected to increased taxes due to changes in U.S. or international tax laws, the inability to obtain or retain tax incentives, or from adverse resolutions of tax audits and controversies.
Our international sales and operations and global customer base subject us to additional risks, including trade restrictions, export controls and sanctions, that can adversely affect our operating results.
The healthcare industry is highly regulated, and thus, we are subject to several laws, regulations and industry initiatives, non-compliance with certain of which could adversely affect our healthcare business.
Our sales to local, state, federal and foreign government customers expose us to business volatility and risks, including government budgeting cycles and appropriations, government shutdowns, procurement regulations, governmental policy shifts, early termination of contracts, audits, investigations, sanctions and penalties.
Environmental and other related laws and regulations subject us to a number of risks and could result in significant liabilities and costs.
Changes in currency exchange rates can adversely affect customer demand and our revenues and profitability.
There are risks associated with our outstanding and future indebtedness.
If our accounting estimates and judgments turn out to be inaccurate, our future financial results could fall short of expectations, which could have a material adverse effect on our stock price.
Risks Related to our Common and Preferred Stock Our stock price could become more volatile and your investment could lose value.
Conversion of our 6.50% Series D Mandatory Convertible Preferred Stock (Mandatory Convertible Preferred Stock) and our depositary shares, or the payment of dividends on Mandatory Convertible Preferred Stock in shares of common stock, or the issuance of shares of our common stock under the At the Market (ATM) Program will dilute the ownership interest of the holders of our common stock.
The ATM Program, the Mandatory Convertible Preferred Stock or our depositary shares may adversely affect the market price of our common stock, and we cannot guarantee that our ATM Program will be fully implemented.
Our common stock ranks junior to our Mandatory Convertible Preferred Stock with respect to the payment of dividends and amounts payable in the event of our liquidation, winding-up or dissolution.
We cannot guarantee that our stock repurchase program will be fully implemented or that it will enhance long-term stockholder value.
Significant events in certain geographic locations could adversely affect our operating results and disrupt our business. 16 Table of Contents Business and Operational Risks We may be unsuccessful in developing and selling new products and services, integrating acquired products and services and enhancing our existing products and services.
We are building AI into many of our product offerings and we are also making AI available for our customers to use in solutions that they build.
Moreover, AI models and training approaches may contain errors or limitations.
The data used to develop or operate AI systems may be overly broad, incomplete, or include biased or inaccurate information, which could result in outputs that are offensive, unlawful, inaccurate or otherwise harmful.
If we enable or offer AI products that draw controversy due to their perceived or actual impact on society, or if we are unable to develop, implement and maintain effective internal policies and frameworks relating to the responsible development and use of AI, we may experience brand or reputational harm, competitive harm or legal liability.
Jurisdictions around the world are developing and passing new regulations that apply specifically to the use of AI.
AI regulatory framework remains in development and has been introduced at the federal level through executive orders and legislation has been introduced and enacted at the state level.
Additionally, obligations under the EU AI Act have gone into effect and will continue to be implemented in phases through 2030, and other jurisdictions have passed or are considering similarly focused legislation.
Regulatory uncertainty, including the lack of comprehensive federal legislation and a patchwork of existing and proposed frameworks and regulatory initiatives in numerous jurisdictions, may expose us to compliance challenges, costs and uncertainties requiring us to manage varying and sometimes conflicting expectations in the U.S. and globally, including potential government restrictions on AI infrastructure, compute resources, model weights, cross-border AI services, customer access and localization or nationalization initiatives.

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To grow our OCI business, which requires increased computing capacity, we must incur significant capital and operating expenditures to increase our existing data center capacity and to establish data centers in new geographic locations.
Conversely, if we overestimate customer demand or any of our key customers are unable to pay or 18 Table of Contents otherwise perform under their contracts with us, we could be locked into multi-year commitments for excess data center space and related capital expenditures, as well as associated financings, without receiving corresponding revenue.
In addition, the terms, renewal options and pricing adjustments in our long-term data center leases typically do not align with the duration and pricing of customer contracts, and if customers do not renew their contracts, we may be unable to re-lease, repurpose or assign such capacity on acceptable terms, if at all.
Our business is, and may continue to be, exposed to risks of customer non-payment and non-performance.
Our customer base and our policies and procedures to manage our exposure to credit risk, including through receipt of prepayments under some of our committed contracts, credit analysis and monitoring procedures, cannot fully eliminate customer credit risk, and to the extent our policies and procedures prove to be inadequate, it could negatively affect our business, operating results and financial condition.
In addition, some of our customers may be highly leveraged and subject to their own operating and regulatory risks and, even if our credit review and analysis mechanisms work properly, we may experience risks of non-payment and non-performance in our dealings with such parties.
In certain OCI offerings, we are more concentrated among a number of large customers, which could increase these risks.
Our data center expansion depends on access to suitable, permitted build sites; reliable and predictable power sources; networking hardware; and server availability, including graphics processing units, memory devices and other critical components.
Government-imposed limits or moratoria on data center construction in a given market could hinder our ability to execute our expansion plans or prevent us from completing planned data center projects.
Even where suitable sites and capacity are available, our data center expansion plans are complex and subject to execution risks, including, among others, delays or cost increases related to design, engineering, permitting, construction, utility interconnection, equipment delivery and contractor performance.
Our ability to build and operate data centers also may be affected by existing and evolving laws, regulations and policies relating to land use and zoning, environmental permitting, energy usage, grid reliability, greenhouse gas emissions, water usage, building codes, health and safety, tax incentives and data localization.
These requirements, or changes in their interpretation or enforcement, could increase our capital and operating costs, delay or prevent planned projects, limit where or how we build or operate data centers, or adversely affect our ability to meet customer commitments and anticipated demand.
In addition, we depend on third parties to develop and deliver certain data center capacity and related infrastructure, and their inability to obtain financing, complete construction on schedule or manage construction cost overruns could delay the availability of data center space or increase our costs.
We have faced, and may continue to face, challenges with securing reliable and cost-effective power sources for our data center energy demands, which are constrained globally due to the significant increase in demand for and limited availability of energy to power AI compute.
These constraints on available power sources could disrupt operations at affected data centers or restrict our capacity to grow, adversely impacting our business, operating results, financial condition and prospects.
In addition, power prices can be volatile, including due to extreme weather events and market structure in certain regions, and increases in energy costs can adversely affect our margins, particularly where customer pricing is fixed or committed.
We also may enter into long-term power supply arrangements, including power purchase agreements or similar arrangements, that may extend beyond customer contract terms and expose us to counterparty risk, pricing risk and potential collateral or credit support requirements.
We also may be unable to secure sufficient energy resources on acceptable terms to meet customer expectations or our sustainability goals.
These investments and commitments may require significant cash outlays before, or in excess of, the revenues or cash flows generated by the related capacity, which could adversely affect our cash flows, increase our need for external financing or require us to reduce, delay or reprioritize other investments.
We typically depreciate these assets over their estimated useful lives, which could be shortened should our cloud strategies change, which could adversely affect our profitability.
