Correspondence 0001193125-23-259958 from ORACLE CORP (ORCL) (CIK 0001341439) (ORCL)
ORACLE CORP (ORCL) (CIK 0001341439)
Date: Oct. 20, 2023 · CIK: 0001341439 · Accession: 0001193125-23-259958
AI Filing Summary & Sentiment
File numbers found in text: 001-35992
Referenced dates: August 21, 2023, October 6, 2023, September 19, 2023
Letter
VIA EDGAR Division of Corporation Finance Office of Technology RE: Oracle Corporation Form 10-K for Fiscal Year Ended May 31, 2023 Response Dated September 19, 2023 File No. 001-35992
Dear Ms. Gibbs-Tabler and Ms. Angelini:
This letter responds to the supplemental comment letter from the Staff of the Division of Corporation Finance, Office of Technology (the “Staff”) of the Securities and Exchange Commission (the “SEC”) to Safra Catz, Chief Executive Officer of Oracle Corporation (the “Company”) dated October 6, 2023, issued in response to the Company’s letter dated September 19, 2023 (the “Initial Response Letter”) in response to the Staff’s comment letter dated August 21, 2023, all relating to the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2023 (the “2023 Form 10-K”). In this letter, we have recited the supplemental comments from the Staff in italicized type and have followed each supplemental comment with the Company’s response.
As a general note and as noted in the Initial Response Letter, the Company carefully considers the requirements applicable to each filing under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the rules and regulations promulgated thereunder (the “Applicable Disclosure Requirements”), as well as SEC guidance regarding those requirements, including the SEC’s Guidance Regarding Disclosure Related to Climate Change (SEC Rel. 33-9106, Feb. 2, 2010). In connection with the preparation of its filings under the Exchange Act and in consideration of the Applicable Disclosure Requirements, the Company engages in a number of processes to surface potentially material developments, events, trends and risks for consideration for disclosure (collectively, the “Disclosure Reviews”). Among other things, members of the Company’s legal, finance, regulatory, compliance, investor relations, tax, treasury and sustainability teams review portions of the Company’s prior disclosures; propose potential new disclosures as appropriate; meet with each other and with other key business leaders to discuss potentially material developments, events, trends and risks; and seek input from other areas of the business as necessary. In addition, the Company maintains a standing Disclosure Committee, which includes the Company’s Chief Executive Officer, Chief Accounting Officer, Chief Legal Officer and other senior business leaders. The Disclosure Committee generally meets on a quarterly basis to review previous and proposed new disclosures and to discuss any changes that may be appropriate as a result of potentially material developments, events, trends and risks identified during the Disclosure Review process, including environmental and climate-related risks. The Company also maintains an Environmental Steering Committee (the “ESC”) which is led by the Company’s Chief Sustainability Officer and includes senior management and executives across several Oracle business units. The ESC is responsible for assessing climate-related issues and driving cross-functional collaboration across the organization. The Company’s Chief Accounting Officer and several executives who observe Disclosure Committee meetings and/or report to members of the Disclosure Committee are members of the ESC. The ESC also regularly reports to the Company’s Chief Executive Officer regarding strategic climate change risks and opportunities. In determining the materiality of information to be included in its disclosures, the Company refers to the standard of materiality set forth in Basic v. Levinson, 485 U.S. 224 (1988).
Page
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Form 10-K for Fiscal Year Ended May 31, 2023
Management’s Discussion and Analysis of Financial Condition and Results of Operations, page 35
1. We note your response to prior comment 2. Please further address the following:
•
Your response that you have not seen or identified any material indirect consequences of climate-related regulation or business trends appears conclusory in nature. In this regard, we note disclosure in your Form 10-K cited in response to prior comment 1, including that “Regulatory, market, and competitive pressures regarding the greenhouse gas emissions and energy mix for our data center operations may also grow,” and on page 4 regarding increased customer demand for Oracle Cloud Services. Tell us more about how you evaluated the indirect consequences of climate-related regulation and business trends and how you concluded they are not material, providing support for your determinations.
