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5,900 | ORCL | 4 | 2,024 | 2024-06-11 17:00:00 | Oracle Corporation | 22,247 | Larry Ellison: Okay. All right. Well, we are building a very, very large data center, very big about half of a huge data center. We're building for them lots of NVIDIA chips, the new NVIDIA chips, the new NVIDIA interconnect, liquid cooled and they are primarily for training. I mean not inference things. It's we're doing masses and masses of training. And I don't know, that's what we're doing and the training goes beyond languages because now these systems are -- even the call -- even though they are called large language models, they really -- part of the proper name is probably neural networks, they're neural networks, and they're trained not just with language, but masses of images as well. For example, Oracle is very involved with taking biopsy slides and using microscopes to read biopsy slides, recording those images and then using AI to diagnose cancer from these biopsies. It is one of the projects we're working on the medical side of our business. And these large language models, strangely enough, are also looking at biopsies. They're not just reading things language. They are also looking at images and interpreting images. So that is actually a bigger and more complicated problem than understanding language. That's what's so exciting about -- again second time I mentioned Elon and Elon company. Tesla is very close to getting full service driving authorized in China. I'm not speaking at it at school. I think the Chinese government is moving along the full self-driving, self-driving in China. In order to train a car to do full self-driving, you trained on vast amounts of images because the car has to look at these images and then decide what it's going to do next. That's what it does. It doesn't speak, it responds to what it sees. That's a very different problem than answering a question posed in any language. So everyone is going to be training their models on imaging. That's a huge amount of additional data. It is a huge amount of additional training, and we are right in the middle of it. |
5,901 | ORCL | 4 | 2,024 | 2024-06-11 17:00:00 | Oracle Corporation | 22,247 | Kirk Materne: Thank you.
Operator: Your final question today comes from John DiFucci with Guggenheim Securities. Please go ahead.
John DiFucci: Thank you for taking my question. My question, I think, is for Safra. Safra, the IaaS revenue growth has been really impressive and it has been for a while here, but perhaps even more so the last couple of quarters, especially is the backlog given its scale. And this may be somewhat of an obvious question for you, but it's based on my conversation with investors. There's two high-profile topics that I want to make sure we understand what the contribution has been today versus next year. And that's Oracle database at Azure and AI in general. We've heard a lot of conversation about the former when we speak to partners and customers in the field. And you've spoken a lot about the latter today. So beyond conversation volume, can you talk a little bit more about what the contribution of these two topics has been to that impressive IaaS revenue growth in this quarter versus what we should expect that contribution to be in fiscal 2025. |
5,902 | ORCL | 4 | 2,024 | 2024-06-11 17:00:00 | Oracle Corporation | 22,247 | Safra Catz: Okay. I would tell you that both of them, both whether it's database at Azure or even the AI workloads as they come on board, they are all incremental to anything you saw so far in our revenues, okay? The database at Azure, those centers are just going live now. So even though we are selling quite a bit of ARR there, these are small and growing very, very fast. So the revenue in Q4 of, let's say, Azure was very small. Q1 will be 10 times as much. Q2 will be potentially 30 times as much. So it is extremely incremental to our current run rate. By the way, that is also true to -- we've already -- we have revenue -- AI revenue so far. Yes, we do, and we've been announcing those. These contracts that we are signing -- that we've signed at the end of Q3 and that are signed at the end of Q4 are so much larger in size that they will be incremental to everything you saw this past year, literally incremental added by quite a bit. So it is going to be -- this is a very exciting time, obviously. And everything is incremental to what you've seen so far because it dwarfed it in many ways.
John DiFucci: That is really clear, and it really speaks to, I think, what you started talking about a long time ago, especially a lot more publicly, I don't know in the fall of 2022, but thanks. That's really clear.
Ken Bond : Thank you, John. A telephonic replay of this conference call will be available for 24 hours on the Investor Relations website. Thank you for joining us today. And with that, I'll turn the call back to Krista for closing.
Operator: Ladies and gentlemen this does conclude today's conference call. Thank you for your participation and you may now disconnect. |
5,903 | ORCL | 3 | 2,024 | 2024-03-11 19:45:00 | Oracle Corporation | 22,247 | Operator: Good afternoon. My name is Krista, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Oracle Corporation Third Quarter Fiscal Year 2024 Earnings Conference Call. [Operator Instructions] Thank you. I would now like to turn the conference over to Ken Bond, Senior Vice President, Investor Relations. Mr. Bond, you may begin your conference. |
5,904 | ORCL | 3 | 2,024 | 2024-03-11 19:45:00 | Oracle Corporation | 22,247 | Ken Bond: Thank you, Krista. Good afternoon, everyone, and welcome to Oracle's third quarter fiscal year 2024 earnings conference call. A copy of the press release and financial tables, which includes a GAAP to non-GAAP reconciliation and other supplemental financial information can be viewed and downloaded from our investor relations website. Additionally, a list of many customers who purchased Oracle Cloud Services or went live on Oracle Cloud recently will be available from our Investor Relations website. On the call today, our Chairman and Chief Technology Officer, Larry Ellison; and Chief Executive Officer, Safra Catz. As a reminder, today's discussion will include forward-looking statements, including predictions, expectations, estimates, or other information that might be considered forward-looking. Throughout today's discussion, we will provide some important factors relating to our business, which may potentially affect these forward-looking statements. These forward-looking statements are also subject to risks and uncertainties that may cause actual results to differ materially from statements being made today. As a result, we caution you against placing undue reliance on these forward-looking statements and we encourage you to review our most recent reports including our 10-K and 10-Q and any applicable amendments for a complete discussion of these factors and other risks, which may affect our future results or the market price of our stock. And finally, we are not obligating ourselves to revise our results or these forward-looking statements in light of new information or future events. Before taking questions, we'll begin with a few prepared remarks. And with that, I'd like to turn the call over to Safra. |
5,905 | ORCL | 3 | 2,024 | 2024-03-11 19:45:00 | Oracle Corporation | 22,247 | Safra Catz: Thanks, Ken, and good afternoon, everyone. We had another excellent quarter with third-quarter revenue coming in as expected and EPS $0.02 above the high end of my guidance range. Now, before I get into the results of the quarter I wanted to touch on the strength of our infrastructure cloud business. OCI has emerged as the largest driver of our overall revenue acceleration growing much, much faster than our cloud competitors. Customers have figured out that by moving to OCI they can really get more while paying less, but it's not just the cost that matters to our customers. Beyond the superior price performance of OCI customers are choosing Oracle and Oracle services for multiple reasons. First, we know better than anyone what it takes to run the full stack of technology that goes into mission-critical workloads. I'm talking about running at enterprise scale with comprehensive security and unparalleled support and that's from decades of experience running the world's most important workloads and optimizing clustering technology, which is critical to artificial intelligence, workloads, and database services. Secondly, our AI capabilities are unique as they're built-in to help customers drive business outcomes. This is more than integrating generative AI across our Fusion and Industry Cloud applications and autonomous database, which we have done. It's also about enabling and refining these AI models with the customer's own data to better understand and serve their operations without them losing control of their own data. Third, we provide deployment flexibility for customers based on how they want to run in the cloud. In addition to offering public cloud services, we remain the only vendor which also offers a dedicated and complete cloud of customer, dedicated regions, sovereign clouds, and Alloy, our partner cloud so customers don't have to compromise the services they receive while meeting their deployment needs. And finally, we provide multi-cloud offerings so customers can consume our cloud |
5,906 | ORCL | 3 | 2,024 | 2024-03-11 19:45:00 | Oracle Corporation | 22,247 | receive while meeting their deployment needs. And finally, we provide multi-cloud offerings so customers can consume our cloud services in the public cloud of their choice. We offer Oracle database at Azure with Microsoft as well as MySQL HeatWave through multiple clouds and you can expect more multi-cloud services to come. Now to Q3 results, which I'd like to point out I had the actual results on day five and signed off with my auditors days ago. So I'm just bragging a little bit but I couldn't help it, I know a lot of CFOs are pretty jealous. As I mentioned earlier, total revenue came in at the midpoint of my constant-currency guidance and EPS was above the high-end of guidance. As was the case when I gave guidance last quarter, currency had little effects in Q3. But I'll still discuss our results using constant currency growth rates in the few areas that the rates are slightly different. So here we go. Cloud revenue that's SaaS and IaaS excluding Cerner was $4.4 billion, up 26%. Including Cerner, total cloud revenue was up 24% at $5.1 billion with IaaS revenue of $1.8 billion, up 49%, and SaaS revenue of $3.3 billion, up 14%. This quarter marks the first time our total cloud revenue is more than our total license support revenue. So we have crossed over total cloud services and license support revenue for the quarter with $10 billion, up 11% driven again by our Strategic Cloud Applications, Autonomous Database, and OCI. Application subscription revenues, which includes product support were $4.6 billion and up 10%. Our strategic back-office SaaS applications now have an annualized revenue of $7.4 billion and were up 18%. Infrastructure revenues which includes license support were $5.4 billion and up 13%. Infrastructure cloud services revenue was up 49%. Excluding Legacy Hosting Services, OCI Gen2 infrastructure cloud services revenue grew 52% with an annualized revenue of $6.7 billion. OCI consumption revenue was up 63%. Where if not for some continuing supply constraints, consumption growth would have been |
5,907 | ORCL | 3 | 2,024 | 2024-03-11 19:45:00 | Oracle Corporation | 22,247 | OCI consumption revenue was up 63%. Where if not for some continuing supply constraints, consumption growth would have been even higher. Database subscription revenues, which include database license support were up 5%. And highlighted by cloud database services, which were up 34% and now has annualized revenue of $1.9 billion. Very importantly, has on-premise databases migrate to the cloud, we expect these cloud database services will be the third leg of revenue growth alongside strategic SaaS and OCI. Software license revenues were $1.3 billion, down 3%. So all in, total revenues for the quarter was $13.3 billion, up 7% including Cerner and up 9% excluding Cerner. Now to margins, the gross margins for Cloud Services and License Support was 77%. This is as before a result of the mix between support and cloud in which cloud is growing much faster than support. Support and SaaS gross margin percentages are consistent with last year while IaaS gross margins improved substantially year-over-year. While we continue to build data center capacity, overall gross margins will go higher as more of our cloud regions fill up. We monitor these expenses carefully to ensure gross margin percentages expand as we scale. And to that point, gross profit dollars of Cloud Services and License Support grew 8% in Q3. Non-GAAP operating income was $5.8 billion, up 12% from last year. Operating margin was 44%, up from 42% last year as we continue to drive more efficiencies in our operating expenses, which continue to trend down as a percentage of revenue. Looking forward, as we continue to benefit from economies of scale in the cloud and drive Cerner profitability to Oracle standards, we will not only continue to grow operating income but we will also expand the operating margin percentages. The non-GAAP tax rate for the quarter was very close to my guidance at 18.9%, and non-GAAP EPS was $1.41 in USD, up 16% in both USD and constant currency. GAAP EPS was $0.85. At quarter-end, we had nearly $9.9 billion in cash and marketable |
5,908 | ORCL | 3 | 2,024 | 2024-03-11 19:45:00 | Oracle Corporation | 22,247 | up 16% in both USD and constant currency. GAAP EPS was $0.85. At quarter-end, we had nearly $9.9 billion in cash and marketable securities. And short term deferred revenue balance was $8.9 billion, up 4%. Over the last four quarters, operating cash flow was $18.2 billion, up 18% and free cash flow was $12.3 billion, up 68%. Capital expenditures were $6 billion over the same time period as we continue to see cash-flow benefits from our cloud transformation. Our remaining performance obligation or RPO is now over $8 billion with the portion excluding Cerner up 41% in constant currency. We signed several large deals this quarter and we have many more in the pipeline. Approximately 43% of our total RPO is expected to be recognized as revenue over the next 12 months. And this reflects the growing trend of customers wanting larger contracts as they see first-hand how Oracle Cloud Services are benefiting their businesses. And we expect to have some very nice joint announcements with NVIDIA next week. Now while we spent $2.1 billion on CapEx this quarter, the $1.7 billion in the cash-flow statements is slightly lower just due to the timing of payments. So the $2.1 billion is actually what we spent and will pay for. We are working as quickly as we can to get the cloud capacity built out given the enormity of our backlog and pipeline. I expect the CapEx will be somewhere around $7 billion to $7.5 billion this fiscal year, meaning our Q4 CapEx should be considerably higher. To that point, we now have 68 customer-facing cloud regions live with 47 public cloud regions around the world and another eight being built. 12 of these public-cloud regions interconnect with Azure and more locations with Microsoft are coming online soon. We also have 11 dedicated region slots and 13 more planned. Several national security regions in EU sovereign regions live with increasing demand for more of each. And finally, we already have two Alloy cloud regions live with five more planned where Oracle Partners become cloud providers offering |
5,909 | ORCL | 3 | 2,024 | 2024-03-11 19:45:00 | Oracle Corporation | 22,247 | we already have two Alloy cloud regions live with five more planned where Oracle Partners become cloud providers offering customized cloud services alongside Oracle Cloud. And of course, we have also many, many, many clouded customer installations. As I mentioned earlier the sizing, flexibility, and deployment optionality of our cloud regions continues to be incredible advantage for us in the marketplace. And as we've said before, we're committed to returning value to our shareholders through technical innovation, acquisitions, stock repurchases, prudent use of debt, and a dividend. And this quarter, we repurchased 4 million shares for a total of $450 million. In addition, we paid out dividends of $4.4 billion over the last 12 months. And the Board of Directors declared a quarterly dividend of $0.40 per share today. Now, before I dive into Q4 guidance, I'd like to share some thoughts on what I see for the next 12 months or so. As demand for our Cloud Services continues getting stronger, our pipeline is growing even faster and our win rates are going higher as well. As our supply constraints ease revenue growth rates will accelerate higher as our capacity expands and we get into fiscal year '25. I should also say that we continue to expect the FY '24 of which we are now in the fourth quarter, total revenue excluding Cerner will accelerate from last year as it has for the past three years and will likely be significantly higher in FY '25. In addition, Cerner, which is a significant headwind this year, we expect to return to growth next year. And final - and I remain firmly committed to our FY '26 financial goals for revenue, operating margin, and EPS growth. However, some of these goals might prove to be too conservative given our momentum. Let me now turn to my guidance for Q4, which I'll review on a non-GAAP basis as always. And if currency exchange rates remain the same as they are now, currency should have little effect on total revenue and EPS. However, of course, actual currency impact may be different. So, |
5,910 | ORCL | 3 | 2,024 | 2024-03-11 19:45:00 | Oracle Corporation | 22,247 | currency should have little effect on total revenue and EPS. However, of course, actual currency impact may be different. So, at least right now, all the numbers are the same for constant currency and USD. Total revenues including Cerner are expected to grow from 4% to 6%. Total revenue excluding Cerner are expected to grow 6% to 8%. The total cloud revenue excluding Cerner is expected to grow from 22% to 24% as more capacity comes online in Q4. The EPS growth rate will be affected by the compare as our Q4 tax rate last year was 9.2%, which I believe most of you have already accounted for in your models. And my EPS guidance for Q4 assumes a base tax rate of 19%. As always, one-time tax events could cause actual tax rates to vary from my guidance as stated last year. So with that, non-GAAP EPS is expected to be down 2% or to flat and be between a $1.62 and $1.66. And with that, I'll turn it over to Larry for his comments. |
5,911 | ORCL | 3 | 2,024 | 2024-03-11 19:45:00 | Oracle Corporation | 22,247 | Larry Ellison: Thank you, Safra. Well, Oracle signed another big Generation 2 cloud infrastructure contract with NVIDIA in Q3. Oracle's Gen2 AI infrastructure business is booming. That's become pretty clear to everybody. But in addition to selling infrastructure for training AI large language models, Oracle is also completely re-engineering its industry-specific applications to take full advantage of generative Artificial Intelligence. The best example of this is in Healthcare where Oracle did not just add a bit of AI around the edges of the existing applications. Instead, we developed completely new applications using our Apex Application Generator and our Autonomous Database. These all new applications use generative AI throughout the application. The best example is in Healthcare where our new Ambulatory Clinic System is being delivered to customers this Q4. This completely new application features a voice interface called the Clinical Digital Assistant. The Clinical Digital Assistant listens to a doctor's consultations with a patient and automatically generates prescriptions, Doctor's orders, doctor's notes, then automatically updates the patient's electronic health records. The Clinical Digital Assistant's voice interface makes our new healthcare systems dramatically easier to use and saves hours of doctors precious time every day which now can be spent with patients rather than typing into a computer. The delivery of our new AI-centric healthcare cloud applications, including the Ambulatory Clinic System, the Clinical Digital Assistant, and the Health Data Intelligence System will enable the rapid modernization of our customers' healthcare systems and transform Oracle Health and Cerner into a high-growth business for years to come. Ken, back to you.
