Oracle Inflates Operating Income $131 Million With Accounting Change

IT firm slows depreciation expense for certain technology assets to lift plunging operating margin.

September 15, 2022

In its latest quarterly filing Oracle (ORCL), a legacy IT firm, increased the useful life estimate for its servers from four to five years. The new treatment slowed the company’s depreciation expense, lifting quarterly operating income by $131 million, or 4.9%.

The accounting change softened the plunge in operating margin— which declined 1,200 basis points to 23% YoY.

Oracle isn’t alone in extending the useful lives of its assets to lift margins. As we’ve noted recently, companies like Meta (FB), Microsoft (MSFT), Google (GOOGL), and UPS (UPS) are using similar accounting changes to add billions of dollars to reported earnings.

Related: CLDR, BASE, POND, CSCO, IBM, MSFT, AMZN, GOOGL, DOMO, MDB

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