Q3 2022 Oracle Corporation Earnings Call
Good afternoon, everyone and welcome to Oracle's third quarter fiscal year 2022 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 the Investor Relations website. Additionally, a list of many customers who purchase.
Oracle cloud services or went live on Oracle cloud recently will be available from the Investor Relations website. Following this call on the call today are chairman and Chief Technology Officer, Larry Ellison, and Ceos Safra Cats. As a reminder, today's discussion will include forward looking statements, including predictions expectations estimates or.
Our 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're not obligating ourselves to revise our results.
These forward looking statements in light of new information or future events before taking questions. We'll begin with a few prepared remarks. However, we will be making no comments regarding cerner with that I'd like to turn the call over to Safra.
Thanks, Ken and good afternoon, everyone.
To start by acknowledging the tragic events unfolding in eastern Europe as a result of the Russian invasion of Ukraine.
Our working incredibly hard to help our Ukrainian employees and support our customers and partners.
We have suspended all Oracle operations in Russia, and we did so well over a week ago.
I'll now turn to Oracle third quarter results I'll review, our non-GAAP results using constant dollar growth rates, unless I say otherwise.
And clearly we had an excellent quarter with total revenue growing over 7% not only with total revenue above the midpoint of my guidance, but it was also the highest organic growth rate since we began our transition to the cloud.
We saw broad based outperformance in all segments and for the first time in more than 10 years.
All segments of our business saw growth.
Total cloud revenues when annualized are now 11 2 billion and they grew 26%.
I expect the cloud revenue will exit the fiscal year growing in the mid twenties.
Total cloud services and license support revenues for the quarter were $7 6 billion up 8% and accounted for 73% of total company revenue.
GAAP application subscription revenues saw a record level organic growth of 10% and were $3 2 billion fusion apps were up 29% with strategic back office applications now having annualized revenue of $5.
$1 billion, and growing 30%, including fusion ERP up 35% and fusion HCM up 22% and net suite ERP up 29%.
GAAP infrastructure subscription revenues were $4 5 billion up 7% and higher than last quarter.
And excluding legacy hosting services infrastructure cloud services grew more than 60% and I expect the infrastructure revenue growth rate will trend higher over time.
OCI consumption, which includes autonomous database was up 93% also higher than last quarter and total cloud at customer revenue was up 43% with the backlog for cloud at customer machines growing too.
Triple digits.
Database subscription revenues, including database support and database cloud services were up 4% and again higher than last quarter.
License revenues were $1 3 billion up 4% with strong performance in our test business.
So all in total revenues for the quarter were $10 5 billion up over 7% and as I mentioned earlier, our highest organic growth rate.
For 10 years.
Operating expenses were up 10% this quarter as we invest to meet growing demand for our cloud services. The gross margin for cloud services and license support was 84% and the gross profit dollars grew 5%.
I expect the full year growth in gross profit dollars for cloud services and license support will be higher than last year.
Our plan is to continue to grow profits, while we push our topline growth into double digits next year.
non-GAAP operating income was $4 8 billion up 4% from last year.
And the operating margin was 46%.
Then all of our competitors.
Earnings per share was adversely affected by around five.
Per share primarily due to share price declines of equity investments impacted by the widespread downturn in equity markets last quarter.
The non-GAAP tax rate for the quarter was 19% in line with our base tax rate and earnings per share was 1.11 dollar and 13th in U S dollars up 1% in constant currency and down 3% in U S dollars.
The GAAP tax rate was 18, 4% slightly below our base rate and the GAAP earnings per share was <unk> 84 in U S dollars.
Operating cash flow for the last four quarters was 10 $4 billion and our free cash flow over the same period was $6 6 billion. Both results were negatively affected by a one time litigation charge in Q2.
Capital expenditures for the last four quarters were $3 8 billion and Capex for Q3 was $1 1 billion and we're on track to invest $4 billion in Capex This year.