Further, evolving customer requirements and technological changes in data center design and equipment may 19 Table of Contents require retrofits or other incremental capital expenditures, and physical damage to data centers or key energy infrastructure from natural disasters, geopolitical events, terrorist events or other catastrophic events could adversely affect our profitability.
In addition, the actual useful lives, performance characteristics or failure rates of certain components may differ from our expectations, and we may incur unplanned repair, replacement or refreshment costs, including in some cases outside applicable warranty coverage.
Delays in delivery of critical components could cause us to incur operating costs for data center capacity that is not yet revenue-generating and, in some cases, could subject us to penalties or other contractual remedies.
We also store inventory and equipment in third-party logistics, warehousing or staging facilities, and these assets may be subject to damage, theft, break-ins or other losses that may not be fully covered by insurance.
We may initiate new restructuring plans in the future.
In addition, the adoption and deployment of AI technologies across our operations have resulted, and may continue to result, in reductions to our workforce.
These types of restructurings may also lead to shortages of sufficiently skilled employees in certain roles, loss of valuable institutional knowledge and damage to employee morale and retention.
For example, in recent years, recruiting, hiring and retaining employees with expertise in the AI computing industry has become increasingly difficult as the demand for AI computing infrastructure has increased as a result of the increase in AI and machine learning development, deployment and demand.
In addition, implementation of AI tools may require new skills and capabilities, and we may not be successful in reskilling current employees.
Our stock price has been volatile in recent periods, and if it were to stagnate or further decline, our ability to retain or attract employees may be harmed.
We regularly review and consider strategic acquisitions, joint ventures and strategic alliances.
Data Privacy, Cybersecurity and Intellectual Property Risks We are subject to business, financial and reputational risks related to cybersecurity incidents and data breaches.
The increasing use of AI technologies may also introduce or accelerate existing cybersecurity and operational risks.
AI systems may be susceptible to the introduction of malicious code, manipulation, or other misuse, and may be used by third parties to develop or deploy more sophisticated attacks.
In addition, the rapid pace at which AI-related risks can emerge and evolve may challenge our ability to timely identify, assess and mitigate such risks.
If we are unable to adapt our processes, controls and technologies effectively, our systems, data and operations could be adversely affected.
We also apply for and may obtain various U.S. state and local and foreign country income, property, sales and other tax incentives for infrastructure or other investments and business activities.
Further, certain governments and the OECD continue to consider the impacts of digital technologies and business models on the existing international tax framework and rules and may propose or enact changes to tax laws, treaties and guidance or introduce new tax measures that would increase the level of income or other taxes on our international revenues and profits.
If U.S. or other tax authorities make any of such changes or successfully challenge how or where our profits are currently recognized, our overall tax liabilities could increase.
Such possible unfavorable tax changes also create the potential for added volatility in our quarterly provision for income taxes.
Evolving restrictions and rules governing access to cloud-based infrastructure or GPU-enabled services by customers in certain jurisdictions, could require additional compliance controls or limit our ability to provide, lease, host or otherwise make available such resources to affected customers.
Specific risks include, but are not limited to, the following: We have medical devices registered with the U.S.
Food and Drug Administration and other foreign medical device regulators, and certain other products and solutions may now or in the future be regulated under the Federal Food, Drug and Cosmetics Act, as amended, and other foreign medical device laws.
Certification involves complex and specific requirements related to various types of requests for the access, exchange or use of Electronic Health Information.
The 21st Century Cures Act, as amended, allows for penalties for stakeholders, including but not limited to, health IT developers and providers who do not comply with the act.
The federal Anti-Kickback Statute (AKS) prohibits us from knowingly and willfully soliciting, receiving, offering or providing remuneration (including any kickback or price concession) in exchange for referrals or the purchase, order, or recommendation of any products or services which are paid for by federal healthcare programs such as Medicare and Medicaid.
The Centers for Medicare & Medicaid Services has stated that kickbacks have led to overutilization and increased costs of healthcare services, corruption of medical decision making, steering patients away from valid services or therapies and unfair, non-competitive service delivery.
Certain of our products and services may now, or in the future, be subject to the AKS, the federal False Claims Act (FCA) and other fraud and abuse laws.
In addition, a claim including products or services resulting from a violation of AKS constitutes a violation of the FCA.
Companies can be held liable under the FCA even when they do not submit claims directly to government payors if they are deemed to cause the submission of false or fraudulent claims.
The FCA also permits a private individual acting as a whistleblower to bring actions on behalf of the federal government alleging violations of the FCA and to share in any monetary recovery.
The federal government has used the FCA to prosecute a wide variety of alleged false claims and fraud allegedly perpetrated against federal and state healthcare programs, including a variety of coverage, reimbursement, billing and coding errors, fraud and conduct.
The healthcare industry is regularly subject to negative publicity, including as a result of governmental investigations, adverse media coverage and political debate concerning industry regulation.
We have been, and in the future may become involved in routine, regular and special governmental inquiries, audits, reviews and assessments.
Negative publicity may damage our reputation and expose us to regulatory scrutiny. 29 Table of Contents Complying with healthcare industry regulations globally is expensive and could subject us to unanticipated and significant delays or disruption to availability of our health products/services.
Additionally, new or updated regulated disclosure requirements could result in revisions to our previous ESG-related disclosure, which could expose us to liability or reputational harm. 30 Table of Contents Financial Risks Our operations can be difficult for us to predict because our quarterly results of operations may fluctuate significantly based on a number of factors.
If our cloud infrastructure buildout takes longer than expected, our cloud revenue forecasts will be affected.
In addition, sudden shifts in regional or global economic or political activity may cause our sales forecasts to be inaccurate.
Our quarterly results may also be affected by changes in the timing and amount of our capital expenditures, which may vary materially from changes to supplier pricing, tariffs and supply chain and construction timelines.
In addition, we hold a portfolio of marketable and non-marketable debt and equity investments.
It may take longer than expected to realize the full economic benefits from these investments or the benefits may ultimately be smaller than we expected.
Our foreign currency forward contracts and other hedging activities may not fully offset, and may in some cases increase, the adverse financial effects of currency movements.
We may incur additional indebtedness from time to time to finance capital expenditures, future investments or acquisitions, to finance the payment of cash dividends on or repurchases of our common stock, to refinance existing debt or for other purposes.
Future financing or funding needs could differ from our projections.
The incurrence of additional indebtedness will also result in increased fixed obligations and increased interest expense and could also include covenants or other restrictions that may impede our ability to manage our operations.
Some of our indebtedness may bear interest at variable rates, and increases in interest rates could increase our debt service obligations.
In addition, changes in interest rates could adversely affect the economics of certain long-term commitments or customer arrangements, particularly where pricing is fixed or committed.
More broadly, disruptions in credit markets, including reduced liquidity, changes in creditor sentiment or lender concentration limits, could increase our borrowing costs or limit our ability to access debt financing on acceptable terms, or at all.
A downgrade could also reduce our access to, or increase the cost of, commercial paper or other short-term financing, affect the terms or availability of certain long-term commitments (including data center leases), limit eligibility to contract with certain customers, and increase collateral, letter of credit or other credit support requirements under certain contractual arrangements.
If our accounting estimates and judgments turn out to be inaccurate, our future financial results could fall short of expectations, which could have a material adverse effect on our stock price.
