Q4 2022 Oracle Corp Earnings Call
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 or.
Perfect.
New information or future events.
For taking questions, we'll begin with a few prepared remarks and with that I'd like to turn the call over to Sam.
Thanks, Ken and good afternoon, everyone.
As you can see we had an excellent quarter across the board with total revenue growing 10% in constant currency the highest organic growth we've seen since 2011 and $240 million above the high end of my current constant currency guidance.
Earnings were equally strong as the EPS was 20 <unk>.
Above the high end of guidance, while Q4 demonstrates is that our business is accelerating.
Growing list of customers, many new to Oracle are choosing us for more products and services as they understand the benefits of Oracle technology, our technology helps make our customers' modern efficient and more productive and they got to see that during the pandemic.
And now it's very clear those customers are then becoming larger oracle customers fusion customers are buying OCI OCI customers are buying fusion and netsuite wheat database customers are moving to autonomous on OCI industry vertical.
Customers are going all in on fusion, we have real momentum all around going forward and despite the macro environment. We continue to expect the revenue growth in our cloud business will accelerate substantially in fiscal year 'twenty three.
We're also excited about completing the Cerner acquisition, Larry spoke at our Oracle Health strategy session last week and he will give you more details today and I'll fill in with some numbers.
As you can see in the financial statements the currency headwind. This past quarter was 5%, which was considerably higher than the two to three it was during our last earnings call. Following my regular custom I'll be reviewing our non-GAAP USD results using constant currency growth.
Right. So you have a clear view of the business as we manage it now.
Now for Q4.
Total cloud services and license support revenue for the quarter with $7 6 billion up 7% in constant currency again, driven by fusion net suite autonomous database and of course Gen. Two OCI.
Total cloud revenues, that's Ias plus SaaS was $2 5 billion in USD up 22% in constant currency applications subscription revenues were $3 2 billion up 9% in constant currency, our strategic back office.
Loud applications now have an annualized revenue of $5 4 billion and grew 24% in constant currency this quarter, including fusion ERP up 23% and net suite ERP up 30%.
Infrastructure subscription revenues were $4 4 billion up 5% in constant currency infrastructure cloud services now have an annualized revenue of more than $3 2 billion and excluding our legacy hosting services infrastructure.
Cloud services grew 49%, including OCI consumption revenue, which was up 83% cloud at customer consumption revenue, which was up 108% and autonomous database, which was up 29%.
License revenues were $2 5 billion up 25% in constant currency led by database sales for use in the cloud by major application cloud SaaS companies as.
As a result, our database business had an exceptional quarter with total database revenue up double digits.
All in total revenue for the quarter.
We're late were $11 8 billion up 10% in constant currency.
Operating expenses were up 11% as we continued to invest to meet growing demand for our cloud services.
For the quarter, the gross margin for cloud services and license support was 82% and the gross profit dollars grew 4% the full year growth of this growth of this gross profit was 4% higher than the 2% we saw last year and.
I expect it will be significantly higher in.
In FY 'twenty three.
Though we will continue to invest in growth, we should benefit from economies of scale of running our cloud business as it gets larger you should keep in mind that our fundamental principle going forward is to grow non-GAAP EPS, while accelerating cloud Rev.
New growth.
non-GAAP operating income was $5 6 billion up 8% from last year and the operating margin was 47% once again higher than all of our competitors.
And even while we've been investing aggressively for growth we've maintained our financial discipline.
The non-GAAP tax rate for the quarter was $10, one and below our base tax rate of 19% as we received a benefit from the resolution of some tax matters in Q4.
EPS was $1 54 in U S dollars up 7% in constant currency unchanged in USD.
GAAP EPS was $1 16.
Down 8% in constant currency down 15% in USD.
Now for the fifth let me go through the full fiscal year. So I've given you some full year numbers. So far every once in a while.
For the full fiscal year total company revenues were $42 4 billion up 7% in constant currency and our highest annual growth rate in more than 10 years.
Total applications revenue grew 8% compared to 5% last year and total infrastructure revenue grew 7% compared to 2% growth last year clearly our revenue growth accelerated this year.
The investments into our cloud businesses are paying off.
