ORACLE CORP [ORCL] Filings

10-Q 1 orcl-20230831.htm 10-Q 10-Q

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended August 31, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission File Number: 001-35992

Oracle Corporation

(Exact name of registrant as specified in its charter)


Delaware		54-2185193
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

2300 Oracle Way Austin, Texas		78741
(Address of principal executive offices)		(Zip Code)

(737) 867-1000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.01 per share 
3.125% senior notes due July 2025 

ORCL
—

New York Stock Exchange 
New York Stock Exchange 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ☒		Accelerated filer ☐
Non-accelerated filer ☐		Smaller reporting company ☐
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of registrant’s common stock outstanding as of September 7, 2023 was: 2,739,821,000.

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ORACLE CORPORATION

FORM 10-Q QUARTERLY REPORT

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		Page

PART I.	FINANCIAL INFORMATION	3

Item 1.	Financial Statements (Unaudited)	3

	Condensed Consolidated Balance Sheets as of August 31, 2023 and May 31, 2023	3

	Condensed Consolidated Statements of Operations for the Three Months Ended August 31, 2023 and 2022	4

	Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended August 31, 2023 and 2022	5

	Condensed Consolidated Statements of Stockholders’ Equity (Deficit) for the Three Months Ended August 31, 2023 and 2022	6

	Condensed Consolidated Statements of Cash Flows for the Three Months Ended August 31, 2023 and 2022	7

	Notes to Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35

Item 4.	Controls and Procedures	35

PART II.	OTHER INFORMATION	37

Item 1.	Legal Proceedings	37

Item 1A.	Risk Factors	37

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37

Item 5.	Other Information	38

Item 6.	Exhibits	39

	Signatures	40

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Cautionary Note on Forward-Looking Statements

For purposes of this Quarterly Report on Form 10-Q (this Quarterly Report), the terms “Oracle,” “we,” “us” and “our” refer to Oracle Corporation and its consolidated subsidiaries. This Quarterly Report contains statements that are not historical in nature, are predictive in nature, or that depend upon or refer to future events or conditions or otherwise contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), and Section 27A of the Securities Act of 1933, as amended (the Securities Act). These include, among other things, statements regarding:

•

our expectation that we may acquire, and realize the anticipated benefits of acquiring, companies, products, services and technologies to further our corporate strategy as compelling opportunities become available;

•

our expectation that, on a constant currency basis, our total cloud and license revenues generally will continue to increase due to expected growth in our cloud services and continued demand for our cloud license and on-premise license and license support offerings;

•

our expectation that substantially all of our customers will renew their license support contracts upon expiration;

•

our expectation that our hardware business will have lower operating margins as a percentage of revenues than our cloud and license business;

•

our expectation that we will continue to make significant investments in research and development, and our belief that research and development efforts are essential to maintaining our competitive position;

•

our expectation that our international operations will continue to provide a significant portion of our total revenues and expenses;

•

our expectation that the proportion of our cloud services revenues relative to our total revenues will continue to increase;

•

the sufficiency of our sources of funding for working capital, capital expenditures, contractual obligations, acquisitions, dividends, stock repurchases, debt repayments and other matters;

•

our belief that we have adequately provided under U.S. generally accepted accounting principles for outcomes related to our tax audits, that the final outcome of our tax-related examinations, agreements or judicial proceedings will not have a material effect on our results of operations, and that our net deferred tax assets will likely be realized in the foreseeable future;

•

our belief that the outcome of certain legal proceedings and claims to which we are a party will not, individually or in the aggregate, result in losses that are materially in excess of amounts already recognized, if any;

•

the possibility that certain legal proceedings to which we are a party could have a material impact on our financial position or results of operations;

•

the timing and amount of expenses we expect to incur;

•

the cost savings we expect to realize pursuant to our Fiscal 2024 Oracle Restructuring Plan;

•

declarations of future cash dividend payments and the timing and amount of future stock repurchases, including our expectation that the levels of our future stock repurchase activity may be modified in comparison to past periods in order to use available cash for other purposes;

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•

our ability to predict revenues, particularly certain cloud license and on-premise license revenues and hardware revenues;

•

the percentages of remaining performance obligations that we expect to recognize as revenues over respective future periods;

as well as other statements regarding our future operations, financial condition and prospects, and business strategies. Forward-looking statements may be preceded by, followed by or include the words “anticipates,” “believes,” “endeavors,” “estimates,” “expects,” “intends,” “is designed to,” “plans,” “seeks,” “should,” “strives,” “will” and similar expressions. We claim the protection of the safe harbor for forward-looking statements contained in the Exchange Act and the Securities Act for all forward-looking statements. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to risks, uncertainties and assumptions about our business that could affect our future results and could cause those results or other outcomes to differ materially from those expressed or implied in the forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in “Risk Factors” included in documents we file from time to time with the U.S. Securities and Exchange Commission, including our Annual Report on Form 10-K for the fiscal year ended May 31, 2023 and our other Quarterly Reports on Form 10-Q to be filed by us in our fiscal 2024, which runs from June 1, 2023 to May 31, 2024.