The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make certain estimates, judgments and assumptions that can affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures.
We base our estimates, judgments and assumptions on information available to us at the time that they are made, as discussed in Critical Accounting Estimates under Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations and in Significant Accounting Policies discussed in Note 1 of Notes to Consolidated Financial Statements included elsewhere in this Annual Report.
For example, we make certain judgments related to revenue recognition and remaining performance obligations.
While we believe these judgments and assumptions are reasonable under the circumstances, they are subject to uncertainties and actual results may differ.
We are a named defendant, along with certain of our officers and a director, in a putative class action brought by an alleged stockholder that alleges various violations of securities laws in connection with a drop in our stock price.
Additional information regarding this lawsuit is discussed under Note 15 of Notes to Consolidated Financial Statements included elsewhere in this Annual Report.
This litigation, and any future similar litigation, could expose us to substantial costs and divert management s attention and resources, which could adversely affect our business.
Conversion of our Mandatory Convertible Preferred Stock (and our depositary shares), or the payment of dividends on Mandatory Convertible Preferred Stock in shares of common stock, or the issuance of shares of our common stock under the ATM Program will dilute the ownership interest of the holders of our common stock.
The conversion of some or all of our shares of Mandatory Convertible Preferred Stock and our depositary shares, or the payment of dividends on our Mandatory Convertible Preferred Stock in the form of common stock or the issuance of shares of our common stock under the ATM Program will dilute the ownership interest of the holders of our common stock and may depress the market price of our common stock.
The ATM Program, the Mandatory Convertible Preferred Stock or our depositary shares may adversely affect the market price of our common stock, and we cannot guarantee that our ATM Program will be fully implemented.
The market price of our common stock is likely to be influenced by our ATM Program, the Mandatory Convertible Preferred Stock and our depositary shares.
The market price of our common stock could become more volatile and could be depressed by: (1) investors anticipation of the potential sale or resale, as applicable, in the market of a substantial number of additional shares of common stock issued under the ATM Program or received upon conversion of the Mandatory Convertible Preferred Stock or our depositary shares;
(2) possible sales of our common stock by investors who view the Mandatory Convertible Preferred Stock or our depositary shares as a more attractive means of equity participation in us than owning shares of common stock; and (3) any hedging or arbitrage trading activity involving the Mandatory Convertible Preferred Stock or our depositary shares and our common stock.
Our ATM Program may not be fully implemented.
Disruptions in equity markets, including reduced liquidity or changes in investor sentiment, could limit our ability to access equity financing on acceptable terms, or at all.
Our common stock ranks junior to our Mandatory Convertible Preferred Stock with respect to the payment of dividends and amounts payable in the event of our liquidation, winding-up or dissolution.
This means that, unless accumulated dividends have been paid or set aside for payment on all our outstanding Mandatory Convertible Preferred Stock through the most recently completed dividend period, no dividends may be declared or paid on our common stock, subject to limited exceptions.
Likewise, in the event of our voluntary or involuntary liquidation, winding-up or dissolution, no distribution of our assets may be made to holders of our common stock until we have paid to holders of our Mandatory Convertible Preferred Stock a liquidation preference equal to $100,000 per share plus accumulated and unpaid dividends.
General Risks Economic, political and market conditions can adversely affect our business, results of operations and financial condition, including our revenue growth and profitability, which in turn could adversely affect our stock price. 33 Table of Contents Our business is influenced by a range of factors that are beyond our control and that we have no comparative advantage in forecasting.
Significant events in certain geographic locations could adversely affect our operating results and disrupt our business.

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Risk Factor Summary Business and Operational Risks We may be unsuccessful in developing and selling new products and services, integrating acquired products and services and enhancing our existing products and services.
We have continued to refresh and release new offerings of our cloud products and services, but if we are unable to develop new or sufficiently differentiated products and services, enhance and improve our product offerings and support services in a timely manner or position and price our products and services to meet demand, customers may not purchase or subscribe to our ~~license,~~ software, hardware or cloud offerings or renew ~~license~~ software support, hardware support or cloud subscriptions contracts.
In addition, our business may be adversely affected if: we do not continue to develop and release new or enhanced products and services within the anticipated time frames; ~~infrastructure~~ it takes more time or costs more than anticipated to build out the infrastructure required to deliver new or enhanced products and ~~services~~ ~~take~~ ~~longer~~ or ~~result~~ in ~~greater~~ ~~costs~~ ~~than~~ ~~anticipated;~~ services; supply chain costs, energy costs or other costs to develop, produce or distribute our products and services result in greater costs than anticipated; we are unable to accurately anticipate, pay for, plan for and manage future data center capacity needs in a timely manner to meet current or expected customer demand; we fail to meet our contractual service level commitments; there is a delay in market acceptance of and difficulty in transitioning new and existing customers to new, enhanced or acquired product lines or services; sanctions, tariffs, export controls, geopolitical ~~instability~~ instability, strained economic relationships between countries and related market disruptions or other regulatory, legislative or ~~other~~ trade and non-tariff barriers, including retaliatory measures, impede or prevent us from serving certain customers based on their location, jurisdiction of incorporation, ownership, control or other ties to restricted jurisdictions, or restrict us or our customers from operating in specific jurisdictions; inflation, trade policy, geopolitical conditions and other macroeconomic factors reduce customer demand or their ability to pay for our products and services or cause us to be unable to meet current or expected customer demand; there are changes in IT trends that we do not adequately anticipate or timely address with our product development efforts; we do not optimize complementary product lines and services in a timely manner; or we fail to adequately integrate, support or enhance acquired product lines or services.
In addition, our profitability and revenues could be adversely impacted if we lose one or more of our key customers for any reason, including as a result of any of the factors discussed ~~above.~~ above, or if one or more of our key customers experiences insolvency, bankruptcy or other issues impacting their creditworthiness.
We have ~~invested,~~ made significant investments in AI initiatives, including investments in infrastructure and headcount, and we expect to continue to ~~invest,~~ invest significant resources to build and support our AI ~~products.~~ products in support of our growth strategy.
If we are unable to introduce new AI ~~products~~ products, or if our AI products fail to operate as anticipated or as well as competing products or otherwise do not meet customer needs, or if our competitors AI products achieve higher market acceptance than ours, or if we incur costs higher than expected to build and support our AI products, we may fail to 17 ~~Table~~ of ~~Contents~~ recoup our investments in AI and our business and reputation may be harmed.
Further, if we do not 17 Table of Contents continue to invest significant resources to develop and support our AI products, we may fall behind technological developments and evolving industry standards, which would likewise harm our ability to compete.
In ~~addition,~~ AI technologies are rapidly changing and present evolving legal, regulatory and ethical issues, including claims of bias, discrimination, a perceived lack of transparency, as well as sometimes unpredictable behaviors or ~~improper~~ inadvertent use or incorporation in model training or outputs of copyrighted or other protected material, such as personal and patient health information, any of which could expose us or our customers to reputational or legal risk and inhibit adoption of our AI products.