Safra Catz: We don't hear you, Ken.
Ken Bond: Thank you. Thank you, Larry. Sorry about that. Krista, if you could please poll the audience for questions and if we can proceed from there? Thank you. |
5,912 | ORCL | 3 | 2,024 | 2024-03-11 19:45:00 | Oracle Corporation | 22,247 | Operator: [Operator Instructions] Your first question comes from the line of John DiFucci from Guggenheim Securities. Please go ahead.
John DiFucci: Thank you. Safra, the infrastructure as a service growth of 49% implies a herculean increase in new business coming online, new ARR the way we model it anyway something I just thought you wouldn't be able to do this quarter given how much you had to do though we've realized we don't know the timing of when deals come online. But last quarter you said you were going to reallocate resources to focus on some of these very large OCI deals to get them implemented earlier so you start to get revenue earlier. Is that what happened this quarter? Is that what we're seeing or is that still to come?
Safra Catz: Honestly, John, that is still to come. So, this is just pretty much our regular way business. That's what you're seeing. We have enormous amounts of demand. I tried to make that clear last quarter, and we have more capacity coming online. But we have tried to - we're trying to focus on much larger chunks of data center capacities and electricity and all of that and that's just - that all to come. This is really our regular way business and our customers just growing and a whole bunch of new customers, by the way. I think there are many, many customers who have come on and that haven't gotten capacity yet. We've got at least 40 new AI bookings that are over $1 billion that hasn't come online yet. |
5,913 | ORCL | 3 | 2,024 | 2024-03-11 19:45:00 | Oracle Corporation | 22,247 | Larry Ellison: Okay, let me add that Oracle has been building data centers at a record level and a lot of people I think are aware that we can build fairly small data centers to get started when we want to. But the unique thing about Oracle's data centers, they're all identical except for scale. We did not have custom data center. They all have all the Oracle services. They are all complete. One of the things that's unusual about them, they are all completely automated. They come up on their own and they kind of run their selves. I mean, look, we do have a bunch of people working on these data centers but they are extremely highly automated. Our operating system is Autonomous Linux. Our database is the Oracle Autonomous Database. Our new HeatWave database, Microsoft - MySQL HeatWave, it's highly automated. And therefore, we can build every time we build a data center, it's like the data center we've built before except for one thing, scale. We can go very small. We can get a full cloud data center with all the services in [10 racks]. But this is what I want to point out. We're also building the largest data centers in the world that we know of. We're building an AI data center in the United States where you could park eight Boeing 747s nose-to-tail in that one data center. So, we are building large numbers of data centers, and we were - and some of those data centers are smallish, but some of those data centers are the largest AI data centers in the world. So, we're bringing on enormous amounts of capacity over the next 24 months because the demand is so high, we need to do that to satisfy our existing set of customers. To give you an idea. One more thing, in terms of data centers we're building 20 data centers from Microsoft and Azure. They just ordered three more data centers this quarter. They're adding to that already. And there are other multi-cloud agreements that are being signed. There are multicloud - a number of multicloud agreements in Japan where computer manufacturers in Japan are adopting our cloud |
5,914 | ORCL | 3 | 2,024 | 2024-03-11 19:45:00 | Oracle Corporation | 22,247 | There are multicloud - a number of multicloud agreements in Japan where computer manufacturers in Japan are adopting our cloud and will be reselling our cloud as partners. And we think NRI is already doing that, but there a number of other companies that are going to be doing that. So that's something we're seeing over demand for data centers or people who want to buy Alloy and then resell our cloud services with their proprietary cloud services on top of it. We're seeing that. So some of our largest customers all over the world want their own Oracle region. They don't want to share a public cloud, they want a cloud region dedicated or actually multiple cloud regions dedicated to that bank or that technology company or that telecom company. So they are building their own data centers which are - those are Oracle cloud data centers, they are that - yes, they're all identical. So we're able to automate and run those with not a lot of additional labor costs. It's a huge advantage for us. |
5,915 | ORCL | 3 | 2,024 | 2024-03-11 19:45:00 | Oracle Corporation | 22,247 | John DiFucci: Well, thank you, Larry, and Safra. Listen, what you put up this quarter in Infrastructure as a Service, it just looks pretty impressive. But it sounds like there's a lot more to come. Thank you for taking my question.
Larry Ellison: John, my last comment will be - would be the growth in RPO is what's to come. And RPO is obviously growing faster than revenue because we can't meet the demand. That's the measure of demand, the $80 billion RPO is quite a - an acceleration of demand. So demand is not slowing down, it's actually increasing quite a bit.
John DiFucci: Well, there were lot of questions on that last quarter, and I guess there won't be any on this one. Thank you.
Ken Bond: Thank you, John. Next question, please.
Operator: Your next question comes from the line of Raimo Lenschow from Barclays. Please go ahead.
Raimo Lenschow: Hi, thank you, and congrats from me as well. I wanted to talk a little bit about Cerner. In the announcements, you talked about that most of Cerner now it's - is running out of your OCI. Well, first of all, let a very quick turnaround here, so well done. What's kind of the implications for that both from running efficiency but also innovation on the platform? Thank you. |
5,916 | ORCL | 3 | 2,024 | 2024-03-11 19:45:00 | Oracle Corporation | 22,247 | Larry Ellison: Well, two things. One is we save a huge amount of money moving them into our standard data center. Our OCI costs are much lower than the cost of the Cerner dedicated data center in Kansas City. Also, the big thing that we're excited about is OCI is highly secure, it's got a highly secure perimeter and therefore those applications are much less vulnerable to ransomware or other kinds of attacks than if they were in a different kind of data center. So we're very happy that these are now secured. The third thing is now that they're in our cloud, we're able to update those applications on our regular three months cadence. So, we're able to modernize those customers that are in the cloud on a regular basis and start delivering our brand new applications that completely rewritten Cerner application. First for ambulatory clinics and then eventually for acute-care hospitals. But ambulatory clinics system is coming out this quarter and we're able to automatically deliver that system to existing customers. It's not a reimplementation. It is literally an update to what they've already got running on the Oracle Cloud. Even though it's an all-new application, I'm not going to see much technical detail, but it uses the same underlying data schema. So, we literally can bring up the new application without the customer having to go through any implementation process. We can do it just as an update, like when we ship a new version of Fusion to an existing Fusion customer. We can now ship a new version of - an all-new version of the Cerner application to a Cerner customer in OCI. So it allows us to modernize their infrastructure very, very rapidly, deliver the Voice - Clinical Digital Assistant, make the system easier to use, save doctor's time, deliver a lot more value put it in the diagnostic imaging systems that help data intelligence system, deliver all of that automatically on a regular three-months cadence. So, it allows us to modernize the Cerner base very, very quickly while keeping them safe from |
5,917 | ORCL | 3 | 2,024 | 2024-03-11 19:45:00 | Oracle Corporation | 22,247 | a regular three-months cadence. So, it allows us to modernize the Cerner base very, very quickly while keeping them safe from ransomware. |
5,918 | ORCL | 3 | 2,024 | 2024-03-11 19:45:00 | Oracle Corporation | 22,247 | Raimo Lenschow: Perfect. Thank you.
Operator: Your next question comes from the line of Ben Reitzes from Melius Research. Please go ahead.
Ben Reitzes: Yes, thanks. It's a pleasure to be speaking with you this afternoon. Larry and Safra, can you talk a little bit about CapEx? Your guidance implies almost doubling of CapEx in the fourth quarter and then what kind of trajectory is needed for the next fiscal year given this RPO growth? What kind of uptick is needed? And Larry, if you don't mind, what - if you can give some color on GPU availability and how that plays in versus data center requirements in terms of that spending? Thanks so much.
Safra Catz: So, for fiscal year '25, looking at about $10 billion in CapEx because it's also involves not only some big centers, but it also involves expansions of existing centers. So we've already got some areas that we will be filling out. So at least preliminarily, we're looking at $10 billion for next year. And then it's not too complicated to figure out the math here when I'm looking at somewhere between $7 billion and $7.5 billion for the full year and you've got all the numbers for one, two, and three at this point. And I would include for Q3 the one we just are announcing. I would add in the amount we haven't paid yet as the CapEx number for this quarter. Okay? And then I guess that would be and then Larry gets the second question. But anyway, so $2.1 billion for this quarter and you've got Q1 and Q2 and I'm going to be somewhere between $7 billion and $7.5 billion for the full year, which is actually a little bit lower than I thought. But we were able to do pretty well. You know-how we spend very carefully.
Ben Reitzes: Great, thanks. And Larry, the amount that - how is the GPU availability in terms of hitting your goals and vis-a-vis other bottlenecks that could be out there?
Safra Catz: Can I take at least part of this?
Ben Reitzes: Oh, yes, sure. |
5,919 | ORCL | 3 | 2,024 | 2024-03-11 19:45:00 | Oracle Corporation | 22,247 | Safra Catz: Can I take at least part of this?
Ben Reitzes: Oh, yes, sure.
Safra Catz: The GPU we are good. We are actually very good in our GPU access and capability. So, building the computers and that it's much more making sure we've got the power on that.
Larry Ellison: Yes.
Ben Reitzes: Thank you.
Larry Ellison: And as Safra says, we have - so, as Safra says, we have a great relationship with NVIDIA. They're a customer of ours as well as us being a customer of theirs and we work very closely together. So, that's going pretty well. Building these let them is the scale of some of these data centers is breathtaking. Again the one we're building in Salt Lake. Again, you can park 8747s nose-to-tail. We can give you a video of this thing under construction, but it's hard, I mean, it's breathtaking. So, there is a tremendous amount of demand, the data centers take longer to build, and we would like that said, we are getting very good at building them quickly and getting the building the power and the communication links in, we're doing faster than we have ever happened in the past. And the thing is once we deliver the hardware, the hardware comes up very, very quickly because the process of bringing up the hardware is now automated. It's very different than it used to be. So, we're able to bring additional capacity online very quickly if we have that the electric power and the communication lines. So, is the long pole in the tent is actually building the structure, connecting the electricity, connecting the communication lines.
Ben Reitzes: Thanks, Larry. Appreciate it. Congrats something OCI growth.
Larry Ellison: Thank you.
Operator: Your next question comes from the line of Derrick Wood from TD Cowen. Please go ahead. |
5,920 | ORCL | 3 | 2,024 | 2024-03-11 19:45:00 | Oracle Corporation | 22,247 | Larry Ellison: Thank you.
Operator: Your next question comes from the line of Derrick Wood from TD Cowen. Please go ahead.
Derrick Wood: Great, thank you. Larry, just within the last few months you guys have enabled Oracle Database and OCI to be run on top of Azure, which seems like a fairly significant development. Can you talk about what the customer reception has been around this announcement? How you think it could change the arc of new investments on the Oracle Database platform? And what this means for potentially unlocking a stronger adoption cycle for Autonomous Database? |
5,921 | ORCL | 3 | 2,024 | 2024-03-11 19:45:00 | Oracle Corporation | 22,247 | Larry Ellison: Well, I think it is the key to unlocking a stronger adoption cycle for a - moving Oracle in general to the cloud in general and specifically the migration to Autonomous Database. Oracle, we expect the multicloud initiatives to continue to expand. We're seeing it expand in Japan, but we expected to expand amongst other hyperscalers to adopt a similar multi-cloud approach where we built and we built OCI regions inside of the coexisting with their existing cloud infrastructure. We think the world - the era of walled gardens is coming to an end where it used to be okay, I'm going to move all my stuff to AWS, trying to move all my stuff to Azure. What customers really want is the ability to use multiple clouds and for those multiple clouds to talk to one another. And I think - I mean in the era of the Internet and now cloud computing, it's really called Cloud Computing. It's not called a bunch of separate clouds. So we expect that multi-cloud to become the norm and Oracle to be available everywhere. And we - and that's what you said, we think that will preserve our franchise and database where we've been the number-one database in the IT ecosystem for a very long-time. We think that's going to preserve that franchise and expand it because the Autonomous Database is a unique piece of technology and there is nothing like it in the world, and maybe the most interesting thing, no one else is working on anything like that. No one else even trying to duplicate the Autonomous Database. So, we think it will be - it will become a very successful product in every cloud.
Derrick Wood: Thanks, Larry.
Operator: Your next question comes from the line of Kirk Materne from Evercore ISI. Please go ahead. |
5,922 | ORCL | 3 | 2,024 | 2024-03-11 19:45:00 | Oracle Corporation | 22,247 | Operator: Your next question comes from the line of Kirk Materne from Evercore ISI. Please go ahead.
Kirk Materne: Yes, thanks very much for taking the questions and congrats on a incredible bookings this quarter. Larry, I was wondering if you could just talk a little bit about the interest level on Alloy in international markets where there might be a bit of a premium on data sovereignty and maybe how that's impacting the growth opportunity for OCI when we look out towards the balance of calendar '24? Thanks. |
5,923 | ORCL | 3 | 2,024 | 2024-03-11 19:45:00 | Oracle Corporation | 22,247 | Larry Ellison: Well, I think Japan is maybe the most interesting market where we had early success with NRI. They run the Tokyo Stock Exchange. No - what NRI has is just is an Oracle - a couple of Oracle Cloud regions which they resell in the financial services community inside of Japan. And one of their applications is a major stock exchange, the Tokyo Stock Exchange. So, think about how many clouds run stock exchanges, that would be ours. It's got to be highly secure, it can never go down, it's going to have extremely high transaction rates, we can do that. And the success of NRI is caused other - the other computer companies in Japan to become very, very interested and also reselling our cloud with - and we also have the ability that they can add on some of their own technology to our cloud so, our cloud is open so you can plug-in other things to the cloud. So, imagine a big computer company in Japan adopting the Oracle Cloud, reselling Autonomous Database, reselling all of our technologies because all we --we only make one kind of cloud, they're all the same and they have all of the services. But then that company can add their own services to there for their customers. We think all of the cloud companies in Japan are going to adopt OCI. Plus a lot of big companies, the big car companies in Japan. We want around their own, the phone companies in Japan will want their own, the technology companies in Japan will want their own Oracle regions. And because they are sovereign because they are highly secure and because they are highly cost-effective, so we think this allows us to enter a variety of new markets. Pretty much every government is going to want a sovereign cloud and a dedicated region for that government for not only to - so we see a number of countries. It's funny, we talked about winning business with companies. For the first time, we're beginning to win business country - per countries for sovereign cloud where the national government and the state governments are moving to that Oracle OCI region. |
5,924 | ORCL | 3 | 2,024 | 2024-03-11 19:45:00 | Oracle Corporation | 22,247 | per countries for sovereign cloud where the national government and the state governments are moving to that Oracle OCI region. And of course, it's got to be at least two of them for redundancy and disaster recovery. So, we have a number of countries where we're negotiating sovereign regions with the national government. We see that time and time again, major companies, governments, computer suppliers reselling our Alloy Cloud. The demand for our cloud regions is extraordinarily high. I believe we will end up - well, this is a funny prediction, but okay, we'll end up with more data centers and cloud regions than all the other hyperscalers combined. |
5,925 | ORCL | 3 | 2,024 | 2024-03-11 19:45:00 | Oracle Corporation | 22,247 | Safra Catz: Yes. I think that's the story.