Total cloud services and license support revenue.
For the year was $30 2 billion up 6% total cloud services were up 22% to 10 8 billion.
non-GAAP EPS was $4 nine was $4.90 in USD.
Okay.
Up 5% in USD.
Up 8% in constant currency, the full year operating margin percentage was 46%.
Up 2% from pre pandemic levels and down a little bit.
Down 1% from last year.
Operating cash flow over the last four quarters with nine 5 billion and free cash flow was $5 billion with capital expenditures of $4 5 billion during the year for.
For the quarter operating cash flow was $4 billion and free cash flow was $2 6 billion.
At quarter end, we had nearly 22 billion in cash and marketable securities, but that slower announced that Cerner has closed the short term deferred revenue balance was $8 4 billion up slightly in constant currency.
The remaining performance obligation or RP O balance is $46 6 billion up 17% in constant currency due to strong bookings approximately 57% is expected to be recognized as revenue.
Over the next 12 months.
As we've said before we're committed to returning value to our shareholders through technical innovation strategic acquisitions stock repurchases prudent use of debt and a dividend.
This quarter, we repurchased 8 million shares for a total of $600 million. In addition, we paid out dividends of $3 5 billion over the last 12 months and the board of directors declared a quarterly dividend of 32 per share.
With the completion of the Cerner acquisition, which happened after the end of Q4 actually guess last week, we've added about $15 8 billion of debt.
And we anticipate retaining our investment grade credit rating, meaning that for the time being we're going to focus on reducing our debt balance.
While continuing our share repurchases at current levels.
In addition, I don't believe the dividend will be impacted at all.
Once the debt level has declined will reexamine share repurchase levels.
Now to the guidance.
We feel very optimistic about our business momentum and we also recognize that there is increasing macro uncertainty right. Now. In addition, since we ceased operations in Russia in March and made other adjustments in the region, we have factored out around $100 million per quarter from guidance that.
We used to receive from these customers taking all that into account.
I do expect our cloud business, which grew 22%. This year, we will organically grow more than 30% in constant currency in FY 'twenty three.
Cloud service and license support will also see growth acceleration and could well see double digit organic growth.
As I said earlier, our fundamental principle is to grow EPS, while accelerating cloud revenue growth.
Given our increasing confidence in the organic revenue growth, we will continue to prudently invest back in the business and you can already see the returns in our performance.
Revenue growth accelerated from 2% in FY 'twenty, 1% to 7%. This year clearly there's strong demand for our cloud services and we intend to capitalize it to capitalize on it as such I expect our capex spend will be higher in FY 'twenty three to meet the.
<unk>.
We expect to add another six regions in fiscal 2023. In addition to the 38 cloud regions across 20 countries that we have already serving our customers.
I also want to share how we will be running cerner since it will impact their contribution to Oracle going forward we.
We are already working actively to build and implement world class health care cloud capabilities, Larry will go over that.
This means that we are reviewing their entire product portfolio to identify areas.
Where we can include Oracle technology, rather than third party products as well as moving them to OCI. These efforts will deliver a more stable secure and innovative product portfolio for customers, while using less third party products, we remain confident in.
Our ability to grow <unk> topline and bottom line.
Faster than they were able to do so on their own as these changes are implemented.
Now, let me turn to my guidance.
I'll review Q1 on a non-GAAP basis and have currency.
And if currency exchange rates remain the same as they are now.
Currency should have a 3% to 4% negative impact on total revenue and maybe five to six.
Negative effect on EPS in Q1, however, actual currency impact may be different.
Total revenues for Q1, including Cerner are expected to grow from 20% to 22% in constant currency and are expected to grow 17, two 919%.
In USD at today's exchange rate as with past acquisitions.
Added conservatism for the Cerner revenue contribution to account for the transition.
Four four.
For Q1 cloud total cloud excluding cerner.
Is expected to grow from 25% to 28% in constant currency and is expected to grow from 22% to 25% in USD.
As I mentioned above for fiscal year, 'twenty 'twenty three total cloud excluding cerner.
He is expected to grow over 30% in constant currency.
Total cloud growth in Q1, including Cerner.