Our failure to adapt to these changes, or any failure by our employees, contractors, partners, ~~suppliers~~ suppliers, customers or agents to comply with laws and regulations applicable to our AI products or our related policies and procedures, could result in legal, financial and reputational consequences including, but not limited to, being required to adjust or limit our product offerings or our use of AI in certain jurisdictions to comply with new and evolving AI laws and regulations.
If we do not successfully execute our Oracle Cloud strategy, including our offerings of Oracle ~~Cloud~~ ~~Services,~~ Cloud, our revenues and profitability may decline.
Additionally, the increasing prevalence of various cloud offering models by us and our competitors may unfavorably impact the pricing of our cloud and ~~license~~ software offerings.
As customer demand for our cloud offerings increases, we experience volatility in our reported revenues and operating results due to the differences in timing of revenue recognition between our ~~cloud~~ ~~license~~ ~~and~~ ~~on-premise~~ software license and hardware product arrangements relative to our cloud offering arrangements.
In addition, we may not be able to accurately anticipate customer transitions ~~from~~ from, or be able to sufficiently backfill reduced customer demand ~~for~~ for, our ~~license,~~ software, hardware and support offerings relative to the expected increase in customer adoption of and demand for our Oracle ~~Cloud~~ ~~Services,~~ Cloud, which could adversely affect our revenues and profitability.
In connection with these investments, we have entered, and expect to continue to enter, into long-term lease commitments with third-party data center providers and other significant commitments with suppliers of chips and other data center infrastructure.
Data centers in geographies that we rely on may ~~also~~ be unavailable on commercially reasonable terms or at all.
~~Moreover,~~ we We do not control the operation of these third-party data centers, and they may suffer interruptions in service from events beyond our control, including from acts of government, natural events, power loss, break-ins or misconduct by those third parties.
In ~~addition,~~ we We also rely on third-party suppliers to provide equipment and components required to outfit these data centers on a timely basis.
Despite testing prior to the release and throughout the lifecycle of a product or service, our cloud, ~~license~~ software and hardware offerings sometimes contain coding, manufacturing or configuration errors that can impact their function, performance and security, and result in other negative consequences.
The detection and correction of any errors in released cloud, ~~license~~ software or hardware offerings can be time consuming and costly.
Errors in our cloud, ~~license~~ software or hardware offerings, or errors embedded in third-party software products or services incorporated into our own products, can affect their ability to properly function, integrate or operate with other cloud, ~~license~~ software or hardware offerings; result in service interruptions, delays or outages of our cloud offerings; create security vulnerabilities in our products or services; delay the development or release of new products or services or new versions of products or services; and adversely affect market acceptance of our products or services.
If we experience any of these errors, or if there are delays in releasing our cloud, ~~license~~ software or hardware offerings or new versions of these offerings, our sales could be affected and revenues could decline.
Enterprise customers rely on our cloud, ~~license~~ software and hardware offerings and related services to run their businesses, and errors in our cloud, ~~license~~ software and hardware offerings and related services could expose us to product liability, performance and warranty claims as well as significant harm to our brand and reputation, which could impact our future sales.
Our enterprise cloud, ~~license~~ software and hardware offerings compete directly with certain offerings from some of the largest and most competitive companies in the world, many of which have well-developed customer bases and strong brand recognition.
Additionally, the increasing prevalence of cloud delivery models offered by us and our competitors may unfavorably impact the pricing of our other ~~cloud~~ ~~and~~ ~~license,~~ cloud, software, hardware and services offerings, and we have incurred increased cloud delivery expenses as we expand our cloud operations and update our infrastructure, all of which could reduce our revenues and profitability.
Our ~~license~~ software support fees and hardware support fees are generally priced as a percentage of our net software license fees and net new hardware products fees, respectively.
If we do not adapt our pricing models to reflect changes in customer use of our products, changes in customer demand or increased competition, our revenues could decrease. 19 21 Table of Contents Any failure to offer high-quality technical support services may adversely affect our relationships with our customers and our financial results .
Any failure to maintain high-quality technical support, or even the perception that our support is insufficient, could adversely affect our reputation, negatively impact our relationships with our customers, hinder our ability to sell and renew our applications and infrastructure offerings to existing and prospective customers, and negatively impact our business, operating results and financial position.
We may not receive significant revenues from our current research and development efforts for several years, if at all.
Developing our various product offerings is expensive and the return on investment is often long.
An important element of our corporate strategy is to commit significant resources to research and development, as well as related product and service opportunities, both through internal investments and the acquisition of intellectual property from acquired companies.
Accelerated product and service introductions and short lifecycles require high levels of research and development spending, which could adversely affect our operating results if not offset by revenue increases.
We believe that continued investment in research and development is essential to maintaining our competitive position.
However, our investments in research and development may fail to yield competitive products and services and we do not expect to receive significant revenues from these investments for several years, if at all. 20 Table of Contents Our products and services may not function properly if we experience significant coding, manufacturing or configuration errors in our cloud, software and hardware offerings.
Our cloud offerings and hardware offerings are complex, and if we cannot successfully manage this complexity, including the sourcing of technologies and components, the results of these businesses will suffer.
We depend on suppliers to develop, manufacture and deliver on a timely basis the necessary technologies and components for our hardware products that we market and sell to our customers and that we use as a part of our cloud infrastructure to deliver our cloud offerings, and there are some technologies and components that can only be purchased from a single vendor due to price, quality, technology, availability or other business constraints.
Our supply chain operations are affected by industry consolidation and component constraints or shortages, natural disasters, political unrest (such as conflicts in the Middle East and the tensions between China and Taiwan), public health crises, changes to trade laws or regulations, tariffs and customs controls, port stoppages, shipping interruptions or other transportation disruptions or slowdowns, and other factors affecting the countries or regions where these single source component vendors are located or where the products are being shipped.
If disruption caused by one or more of the risks described above occurs, our cloud and ~~license~~ software business and hardware business and related operating results could be materially and adversely affected.
Supply chain shortages have in some instances resulted in increases to the costs of production of our hardware products that we may not be able to pass on to our customers.
In addition, we have in some instances responded to such shortages by committing to higher purchases and balances of hardware products that we market and sell to our customers and that we use as a part of our cloud infrastructure to deliver our cloud offerings, relative to our historical positions.
For example, industry supply capacity for AI accelerators, including graphics processing units, as well as memory devices, is competitive, and we at times have to accept less favorable terms with suppliers to ~~avoid~~ minimize supply constraints.

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While this permits us to secure cloud infrastructure capacity, it has increased excess and obsolescence risk of such hardware products and could adversely impact our profitability and cash flows.
We expect these factors will continue to impact us in the future.
We outsource most of our manufacturing, assembly, delivery and technology of, and certain component designs for, our hardware products to a variety of companies, many of which are located outside the U.S.
From time to time, these partners experience production problems or delays or cannot meet our demand for products on a timely or cost-effective basis, including as a result of changes to trade laws or regulations, tariffs, sanctions and export or import controls.
Ongoing or future delays or cost increases in manufacturing could cause the loss of additional sales, delayed revenue recognition or an increase in our hardware products expenses, all of which could adversely affect the margins of our cloud and ~~license~~ software business and hardware business.