We have no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or risks, except to the extent required by applicable securities laws. If we do update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements. New information, future events or risks could cause the forward-looking events we discuss in this Quarterly Report not to occur. You should not place undue reliance on these forward-looking statements, which reflect our expectations only as of the date of this Quarterly Report.

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

ORACLE CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

As of August 31, 2023 and May 31, 2023

(Unaudited)


(in millions, except per share data)	August 31, 2023			May 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	11,613		$	9,765
Marketable securities		470			422
Trade receivables, net of allowances for credit losses of $445 and $428 as of August 31, 2023 and May 31, 2023, respectively		6,519			6,915
Prepaid expenses and other current assets		3,564			3,902
Total current assets		22,166			21,004
Non-current assets:
Property, plant and equipment, net		17,644			17,069
Intangible assets, net		9,074			9,837
Goodwill, net		62,206			62,261
Deferred tax assets		12,243			12,226
Other non-current assets		13,329			11,987
Total non-current assets		114,496			113,380
Total assets	$	136,662		$	134,384
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Notes payable and other borrowings, current	$	4,499		$	4,061
Accounts payable		1,034			1,204
Accrued compensation and related benefits		1,818			2,053
Deferred revenues		11,120			8,970
Other current liabilities		6,886			6,802
Total current liabilities		25,357			23,090
Non-current liabilities:
Notes payable and other borrowings, non-current		84,442			86,420
Income taxes payable		11,201			11,077
Deferred tax liabilities		5,281			5,772
Other non-current liabilities		7,540			6,469
Total non-current liabilities		108,464			109,738
Commitments and contingencies
Oracle Corporation stockholders’ equity:
Preferred stock, $0.01 par value—authorized: 1.0 shares; outstanding: none		—			—
Common stock, $0.01 par value and additional paid in capital—authorized: 11,000 shares; outstanding: 2,739 shares and 2,713 shares as of August 31, 2023 and May 31, 2023, respectively		30,295			30,215
Accumulated deficit		(26,428	)		(27,620	)
Accumulated other comprehensive loss		(1,497	)		(1,522	)
Total Oracle Corporation stockholders’ equity		2,370			1,073
Noncontrolling interests		471			483
Total stockholders’ equity		2,841			1,556
Total liabilities and stockholders’ equity	$	136,662		$	134,384

See notes to condensed consolidated financial statements.

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ORACLE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three Months Ended August 31, 2023 and 2022

(Unaudited)


	Three Months Ended August 31,
(in millions, except per share data)	2023			2022
Revenues:
Cloud services and license support	$	9,547		$	8,417
Cloud license and on-premise license		809			904
Hardware		714			763
Services		1,383			1,361
Total revenues		12,453			11,445
Operating expenses:
Cloud services and license support(1)		2,179			1,735
Hardware(1)		219			249
Services(1)		1,212			1,053
Sales and marketing(1)		2,026			2,177
Research and development		2,216			2,093
General and administrative		393			411
Amortization of intangible assets		763			919
Acquisition related and other		11			41
Restructuring		138			144
Total operating expenses		9,157			8,822
Operating income		3,296			2,623
Interest expense		(872	)		(787	)
Non-operating expenses, net		(49	)		(180	)
Income before income taxes		2,375			1,656
Benefit from (provision for) income taxes		45			(108	)
Net income	$	2,420		$	1,548
Earnings per share:
Basic	$	0.89		$	0.58
Diluted	$	0.86		$	0.56
Weighted average common shares outstanding:
Basic		2,728			2,685
Diluted		2,823			2,747

(1)

Exclusive of amortization of intangible assets, which is shown separately.

See notes to condensed consolidated financial statements.