Is expected to grow from 47% to 50% in constant currency, 44% to 47% in USD.
non-GAAP EPS is expected to grow between 6% to 10%.
And be between $1 nine and $1 13 in constant currency non-GAAP EPS is expected to grow between 1% to 5% and be between $1 four and $1 eight in USD.
And as I've said before Cerner will be accretive to earnings this year, including Q1.
My EPS guidance for Q1 assumes a base tax rate of 19%. However, one time tax events could cause actual tax rates for any given quarter to vary.
And with that.
I'll turn it over to Larry for his comments.
Thank you Sabra.
Sabra said our plan is to accelerate cloud revenue growth, while continuing to grow earnings per share.
First let me provide some detail on how we plan to accelerate cloud revenue growth.
It all starts with our two most important verticals healthcare and financial services.
In healthcare, we are in the process of building a complete suite of applications for the entire health care ecosystem.
Starting with health care providers like hospitals and clinics.
We're modernizing centers clinical systems by adding capabilities like our.
Voice user interface and applications like disease specific AI models.
Cancer and other diseases.
Were including an Iot device network to improve patient diagnostics and monitoring.
We're adding administrated systems, including managing the incredibly complex contract workforce that hospitals have as doctors are not full time employees, nor our nurses.
Youre going to help recruiting scheduling and paying those contract workers.
According to their contracts.
Inventory at hospitals are enormous recall is enormously complicated inventories arent in a central location you find inventory.
<unk> stations outside operating rooms outside the intensive care unit inventory everywhere managing that inventory is very complicated, we're adding RFID tags and and maps on handheld phones to help people find what they're looking for quickly.
For payers, including insurance companies and governments, we're automating payment authorization.
And billing systems.
For pharmaceutical companies, we're integrating our clinical trial system directly into the hospital clinical system, making clinical trial trials easier to start.
And faster to complete.
We can do all of this and more.
We're building these health care applications using the latest most productive.
Technologies, and the cloud, namely the Oracle Autonomous database.
The apex low code programming language.
Using these tools security and reliability are built into the technology platform not the application.
Yeah.
In our financial services vertical we are working with major money center banks, and leading logistics companies to automate b to B commerce from directly within the Oracle ERP cloud.
For example, with.
When a hospital wants to buy an X Ray machine.
That hospital simply enters a purchase request for the X Ray machine into their Oracle ERP procurement system.
That procurement system, and then send that order directly to the selling companies Oracle ERP order management system.
And automatically originates a corresponding loan request.
From that hospitals preferred bank.
The company's selling the X Ray machine uses their Oracle ERP order management system to check product availability and submit a shipping request to their preferred logistics provider to <unk>.
<unk> quote a delivery date to the buyer.
The entire BBB ecommerce process is automated with.
The Oracle cloud.
Purchasing selling.
Selling loan origination shipping.
Billing and payments.
Automating <unk> e-commerce is yet another huge opportunity for Oracle.
We already have over 30000 cloud ERP customers, including many of the world's most important banks in leading logistics companies.
Let's take a moment to look at the progress we continue to make.
Our Oracle ERP cloud.
Starting with healthcare.
The.
We've got a very strong position in healthcare with the providers, including Kaiser.
Oh clinic, Cleveland Clinic, Mount Sinai, North well held tenets HCM help Highmark health Humana, Cigna and many others.
In Q4, we closed United healthcare win over at AAP.
We.
We won.
The NHS.
U K is.
Sure.
Second major move to the cloud.
We won new South Wales Ministry of Health in Australia.
RP and SCM.
We won well spud.
Regional provider in Pennsylvania, with eight hospitals one outcome.
UK life Sciences company, increasing their footprint in ERP and HCM.
Going live.
In Q4, where the Cleveland clinic.
ERP and SCM UC health for ERP and SCM adviser.
On enterprise performance management UK health.
<unk> went live atrium health went live all in Q4.
In financial services or other really big vertical we have.
As I said earlier, we have a very strong position with the money center banks.
With ERP.
Bank of America uses fusion applications JP Morgan Chase uses fusion applications.
So does it send Santander Bank of New York Mellon HSBC, Lloyds Macquarie, whether it's credit Suisse UBS credit Agricole.