These challenges could arise if we alter our manufacturing strategies, suppliers, or locations.
We ~~periodically~~ ~~restructure~~ or ~~make~~ ~~other~~ have an existing restructuring plan in place under which we have made, and will continue to make, adjustments to our workforce in response to management changes, product changes, performance issues, changes in strategies, acquisitions and other internal and external considerations.
These types of restructurings have resulted, and may in the future result, in increased restructuring costs and ~~temporarily~~ reduced ~~productivity~~ ~~while~~ ~~employees~~ ~~adjust~~ to ~~the~~ ~~restructuring.~~ productivity.
~~These~~ ~~types~~ of ~~restructurings~~ ~~may~~ ~~also~~ ~~lead~~ to ~~shortages~~ of ~~sufficiently~~ ~~skilled~~ ~~employees~~ in ~~certain~~ ~~roles,~~ ~~loss~~ of ~~valuable~~ ~~institutional~~ ~~knowledge~~ ~~and~~ ~~damage~~ to ~~employee~~ ~~morale~~ ~~and~~ ~~retention.~~ 20 ~~Table~~ of ~~Contents~~ Hiring freezes or slowdowns can also result in decreased productivity while existing employees take on additional roles and responsibilities, and may also lead to a shortage of sufficiently skilled employees in certain roles.
We rely on hiring qualified employees and retaining our senior management, including our ~~Chairman~~ Executive Chair of the Board, Chief Technology Officer and founder; our Chief Executive ~~Officer;~~ Officers; other executive team members; and key employees.
Our general compensation program includes restricted stock units ~~(RSUs)~~ (RSUs), stock options and performance-based equity, which are important tools in attracting and retaining employees in our industry.
Any changes in our compensation practices or those of our competitors could affect our ability to retain and motivate existing personnel and recruit new personnel. 22 Table of Contents There are risks associated with our cloud and software and hardware indirect sales channels which could affect our future operating results.
There are risks associated with our cloud and ~~license~~ software and hardware indirect sales channels which could affect our future operating results.
Our cloud and ~~license~~ software and hardware indirect channel networks consist primarily of resellers, system integrators/implementers, consultants, education providers, internet service providers, network integrators and ISVs.
~~Acquisitions~~ Acquisitions, joint ventures and strategic alliances present many risks and we may not achieve the financial and strategic goals that were contemplated at the time of a transaction.
~~However,~~ ~~our~~ ~~strategic~~ ~~acquisition~~ ~~program~~ ~~carries~~ ~~several~~ ~~risks,~~ These transactions present material risks and challenges, including but not limited to: business disruption and management ~~distraction~~ ~~due~~ to ~~acquisition,~~ ~~transition~~ distraction; introduction of additional compliance obligations or ~~integration~~ ~~activities;~~ new risks, including with respect to increased privacy and data collection concerns, content moderation and censorship, and system outages; challenges in managing acquired technologies or lines of business, entering new markets where we have no, or limited, direct prior experience or market positions, or retaining key personnel from the acquired companies; 21 ~~Table~~ of ~~Contents~~ ~~acquisitions~~ transactions that do not meet strategic expectations, including due to difficulties integrating acquired companies, negative impacts from imposed business practices or different go-to-market strategies, and the risk of overpaying or failing to realize expected returns on our investments, each or all of which could adversely affect our business or operating results and potentially cause impairment to assets that we recorded as a part of an acquisition, including intangible assets and goodwill; negative financial impacts from (1) assumed claims or liabilities;
(2) assumed costly or disruptive pre-existing contractual relationships; and (3) unfavorable revenue recognition or other accounting treatment as a result of an acquired company s business practices; failure to identify or accurately assess significant liabilities or shortcomings prior to finalization of an acquisition; failure to realize expected revenue growth from an ~~acquisition~~ a strategic transaction for a number of reasons, including (1) more customers than expected declining to renew or terminating their contracts;
(3) acquired customers declining to purchase our technologies due to differing business practices; or (4) contract models utilized by an acquired company conflicting with our revenue recognition methods; integration difficulties, including aligning acquired compliance programs, technologies, products, services, supply chain operations, environmental practices or infrastructure with our existing lines of business; product and service inconsistencies across multiple product lines or services offerings, leading to customer confusion and delays; higher than anticipated costs related to supporting, developing and delivering acquired products or services, expanding general and administrative functions for new business models or complying with complex regulations applicable to an acquired business; labor challenges, including difficulties obtaining timely approvals from works councils or similar bodies under applicable employment laws; 23 Table of Contents regulatory and judicial challenges, including delays or restrictions from governmental authorities under foreign direct investment, foreign subsidy, competition and antitrust laws, potentially requiring asset divestitures, other concessions or a termination of the acquisition process; limitations on our potential other uses for our cash; and financial constraints that may require us to incur additional debt to pay for acquisitions or delay or not proceed with an acquisition if we cannot obtain the necessary funding to complete the acquisition in a timely manner or on favorable terms.
We are subject to evolving, and sometimes conflicting, laws, executive orders, regulations, policies and stakeholder expectations relating to matters beyond our core products and services, including ESG matters, such as environmental sustainability, climate change, human capital and workforce matters.
Efforts to meet evolving and increasingly divergent stakeholder expectations on ESG and related matters may place a strain on our employees and systems, and if we are targeted by those who disagree with our public positions on ESG and related issues, or if we do not otherwise successfully manage ESG-related expectations across our stakeholders, it could erode stakeholder trust, impact our reputation or subject us to litigation, which could adversely affect our business and reputation. 22 ~~Table~~ of ~~Contents~~ ~~Data~~ ~~Privacy,~~ ~~Cybersecurity~~ ~~and~~ ~~Intellectual~~ ~~Property~~ ~~Risks~~ If ~~our~~ ~~security~~ ~~measures~~ ~~for~~ ~~our~~ ~~products~~ ~~and~~ ~~services~~ ~~are~~ ~~compromised~~ ~~and~~ as a ~~result,~~ ~~our~~ ~~data,~~ ~~our~~ ~~customers~~ ~~data~~ or ~~our~~ IT ~~systems~~ ~~are~~ ~~accessed~~ ~~improperly,~~ ~~made~~ ~~unavailable,~~ or ~~improperly~~ ~~modified,~~ ~~our~~ ~~products~~ ~~and~~ ~~services~~ ~~may~~ be ~~perceived~~ as ~~vulnerable,~~ ~~our~~ ~~brand~~ ~~and~~ ~~reputation~~ ~~could~~ be ~~damaged,~~ ~~the~~ IT ~~services~~ we ~~provide~~ to ~~our~~ ~~customers~~ ~~could~~ be ~~disrupted,~~ ~~and~~ ~~customers~~ ~~may~~ ~~stop~~ ~~using~~ ~~our~~ ~~products~~ ~~and~~ ~~services,~~ ~~any~~ of ~~which~~ ~~could~~ ~~reduce~~ ~~our~~ ~~revenue~~ ~~and~~ ~~earnings,~~ ~~increase~~ ~~our~~ ~~expenses~~ ~~and~~ ~~expose~~ us to ~~legal~~ ~~claims~~ ~~and~~ ~~regulatory~~ ~~actions.~~
Our products and services, including Oracle ~~Cloud~~ ~~Services,~~ Cloud, store, retrieve, process and manage third-party data, such as our customers data, as well as our own data.