We now have more than 23 billion in cash and marketable securities. The short term deferred revenue balance is $7 9 billion up 1% with gross deferred revenue growing 6%.
The remaining performance obligation or RP O balance is 38 5 billion up 13% in constant currency due to the very strong bookings approximately 59% is expected to be recognized as revenue over the next two.
<unk> months.
As we've said many times before we're committed to returning value to our shareholders through technical innovation strategic acquisitions stock repurchases and prudent use of debt and the dividend.
This quarter, we repurchased 7 million shares for a total of $600 million as we reduce the buybacks in advance of the purchase of Cerner.
We've paid out dividends of $3 5 billion over the last 12 months and the board of directors again declared a quarterly dividend of <unk> per share.
Our business is strong as our fast growing cloud business continues to become a larger proportion of the overall business.
A few points.
First my guidance assumes that Cerner does not close in Q4, though it very well may close in the quarter and again cerner should be accretive in the first year.
Secondly, cloud is fundamentally a more profitable business to on premise and I expect that our full year non-GAAP operating margins for fiscal year, 2022, which we're finishing now will be 1% to 2% higher than pre pandemic levels of 44.
Percent.
Let me now turn to my guidance for Q4, which I'll provide on a non-GAAP basis now.
Now the U S dollar strengthened dramatically in November .
And as you all know it was a lot of fluctuations this quarter, but assuming currency exchange rates remain the same as they are right now I expect we will see a currency headwind of 2% to 3% on revenue and <unk>.
For EPS in Q4 of course.
The dollar could easily strengthen from here.
Total revenue for Q4 is expected to grow between 6% to 8% in constant currency and growth between 3% to 5% in USD.
Cloud service and license support revenue for Q4 is expected to grow between six 8% in constant currency and growth between 4% to 6% in USD.
non-GAAP EPS for Q4 is expected to be between $1 40, and 144 in constant currency GAAP EPS is expected to be between $1 35, and $1 39 in USD now, both non-GAAP and GAAP EPS or.
Expected to decline year over year due to some large investment gains we saw last year as well as a very low tax rate last year was 10, 7%. Both of these masked the strong earnings growth and momentum we continue.
To see out of our core cloud business.
My EPS guidance for Q4 assumes a base tax rate of 19% as.
As I always say, however, one time tax events could cause actual rates for any given quarter to be higher or lower but I expect that a normalizing for these one time tax events, our non-GAAP tax rates will average around 19 or so.
And with that I'll turn it over to Larry for his comments.
Thank you Safra I have two parts to my comments I'm going to start with if you will business as usual and that is.
Going from strength to strength in our ERP and HCM cloud businesses, Let me go over the wins and go lives.
For our SaaS, our SaaS strategic Stuff's business second I'm going to talk about our brand New my sequel heat wave product.
I think it's fair to say at all on our read the close what I'm going to do is speak a little bit about it and then I'm going to read the quotes from analysts and customers.
And I think youll find that.
We've never had a product so well received by customers and analysts in our history I'm not sure. The industry has either these are really remarkable innovation.
I'm going to get to that second one first.
As our SaaS business doing right now.
Overall, we have incredible progress winning more and more in the ERP and HCM back office Q3 was an exceptionally strong quarter for ERP cloud sales. We now have over 10000 fusion ERP HCM customers.
And for the first time, we're beginning to see we've been in this business long enough, we're beginning to see us roll off of certain industries.
Starting with the largest industry on Earth healthcare.
Okay. So how are we doing in health care, we already have tenant health Kaiser Mayo clinic, Cleveland Clinic, North well health Mount Sinai Atrium Health I can go a long list of.
ERP and HCM wins in the healthcare those are all health care providers. We've added some additional health care providers hospitals and clinics, we've added the CHS community Health services.
That's a.
Our consortium that the 83 hospitals.
And as an ERP HCM SCM win.
There and we're replacing a kronos I call that out because.
Corona hospitals.
Really are while they are not recognized as having some similarities to Uber.
We have a lot of people that work at hospitals that are not employees of the hospitals.