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ORACLE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the Three Months Ended August 31, 2023 and 2022

(Unaudited)


	Three Months Ended August 31,
(in millions)	2023			2022
Net income	$	2,420		$	1,548
Other comprehensive income (loss), net of tax:
Net foreign currency translation losses		(44	)		(288	)
Net unrealized gains on cash flow hedges		72			17
Other, net		(3	)		(1	)
Total other comprehensive income (loss), net		25			(272	)
Comprehensive income	$	2,445		$	1,276

See notes to condensed consolidated financial statements.

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ORACLE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

For the Three Months Ended August 31, 2023 and 2022

(Unaudited)


	Three Months Ended August 31,
(in millions, except per share data)	2023			2022
Common stock and additional paid in capital
Balance, beginning of period	$	30,215		$	26,808
Common stock issued		308			515
Stock-based compensation		849			750
Repurchases of common stock		(13	)		(73	)
Shares repurchased for tax withholdings upon vesting of restricted stock-based awards		(1,060	)		(829	)
Other, net		(4	)		53
Balance, end of period	$	30,295		$	27,224
Accumulated deficit
Balance, beginning of period	$	(27,620	)	$	(31,336	)
Repurchases of common stock		(137	)		(486	)
Cash dividends declared		(1,091	)		(860	)
Net income		2,420			1,548
Balance, end of period	$	(26,428	)	$	(31,134	)
Other stockholders’ equity (deficit), net
Balance, beginning of period	$	(1,039	)	$	(1,240	)
Other comprehensive income (loss), net		25			(272	)
Other, net		(12	)		(27	)
Balance, end of period	$	(1,026	)	$	(1,539	)
Total stockholders’ equity (deficit)	$	2,841		$	(5,449	)
Cash dividends declared per common share	$	0.40		$	0.32

See notes to condensed consolidated financial statements.

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ORACLE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Months Ended August 31, 2023 and 2022

(Unaudited)


	Three Months Ended August 31,
(in millions)	2023			2022
Cash flows from operating activities:
Net income	$	2,420		$	1,548
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		712			547
Amortization of intangible assets		763			919
Deferred income taxes		(517	)		(344	)
Stock-based compensation		849			750
Other, net		169			156
Changes in operating assets and liabilities, net of effects from acquisitions:
Decrease in trade receivables, net		380			761
Decrease in prepaid expenses and other assets		269			44
Decrease in accounts payable and other liabilities		(457	)		(166	)
Increase in income taxes payable		69			145
Increase in deferred revenues		2,317			2,034
Net cash provided by operating activities		6,974			6,394
Cash flows from investing activities:
Purchases of marketable securities and other investments		(333	)		(57	)
Proceeds from sales and maturities of marketable securities and other investments		85			138
Acquisitions, net of cash acquired		—			(27,798	)
Capital expenditures		(1,314	)		(1,719	)
Net cash used for investing activities		(1,562	)		(29,436	)
Cash flows from financing activities:
Payments for repurchases of common stock		(150	)		(552	)
Proceeds from issuances of common stock		308			515
Shares repurchased for tax withholdings upon vesting of restricted stock-based awards		(1,060	)		(829	)
Payments of dividends to stockholders		(1,091	)		(860	)
Repayments of commercial paper		(562	)		—
Proceeds from issuances of senior notes and other borrowings, net of issuance costs		—			20,046
Repayments of senior notes and other borrowings		(1,000	)		(5,883	)
Other, net		27			(127	)
Net cash (used for) provided by financing activities		(3,528	)		12,310
Effect of exchange rate changes on cash and cash equivalents		(36	)		(203	)
Net increase (decrease) in cash and cash equivalents		1,848			(10,935	)
Cash and cash equivalents at beginning of period		9,765			21,383
Cash and cash equivalents at end of period	$	11,613		$	10,448
Non-cash financing activities:
Fair values of stock awards assumed in connection with acquisitions	$	—		$	55

See notes to condensed consolidated financial statements.

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ORACLE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2023

(Unaudited)

BASIS OF PRESENTATION AND OTHER

Basis of Presentation

We have prepared the condensed consolidated financial statements included herein pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP) have been condensed or omitted pursuant to such rules and regulations. However, we believe that the disclosures herein are adequate to ensure the information presented is not misleading. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended May 31, 2023.

We believe that all necessary adjustments, which consisted only of normal recurring items, have been included in the accompanying financial statements to present fairly the results of the interim periods. The results of operations for the interim periods presented are not necessarily indicative of the operating results to be expected for any subsequent interim period or for the fiscal year ending May 31, 2024.