•
According to your response, you (i) believe customers purchase your products and services for a wide variety of reasons, (ii) do not believe you have experienced decreased demand for products or services that produce significant greenhouse gas emissions or are related to carbon-based energy sources, (iii) have not identified emissions as a driver of demand, (iv) are not aware of energy efficiency being a primary consideration, and (v) are not able to isolate the extent to which any single factor affects customers’ decisions. Tell us more about your actual experience regarding climate-related changes in demand and competition, including how you have identified or become aware of them. Explain the difficulty you have experienced in isolating climate-related factors from the other factors noted in your response, and tell us how you considered disclosing the related uncertainties in evaluating climate-related business trends.
•
Your response indicates that you believe your offerings could support customers’ achievement of environmental sustainability goals, both through transition to the cloud and through various cloud solutions. We also note disclosure on page 5 of your Form 10-K indicating that cloud service revenues represented 32%, 25%, and 22% of total revenues in fiscal 2023, 2022, and 2021. Tell us how you evaluated the materiality of these potential opportunities for purposes of disclosure.
•
Your response indicates that your cloud services used 81% renewable energy in 2023, with the goal of reaching 100% renewable energy across your commercial portfolio by the end of 2025. Provide us with additional information regarding the steps you have taken and expect to take in connection with your renewable energy goal. Include quantification of the costs incurred during the periods covered by your Form 10-K and expected to be incurred in future periods, and tell us how you assessed materiality.
Page
Response
Set forth below are the Company’s detailed responses to each of the items referenced in the Staff’s comment.
•
Your response that you have not seen or identified any material indirect consequences of climate-related regulation or business trends appears conclusory in nature. In this regard, we note disclosure in your Form 10-K cited in response to prior comment 1, including that “Regulatory, market, and competitive pressures regarding the greenhouse gas emissions and energy mix for our data center operations may also grow,” and on page 4 regarding increased customer demand for Oracle Cloud Services. Tell us more about how you evaluated the indirect consequences of climate-related regulation and business trends and how you concluded they are not material, providing support for your determinations.
The Company has implemented a robust process to proactively identify, assess and manage environmental and climate-related risks, including through the use of risk management software and risk modeling tools and the performance of quantitative and qualitative scenario analyses. Assessments of environmental and climate-related risks are reviewed and discussed during quarterly meetings of the ESC and are also considered in connection with the Company’s Disclosure Reviews.
In connection with this process, the Company has assessed the reasonably foreseeable direct and indirect consequences of a variety of climate-related risks, including with respect to current and emerging regulation, technology, legal and compliance, market, reputational, acute physical and chronic physical risks. For example, as part of its assessment and management of climate-related regulatory risks, the Company closely monitors potential laws around energy efficiency and the circular economy and has sought to proactively mitigate the potential impact of such laws by participating in voluntary energy efficiency programs such as ENERGY STAR and LEED certifications. Informed by these risk assessment and risk management exercises, the Company expects its exposure to risks related to existing climate-related regulation to increase gradually over time but does not expect that such risks will represent exposures of more than 1% of its annual revenues.
Similarly, the Company has not identified any material indirect consequences of climate-related business trends. In connection with the Company’s risk management processes and Disclosure Reviews, the Company monitors market trends, including potential shifts in customer preferences toward low-carbon products, to inform product strategy. For example, in order to ensure that the Company’s products align to customers’ emissions reduction goals, the Company has implemented trainings for its hardware engineers in circular economy design principles. In addition, the Company believes that its Social Impact Report and other proactive and voluntary stakeholder communications have helped to communicate its alignment with climate-related business trends, aiding the Company’s ability to effectively mitigate potential demand and reputational risks relating to climate-related business trends.