Larry Ellison: That's what I believe.
Safra Catz: So, just to make sure you have all the numbers between Alloy and dedicated regions, we've got 13 lives. We've got 18 under-construction. And we've signed five new ones just this past quarter. So for us, it's - they're just - there's just a list we're going through and trying to get them all because they are such a unique capability and in such high demand.
Larry Ellison: Yes. And let me just add one last thing. Microsoft does not compete for this business. AWS does not compete for this business. Google does not compete for this business. We're the only ones in this business.
Kirk Materne: Thank you, all.
Operator: Our final question today comes from Brad Zelnick from Deutsche Bank. Please go ahead.
Brad Zelnick: Thanks very much for taking my question. Larry, my question actually follows on your answer to Kirk's question because I think it's so important. In talking to one of your GSI partners we heard about a global public sector solution that they referred to as government in a box where Oracle in partnership with likes Starlink, the Tony Blair Project, our building solutions on top of OCI including [Absence Check] and even Cerner. So, literally run the entire country's digital operations. So, hoping you can add even a little bit more color about what you're doing here. How big an opportunity it is because it just seems like it's such a powerful example of the entire Oracle Cloud Stack coming together in a very meaningful way? |
5,926 | ORCL | 3 | 2,024 | 2024-03-11 19:45:00 | Oracle Corporation | 22,247 | Larry Ellison: All right. It is really, really - it is very interesting. And we've gone into the National Government and State Government applications in a very, very big way to give you an idea a little glimpse of what we're doing. Yes, because we can't deliver these cloud regions to medium-sized countries. So, for example, Serbia is standardizing on - or these Oracle Cloud regions for their National Government. We're automating their healthcare and people know that we're in the healthcare business. What they might not know is in cooperation with Starlink we're able to deliver an Internet service to - for the entire country. The rural part of the country, by the way, we can deliver the Internet and we have delivered the Internet. Let's say Kenya or Rwanda very inexpensively using Starlink and our sovereign cloud regions to backhaul the Internet traffic. So, you can bring every school in Serbia online the Internet connectivity even if they're rural doesn't matter. Every school, every hospital as is true of Rwanda, that's true of Kenya. We can do it very, very cost-effectively and one of the applications we have for agriculture, we actually do a national map of the country where we can show you each of the farms in the country, what they're growing - this farm is growing coffee, this farm is growing maze, this farm - what's part of the fields are getting enough nitrogen, which part of the fields are getting enough water? What corrective actions you need to take to increase your agricultural output? We're doing that again in concert with Elon Musk and SpaceX to do this kind of mapping to provide this AI-assisted and then these maps are AI-assisted help them plan their agricultural output and predict their agricultural output, predict markets, the logistics of the agricultural output during all of those things as next-generation national application. And it is one of the most exciting things we're doing, of course, we do procurement and accounting and human resources and recruiting for the government, we do all of |
5,927 | ORCL | 3 | 2,024 | 2024-03-11 19:45:00 | Oracle Corporation | 22,247 | we're doing, of course, we do procurement and accounting and human resources and recruiting for the government, we do all of those applications. But in some of the newer applications, regarding food security. Making sure all the schools are online. Rural growth schools are online. That rural hospitals are online. It's automating those rural hospitals. It's automating their vaccination program, their healthcare program across the board. These next-generation applications are very attractive. I'll tell you one other crazy thing that we do. It's another generative AI application. If you want to join the EU, it took Serbia eight years to harmonize their laws to be able to join the EU. Albania is facing the same thing. But with generative AI, we can read the entire corpus of the Albanian laws and actually harmonize their laws with the EU and probably more like 18-months to two years rather than the eight years it took Serbia. So, there are all sorts of interesting new AI applications out there that people you've probably never heard of before or at least I hadn't heard of before, until this last 12 months. Now that we've worked on and we're now in the process of delivering. |
5,928 | ORCL | 3 | 2,024 | 2024-03-11 19:45:00 | Oracle Corporation | 22,247 | Brad Zelnick: Really amazing stuff. Larry, thank you and congrats. And Safra, really great to see the firm reiteration of your fiscal '26 targets. Thanks so much for taking my question.
Safra Catz: Thank you.
Ken Bond: Thank you, Brad. A telephonic replay of this conference call will be available for 24 hours on our Investor Relations website. Thank you for joining us today. And with that, I'll turn the call back to Krista for closing.
Operator: Thank you, everyone. This does conclude today's conference call. Thank you for your participation and you may now disconnect. |
5,929 | ORCL | 2 | 2,024 | 2023-12-11 17:00:00 | Oracle Corporation | 22,247 | Operator: Good afternoon. My name is Emma, and I will be your conference operator today. At this time, I would like to welcome everyone to the Oracle Corporation's Second Quarter 2024 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. [Operator Instructions]. Ken Bond, you may begin your conference. |
5,930 | ORCL | 2 | 2,024 | 2023-12-11 17:00:00 | Oracle Corporation | 22,247 | Ken Bond: Thank you, Emma. Good afternoon, everyone, and welcome to Oracle's second quarter fiscal year 2024 earnings conference call. A copy of the press release and financial tables, which includes a GAAP to non-GAAP reconciliation and other supplemental financial information can be viewed and downloaded from our Investor Relations website. Additionally, a list of many customers who purchased Oracle Cloud services or went live on Oracle Cloud recently will be available from our Investor Relations website. On the call today, our Chairman and Chief Technology Officer, Larry Ellison, and Chief Executive Officer, Safra Catz. As a reminder, today's discussion will include forward-looking statements, including predictions, expectations, estimates, or other information that might be considered forward-looking. Throughout today's discussion, we will present some important factors relating to our business, which may potentially affect these forward-looking statements. These forward-looking statements are also subject to risks and uncertainties that may cause actual results to differ materially from statements being made today. As a result, we caution you against placing undue reliance on these forward-looking statements, and we encourage you to review our most recent reports, including our 10-K and 10-Q, and any applicable amendments for a complete discussion of these factors and other risks that may affect our future results or the market price of our stock. And finally, we are not obligating ourselves to revise our results or these forward-looking statements in light of new information or future events. Before taking questions, we'll begin with a few prepared remarks. And with that, I'd like to turn the call over to Safra. |
5,931 | ORCL | 2 | 2,024 | 2023-12-11 17:00:00 | Oracle Corporation | 22,247 | Safra Catz: Thanks, Ken, and good afternoon, everyone. We had another great quarter. When you look at the top of our financial results table, a few things are very clear. The largest number, cloud services and license support, is now 74% of the revenue, and it's recurring revenue, and it's the one growing by $1 billion this quarter. The smaller numbers, which are not recurring, now account for only 26%. This is exactly what we told you would happen, and it's happening. And as this continues, total revenue growth will accelerate every year. To that point, OCI is now one of the clear drivers of our acceleration. Imagine just three years ago, OCI was rarely, if ever, mentioned as a viable hyperscale alternative. Of course, we knew what we had built and we kept talking about it and we knew it was only a matter of time. And now, more industry analysts are catching on to what customers are choosing. For example, just last week, we were recognized as a leader in the 2023 Gartner Magic Quadrant for Strategic Cloud Platform Services. Our financial results reflect that customers have figured out that by moving to OCI, they really can get more while paying less. On top of that, we are now the default choice for AI workloads given our unique differentiation and price performance capabilities. Why specifically are they coming to Oracle Cloud Infrastructure? Well, it's a combination of several things. Creating the second generation cloud enabled us to build a much better, more scalable, and more efficient cloud. We understood the limitations of the first generation and engineered very differently. Second, we know what it takes to run at enterprise scale, performance and security better than, I say, anyone else. Our 45-year history as the leading enterprise software company gives us unique knowledge of what exactly is required to run mission critical systems. Third, we recognize that customers need deployment flexibility rather than just offer public cloud services like our competitors, we are the only vendor which also offers |
5,932 | ORCL | 2 | 2,024 | 2023-12-11 17:00:00 | Oracle Corporation | 22,247 | flexibility rather than just offer public cloud services like our competitors, we are the only vendor which also offers dedicated cloud to customer, dedicated region, sovereign clouds, and Alloy, our partner clouds. And then finally, our belief in the importance of multi-cloud offerings will be industry changing as these collaborations roll out. With all this success and exploding demand, we are working as quickly as we can to get the cloud capacity built out. Now, to the Q2 results. With total revenue at the midpoint of my constant currency guidance and the EPS at the high end of guidance. Now, as a reminder, currency was 1 point less helpful than when we gave guidance three months ago. Total cloud revenue, that's SaaS plus IaaS, excluding Cerner, was $4.1 billion, up 25%. Including Cerner, total cloud revenue was up 24% at $4.8 billion, with IaaS revenue at $1.6 billion, up 50%, and SaaS revenue of $3.2 billion, up 14%. Total cloud services and license support revenue for the quarter was $9.6 billion, up 11%, driven again by our strategic cloud applications, autonomous database, and our Gen 2 OCI. Application subscription revenues, which includes support, were $4.5 billion, up 9%. Our strategic back office SaaS applications now have an annualized revenue of $7.1 billion and we're up 19%. Infrastructure subscription revenues, which includes license support, were $5.2 billion, up 12%. Infrastructure cloud services revenue was up 50%. Excluding legacy hosting services, Gen 2 infrastructure cloud services revenue grew 55%, with an annualized revenue of $6 billion. OCI consumption revenue was up 71%. Database subscription revenues, which includes database license support, were up 4%, highlighted by Exadata database cloud services revenue, which was up 40%, and autonomous database up 26%. Very importantly, as on-premise databases migrate to the cloud, we expect these cloud database services will be the third leg of revenue growth alongside strategic SaaS and Gen 2 OCI. Software license revenues were $1.2 billion, |
5,933 | ORCL | 2 | 2,024 | 2023-12-11 17:00:00 | Oracle Corporation | 22,247 | will be the third leg of revenue growth alongside strategic SaaS and Gen 2 OCI. Software license revenues were $1.2 billion, down 19% in a tough comparison to last year where it was up 23%. So all in, total revenues for the quarter were $12.9 billion, up 4% including Cerner, actually up 6% excluding Cerner. Now shifting to margins, the gross margin for cloud services and license support was 78%. This is because of the mix between support and cloud in which cloud is growing much faster than support. Support and SaaS margins are consistent with last year, while IaaS gross margins improved substantially. While we continue to build data center capacity, gross margins go higher as these new cloud regions fill up. We monitor these expenses carefully to ensure gross margin percentages expand as we scale. To this point, the gross profit dollars of cloud services and license support grew 10% in Q2. Non-GAAP operating income was $5.5 billion, up 7% from last year. The operating margin was 43%, up from 41% last year. As we continue to benefit from economies of scale in the cloud and drive Cerner profitability to Oracle standards, we will not only continue to grow operating income, but we will also expand the operating margin. The non-GAAP tax rate for the quarter was 19% and non-GAAP EPS was $1.34 in USD, up 11% in USD, and up 9% in constant currency. GAAP EPS was $0.89 in USD. At quarter-end, we had nearly $8.7 billion in cash and marketable securities and the short-term deferred revenue balance was $8.9 billion, up 1%. Over the last four quarters, operating cash flow was $17 billion, up 13%. And free cash flow was $10.1 billion, up 20%. Capital expenditures were $6.9 billion over the same period as we continue to seek cash flow benefit from our cloud transformation. Our remaining performance obligation, or RPO, is now over $65 billion, with the portion excluding Cerner up 11% in constant currency. We continue to sign large deals with many in the pipeline. Approximately 48% of total RPO is expected to be recognized as |
5,934 | ORCL | 2 | 2,024 | 2023-12-11 17:00:00 | Oracle Corporation | 22,247 | We continue to sign large deals with many in the pipeline. Approximately 48% of total RPO is expected to be recognized as revenue over the next 12 months. CapEx was $1.1 billion in Q2 as we continue to build capacity for bookings and our customers' growing needs. Given the enormity of our pipeline and backlog, I expect CapEx will be somewhere around $8 billion this fiscal year, meaning our second half CapEx will be considerably higher as we bring online more capacity. To that point, we now have 66 customer facing cloud regions live, with 45 public cloud regions around the world and another six being built. 12 of these public cloud regions interconnect with Azure and starting next year, customers will be able to run Oracle Database at Azure on OCI inside Azure. We also have 10 dedicated regions live and 13 more planned, nine national security regions, and two EU sovereign regions live with increasing demand for more of each. And finally, we have seven Alloy cloud regions planned where Oracle partners become cloud providers offering customized cloud services alongside the Oracle Cloud. And of course, we also have so many, many, many clouded customer installations. The sizing flexibility and deployment optionality of our cloud regions continues to be advantages for us in the marketplace. Finally, as we've said before, we're committed to returning value to our shareholders through technical innovation, strategic acquisition, stock repurchases, prudent use of debt, and a dividend. This quarter, we repurchased 4 million shares for a total of $450 million. And in addition, we paid out dividends of $4.1 billion over the last 12 months. And the Board of Directors declared a quarterly dividend of $0.40 per share. Now let me turn to my guidance for Q3, which I will review, as always, on a non-GAAP basis. If currency exchange rates remain the same as they are now, currency should have little effect on total revenue and EPS. However, the actual currency impact may be different. So because of that, all the numbers I give you |
5,935 | ORCL | 2 | 2,024 | 2023-12-11 17:00:00 | Oracle Corporation | 22,247 | on total revenue and EPS. However, the actual currency impact may be different. So because of that, all the numbers I give you are the same for constant currency and USD. Total revenues, including Cerner, are expected to grow from 6% to 8%. Total revenues excluding Cerner are expected to grow from 8% to 10%. Total cloud revenue excluding Cerner is expected to grow from 26% to 28%. Non-GAAP EPS growth is expected to grow between 10% and 14% and be between $1.35 and $1.39. My EPS guidance for Q3 assumes a base tax rate of 19%. However, one-time tax events could cause actual tax rates to vary. Finally, I remain firmly committed to our fiscal ‘26 financial goals for revenue, operating margins, and EPS growth. And with that, let me turn it over to Larry for his comments. |
5,936 | ORCL | 2 | 2,024 | 2023-12-11 17:00:00 | Oracle Corporation | 22,247 | Larry Ellison: Thank you, Safra. The demand for Oracle's Cloud Infrastructure and Generative AI is consistently increasing quarter after quarter. Oracle's total remaining performance obligations, or RPO, has now reached $65 billion, slightly more than our annual revenue. In response to this sharply increasing demand, Oracle is in the process of expanding 66 of our existing cloud data centers and building 100 new cloud data centers. We have to build 100 additional cloud data centers because there are billions of dollars more in contracted demand than we currently can supply. Cloud Infrastructure demand is huge and growing at an unprecedented rate. In the next few weeks, we expect to sign a couple more billion dollar Cloud Infrastructure contracts. Gartner recently named Oracle OCI as a leader in cloud platform and infrastructure services. The demand for Cloud Infrastructure services and new Oracle cloud data centers is broad-based, driven not only by Generative AI customers, but also by nation states buying sovereign Oracle cloud data centers, plus large banks, telecommunications companies, and industrial companies, buying dedicated cloud data centers, dedicated Oracle cloud data centers, and perhaps most interestingly, demand from other hyperscalers and other cloud service providers, co-locating and connecting their clouds with Oracle cloud data centers. Customers don't want clouds to be walled gardens. In the next few months, we will turn on 20 new Oracle cloud data centers, co-located with and connected to Microsoft Azure as a part of our joint multi-cloud initiative. These 20 new multi-cloud data centers will house over 2,000 full racks of Exadata database machines designed to meet pent-up demand for the Oracle cloud database. We're able to build new data centers rapidly and operate them inexpensively because all of our data centers are architecturally identical, highly automated, with an identical high-performance RDMA network, autonomous services, and applications. Oracle cloud data centers vary only by |
5,937 | ORCL | 2 | 2,024 | 2023-12-11 17:00:00 | Oracle Corporation | 22,247 | with an identical high-performance RDMA network, autonomous services, and applications. Oracle cloud data centers vary only by scale. Again, several nation states have ordered multiple sovereign data centers to be built within their country so that they can move their government, healthcare, and commercial workloads to the Oracle cloud. These new countries include Japan, Italy, Saudi Arabia, Bangladesh, New Zealand, and others. Some of the world's largest banks, telecommunications and industrial companies, have also contracted with us to build Oracle cloud data centers dedicated entirely to them so that they can migrate their workloads to an Oracle cloud data center. These companies include Nomura, Vodafone, Telecom Italia Mobile, Saudi Telecom, a huge Korean conglomerate, and a huge US defense contractor. These are but a few examples that demonstrate the diversity of the growing demand for Oracle's highly differentiated Gen2 cloud infrastructure and data center technology. Back to you, Ken. |
5,938 | ORCL | 2 | 2,024 | 2023-12-11 17:00:00 | Oracle Corporation | 22,247 | Ken Bond: Thank you, Larry. Emma, if we could please poll the audience for questions.