No.
Gig economy doctors work at multiple hospitals multiple clinics out there on offices.
Nurses same thing scheduling and paying the workforce.
And the hospitals is one of the most complicated things.
Ongoing.
Our changing economy.
And we have adapted our HCM systems.
With that we do help the hospitals recruit truck schedule and pay.
For their health professionals.
Only other company that was doing that.
Someone not very well known as Kronos.
And we are beginning to replace out Kronos in.
In the hospital space and we did it the community Health systems, we won an HCM deal overworked via trials.
Loma, Linda University Health care health centers.
We won an HCM over there and they already have our ERP.
Healthcare is interesting.
I started by talking about hospitals provide people, who provide health care health care industry is much bigger than us.
There are medical device manufacturers are pharmaceutical companies there are the payers and insurance companies.
And.
And government and government agencies that are all part of this.
<unk> care ecosystem so.
We're not just focused on providers like hospitals and clinics, but also we want a big ERP deal over.
Johnson <unk> Johnson of J&J.
We won a big ERP deal over at.
The medical device company here.
Headaches.
We won an ERP deal at Saskatchewan Health Authority, one of the government payer and most of the payers and health care are governments. So if this entire ecosystem that we're building specific features and functions for.
To automate health care across the board no one's been able to roll up health care everyone's talked a little.
This portion of the just the providers just the ambulatory clinics just inpatient hospitals just the payers just just a pharmaceutical company just a medical device.
We're going after the entire integrated ecosystem and we're having some great results, obviously that influenced our decision to buy sooner.
We have great go lives that Francisco missionaries.
The health system.
Its a consortium of 20 hospitals, we wanted integrity health. They went live on our ERP HCM and SCM 16 hospitals, new more children's health.
One went live in HCM with 34000 users.
Health care has been has been a real strength for us and obviously, we will get stronger with Cerner as we provide that provide additional capability to providers. Okay. The other industry, we've always outlined as being a key strategic target of ours. In addition to healthcare is financial services.
And we have a very strong position in financial services Bank of America, Jpmorgan Chase Santander Bank of New York Mellon HSBC, Lloyds Macquarie Credit Suisse, UBS credit Agricole, and a lot more our customers in ERP and HCM. We've just won a TD bank ERP win over S&P at TV.
We just won Silicon Valley bank another win over SAP.
We won society Generale in France.
Now have two of the three largest banks after winning credit agricole into Q2.
And we will get the other one.
We will get Perry Bob very soon.
JP Morgan Chase.
Just did a huge expansion of our on our HCM product.
Discover the credit card.
Just went live on ERP, So again Barry.
Strong in financial services getting even stronger.
And communications are big customers AT&T, Orange MTN Bharti Airtel all around all around the world. We just added a big ERP win at Rogers Communications huge go live at wind tree.
And that was the replacement of the go live of <unk> was a replacement of S&P <unk>.
<unk>, SAP, but replacing an existing SAP system.
In logistics and transportation.
We had where our big customers are GPS Fedex nice Swift yellow Schneider national and so on.
We had a big ERP HCM win SAP at U S Xpress.
We had an HCM win at TV <unk> freight, where we replaced workday didn't beat workday, we replaced an existing workday system.
Go live with DHL.
DHL is really interesting it was the go live in Germany and.
Austria, right and Sap's backyard.
And we have a number of wins in Germany. I think this is why we are pretty confident.
These days against the former winter the winter in the on premise ERP.
<unk> Wars, SAP in Germany, and Sap's backyard, we won BHL, we want don't you post dose we want Deutsche Bond, we want fewer IP services and we just added a win at Daimler truck or breadth.
In Japan, our country really not known for buying package application software very much.
We've got a pretty good position.
<unk>, a word Panasonic, wherein Toyota where at Mizuho financial services this quarter big wins that can in a big ERP win over SVP of Canada.
A big win a tie say that's one of them.
The five largest general contractors in Japan, so doing well and Germany doing well in Japan doing well in these big economies.