As a result of these risk assessment and management processes, the Company believes its exposure to risks relating to the indirect consequences of climate-related regulation or business trends is limited and has been further mitigated by the Company’s proactive steps to address those risks. For these reasons, the Company determined that no additional disclosure regarding the potential indirect consequences of climate-related regulation or business trends beyond that included on page 28 of the 2023 Form 10-K, which states that regulatory, market and competitive pressures regarding the greenhouse gas emissions and energy mix for its data center operations may grow, was required under the Applicable Disclosure Requirements or would otherwise constitute material information necessary in order to make the statements in the 2023 Form 10-K, in light of the circumstances under which they were made, not misleading.
•
According to your response, you (i) believe customers purchase your products and services for a wide variety of reasons, (ii) do not believe you have experienced decreased demand for products or services that produce significant greenhouse gas emissions or are related to carbon-based energy sources, (iii) have not identified emissions as a driver of demand, (iv) are not aware of energy efficiency being a primary consideration, and (v) are not able to isolate the extent to which any single factor affects customers’ decisions. Tell us more about your actual experience regarding climate-related changes in demand and competition, including how you have identified or become aware of them. Explain the difficulty you have experienced in isolating climate-related factors from the other factors noted in your response, and tell us how you considered disclosing the related uncertainties in evaluating climate-related business trends.
Page
As noted above, market risks, such as potential shifts in customer preferences toward low-carbon products, are included in the Company’s climate-related risk assessments, and the Company monitors market trends, including potential shifts in customer preferences toward low-carbon products, to inform product strategy. For example, in order to ensure that the Company’s products align to customers’ emissions reduction goals, the Company has implemented trainings for its hardware engineers in circular economy design principles. In addition, the Company believes that its Social Impact Report and other proactive and voluntary disclosures about its environmental initiatives and footprint, including with respect to building and energy efficiency, renewable energy and emissions reduction, have helped to communicate its alignment with customers’ potential emissions reduction goals, aiding the Company’s management of demand and reputational risks relating to climate-related business trends.
The Company believes that these efforts to identify and respond to climate-related market trends, coupled with its proactive disclosures regarding such matters, have effectively addressed and mitigated the potential for customer considerations related to energy efficiency, greenhouse gas emissions, use of carbon-based energy sources and other potential climate-related considerations to adversely affect demand for the Company’s offerings. Although the Company believes that greenhouse gas emissions, use of carbon-based energy sources and energy efficiency may be among the factors considered by some of its customers, it is difficult to isolate the extent to which such factors affect customers’ decisions, if at all, as to whether or not to utilize its offerings. Further, as disclosed in the Initial Response Letter and on page 15 of the 2023 Form 10-K, the Company believes that numerous other factors, including cost, performance, scalability, reliability, security, functionality, efficiency, ease of use, speed to production and quality of technical support, are the key factors on which the Company competes in its cloud services and other businesses. Because the Company does not consider climate-related considerations to be a key factor upon which it competes, the Company believes a discussion of uncertainties in evaluating climate-related business trends was not material under the Applicable Disclosure Requirements and was appropriately omitted from the 2023 Form 10-K.
•
Your response indicates that you believe your offerings could support customers’ achievement of environmental sustainability goals, both through transition to the cloud and through various cloud solutions. We also note disclosure on page 5 of your Form 10-K indicating that cloud service revenues represented 32%, 25%, and 22% of total revenues in fiscal 2023, 2022, and 2021. Tell us how you evaluated the materiality of these potential opportunities for purposes of disclosure.
As noted above, the Company monitors market trends, including potential shifts in customer preferences toward low-carbon products, to inform product strategy, and believes that climate-related factors may be among the factors considered by some customers in deciding whether or not to utilize the Company’s offerings. For example, transitioning from on-premises infrastructure to a more efficient and sustainably powered cloud can help customers reduce their greenhouse gas emissions. However, as discussed above, the Company believes that numerous other factors, including cost, performance, scalability, reliability, security, functionality, efficiency, ease of use, speed to production and quality of technical support, are the key factors on which the Company competes in its cloud services and other businesses. Because the Company does not believe the potential to support customers’ achievement of sustainability goals is a key factor upon which it competes, it believes a discussion of such potential opportunities was not material under the Applicable Disclosure Requirements and was appropriately omitted from the 2023 Form 10-K.