S MFB TD Bank Society Generale Vanguard State Street I can go on and on but let me go to the results in Q4 and Q4, we won at Citibank and a big ERP win against SAP.
Yes.
One we wanted to Chubb, we wanted a PMC.
The sixth largest bank in the United States, we wanted to SM BC.
<unk> Japanese zone back in the United States.
One overseas, China banking Corp.
We won Mizuho is the third largest bank in Japan.
Hey, <unk>.
Mitsui Sumitomo Sumitomo also in Japan GNP Mecca.
In Mexico, one of <unk>.
Mexico's largest financial services company.
We have a very very strong position in financial services.
That's one it and one of the key groups.
Groups of partners that we're working to automate b.
<unk> ecommerce.
Along with the logistics companies and retail.
We we won but we already have colds office depot, Macy's Kroger's, Albertsons Petsko Mcdonald's to bolt <unk> Williams, Sonoma, Walmart CBS , but in Q4, we added to that list.
We added lows, then albertsons instrument Sherwin Williams in Abercrombie and Fitch.
We had major go lives that Macy's next doors and the co op stores, all in retail and communications, where we're already present at AT&T Orange MTN Bharti Airtel Rogers Wintry Telecom Italia, KPN and SEC, we won Virgin media.
We had a major expansion at AT&T and ERP SDM expansion.
We won.
<unk> expansion, the ERP and APM at Verizon.
Very very strong quarter in telecommunications with a huge go live.
KPN the.
The desktop Telecom company in ERP.
Cm.
Service service wins, we already have we already have Pwc KPMG Booz Allen True-blue securitized waste management, Scott Scott Macdiarmid Jacobs.
We won in Q4 BDO various analytics.
And the <unk> group.
Go lives in Q4 and services included price Waterhouse manpower group Tri met and Republic services.
The public sector, we had a major win at the state of Missouri wall to wall at the state of Missouri, ERP SCM HCM win that was a win over workday SAP and everybody else.
We wanted the Scottish government, we wanted the UK home office, we won.
As stated Switzerland Board.
We we run general organization, social insurance in Saudi Arabia.
We won a deal with the police department and the state of Victoria in Australia.
We had major go lives in public sector, and the city of St. Louis and Norfolk County U K.
And hospitality, where we already have Marriott Hilton Caesars MGM Loews Royal Caribbean embargo dealt we added Airbnb for ERP expansion, a win over workday and Intercontinental hotels and resorts.
Logistics again this is our other big group of partners in the <unk>.
Our major effort to automate <unk> e-commerce from within the Oracle ERP cloud, we have a very strong position globally and logistics our customers include UBS.
Yes.
Swift Schneider Union Pacific Yellow.
Added and post the postal service of Ireland.
Go lives included DHL.
UBS and Deutsche post.
In higher Ed.
We're already installed at Princeton, Cambridge, Juilliard, Vanderbilt UCLA University of Chicago, Edinburgh, Rutgers, Baylor UCSD and lots and lots of others. We added the University of Maine East, Tennessee State Bill in Nova.
And the State University University of New York at Stony Brook.
Other notable wins in the quarter were on the high Tech. We won we won taro data.
We won a big winner.
Toyota Motor and ERP win.
So.
Again.
Let's see.
What else do we got.
<unk>.
Very global.
Let's see App team.
<unk>.
Other ERP win in energy.
<unk> Energy's okay. So it was a very very strong quarter.
We're very excited about.
Our momentum in ERP and how we can expand the ERP from what it was in when it was an on premise system to what it can be in terms of <unk> E. Commerce automation now that it's a cloud system with that I'm going to turn it back to safra.
Okay. Thank you Larry David if you'd please poll the audience for questions. We'll go to the Q&A portion of the call.
So really at this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad well pause for just a moment to compile the Q&A roster. We will take our first question from Mark Murphy with Jpmorgan. Your line is now open.
Yes, thank you very much and congratulations on the double digit growth in the quarter.
So Larry your vision of a National Health Records database is very compelling.
It'd be a profound benefit to society.
Considering that several trillion dollars are spent on healthcare what do you see as the size of the opportunity for Oracle and Cerner. If you solve that particular problem.