Operator: Thank you. [Operator Instructions] Your first question today comes from the line of Ben Reitzes with Melius Research. Your line is open.
Ben Reitzes: Hey, thanks a lot. It's great to be speaking with you this afternoon. Do you mind going through your thoughts on the OCI trajectory from here and how you feel backlog will play out into revenue? And perhaps you can comment also, is the acceleration potential that you guided for due to getting more GPUs and more AI backlog moving into revenue? Thanks a lot.
Safra Catz: Larry, you want me to take it or you?
Larry Ellison: No, either one, Safra, you tell me.
Safra Catz: How about I get started? So, where do we expect OCI to go from here? Frankly, the only limiting factor is our ability to get the data centers handed over and filled up fast enough. This quarter alone, we're talking about hundreds of millions of dollars that we would have been able to recognize if our capacity was available. So the reality is, as we roll out and we've got just so many moving parts as you can hear from us, we have a lot of capacity coming online. And as you can see in my CapEx guidance, we expect OCI to just grow astronomically, frankly. It is the ideal infrastructure for so much use. And of course, also as more GPUs become available, and we can put those in, we have just a really unlimited amount of demand. Larry, I don't know if you want to say anything else? |
5,939 | ORCL | 2 | 2,024 | 2023-12-11 17:00:00 | Oracle Corporation | 22,247 | Larry Ellison: Yeah, well again, in the next few weeks, I mentioned we're going to sign two additional contracts right around $1 billion each. I mean the backlog is growing astronomically. I think it's the word Safra used and that's accurate. There's no reason why -- OCI grew 50% this quarter. I think OCI is going to get much bigger and actually the growth rate will be above 50%, I believe, as these data centers come online. We think we can build a lot of these data centers very quickly. By the way, again, I emphasize it's not just GenAI demand. There is huge pent-up cloud database demand. There is huge demand overseas for sovereign clouds, where people -- governments haven't been able to move their workloads. A lot of those are government Oracle workloads. They haven't been able to move their workloads to the cloud. I mean, there are literally, I don't know, five, six, seven large companies in Japan that will be building at least two data centers, Oracle data centers each. So again, the demand is extraordinary. We can build the data centers relatively fast. And I expect the OCI growth rate to be over 50% for a few years.
Safra Catz: Yes, we're not demand limited in any way right now.
Ben Reitzes: Thanks a lot, Safra and Larry. Appreciate it.
Operator: Your next question comes from the line of John DiFucci with Guggenheim. Your line is open. |
5,940 | ORCL | 2 | 2,024 | 2023-12-11 17:00:00 | Oracle Corporation | 22,247 | Operator: Your next question comes from the line of John DiFucci with Guggenheim. Your line is open.
John DiFucci: Thank you. Thanks for the question. Thanks Larry for the -- and Safra, for those comments on the future OCI growth. So since Ben asked about the growth, and maybe I'll take a step back on the other part of all this, and that's the profit side. Per Larry's comments, you're building out a lot of capacity and Safra's comments agree with that, with the CapEx growth. But Clay's also spoken about the time it takes to build out those AI super clusters and I know that's not the only AI workloads you're doing, but that sounds like some pretty exciting stuff. And it takes time before you get revenue. I realize you're also seeing ramp up of those what I'll call core OCI deals like Uber, and you actually get revenue from them over time. But how should we think about cloud gross margins over time in this context with both those things? There's a lot happening here. |
5,941 | ORCL | 2 | 2,024 | 2023-12-11 17:00:00 | Oracle Corporation | 22,247 | Safra Catz: Yes, and I'm really glad you asked. I'm really glad you asked because one of the lines that we show you, even though I give you more detail, is I show you a number that is a mix of cloud and support. And obviously, support is extremely profitable because of the structure of the way it works, and because we are at such a large scale. But the reality is that our cloud businesses are also very profitable. Our SaaS cloud business is very profitable, and our IaaS, our OCI business, is improving profitability as it grows. And so the target gross margins for it are much higher than I think you expect because you're probably comparing it to some of the more pure play cloud folks who somehow don't end up making as much money in all of this. As we grow, our gross margin percentage goes up. So yes, we make a lot of investments and we'll be making a lot of investments, but our profitability continues to go up. Because once the day -- the worst moment is at the moment where the data center is full of computers and you don't have any tenants that first day, but that's not actually how we work. Yes, we have the floor space, but we grow in pieces. Unlike some of the others that they have to do a full out build out and put everything there before they have a penny of revenue, that's not how we work. We -- and more and more of our -- so we start small and build up and that allows us to match our spending with the revenues much better. And that's because we have that engineering deployment flexibility that the first generation folks don't have. I don't know, Larry, if you want to add anything to that? |
5,942 | ORCL | 2 | 2,024 | 2023-12-11 17:00:00 | Oracle Corporation | 22,247 | Larry Ellison: Yeah I do. I think one thing is very important. We're much more highly automated than the older data centers. So to give you an idea, Oracle Cloud -- to run Oracle Cloud we have to keep track of all of our customers, how much they're using. We have to have a variety of databases and applications that run the cloud. Those databases are all the autonomous database. We have no labor associated with those databases. It's all completely automated. Our installations, when we bring up a new cloud, you plug it in and the process of bringing it up is largely automated. There aren't lots and lots of people in the data center to bring it up, and there certainly aren't lots and lots of people in the data center to run it every day. We focus on autonomous services. Our Linux, our operating system is fully autonomous. There's no labor associated with running it. There's certainly labor associated with building the software, but not running the software, it doesn't cost us more to run 100 data centers than it costs us to run 10 in terms of DBAs or people running Oracle Autonomous Linux. So we have a very different model than our old data centers or our competitors' data centers. We can run these things, we can bring them up relatively quickly and we can run them very inexpensively and efficiently. One last thing about being autonomous, the fact that it's automated, there are far fewer errors and there are far fewer security vulnerabilities because the system is completely self-driving.
John DiFucci: If I might, and Safra, go back to something you said, is it fair to assume that OCI gross margins have consistently grown over time, quarter to quarter?
Safra Catz: Yes.
John DiFucci: Okay, and then, and then, and then…
Larry Ellison: Grown a lot. |
5,943 | ORCL | 2 | 2,024 | 2023-12-11 17:00:00 | Oracle Corporation | 22,247 | Safra Catz: Yes.
John DiFucci: Okay, and then, and then, and then…
Larry Ellison: Grown a lot.
John DiFucci: Grown a lot, okay. And then finally, the -- what Larry just said about the database, Safra, I've heard you say at times, we're at the beginning of the beginning of the transition of the database to cloud. So I know you have database in cloud today but that migration of the on-prem that's still to come pretty much.
Safra Catz: Yeah, it is really still to come. It is -- we're talking about tens of billions of dollars when it comes over. So it's starting to come, but we haven't been in the place to receive it all en masse, and customers have to get comfortable with it. And also, multi-cloud has to really roll out, and that's going to be another piece of it. So customers are going to have so many excellent choices. They can go in the public cloud, they can go in OCI, they can go in their cloud to customer. They can go in OCI at Azure is one possibility. So there's just -- it is the absolute beginning. Because remember, the Oracle database is not a toy. It's a mission critical system. If it just disappeared at companies, the whole planet would come to a standstill. And so this is coming and it's just the beginning. So you see what's going on with OCI, no one believed us this was possible, now here we're at, and then right behind it is going to come the database, and that's going to be something.
John DiFucci: And per Larry's comments, and I'll stop talking, but for Larry's comments, the database gross margins, given the autonomous nature of it, we should expect that to be different than the OCI core Infrastructure as a Service gross margin?
Safra Catz: Yes, absolutely. Database… |
5,944 | ORCL | 2 | 2,024 | 2023-12-11 17:00:00 | Oracle Corporation | 22,247 | Safra Catz: Yes, absolutely. Database…
Larry Ellison: I don't want to go into detail, but the autonomous database is, one, autonomous, there's no labor associated with it, but it's also the only database that's fully elastic. In other words, if you're not using it, no one's using it. I mean, there are no cores, there's no cores occupied. It goes back into the pool. So if you as a customer aren't doing something with the database, literally no cores are occupied. It's very different than an Amazon database where you allocate. I always need 64 cores or 64 processors to run my database and that's seven days a week, 24 hours a day. We only charge you for what you use when you're using it. We only consume what you use when you're using it. Otherwise, it goes to other customers. It's totally different. That allows us to have dramatically higher gross margins.
John DiFucci: Thank you very much. Sorry for the several part question, but thank you.
Safra Catz: Our pleasure.
Operator: Your next question comes from the line of Mark Moerdler with Bernstein. Your line is open.
Mark Moerdler: Thank you very much for taking the question. I really appreciate it. I want to change gears a little bit and turn to Cerner, which people don't really focus on that much. Cerner license revenue has been down, likely in preparation for customer shifting to SaaS, but Oracle does not yet have a full multi-tenant scalable Cerner SaaS solution. So what I'd like to ask is couple parts. How should we think about the timing of, one, the availability of -- yep.
Larry Ellison: That's not correct. So Cerner has several pieces.
Mark Moerdler: Okay. |
5,945 | ORCL | 2 | 2,024 | 2023-12-11 17:00:00 | Oracle Corporation | 22,247 | Larry Ellison: That's not correct. So Cerner has several pieces.
Mark Moerdler: Okay.
Larry Ellison: And I believe about half the customers will be moved, half of the Millennium customers. You can think that Cerner is just automating hospitals like Epic. And that's a product called Millennium. And about half of those customers will move to OCI by February. Half of all existing customers will be in Oracle OCI. But we've also developed something that began at Cerner. And we have finished now, completely rewritten it. Well, we're in the process. We will finish next calendar year. But it is largely rewritten and available right now, something called our Health and Data Intelligence platform and it was known as Cerner HealtheIntent. And that's for public health. That's for population scale, public health management. Again, it's sold to US states. It's sold to Australian states. It's sold to European countries. It's for managing population health. Remember during COVID when we didn't know, New York thought they were living out of hospital rooms, but they really weren't, but no one knew, because no one kept track of our inventory of hospital rooms. There was no national view. No one knew how many people contracted COVID yesterday. We didn't have that national view. We have that national view. It is fully staffed and it is available right now. So some of the pieces, some of the Cerner pieces are coming online, other Cerner pieces are moving more gradually, but they're all going into OCI. And they're all very quickly moving from a license basis to a subscription basis.
Mark Moerdler: So that's very helpful. So that starts to answer the question I was asking was how should we think about the timing of the transition, Millennium you're saying is going to be an OCI. Is that going to be a fully SaaS version? When will the rest of the solutions be fully SaaS? And how should we think about the revenue lift as the license and maintenance moves to the cloud -- to SaaS? |
5,946 | ORCL | 2 | 2,024 | 2023-12-11 17:00:00 | Oracle Corporation | 22,247 | Larry Ellison: So it will be fully an OCI and SaaS, but it will not be the new, we are rewriting, we are replacing Millennium a piece at a time, not a big lift and shift, but we are upgrading and modernizing Millennium a piece at a time, and different pieces will be available starting next year. And so, Cerner customers will be getting new features and capabilities as a part of Millennium as Millennium moves to OCI. And again, half the customers will be in OCI by February. So we're making a lot of progress. At the same time, we're adding a lot of new products to Millennium, like the public health products. But we're also adding much of new products for pharmaceutical companies. We're adding additional products for hospitals to keep track of their inventory, for hospitals to manage their workforce, really what we think of is our health division in Oracle has products for the entire healthcare ecosystems. Payers, including governments, including insurance companies, providers, including ambulatory clinics and hospitals, pharmaceutical companies, research companies, and public health departments in national governments and state governments. So we have products for the entire healthcare ecosystem, which is a much larger footprint than Cerner ever had. So we are going after a much larger market than Cerner was. So we expect Cerner to be a growth story. I guess that's what I'm getting at.
Mark Moerdler: Right, that's where I'm going with the question.
Safra Catz: Yeah, so let me just tell you, I think for the year, for the full fiscal year, Cerner will be sort of negative 1 to 2 points. But that will be it. It'll end this fiscal year. And from then on, it will be a growth story. So it will no longer be a drag on Oracle growth. Okay?
Mark Moerdler: Perfect. Thank you so much. I really appreciate it. It was very helpful.
Safra Catz: Great.
Operator: Your next question comes from the line of Siti Panigrahi with Mizuho. Your line is open. |
5,947 | ORCL | 2 | 2,024 | 2023-12-11 17:00:00 | Oracle Corporation | 22,247 | Safra Catz: Great.
Operator: Your next question comes from the line of Siti Panigrahi with Mizuho. Your line is open.
Siti Panigrahi: Thanks for taking my question, Larry and Safra. Many mission critical workloads still run on Oracle database, and you have a sticky [Indiscernible] team. And we expect Oracle will start migrating those database workloads to OCI, which will bring 3x revenue uplift, which you call even the third leg of cloud growth. You also have now OCI inside Azure data center. So my question is, how does this being multi-cloud change your outlook for Oracle database? And what are you hearing from your database customer in terms of their comfort and preparedness to move their Oracle database to the cloud, either OCI or Azure?
Safra Catz: Larry, why don't you start with this?
Larry Ellison: Safra, can you go first?
Safra Catz: No, yes, I do. You go. |
5,948 | ORCL | 2 | 2,024 | 2023-12-11 17:00:00 | Oracle Corporation | 22,247 | Larry Ellison: Okay, thanks. Our customers are very happy with the idea. Remember Oracle started as one of the first databases that ran everywhere. We ran on IBM mainframes. We ran on personal computers. We ran on digital equipment, if you remember them, mini computers, [broadly] (ph) and HP mini computers. We ran on every operating system on every computer. Now, in cloud, they're very happy to see that they can not only get the Oracle database at OCI, they can also get the identical capability from Microsoft. Microsoft, we are building data centers for Microsoft inside Azure. And Microsoft, it wasn't us that decided 2000 was the right number of Exadata machines to install in those 20 data centers. That was Microsoft. The demand is enormous. They want the same flex -- our customers want the same flexibility they've always had with Oracle. They want to use Oracle. They want to transition. But if they're using the Microsoft Cloud, they want to run the best and latest and greatest version of Oracle in the Microsoft Cloud. They'd want to do that in other clouds as well. Some of them, it's very important to have it in Japan, for example. It's very important for some of that data remaining in Japan. One of the things the Oracle database does is it runs the Tokyo Stock Exchange. And it does that in a dedicated data center run by Nomura Research, who supplies financial services and Oracle Cloud, Oracle Gen2 Cloud services to the Japanese market. There are a number of other partners in Japan that are going that same direction. So they used to -- in Japan, they used to buy the Oracle database from Nomura or they used to buy it from Fujitsu, or they bought it from Hitachi, or they bought it from NEC. They wanted that Oracle database. It is quite natural for all of those companies to build their own, have their own dedicated regions of OCI and sell to their and support their customers out of those regions. That's the flexibility we allow that's something that nobody else can do. We can build these regions for our partners. |
5,949 | ORCL | 2 | 2,024 | 2023-12-11 17:00:00 | Oracle Corporation | 22,247 | regions. That's the flexibility we allow that's something that nobody else can do. We can build these regions for our partners. We can build these regions for sovereign states. We can build these regions for large companies that want to have -- that don't want their data commingled with anyone else's data. They want a public cloud, they want a full OCI, they want every part of OCI. But they don't want anyone else in their region. They want it to be theirs and theirs alone. We can do that. Nobody else can. |
5,950 | ORCL | 2 | 2,024 | 2023-12-11 17:00:00 | Oracle Corporation | 22,247 | Ken Bond: Next question, please.