Page
•
Your response indicates
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CORRESP 1 filename1.htm CORRESP Oracle Corporation 2300 Oracle Way phone (737) 867-1000 Austin, Texas 78741 VIA EDGAR U.S. Securities and Exchange Commission Division of Corporation Finance Office of Technology 100 F Street, N.E. Washington, D.C. 20549 Attn: Charli Gibbs-Tabler and Jennifer Angelini October 20, 2023 RE: Oracle Corporation Form 10-K for Fiscal Year Ended May 31, 2023 Response Dated September 19, 2023 File No. 001-35992 Dear Ms. Gibbs-Tabler and Ms. Angelini: This letter responds to the supplemental comment letter from the Staff of the Division of Corporation Finance, Office of Technology (the “Staff”) of the Securities and Exchange Commission (the “SEC”) to Safra Catz, Chief Executive Officer of Oracle Corporation (the “Company”) dated October 6, 2023, issued in response to the Company’s letter dated September 19, 2023 (the “Initial Response Letter”) in response to the Staff’s comment letter dated August 21, 2023, all relating to the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2023 (the “2023 Form 10-K”). In this letter, we have recited the supplemental comments from the Staff in italicized type and have followed each supplemental comment with the Company’s response. As a general note and as noted in the Initial Response Letter, the Company carefully considers the requirements applicable to each filing under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the rules and regulations promulgated thereunder (the “Applicable Disclosure Requirements”), as well as SEC guidance regarding those requirements, including the SEC’s Guidance Regarding Disclosure Related to Climate Change (SEC Rel. 33-9106, Feb. 2, 2010). In connection with the preparation of its filings under the Exchange Act and in consideration of the Applicable Disclosure Requirements, the Company engages in a number of processes to surface potentially material developments, events, trends and risks for consideration for disclosure (collectively, the “Disclosure Reviews”). Among other things, members of the Company’s legal, finance, regulatory, compliance, investor relations, tax, treasury and sustainability teams review portions of the Company’s prior disclosures; propose potential new disclosures as appropriate; meet with each other and with other key business leaders to discuss potentially material developments, events, trends and risks; and seek input from other areas of the business as necessary. In addition, the Company maintains a standing Disclosure Committee, which includes the Company’s Chief Executive Officer, Chief Accounting Officer, Chief Legal Officer and other senior business leaders. The Disclosure Committee generally meets on a quarterly basis to review previous and proposed new disclosures and to discuss any changes that may be appropriate as a result of potentially material developments, events, trends and risks identified during the Disclosure Review process, including environmental and climate-related risks. The Company also maintains an Environmental Steering Committee (the “ESC”) which is led by the Company’s Chief Sustainability Officer and includes senior management and executives across several Oracle business units. The ESC is responsible for assessing climate-related issues and driving cross-functional collaboration across the organization. The Company’s Chief Accounting Officer and several executives who observe Disclosure Committee meetings and/or report to members of the Disclosure Committee are members of the ESC. The ESC also regularly reports to the Company’s Chief Executive Officer regarding strategic climate change risks and opportunities. In determining the materiality of information to be included in its disclosures, the Company refers to the standard of materiality set forth in Basic v. Levinson, 485 U.S. 224 (1988). Page 2 ******************************************** Form 10-K for Fiscal Year Ended May 31, 2023 Management’s Discussion and Analysis of Financial Condition and Results of Operations, page 35 1. We note your response to prior comment 2. Please further address the following: • Your response that you have not seen or identified any material indirect consequences of climate-related regulation or business trends appears conclusory in nature. In this regard, we note disclosure in your Form 10-K cited in response to prior comment 1, including that “Regulatory, market, and competitive pressures regarding the greenhouse gas emissions and energy mix for our data center operations may also grow,” and on page 4 regarding increased customer demand for Oracle Cloud Services. Tell us more about how you evaluated the indirect consequences of climate-related regulation and business trends and how you concluded they are not material, providing support for your determinations. • According to your response, you (i) believe customers purchase your products and services for a wide variety of reasons, (ii) do not believe you have experienced decreased demand for products or services that produce significant greenhouse gas emissions or are related to carbon-based energy sources, (iii) have not identified emissions as a driver of demand, (iv) are not aware of energy efficiency being a primary consideration, and (v) are not