Yes.
Well.
The national the National Health Records database solves two problems and it allows patients in the case of an emergency to have their caregivers get immediate access to all of their health records, which will which will deliver way better outcomes for.
For people.
There is public health officials will get much better information about the state of health in their country.
So I mean, the amount of say.
Having this knowledge.
It's we dramatically improved.
Health care, but we also see an enormous amount of money by doing that I don't know if you remember when.
We said that hospital shipped in New York City because.
The visuals and New York thought there about to run out of hospital beds.
It turns out they were wrong, we didn't run out of hospital beds, but they didn't know they don't have they don't have public health officials don't have access to that kind of information, they're a bit blind.
Clear there and a lot of cases, they were flying blind during the pandemic.
By providing this information.
We not only we save a lot of lives and we save a lot of money the scale of the opportunity is gigantic because it's not people think of as a national opportunity, it's a global opportunity.
Every country.
You look at Western Europe , Western Europe budgets are dominated by healthcare.
If they can save lives and save money by putting in modern information systems.
They'll do it and they'll do it quickly, it's clearly going to be our largest business.
Thank you.
Okay.
Okay next we'll go to Keith Weiss with Morgan Stanley . Your line is open.
Excellent. Thank you guys for taking the questions and congratulations on a really solid quarter. So safra you mentioned on the conference call that you guys are putting up a bit.
This type of result, even on the backdrop, that's not the most stable kind of macro backdrop, and we're seeing a lot of other software companies being slipped deals are seeing it.
Issues with.
Tumor internet companies lowering their spend but you guys seem to be working through this very well could you give us some color into how you do give us is it better execution as the oracle value proposition going through more clearly.
And let's understand where youre able to put up the bigger beach when a lot of guys are working with skinnier beef. If you said all during this during this period.
Okay, well first of all you have to understand we're very big company, we have thousands hundreds.
Thousands of existing customers or products also are so compelling that often customers save money by moving to OCI.
Also many of our customers realized during the pandemic that they absolutely had to have modern systems those companies that didn't have modern systems.
Really survive through the pandemic they have to have a digital connection with their customers with their employees with their suppliers. Those are the kinds of products, we have and when customers move, let's say from Amazon to us they get them.
Moment, they try us they realize well this is better and more economical and of course for Oracle workloads, you can't get anywhere close to what we can do so we have a lot of things working in our favor our products of course, our fusion products.
Our superb I mean, we have so many customers. This call is not long enough to reach them and of course net suite is again industry, leading like fusion for a different part of the market incredible momentum.
And now we.
By the way as I mentioned Theres about a $100 million a quarter that is just the Russia, Ukraine region that we stopped charging our customers in Ukraine. When they were invaded even though we continue to help them and of course, we suspended everything in Russia.
No.
We just are just trying to meet our customers' needs. The biggest issue is having enough to meet demand.
And I'm actually very happy with the way, we manage the supply chain this past quarter.
And I'm, hoping that it will be it will continue to get better because that will give us more capacity and more capability to deliver to our customers. So I mean, we just have so much momentum we have so many happy customers and they're just new customers or just buying.
More you get into this cycle, that's very virtuous and people really build confidence in our capability to execute and to also the overall economic.
<unk>.
Message and an offering that we're giving we've always tried to give a compelling financial.
Offering and I think that's really resonating in these times.
Excellent Super helpful. Thank you.
Thanks Keith.
Next we'll go to Brad Zelnick with Deutsche Bank. Your line is now open.
Great. Thanks, very much for taking my questions and congrats on the great results.
We've picked up a meaningful uptick in the number of large enterprise agreements or <unk> that customers are doing with Oracle and in particular to satisfy their database needs. Both on premise and also in the cloud do you have any telemetry or other insights into customer behavior to see whether deploying these licenses.
And can you talk about why <unk> is so important to your strategy and the longevity of Oracle database and maybe just for safra as well that license number was so strong it in your prepared remarks, you mentioned license growth was led by database use in the cloud by major App cloud SaaS companies just wondering if there's any more color you can provide there.
Thanks.
Yes, with the exception of Workday most of the big application companies maybe conspicuously.