Historically, we have not done that well and obligations, but we are now.
In grocery where we have seen sainsbury co op tusker ouch on Kroger and Albertsons, we had a huge ERP expansion at Kroger and our Big go live at Albertson with 280000 users Albert's.
Albertsons is now live on both HCM and financials.
So very strong in grocery hotels, and resorts, where our big logos or Marriott Hilton Caesars MGM, We just won Intercontinental hotels and resorts, replacing is an HCM win replacing we're not allowed to name.
Who we replace an HCM other than to say there are there are very large cloud competitor of ours.
Hilton We went live with HCM, the big biggest HCM expansion in UK higher Ed higher Ed, where our big logos or UCLA Princeton, Rutgers Vanderbilt Penn State University of Texas, We added an HCM win at the University of Cambridge in the UK, we added three more campuses of the University.
With California system for ERP, we now have six of their nine used a benign UC campuses.
For ERP.
Tennessee University of Tennessee, we want ERP and HCM the University of Arizona.
ERP win all higher Ed.
But some of the other industries and consumer goods.
We had a really important win in ERP, SCM and a division of Unilever and that wasn't.
Replacement <unk> SAP, we replace them and aerospace and defense, we won ERP and SCM.
B E systems.
SAP.
We won.
HCM abreast type of steel we won.
A big full suite expansion and comments.
He and I and oil and gas, which has always been an SAP.
Very very strong industry for us.
We beat them.
Nine.
At a gas company and.
In the public sector, we got well very important agency these days.
<unk> the UN agency on International organization for migrants. This again was a replacement of SAP.
We also won the U K Ministry of Defence.
Went live with a big Bang ERP HCM SCM for over 50000 users go live.
Hi Tech Zoom went live on ERP and SCM Iron Mountain went live on ERP SCM.
Okay.
Got that and beyond that.
I'll try it again bed Bath and beyond Thats hard to say first went live on ERP. Tiffany went live on an HCM expansion for 300 of their stores and engineering and construction Jacobs.
Live on European SCM.
Environmental services waste management Big Suite go live on ERP and supply chain and I'll finish it off in professional services, where HCM, where ABM went live.
So very very strong quarter for us in <unk>.
In the back office and ERP and HCM.
Now I'd like to switch from SaaS.
Infrastructure.
And we had a major announcements.
Our making a major announcement about.
Our other database the two most popular databases in the World are Oracle and Mike Siegal. My sequel is the world's most popular open source database.
My simple is very good of transaction processing, but historically.
<unk> has not been good query processing.
So.
My sequel customers usually.
Use the my sequel database query.
For transaction processing, and then they'll move their data from the <unk> single database.
The redshift at Amazon or into Snowflake to do the query processing.
How it's typically use my sequel for transaction processing redshift snowflake for query processing.
By the way the AWS has their own version of my sequel.
They call it Aurora.
And the.
AWS my sequel Red shift.
My people Aurora redshift business is a multi billion dollar business.
<unk> now.
We're going after that business in two ways, we built a product.
My sequel, Heatwave, which is different than <unk>.
Earlier versions of my sequel.
<unk> sequel Heat wave is good both.
Transaction processing and query processing.
So my sequel, Heatwave doesn't simply replace Aurora.
It replaces both Aurora and redshift.
Or it replaces both Aurora and snowflake.
Because my sequel, Heatwave does transaction processing, very well, replacing Aurora and it does query processing, a lot better than redshift or snowflake.
Because heatwave.
And we decided for the first time to make us a multi cloud product.
So.
Oracle heat wave will run runs already and of the Oracle cloud, but it is but we also have it up and running in AWS.
And as your users will be able to use it as well. So it is a multi cloud product AWS users and why did we do that.
We did that because we're going after.
Aurora user base, and the redshift and Snowflake user base, we want to make it really easy to convert from Aurora, and redshift or Aurora and snowflake to Oracle heatwave.