Siti Panigrahi: Thank you, Larry.
Operator: Your next question comes from the line…
Larry Ellison: Let me summarize. That means literally any way you want to get Oracle, any way you want to get Oracle, you'll be able to get it. It'll be a little bit back to the future. And we think the impact on demand -- on database demand, we're seeing it already. Let me close with 2,000 Exadata racks. That's a stunning number in terms of how many customers you can put on that. That's tens of thousands of customers you can put on that much hardware.
Siti Panigrahi: Thanks, Larry, for the color.
Larry Ellison: And that's Microsoft alone, okay.
Operator: Your next question comes from the line of Alex Zukin with Wolfe Research. Your line is open.
Alex Zukin: Hey, guys. Thanks for taking the question. I wanted to ask around some of the GenAI functionality inside of the applications portfolio, specifically Fusion and NetSuite. Any update or uptick that you're seeing or can share around some of your partnerships around Cohere? Maybe any early feedback from the field that informs incremental value capture, whether or not it's starting to resonate either in the form of increased migration activity, increased market share gains, or increased monetization opportunities around the application portfolio? |
5,951 | ORCL | 2 | 2,024 | 2023-12-11 17:00:00 | Oracle Corporation | 22,247 | Larry Ellison: Yeah, well, we're using it every place. Perhaps the most stunning is our new tele -- again, I mentioned it, and then it's Cerner that we're doing a lot of things that Cerner never did in what is now called Oracle Health. One of those things is our new telecommunication module summarizes a consultation between a doctor and a patient and writes the doctor's notes for the doctor automatically. In fact, for the first time we've done it, we now have our large language model generating the summary without a scribe that the doctor can edit in a couple of minutes. So, it's actually succeeded in doing one of the very hardest tasks we assigned it. And of course, we're using it in all in an -- everything from as simple as doing product descriptions or job descriptions, all of those, you've read about all of those, we've actually got those implemented and are delivering those to customers. But even in the most challenging areas, in drug design, we're having success with pharmaceutical companies. But actually writing the doctor's notes without a scribe has shocked a great many people and well, another area in terms of diagnosing cancer from biopsy, just biopsy images, being able to do that very, very quickly where the patient knows weeks sooner than they would otherwise, and then they get the news weeks sooner, from just the immediate AI processing of the biopsy image, they find out weeks sooner whether they have to go on chemotherapy or whether they're cancer-free. And we're doing that with an Israeli partner called Imaging. So, no, we're seeing a huge uptake of this technology, everything from complex healthcare and health science to more mundane tasks that you find throughout an enterprise, but still very important in making your employees in your company more efficient and more competitive. |
5,952 | ORCL | 2 | 2,024 | 2023-12-11 17:00:00 | Oracle Corporation | 22,247 | Alex Zukin: Got it. And then from a monetization standpoint, do you -- is this monetizing in a copilot way similar to Microsoft, or how do you envision ultimately seeing some of the incremental value capture inside of the model?
Larry Ellison: Well, we think inside of our -- remember we're a little bit different than Microsoft. We have a lot more enterprise applications, for example, in healthcare. We run clinical trials. We run hospitals. We run ambulatory clinics. We run -- we have diagnostic databases for -- image processing databases, conventional blood testing databases, all of those. So our monetization is really at the highest end of the value chain, which is we actually supply the application with our partner that does cancer diagnosis, that does the doctor's notes, that does the doctor's orders, that actually automatically generates the prescriptions, that reminds the patient to take the subscription so you get compliance. Right now, without once again, I can't spend too much time on it. Right now, doctors don't know if patients have refilled their prescriptions. The doctors aren't notified and the patients aren't notified, reminding, we're doing all of that. We're doing a bunch of things with and that's the high end, that's the high value end of AI when you're preventing someone from being re-hospitalized, which has a huge cost in terms of human suffering and money.
Alex Zukin: Okay. Thank you very much.
Safra Catz: Now we have multiple ways, by the way, to monetize it, not only as part of our application, but also as part of our infrastructure. Because one of the unique capabilities we allow is for customers when they use our product to basically use their private data in some of these models for them to learn, but then to ultimately keep control of their data. And this is applicable in many, many different types of applications, and this is a service we provide in addition. So there's just a lot of… |
5,953 | ORCL | 2 | 2,024 | 2023-12-11 17:00:00 | Oracle Corporation | 22,247 | Larry Ellison: Safra is making a very good point in that we have our own applications in healthcare, but we have partners and other companies that come to us to use our AI to enrich their applications. And we keep their data private and allow them to enrich their applications. That company I mentioned earlier, Imaging, that's not our application that does the cancer diagnosis. That's an Israeli company that's doing that, but they're using our AI to develop their healthcare application. So, we monetize through imaging, enabling them to build their AI application. And we also build a lot of our own. So of course, Safra is right. It's a combination of the two.
Safra Catz: Okay.
Alex Zukin: Perfect. Thank you, guys.
Safra Catz: Thank you.
Operator: Your last question today comes from the line of Brad Zelnick with Deutsche Bank. Your line is open.
Brad Zelnick: Great. Thanks so much. Larry, it's taken Oracle several years to reach 66 cloud data centers. And you're now talking about plans to build 100 new ones, which frankly seems very ambitious. What is it that you're seeing that maybe we don't see? And then related, perhaps, Safra, if you could speak to the capital requirements and time frame for that, especially in light of CapEx this quarter, that was a bit less than we had expected? Thank you. |
5,954 | ORCL | 2 | 2,024 | 2023-12-11 17:00:00 | Oracle Corporation | 22,247 | Larry Ellison: Well, okay, how about Microsoft puts an order -- in an order for 20 cloud data centers? That's what we're saying. When one company, as you say, we have 60, by the way, that's a little bit misplaced. That's not quite right. I mean, we have 66 cloud regions and we sometimes use those synonymously. They're not always -- they don't, data center and regions don't necessarily translate one to one. But the -- when someone comes along and orders 20, then that creates a lot of opportunity for us to build more data centers and get more OCI customers because we're building OCI data centers inside of the Azure cloud. So those are the kinds of things we're seeing. We're building our own public regions based on direct customer demand and then we're building partner regions like the 20 data centers from Microsoft. The combination of the two adds up to 100. |
5,955 | ORCL | 2 | 2,024 | 2023-12-11 17:00:00 | Oracle Corporation | 22,247 | Safra Catz: Yeah, and also one of the things is in that number, it doesn't include the many, many clouded customers, which started small, and now companies have decided they want their own region. So they had a clouded customer, which is smaller, and they decide, no, no, no, now I want a dedicated region of my own. I get it. This is working. I've saved millions, tens of millions, sometimes hundreds of millions. Now I want my own. Also really, it is absolutely true, we did not bring up as much capacity as we could have used this past quarter because we had to make some audible calls on the field to decide how to allocate, whether to build something small which was available, which I could have recognized revenue in right in the quarter, or instead to go much bigger and to wait until some larger capacity was going to be available to hand over to me. So as I think I've hinted and we're talking about demand, had we had capacity this quarter in the hundreds of millions of dollars more that was just sitting there waiting to take it, and we had made some deployment choices because we need more and we need it bigger, instead of taking small pieces or smaller pieces, we decided to focus on the bigger parts and try to also treat our customers fairly and work with them to meet their needs. |
5,956 | ORCL | 2 | 2,024 | 2023-12-11 17:00:00 | Oracle Corporation | 22,247 | Larry Ellison: Let me give you one example of that, what Safra is describing, is we got enough Nvidia GPUs for Elon Musk's company xAI to bring up the first version, the first available version of their large language model called Grok. They got that up and running. But boy did they want a lot more. Boy did they want a lot more GPUs than we gave them. We gave them quite a few, but they wanted more and we are in the process of getting them more. So, the demand, we got that up pretty quickly. They were able to use it, but they want dramatically more. There's this gold rush towards building the world's greatest large language model. And we are doing our best to give our customers what we can this quarter, and then dramatically increase our ability to give them more and more capacity each succeeding quarter.
Brad Zelnick: Thanks very much.
Ken Bond: Thank you, Brad. A telephonic replay of this conference call will be available for 24 hours on our Investor Relations website. Thank you for joining us on the call today. And with that, I'll turn the call back to Emma for closing.
Operator: This concludes today's conference call. Thank you for attending. You may now disconnect. |
5,957 | ORCL | 1 | 2,024 | 2023-09-11 17:00:00 | Oracle Corporation | 22,247 | Operator: Good day, everyone, and welcome to Oracle's First Quarter 2024 Earnings Call. Today's call is being recorded. And now, I would like to turn the conference over to Ken Bond. Please go ahead.
Ken Bond: Thank you, Lisa, and good afternoon, everyone, and welcome to Oracle's first quarter fiscal year 2024 earnings conference call. A copy of the press release and financial tables, which includes a GAAP to non-GAAP reconciliation and other supplemental financial information can be viewed and downloaded from our Investor Relations website. Additionally, a list of many customers who purchased Oracle Cloud Services or went live on Oracle Cloud recently will be available from our investor relations website. On the call today are Chairman and Chief Technology Officer, Larry Ellison, and Chief Executive Officer, Safra Catz. As a reminder, today's discussion will include forward-looking statements, including predictions, expectations, estimates, or other information that might be considered forward-looking. Throughout today's discussion, we will present some important factors relating to our business, which may potentially affect these forward-looking statements. These forward-looking statements are also subject to risks and uncertainties that may cause actual results to differ materially from statements made today. As a result, we caution you from placing undue reliance on these forward-looking statements and we encourage you to review our most recent reports including our 10-K and 10-Q and any applicable amendments for a complete discussion of these factors and other risks that may affect our future results or the market price of our stock. And finally, we are not obligating ourselves to revise our results or these forward-looking statements in light of new information or future events. Before taking questions, we'll begin with a few prepared remarks. And with that, I'd like to turn the call over to Safra. |
5,958 | ORCL | 1 | 2,024 | 2023-09-11 17:00:00 | Oracle Corporation | 22,247 | Safra Catz: Thanks, Ken, and good afternoon, everyone. As you know, 22 years ago today was a traumatic day for our country. Like many of you, it feels like yesterday when the country lost nearly 3,000 souls. And we at Oracle, we lost 11 employees. I remember exactly where I was when the tragedy unfolded, and it is still so hard speaking about it even all these years later. Today, we honor and remember each one of the victims and heroes and we hope that their memories are a blessing to all of us. Now before I go to our Q1 numbers, I thought it would help to start with some of the things that are going on at Oracle that you'll be hearing about over the next couple of weeks. Next week, we have Oracle CloudWorld, which will showcase the latest innovations, including AI on OCI, the progress of Oracle Autonomous Database, our multi-cloud strategy, the use of Oracle Analytics throughout our portfolio to drive better decision-making and the use of generative AI to differentiate Fusion, NetSuite and our industry application. Now, CloudWorld is our marquee event each year where current and prospective customers take time out of their busy calendars to join us in person and share their experiences. We know that there are no better spokespeople for our products and services than our existing customers. Our innovation results directly from our development teams interacting with customers to anticipate and build the next generation of products and services. Some of the customers you will hear from next week include NVIDIA, Uber, Ascension Health, Cohere and many, many, many, many more. You'll also hear from our expanding set of strategic partners that are driving the Oracle ecosystem and this includes Amdocs, VMware, Microsoft. Overall, it's remarkable the interest we are getting from the ISV community to work with Oracle. There are a lot of discussions going on and you will see more announcements shortly. From a financial standpoint, we see this customer and partner ecosystem as a leading indicator of our income statement. |
5,959 | ORCL | 1 | 2,024 | 2023-09-11 17:00:00 | Oracle Corporation | 22,247 | From a financial standpoint, we see this customer and partner ecosystem as a leading indicator of our income statement. I've been talking with you about our revenue acceleration for some time now. In Q1, our remaining performance obligations or RPO, climbed to nearly $65 billion, with the portion excluding Cerner, up 11%. We have now signed several deals for OCI greater than $1 billion in total value. In the first week of Q2, we booked an additional $1.5 billion in business, which isn't even included in the Q1 numbers. Approximately 49% of total RPO is expected to be recognized as revenue over the next 12 months. My point here is that customer momentum is continuing to build. This momentum is turning into bookings and that gives me the confidence that our annual revenue growth will continue to accelerate moving forward. Now to the Q1 results, which I remind you, I am announcing on day 11, only because day eight when we were ready was a Friday and I know none of you like that. So this quarter we saw a modest currency tailwind, but as always, I'll discuss our financials using constant currency growth rates. Clearly, Q1 was another great quarter with total revenue at the midpoint of guidance and earnings per share $0.02 above the high-end of guidance and our cloud growth was 29%. Total cloud revenue, SaaS and IaaS, excluding Cerner, was $4 billion, up 29%. Now including Cerner, total cloud revenue was up 29% also at $4.6 billion, and with our IaaS revenue at $1.5 billion, up 64%, and SaaS revenue of $3.1 billion, up 17%. Total cloud services and license support revenue for the quarter was $9.5 billion, up 12%, driven again by our strategic cloud applications, Autonomous Database and our Gen2 OCI. Application subscription revenues, which includes product support, were $4.5 billion, up 11%. Our strategic back-office SaaS applications now have annualized revenue of $6.9 billion, and they grew 20%. Infrastructure subscription revenues, which includes license support, were $5.1 billion, up 14%. Infrastructure cloud |
5,960 | ORCL | 1 | 2,024 | 2023-09-11 17:00:00 | Oracle Corporation | 22,247 | grew 20%. Infrastructure subscription revenues, which includes license support, were $5.1 billion, up 14%. Infrastructure cloud services revenue was up 64%. Excluding legacy hosting services, Gen2 Infrastructure cloud services revenue grew 72% with an annualized revenue of $5.6 billion. OCI consumption revenue was up 91%. Exadata Cloud Services revenue was up 46% and Autonomous Database was up 42%. Database subscription services, which includes license support, were up 6% highlighted by cloud database services which were up 44%. Very importantly, as on-premise databases migrate to the cloud, we expect these cloud of database services will be the third leg of revenue growth alongside strategic SaaS and Gen2 OCI cloud services. Software license revenues were $0.8 billion, down 11% following an amazing Q1 last year of 19% growth, which made it a tough compare this year. So in all, total revenue for the quarter were $12.4 billion, up 8% including Cerner, up 9% excluding Cerner. Shifting to margins. The gross margin for cloud services and license support was 78%, with IaaS gross margins improving substantially from last year. And while we’ve continued to build data center capacity, we've also seen our IaaS margins go higher as these new cloud regions fill up. We monitor our expenses very carefully to ensure our gross margin percentages expand as we scale up. To this point, gross profit dollars of cloud services and license support grew 9% in Q1. Non-GAAP operating income was $5.1 billion, up 12% from last year. The operating margin was 41%, up from 39% last year. As we continue to benefit from economies of scale in the cloud and drive Cerner profitability to Oracle standards, we will not only continue to grow operating income, but we will also grow the operating margin percentage. The non-GAAP tax rate for the quarter was 18.8%, and non-GAAP EPS was $1.19 in US dollars, up 16% in USD, up 14% in constant currency. The GAAP EPS was $0.86 in USD. At quarter end, we had nearly $12.1 billion in cash and marketable |