Salesforce Dot com is a very large.
Very large oracle user.
They license our database for use in their cloud.
But they're not the only ones there are a lot of SaaS companies that use our database in the cloud and.
That keeps our license business.
Very very strong our database license business very very strong don't confuse.
<unk> a license for on premise some licenses.
Classically are used on premise, but a lot of the new licenses that were selling.
Allow our customers to take those licenses and run them in the cloud, whether it's our cloud or other people's clouds or in the case of Salesforce in their own cloud.
So.
It's the Oracle database.
Is still the number one database in the world by a significant margin and it's the number one and it's the number one database in the cloud when you start counting when you start counting all of the SaaS companies that use the Oracle database.
Very helpful. Thank you.
Yeah.
Next we'll go to Mark <unk> with Bernstein Research Your line is open.
Thank you very much and congratulations on the strong quarter and the very positive commentary and guidance.
Like to drill a little more on this question of People's concerns with increasing concerns of recession by many can you tell me what you're seeing.
The apps part of the business and more specifically for ERP I'm trying to understand is how will the shift of the ERP to the cloud would be impacted by any economic slowdown won't it be.
How should we think about that thank you.
Well I'm not sure I followed counties.
Zebra. Please go ahead you go ahead, Larry you go ahead, yeah, Okay, I'm not sure I would call a counter cyclical, but the cloud systems cost a lot less than the on premise systems to run.
So and they give you much better information they allow you to control expenses better.
They don't cost that much to implement because you pay for them over time.
So we what we're seeing is an exciting that let's take a look at next week, which is the low end of the market and you think those would be the companies to be most affected by the recession.
Its not Jpmorgan chase.
They'll keep build adult keep putting in new systems, but some smaller entrepreneurial led companies you think that the reception we got them.
We had the moat, we've got the most revenue we've ever gotten from that suite this past quarter and the highest growth rate we've ever gotten from next week. This past quarter, they are accelerating into the recession.
Because we think the benefits are enormous.
And it equips the companies to.
To compete more effectively.
And again, we don't see that business slowing down quite the contrary, we see our ERP business, both fusion and Netsuite accelerating Steve.
In spite of the macroeconomic situation Debra.
Yeah, I think I think people don't realize how exorbitant Lee expensive it is to run those large.
Systems, they have data centers associated with them. They have hundreds sometimes thousands of technicians to run them, they're all they're clunky and moving to fusion ERP is it's just a totally different world and and costs. So.
Costs are tiny in comparison, I think people sort of forget that.
<unk>.
This applies really to all on premise systems, but even more so to the to those old SAP systems and our cloud offering in that area really is is unrivaled frankly unrifled.
And we are win rates just continue and.
We're very optimistic about it and we've we've sold a lot a lot is still being implemented and we expect that youll see that in the numbers, while our customers end up spending less.
Than what they used to spend with on premise.
Perfect I really appreciate it thank you and again congratulations.
Thank you. Thank you.
Okay next we'll go to Phil Winslow with Credit Suisse. Your line is now open.
Great. Thanks for taking my question last quarter Safra, you expected organic revenue growth to reach double digits next fiscal year and so congratulations on reaching that double digit milestone this quarter.
Now within today's results two numbers really stood out to us versus the upside the license revenue and then second what is your commentary about total database revenue growing in the double digits. So my question is if sovereign Larry could you give us more color on what's driving that Reacceleration in license revenue particular, even as cloud revenue inflected to its highest growth rate in more than four years as at B Y O y.
Well youre, bringing the heat is talking about database growing getting big enough and growing fast enough to lift the overall number et cetera and is this the broad based demand that you mentioned on the Q3 call or is this more big deal driven.
So it's a little of both you see first of all large enterprises understand that having an unlimited agreement for some period of time and unlimited agreement gives some unbelievable flexibility any large customer large database user that does.
Not happened unlimited agreement with Us is <unk>.
It is really not optimizing for their spend because it gives some incredible flexibility. They can use on premise for as long as they need it they can move to the cloud and get a much lower price in the cloud with B Y O L and they can move back and forth.