And if we're running on AWS for example, you press a button a couple of buttons.
And your data is moved immediately to.
Oracle My sequel heat with.
You do not you do not have to change your application at all you press a couple of buttons and you move it.
Why would you do that well because the cost performance.
The benefits of moving.
My sequel Heat wave are extraordinary.
Now.
I'm going to stop talking.
And I'm going to start reading.
I'm going to start reading analyst quotes and I'm going to read them word for word so when I say the benefits are extraordinary.
Understanding what they're saying, let me bring up.
These slides.
I would just start reading a few quotes.
Okay, one industry analyst combined with heat wave in auto pilot.
Combined combined with heat wave and autopilot My sequel database service may very well be the single greatest innovation and open source cloud databases in the past 20 years.
My sequel, heat wave and autopilot represent a quantum leap.
With top flight query performance and superb transaction support.
Oracle wants to open up a second front in the battle for the database market leadership there.
They are attracting an entirely different user base with this product.
Wiki bond believes that.
But the technology underlying my sequel heat as an inflection point in database design and architecture.
The my sequel Heat wave technology is by far the best in the market.
Oracle have shown AWS and snowflake, how to design an architect their true my sequel Cloud database.
Customers can expect my sequel, Heatwave to outperform about semi times faster than Amazon redshift or snowflake at 252 to five times lower cost.
The benefits against Amazon Aurora are even greater.
New entrants such as Snowflake, we'll need to improve their cloud technology fast to stay competitive with heat with these right. This is all word for word what analysts are saying and these are the most distinguished database analyst in the business.
The bottom line is we believe the competition just got outplayed every measurable metric imaginable.
This represents a wakeup call for the industry and a rude awakening to the database cloud competition as they all must respond now to the my sequel innovation Juggernaut.
D wave is the physical manifestation of nearly 10 years of deep database engineering techniques over five dozen patents and demonstrates what real cloud database innovation looks like in 2021.
Oracle introduce my sequel heat wave and they did sent shockwaves because they named and shamed basically every database company out there.
And my favorite is what they talked about with snowflake.
You can spend $80000 on heat wave.
And that would cost you 420000 to run on Snowflake.
It's a no brainer.
These new fully transparent benchmarks by the way, we put all of our benchmarks on Github.
All public the code the data the customers can reproduce all with all of these benchmarks that the analysts are talking about that's what the analyst at the analyst went out and ran their own benchmarks.
And they were shocked.
These new fully transparent benchmarks demonstrate heat waves performance price and scale advantages over all other might sequel and cloud databases.
Clearly the cloud data warehouse market wasn't ready for this and now the competition needs to scramble as they grapple for answers.
For organizations using my sequel, Oracle is giving them yet another reason to invest in its heat wave offerings by delivering seven times the performance at one fifth the cost of solutions such as Snowflake.
Together with massive scale out capabilities. This combination makes my sequel, Heatwave meltdown Snowflake and vaporize it sounds like I wrote it but I didn't.
These are and will provide you with all of these quotes all in for full context names growth. These are all analysts close taken together with massive scale out capabilities. This combination makes my sequel, Heatwave meltdown Snowflake and vaporize Amazon redshift with Aqua My sequel heat waves TPC.
<unk> analytics testing literally blows away Amazon's redshift with Aqua in both performance and cost performance is six eight times faster and 47% less expensive.
Amazon Redshift with Aqua is 18 times slower, resulting in my seat heat wave coming in at an extraordinary 17 times better 17 at better cost performance.
<unk> sequel, heat wave with autopilot sets the bar orders of magnitude higher than.
And AWS Azure, Google and Snowflake, I think I'll stop right, there and turn it back to et cetera.
Thank you Larry Holly if you could please prepare the audience for Q&A portion of the call.
Alright, ladies and gentlemen, if you would like to ask a question Press Star then one on your telephone keypad.
And our first question for the day will come from the line of Brad Zelnick with Deutsche Bank.
Great. Thanks, very much and congrats on the continued momentum and especially all of those all of those great customer wins Larry.