able to isolate the extent to which any single factor affects customers’ decisions. Tell us more about your actual experience regarding climate-related changes in demand and competition, including how you have identified or become aware of them. Explain the difficulty you have experienced in isolating climate-related factors from the other factors noted in your response, and tell us how you considered disclosing the related uncertainties in evaluating climate-related business trends. • Your response indicates that you believe your offerings could support customers’ achievement of environmental sustainability goals, both through transition to the cloud and through various cloud solutions. We also note disclosure on page 5 of your Form 10-K indicating that cloud service revenues represented 32%, 25%, and 22% of total revenues in fiscal 2023, 2022, and 2021. Tell us how you evaluated the materiality of these potential opportunities for purposes of disclosure. • Your response indicates that your cloud services used 81% renewable energy in 2023, with the goal of reaching 100% renewable energy across your commercial portfolio by the end of 2025. Provide us with additional information regarding the steps you have taken and expect to take in connection with your renewable energy goal. Include quantification of the costs incurred during the periods covered by your Form 10-K and expected to be incurred in future periods, and tell us how you assessed materiality. Page 3 Response Set forth below are the Company’s detailed responses to each of the items referenced in the Staff’s comment. • Your response that you have not seen or identified any material indirect consequences of climate-related regulation or business trends appears conclusory in nature. In this regard, we note disclosure in your Form 10-K cited in response to prior comment 1, including that “Regulatory, market, and competitive pressures regarding the greenhouse gas emissions and energy mix for our data center operations may also grow,” and on page 4 regarding increased customer demand for Oracle Cloud Services. Tell us more about how you evaluated the indirect consequences of climate-related regulation and business trends and how you concluded they are not material, providing support for your determinations. The Company has implemented a robust process to proactively identify, assess and manage environmental and climate-related risks, including through the use of risk management software and risk modeling tools and the performance of quantitative and qualitative scenario analyses. Assessments of environmental and climate-related risks are reviewed and discussed during quarterly meetings of the ESC and are also considered in connection with the Company’s Disclosure Reviews. In connection with this process, the Company has assessed the reasonably foreseeable direct and indirect consequences of a variety of climate-related risks, including with respect to current and emerging regulation, technology, legal and compliance, market, reputational, acute physical and chronic physical risks. For example, as part of its assessment and management of climate-related regulatory risks, the Company closely monitors potential laws around energy efficiency and the circular economy and has sought to proactively mitigate the potential impact of such laws by participating in voluntary energy efficiency programs such as ENERGY STAR and LEED certifications. Informed by these risk assessment and risk management exercises, the Company expects its exposure to risks related to existing climate-related regulation to increase gradually over time but does not expect that such risks will represent exposures of more than 1% of its annual revenues. Similarly, the Company has not identified any material indirect consequences of climate-related business trends. In connection with the Company’s risk management processes and Disclosure Reviews, the Company monitors market trends, including potential shifts in customer preferences toward low-carbon products, to inform product strategy. For example, in order to ensure that the Company’s products align to customers’ emissions reduction goals, the Company has implemented trainings for its hardware engineers in circular economy design principles. In addition, the Company believes that its Social Impact Report and other proactive and voluntary stakeholder communications have helped to communicate its alignment with climate-related business trends, aiding the Company’s ability to effectively mitigate potential demand and reputational risks relating to climate-related business trends. As a result of these risk assessment and management processes, the Company believes its exposure to risks relating to the indirect consequences of climate-related regulation or business trends is limited and has been further mitigated by the Company’s proactive steps to address those risks. For these reasons, the Company determined that no additional disclosure regarding the potential indirect consequences of climate-related regulation or business trends beyond that included on page 28 of the 2023 Form 10-K, which states that regulatory, market and competitive pressures regarding the greenhouse gas emissions and energy mix for its data center operations may grow, was required