5,961 | ORCL | 1 | 2,024 | 2023-09-11 17:00:00 | Oracle Corporation | 22,247 | up 14% in constant currency. The GAAP EPS was $0.86 in USD. At quarter end, we had nearly $12.1 billion in cash and marketable securities. The short-term deferred revenue balance was $11.1 billion, up 5%. Operating cash flow for the first quarter was up 9% to $7 billion, while free cash flow was up 21% to $5.7 billion and I expect that we will see a very good result in our free cash flow for the rest of the year. Over the last four quarters, operating cash flow was $17.7 billion, up 68% and free cash flow was $9.5 billion, up 76%. Capital expenditures were $8.3 billion over the last four quarters and we are clearly beginning to see the cash flow benefits stemming from our cloud transformation. CapEx was $1.3 billion in Q1 as we continue to build capacity for bookings and our customers’ growing needs. Given the demand we have and see in the pipeline, I expect that fiscal year 2024 CapEx will be similar to this past year's CapEx. As always, we remain careful to pace our investments appropriately and in line with booking trends, which is why our gross margins are up in our cloud business. We now have 64 cloud regions live with 44 public cloud regions around the world and another six being built, 12 of these public cloud regions interconnect with Microsoft Azure. We also have nine dedicated regions live and 11 more planned, nine security regions and 12 EU sovereign regions live with increasing demand for more of each. And of course, we have many, many clouded customer implementations. The cost advantages, sizing flexibility and deployment optionality of our cloud regions continue to make us so compelling in the marketplace to customers. As we've said many, many times before, we are committed to returning value to our shareholders through technical innovation, strategic acquisitions, stock repurchases, prudent use of debt and the dividends. This quarter we repurchased 1.3 million shares for a total of $150 million. In addition, we paid out dividends of $3.9 billion over the last 12 months and the Board of Directors |
5,962 | ORCL | 1 | 2,024 | 2023-09-11 17:00:00 | Oracle Corporation | 22,247 | a total of $150 million. In addition, we paid out dividends of $3.9 billion over the last 12 months and the Board of Directors declared a quarterly dividend of $0.40 per share. Now before I dive into Q2 guidance, I'd like to share some thoughts on what I see longer-term. Per my earlier remarks, we have a great line of sight into the trajectory of the business, given the bookings momentum. We are extremely confident about our revenue acceleration for the year, even though in any quarter there may be small fluctuations. Because we have far more demand than we can supply, our biggest challenge is building data centers as quickly as possible. In addition, we are in an accelerated transition of Cerner to the cloud. This transition is resulting in some near-term headwinds to the Cerner growth rate as customers move from license purchases, which are recognized upfront to cloud subscriptions, which are recognized ratably. Again, excluding Cerner, I remain committed to accelerating our total revenue growth rate this fiscal year as well as maintaining our current high cloud growth rate for the year. And as you will hear at our financial analyst meeting next week, we remain firmly committed to our fiscal '26 financial goals. Let me now turn to my guidance for Q2, which I'll review on a non-GAAP basis. If currency exchange rates remain the same as they are now, currency should have a 2% positive effect on total revenue and a $0.03 positive effect on EPS in Q2. However, the actual currency impact may be different. Here we go, total revenues including Cerner are expected to grow from 3% to 5% in constant currency, and are expected to grow 5% to 7% in USD at today's rates. Total revenue excluding Cerner are expected to grow from 6% to 8% in constant currency and expected to grow 8% to 10% in USD. Total cloud revenue excluding Cerner, again, I give you these numbers, so you can see the mainline business, is expected to grow from 27% to 29% in constant currency and is expected to grow 29% to 31% in USD. Non-GAAP EPS is expected |
5,963 | ORCL | 1 | 2,024 | 2023-09-11 17:00:00 | Oracle Corporation | 22,247 | is expected to grow from 27% to 29% in constant currency and is expected to grow 29% to 31% in USD. Non-GAAP EPS is expected to grow between 5% to 9%, and be between $1.27 and $1.31 in constant currency. Non-GAAP EPS is expected to grow between 7% to 11% and be between $1.30 and $1.34 in USD. My EPS guidance for Q2 assumes a tax rate of 19%. However, one-time tax events could cause actual tax rates to vary. And with that, I'll turn it over to Larry for his comments. |
5,964 | ORCL | 1 | 2,024 | 2023-09-11 17:00:00 | Oracle Corporation | 22,247 | Larry Ellison: Thank you, Safra. So, is generative AI is the most important new computer technology ever? Maybe, and we are about to find out. Self-driving cars, computer-designed antiviral drugs, voice user interfaces. Generative AI is changing the automobile industry, the pharmaceutical industry, how people communicate with their computers. Generative AI is changing everything. As of today, AI development companies have signed contracts to purchase more than $4 billion of AI training capacity in Oracle's Generation 2 cloud. That's twice as much AI training as we had booked at the end of the last Q4. I'm also very pleased to announce that Exai has signed the contract to do training in Oracle's Gen 2 Cloud. The largest AI technology companies and the leading AI startups continue to expand their business with Oracle for one simple reason, Oracle's RDMA interconnected NVIDIA superclusters train AI models at twice the speed and much less than half the cost of other clouds but growth in our AI cloud infrastructure business is not the only exciting news we have to report at Oracle. Our cloud applications business is doing quite well and it's about to get even better. In the current quarter we expect our Cerner Health business to be awarded two large new contracts with a total value of over $1 billion. And I’m now able to announce that all nine utility companies owned by Berkshire Hathaway are in the process of replacing all their existing ERP systems, and standardizing on Oracle's Fusion Cloud applications. Let me conclude with a few words about our database business and our upcoming announcement with Microsoft later this week. We will be substantially expanding our existing multi-cloud partnership with Microsoft by making it easier for Microsoft Azure customers to buy and use the latest Oracle cloud database technology in combination with Microsoft Azure cloud services. Satya and I will discuss the details of our expanding partnership at Microsoft headquarters in Redmond on the 14th. Please tune in, and thank you. |
5,965 | ORCL | 1 | 2,024 | 2023-09-11 17:00:00 | Oracle Corporation | 22,247 | the details of our expanding partnership at Microsoft headquarters in Redmond on the 14th. Please tune in, and thank you. Back to you, Safra. |
5,966 | ORCL | 1 | 2,024 | 2023-09-11 17:00:00 | Oracle Corporation | 22,247 | Safra Catz: Thanks, Larry. And maybe, Ken, we could start taking questions at this point.
Ken Bond: Absolutely. Before we do that, Lisa, just one quick clarification, that we currently have two EU sovereign regions live with more to come. Lisa, please poll the audience for questions.
Operator: Thank you. [Operator Instructions] We'll take our first question from Brad Zelnick with Deutsche Bank.
Brad Zelnick: Great. Thanks very much, and congrats on the strong start to the year. Larry, I think it's fair to say that you understand the laws of data gravity better than anyone and you have monetized this fundamental concept as well as anyone over the years. And I recently heard someone say, we are moving from a world of data gravity to one of AI gravity, and I'm not sure exactly what that means, or they even knew what that meant, but with AI and other use cases attracting more and more data to central clouds, with many vendors preaching data sharing instead of what used to be making multiple copies of things and keeping them synchronized, does AI plus cloud in any way break what we've always understood about data gravity? And what does that mean for Oracle? |
5,967 | ORCL | 1 | 2,024 | 2023-09-11 17:00:00 | Oracle Corporation | 22,247 | Larry Ellison: Well, you can't build any of these AI models without enormous amounts of training data. So if anything, what AI -- generative AI has shown that the big issue about training one of these models is just getting that -- this vast amount of data ingested into your GPU supercluster. It is a huge data problem in the sense you need so much data. To train -- OpenAI to train ChatGPT 3.5, they read the entire public Internet, they read all of Wikipedia, they read everything, they ingested everything. And to specialize, and you take something like ChatGPT 4.0 and you want to specialize it, you need specialized training data from electronic health records to help doctors diagnose and treat cancer, let's say, and we are partners. Imaging for example, that is ingesting huge amounts of image data to train their AI models. We have our own -- another partner of ours in AI, ingesting huge amounts of electronic health records to train their models. AI doesn't work without getting access to and ingesting enormous amounts of data. So in terms of a shift away from data or a change in gravities at AI, AI is utterly dependent upon vast amounts of training data. Trillions of elements went into building ChatGPT 3.5, multiple times that for ChatGPT 4.0 because you have to deal with all the image data and ingest all of that to train image recognition. So we think this is very good for our database business, and Oracle's new Vector database will contain highly-specialized training data like electronic health records, while keeping that data anonymized and private, yet still training the specialized models that can help doctors improve their diagnostic capability and their treatment prescriptions for cancer and heart disease and all sorts of other diseases. So we think it's a boon to our business, and we are now getting into the deepwater of the information age. Nothing has changed about that. The demands on data are getting stronger and more important.
Brad Zelnick: Thank you so much for your perspective, Larry. |
5,968 | ORCL | 1 | 2,024 | 2023-09-11 17:00:00 | Oracle Corporation | 22,247 | Brad Zelnick: Thank you so much for your perspective, Larry.
Operator: We'll take our next question from Mark Murphy with JPMorgan.
Mark Murphy: Thank you so much. So Larry, companies are starting to understand that OCI has a very fundamentally different architecture than anything else out there in the market because of the non-blocking, low-latency network design. I'm wondering, if you think it's possible to actually pull further ahead through some of your other initiatives. For instance, the Azure Interconnect, it sounds like you're going to expand that. Having more regions, running a stronger database, providing greater isolation, just wondering if you think there is a possibility of extending the lead? |
5,969 | ORCL | 1 | 2,024 | 2023-09-11 17:00:00 | Oracle Corporation | 22,247 | Larry Ellison: Well, again, our -- we have -- we are on our second generation of data center, and our second generation of cloud. Now a lot of people notice that we were a little bit late to the party, but that's because we moved from a generation which we were not very happy with to a second generation, which we think solved a lot of problems the other cloud companies have not yet solved. So the non-blocking ultrafast RDMA network is not only useful for AI -- training AI models, it's useful for almost everything. It's certainly useful for building a much faster database. It's useful for, in terms of the automation level we have in our data centers, our data centers are 100% automated. They configure themselves. They run themselves. We don't have a lot of labor. Now that saves us a huge amount of money, a lot of labor cost is saved. But the biggest advantage is, if you don't have human beings involved, you don't have human labor, you don't have human errors. You don't have mistakes. You can ensure security. Most security problems are caused by people that make mistakes or people that engage in mischief. We don't have that in our data center. That's another huge advantage. Our data centers are -- because they're all identical, the only way we could automate them was to make them all the same and they vary only by scale. There are big ones and small ones, but they are identical, they all have the same hardware pieces and the same software pieces. They all have the same automation and that automation allows us to put these data centers in very small countries. We expect to have many, many more data centers than any other cloud provider. But we also put those data centers at customers. Nomura Research, NRI, which resells Oracle Cloud capacity in Japan has two dedicated regions and are building two more. They run the Tokyo Stock Exchange. I don't know of any clouds that are running stock exchanges other than ours. And, again, it's because of the extreme reliability and security that we get with all of the automation |
5,970 | ORCL | 1 | 2,024 | 2023-09-11 17:00:00 | Oracle Corporation | 22,247 | other than ours. And, again, it's because of the extreme reliability and security that we get with all of the automation that's included with our data center. So we have cost advantages, we have performance advantages, we have security advantages. And that's why we are growing much faster than any of the other hyperscalers. |
5,971 | ORCL | 1 | 2,024 | 2023-09-11 17:00:00 | Oracle Corporation | 22,247 | Mark Murphy: Thank you very much.
Operator: We'll take our next question from Raimo Lenschow with Barclays Capital.
Raimo Lenschow: Thank you. Larry, you mentioned Berkshire, and them moving over to Fusion. I just wanted to talk in -- more bigger picture on the back-office systems, like, in the olden days, back-office, you wouldn't touch, in kind of tougher times because they are big complex project. But you guys are still kind of growing this nicely with over 20%. Like what are you seeing there? And do you see a change in pipelines, change in customer interest of doing something there? Thank you. |
5,972 | ORCL | 1 | 2,024 | 2023-09-11 17:00:00 | Oracle Corporation | 22,247 | Larry Ellison: Yeah, well the back-office in the cloud is very different than the back-office on-premise. And we have a big advantage that we are by far and away the biggest. I don't know, 95% of the cloud ERP market in terms of actual live customers using it. And we have an important partnership with JPMorgan Chase and we'll be announcing some more partnerships in the financial community at the upcoming CloudWorld, where we automate a lot of e-commerce, B2B e-commerce right in the cloud. So what is B2B big e-commerce between two Oracle Cloud customers, two Oracle ERP cloud customers? It's one Oracle procurement system talking to another Oracle order management system and financing the transaction through their bank. We automate that entirely in the cloud. If your bank is JPMorgan Chase, they originate the loan right along with your purchase. It’s e-commerce for B2B, with banking and shipping and insurance, all included and rolled together. No one -- we've done a great job as an industry, automating e-commerce for B2C. I mean, Amazon, Walmart, others have done a brilliant job in that. We've been doing that for a long time. We have not got the equivalent in B2B commerce because B2B transactions are much more complex. In the cloud, you can get all the parties together, the shippers, the insurance company, the manufacturers, the purchasers and we can automate that entirely within the Oracle Cloud. One ERP system talking to another, talking to their bank, talking to their insurance, doing a loan origination, getting it shipped and insured. So we make doing business much easier for our customers when they move to a modern cloud ERP system versus the on-premise ERP system that came before.
Raimo Lenschow: Okay. Thank you.
Operator: We will take our next question from Mark Moerdler with Bernstein. |
5,973 | ORCL | 1 | 2,024 | 2023-09-11 17:00:00 | Oracle Corporation | 22,247 | Raimo Lenschow: Okay. Thank you.
Operator: We will take our next question from Mark Moerdler with Bernstein.
Mark Moerdler: Thank you so much for taking my question. The top-of-mind questions I'm getting are related to AI in general as you'd expect and were specifically as it relates to Oracle, what the impact of AI will be on OCI Gen 2. Two related parts to the question. The first is the profitability of AI supercomputers and whether if some clients try to tell me, it's low-calorie, empty-calorie revenue or can you maintain margins as this business grows? And the second part is about the Oracle ecosystem, and is it strong enough that its workloads transition from model training to inferencing and grounding, could AI compute create a revenue air pocket or [is the ecosystem] (ph) strong enough so you don't have that. Thank you. |
5,974 | ORCL | 1 | 2,024 | 2023-09-11 17:00:00 | Oracle Corporation | 22,247 | Larry Ellison: Well, if you're -- you're constantly training these models. Keep in mind, you have to bring in new data if you're in -- obviously in the healthcare field, in the legal field, new cases are being judged, new researches being published all the time and for your AI models to be relevant they have to be up-to-date. So it's not that you train and then do nothing but inferencing thereafter. So you're training and your inferencing sit right next to each other. As long as we can do this stuff twice as fast as everybody else that's on the -- not just on the training side, that's also on the inferencing side, then we are going to be half the cost or better. So we think we are going to be very, very competitive across the board whether it's training or an inferencing. So we don't -- so we are pretty confident that we've got a cost-performance advantages. Again, if you run twice as fast in the cloud, you cost half as much because you pay by the hour. So the performance advantage is really an enormous cost advantage for us. We don't see that going away anytime soon, and it applies to inferencing as well as well as training. Now as far as GPUs, are GPUs a low-margin business? Not for a 100% automated cloud with very, very low cost. We think, in some cases, our prices for GPU training, which are very profitable by the way, for us, but are often lower -- our prices are lower than the cost of other hyperscalers doing the training.
Mark Moerdler: Thank you. That's very helpful.
Operator: We'll take our next question from Keith Weiss with Morgan Stanley. |
5,975 | ORCL | 1 | 2,024 | 2023-09-11 17:00:00 | Oracle Corporation | 22,247 | Mark Moerdler: Thank you. That's very helpful.
Operator: We'll take our next question from Keith Weiss with Morgan Stanley.