I have one quick one for Safra and then a follow up for you Safra just looking at my model. It looks like you had your strongest organic revenue growth in 10 years this quarter and I just want to make sure I've got that right and I'm not missing anything.
Yes, you know you've got that right and it's basically because of what I've been telling you all for a while which is our fastest growing band snacks, which is our cloud is now getting to be very big and when you're growing different parts of the business 25 30.
40, 60% and it's a big number it causes these it just it's just math here it increases the overall rate of growth of the business.
Yeah.
Thanks Safra.
Larry do you now have an increasing number of Isps that are now supporting and embedding OCI as well as targeted programs, where you have some of the largest global S size in the world really leaning in can you talk to us about how you're winning the ecosystem with OCI and as well if you can update us on the mix of traditional versus nontraditional Oracle workloads.
Just help us to get a sense of how the use cases are evolving and where you see that mix going thanks.
I think it is broad based I think.
One of the back office.
One of our partners, we're working with them.
One of the largest banks on the planet.
<unk>.
With the on a payment system.
Our BTB payments system.
The ERP customers are coming to Oracle so if.
If you look at the future.
The fact that that.
We're so strong.
Dominic I'd argue in cloud ERP, what does it what does the BTB purchase look like a BTB purchased looks like in a modern cloud world One Oracle ERP system, making a purchase from another Oracle ERP system.
And we want to automate that <unk> transaction to Oracle ERP systems Theyre talking to one another.
To automate that transaction, we have to be able to pay for that we have to be able to check credit.
Our finance finance the payments arrange logistics, so where we're working with a large.
A large bank and a very large logistic companies to automate that aspect of our ERP business and some of its never been audited.
ERP doing that but.
This network of these ERP systems talking to one another that is a huge business revenue opportunity to turn on that <unk> payment.
Payment system.
No.
The banks the banks are joining in logistic companies are joining us because the customers are here once the ERP customers started coming.
To Oracle all of the adjacent applications in all of the all the Isps with adjacent applications wanted to be in the same cloud as the ERP customers.
The integrators had to become familiar with the cloud because thats, where the customers are and that's where new cloud customers are going.
<unk> and these are kind of interesting Isps.
The giant banks giant logistics companies, putting up their logistics and payment systems and our cloud to facilitate the b to b transactions between our ERP system is just a gigantic business opportunity that no one no one really ever thought about before.
That's really helpful. Thanks, so much Larry Congrats again.
Okay.
And our next question will come from the line of Raimo <unk> Barclays capital.
Thank you.
I'm trying my luck here its upfront, but it's like any comments on the tick tock tumors that came out today.
And then Ashish.
Okay.
And Larry one for you on.
That success in the in the back office systems is that driven by post pandemic people, realizing oh shoot I really need to update that so thats kind of more temporary boom that youre seeing in Europe or do you think there is more legs to that thank you.
The one thing I can tell you is we have an excellent relationship with the focus it.
Yeah, I'll second that it's excellent.
Let me take the other the other part of your question, which is do I think this is a kind of a year 2000 likely pandemic boom people rushing to get to the cloud and it's going to slow down.
After now that the pandemic, thank God, it's beginning to recede.
Just the opposite and we're really still in the early days. We're in the early days of either understanding of how different cloud ERP is from on premise ERP.
And I just mentioned this one interesting example in that.
In the modern world as more and more people go to cloud ERP and you bought <unk>.
Curious something.
It's really one Oracle ERP system talking to another Oracle ERP system, but it needs to be facilitated through a financial our finance partner and probably multiple finance partners and multiple logistics purpose.
And.
The automated finance and move a move.
Move that product from AWP, and finance that product and understand when it's going to be delivered all of those things.
So no I think we're really in the early days.
We're really early days, even though we now have 10000 customers.
In Oracle Oracle ERP fusion in another.
Almost 30000 customers in total including next week.
I still think we're in the very early days of doing that.