We and our third-party vendors are regularly subject to ~~attempts~~ attacks by third parties (which may include individuals or groups of hackers and sophisticated organizations, such as state-sponsored organizations, nation-states and individuals sponsored by them) designed to identify and exploit product and service vulnerabilities, penetrate or bypass our security measures, and gain unauthorized access to our or our customers , partners and suppliers software, hardware and cloud offerings, networks and systems.
~~Attempts~~ Attacks of this nature typically involve IT-related viruses, worms, and other malicious software programs that attack networks, systems, products and services, exploit potential security vulnerabilities of networks, systems, products and services, create system disruptions and cause shutdowns or denials of service.
Third parties ~~may~~ seek to attempt to fraudulently induce customers, partners, employees or suppliers into disclosing sensitive information such as user names, passwords or other credentials to gain access to our data, our customers , suppliers or partners data or the IT systems of Oracle, our customers, suppliers or partners.
~~Our~~ They also seek to access or modify improperly our products and services, including our Oracle ~~Cloud~~ ~~Services,~~ ~~may~~ ~~also~~ be ~~accessed~~ or ~~modified~~ ~~improperly~~ Cloud; these actions can occur in a variety of ways, including as a result of customer, partner, employee, contractor or supplier error or malfeasance.
When a cyberattack or other security event or incident results in unauthorized access to, or ~~modification~~ modification, loss, destruction or exfiltration of, our customers or suppliers data, other external data, our own data or our IT systems, or if the services we provide to our customers are disrupted, or if our products or services are reported to have (or are perceived as having) security vulnerabilities, we have incurred and ~~could~~ may continue to incur significant expenses 24 Table of Contents and ~~could~~ may suffer substantial damage to our brand and reputation.
Our remediation efforts may not be successful.
We may not detect or confirm any security breach and loss of information or fully remediate the impact for a significant period of time after the security breach.
If a security vulnerability exists in one of these components, a targeted exploit could lead to increased costs, liability claims, customer dissatisfaction, reduced ~~revenue,~~ revenues, or harm to our reputation or competitive ~~position.~~ position, including as a result of business interruption, data loss or unauthorized access to, or disclosure of, data.
We also have an active ~~acquisition~~ acquisition, joint venture and strategic alliance program and have ~~acquired~~ entered into a number of strategic transactions with respect to companies, products, services and technologies over the years.
While we make significant efforts to address any IT security issues with respect to ~~our~~ ~~acquired~~ such companies, products, services and technologies, we may still ~~inherit~~ face such risks and additional or unidentified vulnerabilities when we integrate ~~these~~ such companies ~~within~~ ~~Oracle.~~ or partner with such third parties.
In addition, U.S. federal and state as well as foreign governments have enacted or are considering enacting legislation or regulations, or may in the near future interpret existing legislation or regulations, in a manner that could significantly impact our ability, as well as the 23 ~~Table~~ of ~~Contents~~ ability of our customers, partners and data providers, to collect, augment, analyze, use, transfer (including across national borders) and share personal and other information that is integral to certain services we provide.
Following the European Union s (EU) s General Data Protection Regulation (GDPR), the rate of global consideration and adoption of privacy laws has increased, giving rise to more global jurisdictions in which regulatory inquiries and audits may be requested of Oracle, and if we are not deemed to be in compliance, could result in enforcement actions and/or fines.
Taken together, the laws or regulations associated with the enhanced protection of personal and other types of data could greatly increase the size of potential fines related to data protection, and our cost of providing our products and services could result in changes to our business practices or even prevent us from offering certain services in jurisdictions in which we 25 Table of Contents operate.
Responding to any such claim, regardless of its validity, could: be time consuming, costly and result in litigation; divert management s time and attention from developing our business; require us to pay monetary damages or enter into royalty and licensing agreements that we would not normally find acceptable; 24 ~~Table~~ of ~~Contents~~ require us to stop selling or to redesign certain of our products; require us to release source code to third parties, possibly under open source license terms; require us to satisfy indemnification obligations to our customers; or otherwise adversely affect our business, results of operations, financial condition or cash flows.
If we cannot protect our intellectual property against unauthorized copying or use, or other misappropriation, we may not remain competitive. 26 Table of Contents Legal and Regulatory Risks Adverse litigation results could affect our business.
We may be subjected to increased taxes due to changes in U.S. or international tax ~~laws~~ laws, the inability to obtain or retain tax incentives, or from adverse resolutions of tax audits and controversies.
Significant uncertainties exist with respect to the application of the various taxes to the businesses in which we ~~engage,~~ engage and our intercompany transactions and arrangements, often requiring that we make judgments in determining our tax liabilities and worldwide provision for income taxes.
We are regularly under audit by tax authorities in the U.S. and internationally, which has led to disagreements regarding our treatment of of, or positions taken with respect to, various items, including ~~our~~ foreign tax credits, foreign-earned profits, intercompany transfer prices and ~~calculations~~ transactions, and the applicability of sales or use taxes or withholding taxes to our ~~cross-border~~ operations and intercompany transactions.
Any unfavorable resolution of these tax audits and ~~controversies~~ controversies, or the loss of any tax incentives obtained or anticipated, could cause our tax liabilities to increase and may have a ~~material~~ ~~and~~ material, adverse impact on our provision for income taxes and effective tax ~~rate.~~ rate and on our business.
~~Countries~~ The U.S. federal and state governments, as well as governments of countries around the world and organizations such as the Organisation for Economic Co-operation and Development (OECD), continually consider and make changes to relevant tax, accounting and other laws, treaties, regulations, guidance and interpretations.
For example, the U.S.
~~Other~~ For example, countries ~~also~~ ~~continue~~ to ~~consider~~ ~~changes~~ to outside the U.S. may change their tax laws in a manner that could negatively affect us by increasing taxes imposed on our international revenue streams, operations and cross-border transactions, including ~~the~~ ~~imposition~~ of by imposing taxes targeted at digital technology businesses and ~~changes~~ in changing their withholding tax rules.
~~There~~ ~~can~~ be no ~~assurance~~ ~~that~~ ~~these~~ ~~enacted~~ ~~changes,~~ ~~which~~ ~~are~~ ~~subject~~ to ~~ongoing~~ ~~OECD~~ ~~guidance~~ ~~and~~ ~~interpretations~~ by ~~the~~ ~~various~~ ~~adopting~~ ~~countries,~~ ~~and~~ ~~any~~ ~~contemplated~~ ~~changes,~~ if ~~implemented~~ by ~~countries,~~ ~~will~~ ~~not~~ ~~materially~~ ~~increase~~ ~~the~~ ~~level~~ of ~~income~~ ~~tax~~ on ~~our~~ ~~international~~ ~~profits.~~ 25 ~~Table~~ of ~~Contents~~ Our future income tax provisions and effective tax rate could materially increase ~~under~~ ~~the~~ as a result of tax changes such as those discussed above or if any other changes are made to applicable tax laws and rules in the U.S. or in other countries in which we do business.