Keith Weiss: Excellent. Thank you, guys, and thank you for taking the question. I wanted to drill in on Cerner, basically, the one-year anniversary of that acquisition. And maybe from Larry, get an update on where we are with modernizing that solution and modernizing that product? And basically then whether Cerner has kind of lived up to your expectations thus far? And then maybe for Safra. If we could dig into the expense synergy side of the equation, you guys have done a great job increasing margins on a year-on-year basis in this quarter, how much is left to go within Cerner and getting that margin profile to match the broader Oracle margin profile? |
5,976 | ORCL | 1 | 2,024 | 2023-09-11 17:00:00 | Oracle Corporation | 22,247 | Larry Ellison: Okay. I'll talk about the progress on taking the existing Millennium’s Cerner software and moving it to new Millennium. We basically rewriting that software piece at a time by the way. It's not going to be a big rip and replace it all. There's a two-phase process with Cerner. The first thing is to get the lift and shift and get the existing system hardened, which we've done and moving the customers to the cloud, which we are in the process of moving everybody to the cloud. That will give them better performance, better security and new features will then start showing up with the system. And so there's a two-phase shift to the cloud, we are well on our way. The next is replace feature after feature after feature of the older Cerner system with a new Cerner system, new Millennium, which we are not coding in Java, like we usually do. The new Cerner system is being generated, as you know, generative AI generates code. We have an application generator called APEX. And we are not writing code for the new Cerner. We are generating that code in APEX, and it's going extremely well. Again, one of the great things about code generators is they don't make mistakes. Well, either they make the same mistake over and over again or once you fix the mistake, you fix it everywhere. So the code gen -- we are using a code generator, and to write the new features in Cerner and it's coming along very, very nicely. Also on the business side of things, we -- again, we think that Cerner business is going to get stronger and stronger again, Safra made the point. The old Cerner business you'd sell licenses. You sell a big contract and you get a big chunk of revenue in that quarter. Our new business model, as you know is cloud, so we get a big Cerner award and we get that money now over time rather than all upfront. So that's, if you will, a bit of a revenue headwind, but the Cerner business is doing extraordinarily well. |
5,977 | ORCL | 1 | 2,024 | 2023-09-11 17:00:00 | Oracle Corporation | 22,247 | Safra Catz: And on the expense side, we still have a ways to go, but I think it will become more obvious to you next quarter the changes we've made, as they play out through the income statement more clearly. And so you'll have a better comparison, Q2 to Q2, which will be a full non-deal quarter for you to look at. But you know us, we are always looking to save as much as we can, and to spend as little while still really transforming Cerner into a modern system in its entirety.
Larry Ellison: Let me let me just reinforce what Safra just said. We love to save money. One of the things we did with our data centers is we automated them. We -- what we saved labor costs and we saved -- we have better security and better reliability because we eliminated human error. With Cerner, the rewrite of Cerner, it's not armies of programmers that are going be rewriting this. We are generating the new Millennium software using APEX. And that's also going to save us a lot of human labor and generate higher quality code and higher quality user interfaces and better security all at once.
Keith Weiss: Helpful. Thank you, guys.
Operator: We will take our last question from John DiFucci with Guggenheim.
John DiFucci: Thank you. My question is for Safra, I think. Safra, if the organic constant currency cloud growth was in line with what you did last year and what you want to do for this year at 29%, while license, though it was a difficult comp it was a bit weaker, at least than the street was expecting. And I also -- we also realize that cloud revenue for the same amount of business booked will be a lot less than the equivalent license revenue in the quarter. But does this mean we are seeing a move with stronger momentum to the cloud this quarter than we have seen? And I guess just to clarify, given your guidance for the second quarter, you said you're maintaining your longer-term. Safra, I just wanted to clarify. Are you maintaining your constant currency organic cloud guidance for the year? |
5,978 | ORCL | 1 | 2,024 | 2023-09-11 17:00:00 | Oracle Corporation | 22,247 | Safra Catz: Yes, okay. Let me start with yes. And as I want to remind you of course, I want to remind you 29% of bigger numbers is more. Okay. So, you know, last year we were smaller, and this year we continue to plan on doing the 29% may be better, all of it is dependent on us getting our data centers filled up and built out as fast as possible. The level of demand we have is stunning. Stunning is the only word I can use, and I don't want to get over overly exuberant simply because we do have to continue to build out our systems, et cetera. And so yes, a very strong momentum to the cloud, and again with the focus we told you. We are bringing our customers to the cloud and that's going to have us focusing on growing that and stronger momentum there.
John DiFucci: Okay, great. Very clear. Yes and yes. Got it. Thanks.
Ken Bond: All right. Thank you, John, and thank you, Lisa. A telephonic replay of this conference call will be available for 24 hours on our Investor Relations website. Thank you for joining us today. And with that, I'll turn the call back to Lisa for closing.
Operator: And that does conclude today's presentation. Thank you for your participation and you may now disconnect. |
5,979 | ORCL | 3 | 2,025 | 2025-03-10 17:00:00 | Oracle Corporation | 22,247 | Operator: Ladies and gentlemen, thank you for standing by. My name is Abby I will be your conference operator today. At this time, I would like to welcome everyone to the Oracle Corporation Third Quarter Fiscal Year '25 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks there will be a question-and-answer session. [Operator Instructions] And I would now like to turn the conference over to Ken Bond, Head of Investor Relations. Mr. Bond, you may begin. |
5,980 | ORCL | 3 | 2,025 | 2025-03-10 17:00:00 | Oracle Corporation | 22,247 | Ken Bond: Thank you, Abby. Good afternoon, everyone, and welcome to Oracle's third quarter fiscal year 2025 earnings conference call. A copy of the press release and financial tables, which includes a GAAP to non-GAAP reconciliation and other supplemental financial information can be viewed and downloaded from our investor relations website. Additionally, a list of many customers who purchased Oracle Cloud Services or went live on Oracle Cloud recently will be available from our Investor Relations website. On the call today are Chairman and Chief Technology Officer, Larry Ellison; and Chief Executive Officer Safra Catz. As a reminder, today's discussion will include forward looking statements, including predictions, expectations, estimates or other information that might be considered forward looking. Throughout today's discussion, we will present some important factors relating to our business, which may potentially affect these forward-looking statements. These forward-looking statements are also subject to risks and uncertainties that may cause actual results to differ materially from the statements being made today. As a result, we caution you against placing undue reliance on these forward-looking statements, and we encourage you to review our most recent reports including our 10-K and 10-Q and any applicable amendments for a complete discussion of these risk factors and other risks that may affect our future results or the market price of our stock. And finally, we are not obligating ourselves to revise our results or these forward-looking statements in light of new information or future events. Before taking any questions, we will begin with a few prepared remarks. And with that, I'd like to turn the call over to Safra. |
5,981 | ORCL | 3 | 2,025 | 2025-03-10 17:00:00 | Oracle Corporation | 22,247 | Safra Catz : Thanks, Ken, and good afternoon, everyone. As you can see, this was our strongest booking quarter ever by a huge margin as we added $48 billion to our backlog. Our RPO balance is now $130 billion up from $97 billion last quarter and up from $80 billion last year. That's a growth of 63% year-over-year and this does not include any contracts with project Stargate. The RPO figure is the leading indicator of demand for our cloud services, while our live data center count and power capacity is the leading indicator of the conversion of RPO to revenue. Speaking of data centers, we marked a milestone this quarter as we crossed into triple digits with our 101st cloud region coming online. It's just a matter of time before we have more cloud regions than all of our competitors combined, reflecting the strategic advantage of our Gen 2 architecture, which offers our customers the most flexibility. From a delivery standpoint, the growth of our power capacity under contract is even higher than the growth in the number of data centers and we expect that our available power capacity will double this calendar year and triple by the end of next fiscal year. As we bring more capacity online, our revenues will clearly accelerate. What we are seeing in the market is that we are the destination of choice for both AI training and inferencing. This is due to the fact that our Gen 2 cloud is faster and therefore, cheaper than our competitors and also do to our ultra high-speed networking engineering that we started decades ago and that is now highly relevant for AI. Taken together we have numerous structural engineering advantages that distinguishes OCI from our competitors. And as Larry will discuss in more detail, Beyond that, because of the momentum OCI is enjoying, customers are looking at us for many more workloads. Now shifting to Q3 results. I'll be discussing our financials using constant currency growth rate, as this is how we manage the business. So here goes. Total cloud revenue at SaaS and IaaS was up 25% at |
5,982 | ORCL | 3 | 2,025 | 2025-03-10 17:00:00 | Oracle Corporation | 22,247 | currency growth rate, as this is how we manage the business. So here goes. Total cloud revenue at SaaS and IaaS was up 25% at $6.2 billion with SaaS revenue of 3.6% in the quarter, up 10% and IaaS revenue of $2.7 billion, up 51% on top of 49%, which report -- which we reported last year. Now as a reminder, the exit our advertising business last year had the effect of lowering total cloud revenue growth by 2% this quarter. Total cloud services and license support revenue for the quarter was $11 billion, up 12%, driven again by OCI our strategic cloud applications and cloud database services. Infrastructure subscription revenues, which includes license support, were $6.2 billion, up 18%. Record level AI demand drove Oracle Cloud Infrastructure revenue up 51% in Q3 and that's 54% when you exclude our legacy hosting, both a much higher growth rate than any of our hyperscaler competitors. Our Instructure cloud services now have an annualized revenue of $10.6 billion. OCI consumption revenue was up 57%, Demand continues to dramatically outstrip supply. Now we do expect that the component delays that have slowed cloud capacity expansion this year, should ease in Q1 FY '26. So pretty soon. Growth in the AI segment of our infrastructure business was extraordinary GPU consumption revenue is now nearly 3.5 times the size of last year's. Cloud database services, which were up 28%, now have annualized revenue of $2.3 billion, Autonomous Database consumption revenue was up 42% on top of the 32% growth reported last year. So again, we have acceleration, as we get bigger. As on-premise databases migrate to the cloud either on OCI directly through public cloud, cloud to customer or DRCC, or through our database at cloud service with Azure, Google or AWS. We expect the cloud database revenues collectively, will be the third driver of revenue growth alongside OCI and strategic SaaS. We are currently live in 18 cloud regions with database at cloud services with our partners and have another 40 planned with Azure, Google and AWS. |
5,983 | ORCL | 3 | 2,025 | 2025-03-10 17:00:00 | Oracle Corporation | 22,247 | in 18 cloud regions with database at cloud services with our partners and have another 40 planned with Azure, Google and AWS. Now finally, database subscription revenues, which includes license support, were up 6%. Application subscription revenues, which again, include product support, were $4.8 billion and up 6% [too] (ph). Our strategic back-office SaaS applications now have annualized revenue of $8.6 billion and were up 8%. Software license revenues were down 8% to $1.1 billion. So all in, total revenues for the quarter were $14.1 billion, up 8% from last year. Now shifting to gross profit and operating income, the gross profit dollars of cloud services and license support grew 10% in Q3. We continue to focus on operating expense discipline, which collectively continue to grow slower expense discipline. So expenses continue to grow slower than revenue, a trend that I expect will continue. The Q3 operating income grew 9% and the operating margin was 44%, up slightly from last year. The non-GAAP tax rate for the quarter was 19.9%, which was higher than my 19% guidance and lowered EPS by $0.02. And EPS currency headwind ended up at $0.04 more than I thought would be hurt by currency -- as currency continued to strengthen. The non-GAAP EPS was $1.47, up 4% in USD, up 7% in constant currency. The GAAP EPS was $1.02, up 20% in USD, up 25% in constant currency. At quarter end, we had $17.8 billion in cash and marketable securities. The short-term deferred revenue balance was $9 billion, up 3% and operating cash flow for Q3 was $5.9 billion, slightly more than our $5.9 billion in CapEx, as we front-loaded some purchases into the quarter, given the demand that you see in our RPO growth and the additional demand we see in our pipeline. I expect fiscal year 2025 CapEx will be a little more than double what it was last year at around $16 billion. As always, we remain careful to pace and align our CapEx investments appropriately and in line with booking trends. On a trailing 12-month basis, operating cash flow was up 14% |
5,984 | ORCL | 3 | 2,025 | 2025-03-10 17:00:00 | Oracle Corporation | 22,247 | CapEx investments appropriately and in line with booking trends. On a trailing 12-month basis, operating cash flow was up 14% at $20.7 billion, and free cash flow was $5.8 billion. As I mentioned, remaining performance obligations or RPO is now $130 billion, up 63% in constant currency, and it reflects the growing trend of customers wanting larger and longer contracts, as they see firsthand how Oracle Cloud services are benefiting their businesses. Further, our cloud RPO grew over 90% and now represents more than 80% of total RPO and approximately 31% of that total RPO number is expected to be recognized as revenue over the next 12 months. Now we are and remain committed to returning value to our shareholders through technical innovation, acquisitions, repurchases, prudent use of debt and the dividend. This quarter, we repurchased nearly 1 million shares for a total of $150 million and over the last 10 years, we've reduced the shares outstanding by more than one-third at an average price of $54 a share. In addition, we have paid out dividends of $4.4 billion over the last 12 months, and the Board of Directors increased the quarterly dividend 25% from $0.40 to $0.50 per share today. Before I dive into Q4 specific guidance, I'd like to comment on the financial acceleration we expect to see in the coming years. We now have a clear light of sight to our future revenue growth. We remain very confident and committed to total cloud infrastructure revenue for fiscal year 2025 growing faster than the 50% reported last year and it will be even faster for fiscal year 2026, likely a lot faster. Our confidence in meeting our $66 billion revenue target for FY '26 is now stronger revenue than ever and represents around a 15% growth rate. And more importantly, I now expect that our fiscal year '27 growth rate will be around 20%, which is even higher than I previously guided. Let me now turn to my guidance for Q4, which I'll review on a non-GAAP basis and assuming exchange rates remain the same as they are now, currency should |
5,985 | ORCL | 3 | 2,025 | 2025-03-10 17:00:00 | Oracle Corporation | 22,247 | for Q4, which I'll review on a non-GAAP basis and assuming exchange rates remain the same as they are now, currency should have a $0.01 to $0.02 negative effect on EPS and a 1% negative effect on revenue. However, as usual, currency impact may be different. So focus in on constant currency. Total revenues are expected to grow from 9% to 11% in constant currency and are expected to grow from 8% to 10% and in USD at today's exchange rate. Total cloud revenue is expected to grow from 24% to 28% in constant currency is expected to grow from [25 to 27 in USD] (ph). Non-GAAP EPS is expected to grow from 0% to 2% and be between $1.62 and $1.66 in constant currency. Non-GAAP EPS is expected to grow between negative 1, positive 1 and be between $1.61 and $1.65 in USD. I should mention that my Q4 EPS guide is negatively impacted by $0.03 plus due to losses recognized from an investment in another company. Lastly, my EPS guidance for Q4 assumes a base rate of 19%. However, as you saw in this quarter, onetime tax events could cause actual tax rates to vary and usually do. And finally, I'm sure this isn't lost on anyone, but we are reporting earnings just 10 days after the close of the quarter, and that's also because there was a weekend, using fusion we continue to file our quarterly and annual financial statements faster than any other company in the S&P 500. And with that, I'll turn it over to Larry for his comments. |
5,986 | ORCL | 3 | 2,025 | 2025-03-10 17:00:00 | Oracle Corporation | 22,247 | Lawrence Ellison: Thank you, Safra. Well, as Safra pointed out, some of our existing businesses, AI training and multi-cloud database are experiencing hyper growth. We are in the process of building a gigantic 64,000 GPU, liquid-cooled NVIDIA GB 200 cluster for AI training. Our multi-cloud business at Amazon, Google and Microsoft grew 200% in the last three months alone. But in addition to these rapidly growing existing businesses, new customers and new businesses are migrating to the Oracle Cloud at an unprecedented rate. In Q3, we signed a multibillion dollar contract with AMD to build a cluster of 30,000 of their latest MI355x GPUs and all four of the leading cloud security companies: CrowdStrike, Cyber Reason, Newfold Digital and Palo Alto, they all decided to move to the Oracle Cloud. But perhaps most importantly, Oracle has developed a new product called the AI data platform that enables our huge installed base of database customers to use the latest AI models from OpenAI xAI and meta to analyze all of the data they have stored in their millions of existing Oracle databases. By using Oracle version 23 AI's vector capabilities, customers can automatically put all of their existing data into the vector format that is understood by AI models. This allows those AI models to learn, understand and analyze every aspect of your company or government agency, instantly unlocking the value in your data while keeping your data private and secure. This AI inferencing will be another great large new business for Oracle. Back to you, Ken.