It just got getting faster I mean, the growth is our growth is accelerating and accelerating accelerating you look at our growth rate is not going down we're getting bigger and the growth rate and we're sustaining that mid <unk> high <unk> mid <unk> growth rate growth rate with net suite and <unk>.
Infusion in spite of the fact.
We've more than doubled.
Perfect Congrats yes sounds pretty exciting.
Thank you.
And our next question will come from the line of Phil Winslow with credit Suisse.
Hey, Thanks for taking my question and congrats on another quarter of accelerating growth one comment from your script that really stood out to me and that was continue to grow profits, while we push our topline growth into the double digits next year. Now. Obviously this is continued reacceleration from the 68% in the past two quarters and your guidance, obviously on a constant currency basis for Q4. So my question to you.
Larry can you help just unpack this for us in terms of the puts and takes between database and apps cloud on premise etcetera that give you confidence for continued acceleration in the double digits, but also like you said while growing profits.
Okay. So as you've seen we've made a lot of investments we basically our capex. This year is double last year and that's because we've been putting out a lot of capability around the world.
Simultaneously, our revenues have been increasing but over the past few years, we've had parts of the business that were significant parts of the business that were shrinking and now as you see in this quarter. For example, all lines of businesses are increasing we have.
Different different lines of business have bookings growth some of which are as high as well over 100% and so what's happened is the most of the business is now growing.
So there are much less of the negatives and the things that we're getting smaller like application license. For example is a very small number now and then of course, our technology license.
Is going very very well, including <unk>.
Just this quarter technology was up 9% so.
The cloud business is on an absolute roll you can see it in the numbers already and ERP HCM, but also.
Also of course, OCI straight and autonomous database and just all of those parts of the business are now growing and there are large and the shrinking parts of the business first of all there is a lot less shrinking we grew and to the extent that we have some supply chain loosening where we.
We are able to deliver all of our bookings.
We just expect growth sort of all over the place and so on.
We're very upbeat about this next year.
Yeah.
Great. Thanks, very much appreciate that.
Okay.
Our next question is going to come from the line of Keith Weiss with Morgan Stanley .
Excellent. Thank you guys for taking my question and congratulations on a great quarter, it's great to see the momentum really showing through to the results now.
Last quarter, you guys talked a lot about.
An increasing focus on verticals, particularly banking health care this quarter Youre talking about rolling up some of those verticals can you talk to us a little bit more about the approach on how you build up and create that roll up into vertical how much of that effort is building like vertical specific product how much of it is.
The new go to market strategy. If you will are aligning the go to market strategy for those verticals and how much work is left to be done on those two sides.
Well, let me, let me just start with health care because.
You think of healthcare as a vertical.
And Cerner is certainly in a vertical which is an epic they compete for providers and people think of that as well that is health care.
But that's not health care there is clinical trials for pharmaceutical companies you want to integrate the clinical trials the pharmaceutical companies pay for and run, but actually not really the providers the providers run those clinical trials.
So the whole.
Our whole ecosystem no one's ever tried to do the entire ecosystem, but to answer your question we had.
We are greatly enhancing our HCM system.
For hospitals.
So that they can have nurses that work three days, a week or four days a week.
And doctors that had that work in that one and a couple of different hospitals and scheduling. These independent contractors. If you will is very complicated you don't think of hospitals as being a collection of independent contractors, but it's full time workers and independent contractors in the scheduling. This company that's complex paying them is complex.
Some of them are unionized. The rules are complex. So we're doing a massive massive we're doing a lot of industry specific features for hospitals to help them manage their workforce.
And inventory.
Hospital inventory is isn't in a warehouse hospital inventory the drug they're scattered all throughout the hospital nurses stations have have drugs.
There is a an interesting drug trends academic assay, which is used to stop bleeding, where you can't go to the warehouse someone's bleeding and get out of the warehouses and look at the drug you got to be able to find it immediately and it's got to be close to the operating room, it's got to be close to.