During the first quarter of fiscal 2024, we finalized our adoption of Accounting Standards Update 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting and subsequent amendments to the initial guidance (collectively, Topic 848), which had no material impact to our current or historical condensed consolidated financial statements. There have been no changes to our significant accounting policies as disclosed in our Annual Report on Form 10-K for the fiscal year ended May 31, 2023 that had a significant impact on our condensed consolidated financial statements or notes thereto as of and for the three months ended August 31, 2023.

Cash, Cash Equivalents and Restricted Cash

Restricted cash that was included within cash and cash equivalents as presented within our condensed consolidated balance sheets as of August 31, 2023 and May 31, 2023 and our condensed consolidated statements of cash flows for the three months ended August 31, 2023 and 2022 was nominal.

Remaining Performance Obligations from Contracts with Customers

Trade receivables, net of allowance for credit losses, and deferred revenues are reported net of related uncollected deferred revenues in our condensed consolidated balance sheets as of August 31, 2023 and May 31, 2023. The revenues recognized during the three months ended August 31, 2023 and 2022, respectively, that were included in the opening deferred revenues balances as of May 31, 2023 and 2022, respectively, were approximately $3.9 billion and $3.5 billion, respectively. Revenues recognized from performance obligations satisfied in prior periods and impairment losses recognized on our receivables were immaterial in each of the three months ended August 31, 2023 and 2022.

Remaining performance obligations, as defined in Note 1 of Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended May 31, 2023, were $64.9 billion as of August 31, 2023, approximately 49% of which we expect to recognize as revenues over the next twelve months, 35% over the subsequent month 13 to month 36 and the remainder thereafter.

Sales of Financing Receivables

We offer certain of our customers the option to acquire certain of our cloud and license, hardware and services offerings through separate long-term payment contracts. We generally sell these contracts that we have financed for our customers on a non-recourse basis to financial institutions within 90 days of the contracts’ dates of execution. We record the transfers of amounts due from customers to financial institutions as sales of financing receivables

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ORACLE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

August 31, 2023

(Unaudited)

because we are considered to have surrendered control of these financing receivables. Financing receivables sold to financial institutions were $561 million and $927 million for the three months ended August 31, 2023 and 2022, respectively.

Non-Marketable Investments

Our non-marketable debt investments and equity securities and related instruments totaled $1.7 billion and $1.6 billion as of August 31, 2023 and May 31, 2023, respectively, and are included in other non-current assets in the accompanying condensed consolidated balance sheets and are subject to periodic impairment reviews. Certain of these non-marketable equity securities and related instruments are adjusted for observable price changes from orderly transactions. The majority of the non-marketable investments held as of these dates were with a related party entity for which we follow the equity method of accounting. We are also a counterparty to certain options to acquire additional equity interests in that entity at various times through June 2025 and we could obtain control of that entity should such options be exercised.

Acquisition Related and Other Expenses

Acquisition related and other expenses primarily consist of personnel related costs for transitional and certain other employees, certain business combination adjustments, including adjustments after the measurement period has ended, and certain other operating items, net.


	Three Months Ended August 31,
(in millions)	2023		2022
Transitional and other employee related costs	$	6	$	17
Business combination adjustments, net		1		5
Other, net		4		19
Total acquisition related and other expenses	$	11	$	41

Non-Operating Expenses, net

Non-operating expenses, net consists primarily of interest income, net foreign currency exchange losses, the noncontrolling interests in the net profits of our majority-owned subsidiaries (primarily Oracle Financial Services Software Limited and Oracle Corporation Japan), net losses related to equity investments, including losses attributable to equity method investments and net other income and expenses, including net unrealized gains and losses from our investment portfolio related to our deferred compensation plan and non-service net periodic pension income and losses.


	Three Months Ended August 31,
(in millions)	2023			2022
Interest income	$	136		$	38
Foreign currency losses, net		(82	)		(71	)
Noncontrolling interests in income		(37	)		(38	)
Losses from equity investments, net		(118	)		(86	)
Other income (expenses), net		52			(23	)
Total non-operating expenses, net	$	(49	)	$	(180	)

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ORACLE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

August 31, 2023

(Unaudited)

ACQUISITIONS

Fiscal 2023 Acquisition of Cerner Corporation

On June 8, 2022, we completed our acquisition of Cerner Corporation (Cerner), a provider of digital information systems used within hospitals and health systems that are designed to enable medical professionals to deliver better healthcare to individual patients and communities.