Ken Bond: Thank you, Larry. Abby, please poll the audience for questions. Thank you.
Operator: Thank you. We will now begin the question-and-answer session. [Operator Instructions] And your first question comes from the line of Brad Zelnick with Deutsche Bank. Your line is open. |
5,987 | ORCL | 3 | 2,025 | 2025-03-10 17:00:00 | Oracle Corporation | 22,247 | Brad Zelnick : Great. Thanks so much for taking the question. And congrats on just remarkable booking strength. Larry, I'm hoping you can expand more on Stargate because this is just a massive scale American first venture with Oracle joined by undisputed AI leaders like OpenAI and NVIDIA and they chose you over several other choices in the market. What is Oracle's unique value add here? What can Oracle do that others can't? Thanks.
Lawrence Ellison : Well, I think it's actually very simple. The capability we have is to build these huge AI clusters with technology that actually runs faster and more economically than our competitors. So it really is a technology advantage we have over them. If you run faster and you pay by the hour, you cost less. So that technology advantage translates to an economic advantage, which allows us to win a lot of these huge deals. And it is not just the Stargate deal, which is in our future, by the way. We got to over $130 billion in RPO without any transactions from Stargate. So again, Stargate looks to be the biggest project -- AI training project out there. And we expect that will allow us to grow our RPO even higher in the coming quarters. And we do expect Stargate of our first large Stargate contract fairly soon.
Brad Zelnick : Great. Larry, if I could maybe just sneak in a very quick one for Safra. When Stargate does hit as it is a related party. Is there anything that you can share with us as to how we should expect it might flow through the financials? Thanks again.
Safra Catz : Well, it won’t flow -- through us in any unique way. They will place contracts with us, and they'll come right through. So I'll be explaining it to you once it's fully laid out, but it's not going to make your work harder. We are going to be very, very clear on as the contracts come through us. It won't be as much of a change as you think it's just going to be even larger numbers.
Brad Zelnick : Well, thank you again. |
5,988 | ORCL | 3 | 2,025 | 2025-03-10 17:00:00 | Oracle Corporation | 22,247 | Brad Zelnick : Well, thank you again.
Operator: And your next question comes from the line of Derrick Wood with TD Cowen. Your line is open.
Derrick Wood : Safra and Larry, congrats on a strong bookings quarter. I wanted to drill into the growth under current around OCI, especially in light of such a huge RPO number that didn't even include Stargate. In some quarters, we hear about particular demand for AI contracts certainly seems to be a lot of favorable developments going on there. But other times, we hear about emerging adoption in multi-cloud and database on hyperscalers and we can hear about strength in dedicated as well with sovereign clouds and alloy. I guess as you look at Q3 bookings and pipeline trends, can you give us a sense as to how demand is unfolding across those three different environments and how you feel about the growth durability and really the infrastructure capacity serviceability of each of these vectors. |
5,989 | ORCL | 3 | 2,025 | 2025-03-10 17:00:00 | Oracle Corporation | 22,247 | Safra Catz : Well, I mean the reality is that everything is chugging on all fronts. So multi-cloud, I gave you some of the numbers. These numbers -- I was just looking year-over-year because we only started really having revenue originally a year ago. It's more than 10 times what it was just a year ago and the numbers are exploding. As I told you, we've got 18 lives, but 40 coming online. So that is going unbelievably well. OCI, public cloud going spectacularly, cloud a customer really going well and all the pieces around that and we're starting -- there are whole parts that are only now rolling out which are sovereign clouds disconnected clouds. And so we've laid out quite a lot of capacity, and it's starting to fill up. So bookings are going very, very well, and it's turning into revenue. So pretty much it's -- we're going on all cylinders for us. We are happy when customers come directly to us with their database workloads, but we are also happy when they do -- they come to us through our partners, Azure, AWS and GCP. So for us, we don't care. It is -- they get exactly the same capability at the -- and it's truly ideal. |
5,990 | ORCL | 3 | 2,025 | 2025-03-10 17:00:00 | Oracle Corporation | 22,247 | Lawrence Ellison : Now the customers can get our database everywhere. They can install an Oracle cloud region on their premises. They can get Oracle from Azure. They can get Oracle from Google. They can get Oracle from AWS. They obviously get a good Oracle from OCI. And that Oracle database is becoming more and more capable. It does store most of the world's valuable data. It is by far the largest data base installed base in the world, with nothing remotely close. And most of those databases are still on-premise, but now they are beginning to migrate to the cloud. And one of the big drivers of them migrating to the cloud is the autonomous version of the database. And now perhaps just as importantly the AI data platform, which allows you to take all of your existing data, all of your existing data and make it available to any of the leading AI models, say, Grok, ChatGPT, LLaMa, all of them can immediately take advantage of your existing data and your existing database and turn it into insights and actions and agents directly, again, on your private data while keeping that private data private. And that has been the missing link in companies and government agencies taking fully trained on all of the public data that's available on the Internet. Now that's a huge amount of information and makes for brilliant AI -- but the AI is not -- does not have a lot of information about your company or your government agency because that data is not available on the Internet. That is not data that the AI model was trained on -- now with the Oracle Database, 23 AI. The AI model can look at your data train itself on that data and provide you with, again, inside actions on your existing data while keeping it private. You don't have to share it with anybody.
Derrick Wood: Fantastic. Thank you.
Operator: And your next question comes from the line of Alex Zukin with Wolfe Research. Your line is open. |
5,991 | ORCL | 3 | 2,025 | 2025-03-10 17:00:00 | Oracle Corporation | 22,247 | Operator: And your next question comes from the line of Alex Zukin with Wolfe Research. Your line is open.
Alex Zukin: Hi, thank you guys. And echoing the congratulations for truly unbelievable bookings number. I guess maybe, Larry could you opine on the current kind of state of the AI training versus inferencing opportunity. You have potentially investors worried about diminishing returns to training. Even some of your hyperscaler peers seemingly walking back on some of their CapEx commitments. What are you seeing out there with respect to training versus inference, both in the incremental bookings that you're adding into the pipeline? And maybe just how Oracle is differentiated on the inferencing side versus both hyperscalers and Neo clubs, particularly with this AI data platform product that you just announced? |
5,992 | ORCL | 3 | 2,025 | 2025-03-10 17:00:00 | Oracle Corporation | 22,247 | Lawrence Ellison : Okay. Well, obviously, our training business is getting bigger and bigger and bigger, very rapidly, as evidenced by our RPO. But it wasn't just AI training that drove the RPO up. the AI inferencing, the potential of AI inferencing and think about all of the Oracle databases out there that, that data in those databases are going to train AI models. The AI models are only useful if they're familiar with the data -- your data, the AI models have to understand your products. your customers, your service requests, your financials. So you have to make all that data available to the AI models in those databases. This has not -- this is -- we're right at the beginning of that. And again, on top of those Oracle databases now, we ourselves because [when] (ph) the application business have built lots and lots of agents on top of the Oracle -- on the Oracle databases and made those agents a part of our applications, modernizing and automating our applications. But customers need to do the exact same thing as they build software inside of their government agency where they build software inside, again, AI agents inside of their company. And how are they -- what is -- how do they go about doing that? Well, they go about doing that is training the AI models on their data, on their data that is currently in an Oracle database. And we make that very easy. You push a button -- the new version of the Oracle Database 23 AI with vector capabilities allow you to convert your data into vector format that's understood by the AI models. Nobody else has that. Nobody else has that. So you can easily now train the AI models on your data for inferencing, obviously, and for building of agents, you can do that automatically with the Oracle Database. We are the only one with that capability. So we think inferencing in the end is a much bigger opportunity than AI training. And there are literally millions of Oracle databases all over the world that will and that data, all of those millions of databases, all of that data will |
5,993 | ORCL | 3 | 2,025 | 2025-03-10 17:00:00 | Oracle Corporation | 22,247 | of Oracle databases all over the world that will and that data, all of those millions of databases, all of that data will be used to train AI models. And on top of that, they'll build agents and applications. We think, again, that -- I mean it's -- we don't have these 1 or 2 or 10 huge contracts for training because there aren't that many people building frontier models, but there are hundreds of thousands of our customers that will be consuming those AI models and training those same AI models on their private data and then running agents and applications on top of all of that. That's a much bigger market than AI training for us. |
5,994 | ORCL | 3 | 2,025 | 2025-03-10 17:00:00 | Oracle Corporation | 22,247 | Alex Zukin: Super helpful. And maybe just Safra, how to think about RPO trends and trending over the course of the next few quarters in light of that?
Safra Catz : I think there are going to be lumpiness as you can see, but we actually expect some extremely significant numbers coming within the next few months also. So there's just a lot of demand folks there is a lot of demand where people want to lock in and schedule into our cloud. So we're going to see we're going to see increases in RPO. But remember, our remaining performance obligation, we also burned down some of it through the quarter as capacity goes online, but I expect that number to be extremely large. This is enormous, but I expect it actually to continue to be very large amazingly.
Alex Zukin: Thank you so much.
Operator: And your next question comes from the line of John DiFucci with Guggenheim. Your line is open.
John DiFucci: Thank you. You said you were live on 33 cloud regions and another 40 planned with Azure --.
Safra Catz : No, 18 Multi cloud.
John DiFucci : Sorry, I got it. Yes, I got you way ahead of yourself. I'm sorry, ever. But anyway, I know you said you had another 40 planned with Azure, AWS and Google, this quarter, we saw a big uptick like in discussions between partners and large enterprise regarding Oracle database pick your hyperscaler like the discussions seem to be in like happening in mass, but not the deals yet. And one of the things a limiting factor and talk partners was that some of these global enterprises needed it to be global because the global enterprises. Those 40, I guess, does that get you there for that? And when -- like when do those 40s get deployed? Are they going to be deployed over the next year? Or is it going to be over the next, I don't know, about how long does that take? |
5,995 | ORCL | 3 | 2,025 | 2025-03-10 17:00:00 | Oracle Corporation | 22,247 | Safra Catz: Well, of course, we are not in full control of that, but everyone's motivated to get them as quickly as possible because, as you know, the way the revenue flows through, it flows through to our partner or our host and then we -- and then they pay us. So they are very, very motivated to get it as quickly as possible because that is holding up revenue for them until they can deploy it. It's been moving very quickly. They’ve accelerated recently. And as you can imagine, there is some significant competition between those three hyperscalers to grab those workloads before their competitor takes them. So it is moving quickly. And -- but there is enormous demand again, enormous demand, but that capacity is not always within our control. So but they are very, very motivated to get it going because when those customers move, they often bring a lot of additional workload connected to the database into their cloud would often directly into OCI also. And of course, we are the fourth competitor for them at the same time. So I don't have the exact dates of someone in my organization, no doubt it does, but we do expect it in short order to be a lot more deployed very quickly, and demand is extremely high. |
5,996 | ORCL | 3 | 2,025 | 2025-03-10 17:00:00 | Oracle Corporation | 22,247 | Lawrence Ellison : Can I help – I think I can help on this. So everyone needs a primary and a backup data center in North America. Everyone needs a primary and a backup data center in Europe, typically Western Europe. And everyone needs a primary -- not everyone and a lot of people need primary and backups in Asia. So that's six data centers. So once we get to a primary and backup in North America and Europe and in Asia for let's us say, Google, we're ready to roll. Most of the impediments are out of the way. So -- but then it's just a matter of building the people that want -- that are Japanese national companies. That's for the multinationals or the multinationals that works. And then there's obviously the Japanese domestic market in the German domestic market and so on and so forth. But I think by the time we get to 40, which is around -- close enough to say, 12 months from now, the -- as Safra said, it's not entirely in our control because AWS has to provide us with the space because we are literally embedding the OCI data centers inside of AWS inside of Google and inside of Azure. But we expect this is growing extraordinarily fast, and we think we'll be able to meet most of the needs of customers that need for primary and back up around the world, certainly in the coming months. And then it's just going to be adding capacity country by country.
Operator: And your next question comes from the line of Kirk Materne with Evercore ISI. Your line is open.
Kirk Materne: Thanks very much for taking the question. I'll add my congrats on the RPO and booking strength this quarter. Larry, you mentioned some of the agents you've been building out on top of your application platform earlier. I was just wondering, are you now starting to see the demand for those technologies or those functionality that agents are bringing starting to have an impact on your strategic SaaS business? And perhaps the pace of conversions from any legacy on-prem systems that still might be out there? Thanks. |
5,997 | ORCL | 3 | 2,025 | 2025-03-10 17:00:00 | Oracle Corporation | 22,247 | Lawrence Ellison : Okay. So I would say, I mean, our biggest differentiator when we're competing in the health care field, our biggest differentiator is the quality of our AI agents that we have a lot of AI agents in health care. One, we listen when a doctor consults with a patient, we listened to that consultation and we record all the prescriptions, all the doctors' orders, all the doctors' notes, we automatically. We provide the doctor a prior meeting with the patient, a summary of the patients, their latest lab tests and vital -- when the doctor is finished a meeting with the patient has given all these orders prescriptions and come to diagnostic conclusions, we automatically update the electronic health records, taking a huge burden of the position. They don't have to type any of this stuff in. We just listened the interface to our system is voice, primarily voice which is all AI and -- but the whole system is made up of AI agents. Let me give you another one, another AI agent that we're in the process of building. It is -- the doctors have to -- the hospitals have to get permission to prescribe an expensive cancer drug or to do a heart transplant or something like that or a knee transplant. They have to get prior authorization from the payer, the insurance company in the United States or the government like the NHS in the U.K. And there's this negotiation. You send your patient's electronic health records to the insurer. Insurer looks at that, analyzes that and says, yes, this person is authorized to use Herceptin or a cancer drug or not. But that's all done manually on the phone. But our AI agents, we read the insurance policies. We read all the electronic health records. We actually make mention whether this is a reimbursable drug or this is a reimbursable surgery. We do that and we automate that entirely make it completely electronic. This saves billions of dollars in the health care field and makes a huge difference and determines whether they're going to buy our system or buy some other -- some |
5,998 | ORCL | 3 | 2,025 | 2025-03-10 17:00:00 | Oracle Corporation | 22,247 | health care field and makes a huge difference and determines whether they're going to buy our system or buy some other -- some alternative systems. So I know people are saying, what's the dollar impact when you're selling the agents? Well, the dollar impact is we sell in country, an entire health system. Based on whether our agents and our health software is better than our competitors and saves them money. So it's not just -- it's not money really attributable to AI agents in health care. It's the fact we're selling more and more health care systems because that we have a lot of AI agents embedded in them, which helps -- which produces better outcomes for patients and saves governments and payers money. |
5,999 | ORCL | 3 | 2,025 | 2025-03-10 17:00:00 | Oracle Corporation | 22,247 | Safra Catz: And the name applies to our Fusion applications which have sense of embedded agents, whether it's in supply chain, financials, HCM, we have literally dozens of agents already embedded in our applications, unlike our competitors who are talking about it, we actually have them already built and deployed it.
Lawrence Ellison : But I can make one more statement. It's going to be since our applications are going to be primarily AI agents. Again, I say the applications themselves will migrate to be basically a bunch of the connected AI agents. It really -- you're not going to be able to separate how much of this -- how much did you make on the AI agents and how much did you make on the rest of the applications. All of our applications are becoming AI agents.
Kirk Materne: Safra, if I could just ask a really quick follow-up. Is this the tipping point for any customer that hasn't moved to the cloud to have to get there now to get this functionality, talking some partners, it feels like anybody that's been holding out is now ready to go because they can't get any of this functionality if they're still on-prem. |
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