We're intensive the intensive care unit. So the inventory is distributed all throughout the hospital. So we are in RFID tags, and then all of the inventory. So you can find things very very quickly. So how we handle inventory is being enhanced specifically per hospital that can go on and on.
One thing a doctor does.
Before I can I can authorize the test before I can authorize prescribing a drug for a patient I have to check with the insurance company to make sure. They will pay for it now so the doctors and hospital has been a lot of time negotiating with the payer the insurance company well, okay. Given these symptoms.
Can I can I.
This test pay for it yes no.
These symptoms can I get this drug paper, yes no.
Automating that interaction between the payers and the providers.
So yes, we're adding a lot of industry specific features to automate the interactions in the entire ecosystems ecosystem and that's why we think we're in a good position to rollout health care, which is a gigantic industry no one's ever really tried this before but we have all the <unk>.
We have the payment pieces, we we automate a lot of insurers, we have HCM, which allows us to.
To help them manage their workforce, we have ERP, which helps them keep track of inventory and soon we will have cerner, which will help them.
To deliver.
To deliver care to patients. So it will be an area and we have clinical trial system for the pharmaceutical companies, we have the entire portfolio.
And we're interconnecting all of the pieces. So we can make that ecosystem work efficiently for the first time and actually.
The pandemic has showed were in desperate need of such an integrated system.
Okay.
Yes, it sounds like a massive value unlock if it gets all pull together.
Uh huh.
I think I think we can do it.
On our way to do it and the benefits to Oracle are great, but actually this is at least for me personally. This is a mission I think the benefits too.
Every patient in the world is going to be enormous we need to do this the pandemic is.
The pandemic has shown a variety of weaknesses in our health care systems, we have the technology to address those weaknesses and that's what we're going to do.
Okay. Okay. Thank you Gabriel.
Let me just say one other thing.
We have a number of vertical industries in which we have products and our competitors don't have products and this has been a core part of how we work we work with retailers we work in financial services. We work in utilities, we work in construction engineering, we don't just.
Modify ERP system slightly and say we're in the industry, we're actually in the operational systems in the industry and it brings incredible value to our customers to be able to use these products.
Right Okay.
Thank you.
Gives me our last question for the day will come from the line of Kirk maturing with Evercore ISI.
Thanks, very much suffer I was hoping you could expand a bit on the strength in cloud customer and just you know really two things about that how should we think about cloud at customer being somewhat of a leading indicator for adoption of autonomous database and then are any of the supply constraints starting to loosen up a bit on that front.
So maybe helping to accelerate Rev rack in that area over the next couple of quarters. Thanks.
I will admit that the past couple of years have been really.
A challenging and I'm incredibly proud of our team I think are excellent relationships with our wonderful suppliers made it possible for us to build out our cloud as well as provide hardware to our customers. We couldn't meet every need it as quickly as we would have liked.
And we have an extremely large backlog that is absolutely true that backlog also gives me enormous two visibility because those customers have told us they want cloud at customer or they want.
Where and I have a line of sight to get it landed.
In there in their facilities.
The reality is that we have.
So much.
So much going on at the same time, we've built out our cloud internationally, we built a number of private clouds, where it is exactly the same capability as our public cloud for our customers who have regulatory requirements that require something.
Special or whether it's data sovereignty or otherwise.
And we are meeting everyone's needs and I think that again the incredible optimism you hear from me and Larry is very much because we have line of sight to the massive demand that is that has been coming our way and that we've been handling.
And our line of sight on how to deliver it so.
Now I read the newspapers actually I don't read a newspaper I read the computer they used to be a newspaper and so we see everything that's going on.
But I'm extremely confident in the capabilities of my team to execute.
Okay.
And that will conclude the Q&A portion of today's call I will turn it over to management for their closing comments okay. Thank.
Thank you Holly 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 it back to Holli to close the call.
Once again, we'd like to thank you for participating in todays Oracle third quarter 2022 Conference call you may now disconnect.
Yeah.
Okay.
[music].