The total purchase price for Cerner was $28.2 billion, which consisted of $28.2 billion in cash and $55 million for the fair values of restricted stock-based awards and stock options assumed. In allocating the purchase price based on estimated fair values, we recorded approximately $18.6 billion of goodwill, $12.0 billion of identifiable intangible assets and $2.4 billion of net tangible liabilities. See Note 2 of Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended May 31, 2023 for additional information regarding our acquisition of Cerner.

Other Fiscal 2023 Acquisitions

During fiscal 2023, we acquired certain other companies and purchased certain technology and development assets primarily to expand our products and services offerings. These acquisitions were not significant individually or in the aggregate to our consolidated financial statements.

FAIR VALUE MEASUREMENTS

We perform fair value measurements in accordance with FASB Accounting Standards Codification (ASC) 820, Fair Value Measurement. ASC 820 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at their fair values, we consider the principal or most advantageous market in which we would transact and consider assumptions that market participants would use when pricing the assets or liabilities, such as inherent risk, transfer restrictions and risk of nonperformance.

ASC 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. An asset’s or a liability’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 establishes three levels of inputs that may be used to measure fair value:

•

Level 1: quoted prices in active markets for identical assets or liabilities;

•

Level 2: inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; or

•

Level 3: unobservable inputs that are supported by little or no market activity and that are significant to the fair values of the assets or liabilities.

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ORACLE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

August 31, 2023

(Unaudited)

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Our assets and liabilities measured at fair value on a recurring basis consisted of the following (Level 1 and Level 2 inputs are defined above):


	August 31, 2023						May 31, 2023
	Fair Value Measurements Using Input Types						Fair Value Measurements Using Input Types
(in millions)	Level 1		Level 2		Total		Level 1		Level 2		Total
Assets:
Money market funds	$	3,489	$	—	$	3,489	$	1,694	$	—	$	1,694
Time deposits and other		160		493		653		180		288		468
Derivative financial instruments		—		174		174		—		102		102
Total assets	$	3,649	$	667	$	4,316	$	1,874	$	390	$	2,264
Liabilities:
Derivative financial instruments	$	—	$	112	$	112	$	—	$	126	$	126

Our cash equivalents and marketable securities investments consist of money market funds, time deposits, marketable equity securities and certain other securities. Marketable securities as presented per our condensed consolidated balance sheets included debt securities with original maturities at the time of purchase greater than three months and the remainder of the debt securities were included in cash and cash equivalents. We classify our marketable debt securities as available-for-sale debt securities at the time of purchase and reevaluate such classification as of each balance sheet date. As of August 31, 2023 and May 31, 2023, all of our marketable debt securities investments mature within one year. Our valuation techniques used to measure the fair values of our instruments that were classified as Level 1 in the table above were derived from quoted market prices and active markets for these instruments that exist. Our valuation techniques used to measure the fair values of Level 2 instruments listed in the table above were derived from the following: non-binding market consensus prices that were corroborated by observable market data, quoted market prices for similar instruments, or pricing models, such as discounted cash flow techniques, with all significant inputs derived from or corroborated by observable market data including reference rate yield curves, among others.

Based on the trading prices of the $88.9 billion and $89.9 billion of senior notes and other long-term borrowings and the related fair value hedges that we had outstanding as of August 31, 2023 and May 31, 2023, respectively, the estimated fair values of the senior notes and other long-term borrowings and the related fair value hedges using Level 2 inputs at August 31, 2023 and May 31, 2023 were $78.7 billion and $79.9 billion, respectively.

INTANGIBLE ASSETS AND GOODWILL

The changes in intangible assets for fiscal 2024 and the net book value of intangible assets as of August 31, 2023 and May 31, 2023 were as follows:


	Intangible Assets, Gross						Accumulated Amortization									Intangible Assets, Net
(in millions)	May 31, 2023		Additions & Adjustments, net		August 31, 2023		May 31, 2023			Expense			August 31, 2023			May 31, 2023		August 31, 2023
Developed technology	$	4,300	$	—	$	4,300	$	(2,407	)	$	(168	)	$	(2,575	)	$	1,893	$	1,725
Cloud services and license support agreements and related relationships		9,456		—		9,456		(5,579	)		(269	)		(5,848	)		3,877		3,608
Cloud license and on-premise license agreements and related relationships		2,688		—		2,688		(697	)		(116	)		(813	)		1,991		1,875