under the Applicable Disclosure Requirements or would otherwise constitute material information necessary in order to make the statements in the 2023 Form 10-K, in light of the circumstances under which they were made, not misleading. • According to your response, you (i) believe customers purchase your products and services for a wide variety of reasons, (ii) do not believe you have experienced decreased demand for products or services that produce significant greenhouse gas emissions or are related to carbon-based energy sources, (iii) have not identified emissions as a driver of demand, (iv) are not aware of energy efficiency being a primary consideration, and (v) are not able to isolate the extent to which any single factor affects customers’ decisions. Tell us more about your actual experience regarding climate-related changes in demand and competition, including how you have identified or become aware of them. Explain the difficulty you have experienced in isolating climate-related factors from the other factors noted in your response, and tell us how you considered disclosing the related uncertainties in evaluating climate-related business trends. Page 4 As noted above, market risks, such as potential shifts in customer preferences toward low-carbon products, are included in the Company’s climate-related risk assessments, and the Company monitors market trends, including potential shifts in customer preferences toward low-carbon products, to inform product strategy. For example, in order to ensure that the Company’s products align to customers’ emissions reduction goals, the Company has implemented trainings for its hardware engineers in circular economy design principles. In addition, the Company believes that its Social Impact Report and other proactive and voluntary disclosures about its environmental initiatives and footprint, including with respect to building and energy efficiency, renewable energy and emissions reduction, have helped to communicate its alignment with customers’ potential emissions reduction goals, aiding the Company’s management of demand and reputational risks relating to climate-related business trends. The Company believes that these efforts to identify and respond to climate-related market trends, coupled with its proactive disclosures regarding such matters, have effectively addressed and mitigated the potential for customer considerations related to energy efficiency, greenhouse gas emissions, use of carbon-based energy sources and other potential climate-related considerations to adversely affect demand for the Company’s offerings. Although the Company believes that greenhouse gas emissions, use of carbon-based energy sources and energy efficiency may be among the factors considered by some of its customers, it is difficult to isolate the extent to which such factors affect customers’ decisions, if at all, as to whether or not to utilize its offerings. Further, as disclosed in the Initial Response Letter and on page 15 of the 2023 Form 10-K, the Company believes that numerous other factors, including cost, performance, scalability, reliability, security, functionality, efficiency, ease of use, speed to production and quality of technical support, are the key factors on which the Company competes in its cloud services and other businesses. Because the Company does not consider climate-related considerations to be a key factor upon which it competes, the Company believes a discussion of uncertainties in evaluating climate-related business trends was not material under the Applicable Disclosure Requirements and was appropriately omitted from the 2023 Form 10-K. • Your response indicates that you believe your offerings could support customers’ achievement of environmental sustainability goals, both through transition to the cloud and through various cloud solutions. We also note disclosure on page 5 of your Form 10-K indicating that cloud service revenues represented 32%, 25%, and 22% of total revenues in fiscal 2023, 2022, and 2021. Tell us how you evaluated the materiality of these potential opportunities for purposes of disclosure. As noted above, the Company monitors market trends, including potential shifts in customer preferences toward low-carbon products, to inform product strategy, and believes that climate-related factors may be among the factors considered by some customers in deciding whether or not to utilize the Company’s offerings. For example, transitioning from on-premises infrastructure to a more efficient and sustainably powered cloud can help customers reduce their greenhouse gas emissions. However, as discussed above, the Company believes that numerous other factors, including cost, performance, scalability, reliability, security, functionality, efficiency, ease of use, speed to production and quality of technical support, are the key factors on which the Company competes in its cloud services and other businesses. Because the Company does not believe the potential to support customers’ achievement of sustainability goals is a key factor upon which it competes, it believes a discussion of such potential opportunities was not material under the Applicable Disclosure Requirements and was appropriately omitted from the 2023 Form 10-K. Page 5 • Your response indicates