Our international sales and operations and global customer base subject us to additional ~~risks~~ risks, including trade restrictions, export controls and sanctions, that can adversely affect our operating results.
Violations of these laws and regulations can result in monetary fines, civil and/or criminal penalties, enforcement 27 Table of Contents actions against us, our officers or our employees, and prohibitions on the conduct of our business, including disgorgement, the loss of trade privileges, and other remedial measures.
Any such violations could result in prohibitions on our ability to offer our products and services in one or more countries or territories or to certain entities, and any such violations (or even an allegation of violations) could result in us exiting a market or segment, could delay or prevent potential acquisitions and could also materially damage our reputation, our brand, our international expansion efforts, our ability to attract and retain employees, our business and our operating results.
Changes to sanctions or export control regulations or their enforcement in the U.S. and the other jurisdictions where we currently operate or have dealings, or in the future may operate or have dealings, can require suspension or termination of business (including financial transactions) in or with certain countries and territories or with certain customers.
We face a variety of other risks and challenges in managing an organization operating globally, including those related to: general economic conditions in each country or region; political unrest, terrorism and war, including but not limited to the current Middle East conflicts and the Russia-Ukraine war and its potential economic and geopolitical impacts on Europe, where a material portion of our business is carried out; the potential for other hostilities, including but not limited to further destabilization in the Middle East and Venezuela and tensions between China and Taiwan; the potential for worsening trade and economic relations between the U.S. and China, including the imposition of additional tariffs, export controls, sanctions, retaliatory measures or other trade restrictions; public health, social and supporting infrastructure stability risks, particularly in areas in which we have significant operations; 26 ~~Table~~ of ~~Contents~~ fluctuations in currency exchange rates and related impacts on customer demand and our operating results; difficulties in accessing or transferring funds from or converting currencies in certain countries that could lead to a devaluation of our net assets, in particular our cash assets, in that country s ~~currency;~~ currency, including as a result of exchange controls, seizure, nationalization or other restrictions; losses arising from bank failures, uninsured or underinsured deposit balances, fraud, theft, employee misconduct, or errors in initiating or processing payments or fund transfers; regulatory changes, including unexpected government austerity measures in certain countries that may impair bank deposits or other cash assets that we hold in these countries or that impose additional taxes that we may be required to pay in these countries; common local business behaviors or regulatory requirements that conflict with our business ethics, practices and conduct policies; longer payment cycles and difficulties in collecting accounts receivable; overlapping tax regimes; and 28 Table of Contents weaker protection for intellectual property rights in some countries.
As a participant in the healthcare industry, certain of our products, operations and relationships, and those of our customers, are regulated by several U.S. federal, state, local and foreign governmental entities.
These regulations impact us both directly and indirectly, in ~~terms~~ of including government program requirements applicable to our customers for the use of health IT.
There are significant, wide-ranging and rapidly evolving regulations worldwide, covering healthcare fraud, information sharing, e-prescribing, medical claims processing and transmission, healthcare devices, the use of AI in healthcare, the security and privacy of patient data and interoperability standards, that may be directly or indirectly applicable to our products, operations and relationships or the business practices of our customers.
If ~~any~~ of In instances where our healthcare products and services ~~are~~ ~~deemed~~ to be ~~actively~~ ~~regulated~~ qualify as medical devices by ~~regulatory~~ ~~agencies~~ in countries where we do business, we could be subject to extensive requirements governing pre- and post-marketing activities, including labeling, manufacturing, adverse event reporting and pre-market ~~notification~~ regulatory approval, clearance or ~~recalls.~~ notification.
Certified electronic health record technology (CEHRT) requirements continue to evolve and remain necessary to participate in federal healthcare programs in ~~order~~ to receive reimbursement for health items and services provided by certain of our customers to Medicare and Medicaid beneficiaries.
If we fail to comply sufficiently with these and other regulations, it could negatively impact our ability to continue to develop, distribute and deliver certain of our healthcare products and services, and we could suffer fines or ~~penalties.~~ penalties and/or result in product recalls.
For example, the U.S. government imposes 27 ~~Table~~ of ~~Contents~~ evolving cybersecurity requirements, ~~including,~~ ~~for~~ ~~example,~~ including the FedRAMP authorization process and the Department of ~~Defense~~ ~~(DoD)~~ War (DoW) Cybersecurity Maturity Model Certification.
Compliance with these cybersecurity requirements is complex and costly, and any failure or alleged failure to meet, or delays in meeting, the required security controls could result in liability, limit our ability to sell products and services, directly or indirectly, to the ~~DoD~~ DoW and other federal and state government entities that implement similar cybersecurity requirements and adversely affect our reputation and sales.
In addition, an extended federal government ~~shutdown~~ shutdowns in the U.S. ~~could~~ ~~cause~~ have caused, and may in the future cause, delays in approvals and decision making, which could negatively impact our results of operations.
Compliance with these ever-changing and sometimes divergent ESG laws in a timely manner could increase our product design, development, procurement, manufacturing, delivery, cloud operations, insurance premiums and administration costs, limit our ability to manage excess and obsolete ~~non-compliant~~ inventory, change our sales activities, or otherwise impact future financial results of our cloud and hardware businesses.
Financial Risks Our operations can be difficult for us to predict because our quarterly results of operations may fluctuate significantly based on a number of factors.
Our revenues, particularly certain of our ~~cloud~~ ~~license~~ ~~and~~ ~~on-premise~~ software license revenues and hardware revenues, can be difficult to forecast.
A substantial portion of our ~~cloud~~ ~~license,~~ ~~on-premise~~ software license and hardware contracts is completed in the latter part of a quarter.
If we lose one or more of our key customers for any reason, are unable to recognize revenues for contracted products or we services or experience a delay in even a small number of these large transactions, our quarterly sales, revenues and profitability could fall significantly short of our predictions.
The timing and amount of impairment charges or changes in fair value, if any, of these investments depends on factors beyond our control, including regulatory risks, the perceived and actual performance of the companies or funds in which we invest, and are also subject to the general conditions of public and private equity markets, which are uncertain and have in the past varied, and may in the future vary, materially by period.
Changes in the fair values of these ~~investments,~~ ~~including~~ ~~Ampere,~~ investments have contributed, and may in the future contribute, to volatility in our net income that is not reflective of our core businesses.
Changes in currency exchange rates can adversely affect customer demand and our ~~revenue~~ revenues and profitability.
Our ultimate realized loss or gain with respect to currency fluctuations will generally depend on the size and type of cross-currency exposures that we enter into, the currency exchange rates associated with these exposures and changes in those rates, whether we have entered into foreign currency forward contracts to offset these exposures and any related fees paid to purchase such contracts, and other factors. 31 Table of Contents All of these factors can from time to time materially impact our results of operations, financial position and cash flows.
As of May 31, ~~2025,~~ 2026, we had an aggregate of ~~$92.6~~ $129.5 billion of outstanding indebtedness that will mature between calendar year ~~2025~~ 2026 and calendar year ~~2065.~~ 2066.
Our ability to pay interest and repay the principal for our indebtedness is dependent upon our ability to manage our 29 ~~Table~~ of ~~Contents~~ business operations, generate sufficient cash flows to service such debt and the other factors discussed in this Risk Factors section.