It just give us some the kind of flexibility those agreements are the ultimate sort of the foundation of so much of what goes on in addition of course in technology. We also have our leading job of business, which on premise is in extensive use.
And in the cloud is at no charge, so customers can be motivated to bring their Java to the Oracle cloud and to use use it at no charge their job a program and to use it at no charge. So we have a lot of things that incent, bringing.
Your Oracle databases to our cloud and of course, all your job or work to our cloud. So both of those are absolutely critical for our license numbers.
To be strongest they are and the Oracle database.
Following oracle for well since the eighties and I always we always hear about some new products that's about to.
Overtake Oracle and the reality is that the Oracle database.
Is beyond the gold standard if you really need work done and if you want to protect your most critical data and you want to use large amounts of it it is going to be the Oracle database that is head and shoulders above every other product and in very.
Blake some folks try other things when they get bigger they always come back to the Oracle database. It is irreplaceable because of its technical capabilities that are so far superior and that becomes very very very clear to customers and more and more of them.
Yeah.
License continue their license.
Extend those unlimited agreements whether for on premise.
And in the cloud, it's not either or it's both and that is the best use of it.
Yeah.
Awesome. Thanks for the color I'm sorry go ahead go ahead Lisa.
Add one thing to that which is the.
The Oracle autonomous database is interesting because it's a ton of us.
Other words, it doesn't require a human beings to run it like database administrators things like that.
Recently inside of Oracle and thought of our cloud.
Actually every database going up for to run our cloud autonomous the autonomous database because people don't want to hire database administrators inside of Oracle Corporation is just much cheaper to run.
And I think in that sense.
Sure.
The autonomous database is counter cyclical you do save a huge amount of money just by moving from the conventional Oracle database to the autonomous database, it's actually more secure more reliable and.
Costs whaler is to run you don't need a bunch of experts running it.
To run it.
There is a programming language called apex.
Which.
Users.
The low code programming environment, where you use 10% than any amount of programmers that you would use if you're programming and our other programming language called Java.
And.
Apex is also becoming very popular inside of Oracle to bill to build applications I see this as two interesting trends as people using more modern technology to dramatically reduce their labor costs, which I think will play very well in the next couple of years in this economy.
Okay.
Awesome. Thanks for the added color I appreciate it thank you.
Okay.
And our final question comes from Kirk <unk> with Evercore ISI. Your line is open.
Thanks, very much thanks for taking the questions and congrats on a good quarter separate can you just give any additional color on the capex outlook for fiscal 'twenty three relative to what we saw this year and then just to clarify on the buyback I just want make sure I heard it correctly is the pace of buyback that we saw this last quarter is still reasonable for the near term.
Even with the incremental debt from Cerner.
Yes, let me hit the buyback first because I know I gave you quite a quite a word sandwich there at the end I would <unk> steam.
We bought back $600 million this past quarter I think we bought back about $600 million the previous quarter I expect to do about the same this quarter, usually I don't give you the number in advance, but but since previous quarter to those two we did see.
$7 billion in a couple of eight billions.
We're not going to be at that level will be at the 600 for a few quarters until.
I see where our debt levels are and so $600 million a quarter is probably what I'm targeting can be a little bit more potentially.
But that's kind of where I'm at and then Oh.
On Capex, Okay. So you noticed how I mentioned, how many regions we have we've just.
Put out put up so many regions over the past year and a half or two I think we now have more than Amazon or where I think we do already have more than Amazon.
Already.
We are going to build another six and we're going to expand.
The ones that we have because they are being used so extensively in many cases. They are they are spoken for and so I.
I expect capex.
Which was.
Where it was this year I think it will be a little bit more than what it was this year next year.
I'll be giving a little bit more detailed guidance as I see it playing out over the year, but we have so much I mean, we have so much cloud demand that I am going to continue to test.
To spend in capital expenditure, but I do believe that.
As a percentage of our revenue growth I think I'll start really feeling those economies of scale and increasing my gross margins my operating margins significantly.
Great. Thank you all.
A telephonic replay of this conference call will be available for 24 hours on the Investor Relations website. Thanks for joining us today with that I'll turn it back to David for closing.
This concludes today's conference call you may now disconnect.
Okay.