We have been refinancing portions of our outstanding debt as it ~~matures~~ matures, and we may continue to do so in the future.
Risks Related to Our Common and Preferred Stock Our stock price could become more volatile and your investment could lose value.
All of the factors discussed within this Risk Factors section have affected and could in the future affect our stock price.
The timing of announcements in the public market by us or by our competitors regarding new cloud services, AI advancements, products, product enhancements, technological advances, data center capacity, ~~acquisitions~~ acquisitions, joint ventures and strategic alliances or major transactions could also affect our stock price.
Our stock price could also be affected by factors, some 32 Table of Contents of which are beyond our control, including, among others: speculation in the press, social media and the analyst community; changes in recommendations or earnings-related estimates by financial analysts; changes in investors or analysts valuation measures for our stock; negative analyst surveys or channel check surveys; earnings announcements where our financial results differ from our guidance or investors expectations; our credit ratings; dissemination of inaccurate information or misinformation about our business and results of operations (including through the malicious use of generative AI tools); the enforcement or non-enforcement of laws and regulations; and market trends unrelated to our performance.
General Risks Economic, political and market conditions can adversely affect our business, results of operations and financial condition, including our revenue growth and profitability, which in turn could adversely affect our stock price.
These include: general economic and business conditions; overall demand for enterprise cloud, ~~license~~ software and hardware products and services; governmental budgetary constraints or shifts in government spending priorities; and general legal, regulatory and political developments.
Macroeconomic developments such as the global or regional economic effects resulting from elevated inflation and interest rates, limited liquidity, adverse developments affecting financial institutions, the current ~~wars,~~ wars and conflicts, evolving trade policies between the U.S. and international trade partners, including the imposition of tariffs and other trade measures or restrictions, or the occurrence of similar events in other countries that lead to uncertainty or instability in economic, political or market conditions could negatively affect our business, operating results, financial condition and outlook, which, in turn, could adversely affect our stock price.
Any general weakening of, and related declining 30 ~~Table~~ of ~~Contents~~ corporate confidence in, the global economy or the curtailment of government or corporate spending could cause current or potential customers to reduce or eliminate their IT budgets and spending, which could cause customers to delay, decrease or cancel purchases of our products and services or cause customers not to pay us or to delay paying us for previously purchased products and services.
These factors generally have the strongest effect on our sales of ~~cloud~~ ~~license~~ ~~and~~ ~~on-premise~~ software license, hardware and related services and, to a lesser extent, also may affect our renewal rates for ~~license~~ software support and our subscription-based cloud offerings.

Removed since the previous 10-K 30

Regulatory uncertainty, including the lack of comprehensive federal legislation and a patchwork of existing and proposed frameworks and regulatory initiatives in numerous jurisdictions, may expose us to compliance challenges and uncertainties.
As a part of our Oracle Cloud strategy, we plan our investment levels based on estimates of future revenues and customer demand and future anticipated rates of growth.
In recent periods, our cloud services and license support expenses have grown to meet current and expected demand for our cloud offerings, including investments to increase our existing data center capacity and to establish data centers in new geographic locations.
Conversely, if we overestimate customer demand or our data center capacity needs, we could be locked into multi-year commitments for excess data center space, resulting in lower profitability and cash flows because our third-party data center vendors generally require us to pay significant contract termination fees to early exit such obligations.
We have faced, and may continue to face, rising costs for data center energy demands.
We typically depreciate these assets over their estimated useful lives, which could be shortened should our cloud strategies change, which could adversely affect our profitability. 18 Table of Contents Our products and services may not function properly if we experience significant coding, manufacturing or configuration errors in our cloud, license and hardware offerings.
If our stock price stagnates or declines, our ability to retain or attract employees may be harmed.
We regularly review and consider strategic acquisitions of companies, products, services and technologies as a part of our corporate strategy, and we expect to continue making acquisitions in the future.
Legal and Regulatory Risks Adverse litigation results could affect our business.
Congress is considering extending tax provisions enacted as part of the 2017 Tax Cuts and Jobs Act, as well as making other changes to federal tax law, some of which could have an adverse impact on us.
Various other legislative proposals, if enacted, could substantially raise U.S. income taxes on our domestic and international profits.
Such unfavorable tax proposals create the potential for added volatility in our quarterly provision for income taxes and could have a material adverse impact on our future income tax provisions and effective tax rate.
A project led by the Organisation for Economic Co-operation and Development (OECD), an international association comprised of 38 countries including the U.S., over the last several years has resulted in changes to the basic design of the international tax system, including the implementation of a 15% minimum tax in over 50 countries, as well as proposed changes that would provide greater taxing rights to market jurisdictions where customers or users are located.
For example, the U.S. enacted a law making it unlawful, beginning in January 2025, to provide internet hosting services to TikTok that are used to enable the distribution, maintenance, or updating of TikTok for users within the U.S.
The President issued executive orders that prohibit enforcement until a future date, and also prohibit the imposition of penalties at any time for providing services during the time period covered by the prohibition of enforcement, and ordered the Attorney General to notify relevant service providers that continuing to provide services during the prohibition of enforcement does not violate the statute.
If the prohibition is lifted or expires without a resolution that satisfies relevant legal requirements, we may no longer be able to provide those services to TikTok, and if we cannot redeploy that capacity in a timely manner, our revenues and profits would be adversely impacted.
Even though we may not be directly regulated by specific healthcare laws and regulations, our products and services must be capable of being used by our customers in a way that complies with those laws and regulations.
Specific risks include, but are not limited to, the following: Medical device regulations in the U.S. and other countries may now or in the future apply to certain of our healthcare products and services.
Complying with these regulations globally is expensive and could subject us to unanticipated and significant delays.
Additionally, new or updated regulated disclosure requirements could result in revisions to our previous ESG-related disclosure, which could expose us to liability or reputational harm.
In addition, sudden shifts in regional or global economic or political activity may cause our sales forecasts to be inaccurate. 28 Table of Contents In addition, we hold a portfolio of marketable and non-marketable debt and equity investments, including investments in Ampere Computing Holdings LLC (Ampere), a privately held related party entity in which we had an ownership interest of approximately 29% as of May 31, 2025.
On March 19, 2025, SoftBank Group Corp. announced that it had entered into an agreement with Ampere and certain of 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, that are beyond our control.
If the Ampere Acquisition closes, we will cease to be an investor in Ampere.
During the period prior to closing the Ampere Acquisition, the amount of our investments in Ampere could increase for a variety of reasons and we will continue to recognize our share of loss in Ampere s net earnings until the closure of the acquisition.
If the Ampere Acquisition does not close, we will continue to be exposed to the risk associated with our investments in Ampere as discussed above.
All of these factors can from time to time materially impact our results of operations, financial position and cash flows.
A significant drop in our stock price could also expose us to the risk of securities class action lawsuits, which could result in substantial costs and divert management s attention and resources, which could adversely affect our business.
Our business is influenced by a range of factors that are beyond our control and that we have no comparative advantage in forecasting.
Business disruptions could adversely affect our operating results.

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