Q3 2024 Oracle Corp Earnings Call
Okay.
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. All lines have been placed on mute to prevent any background noise.
Krista: 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. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question.
Operator: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during that time, simply press star followed by the number one on your telephone keypad. And if you would like to withdraw your question, again, press star one. Thank you. I would now like to turn the conference over to Ken Bond, Senior Vice President, Investor Relations. Mr.
Krista: And the answer session, if you'd like to ask a question during that time simply press star followed by the number one on your telephone keypad and if you would like to withdraw your question Gavin Press Star one. Thank you I would now like to turn the conference over to Ken Bond Senior Vice President Investor Relations Mr Bond.
Ken Bond: Bond, you may begin your conference. 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 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 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 those being made today.
Ken Bond: You may begin your conference.
Ken Bond: Thank you Chris.
Ken Bond: 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, our list of <unk>.
Ken Bond: <unk>, who purchase Oracle cloud services.
Ken Bond: 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 Cats. As a reminder, today's discussion will include forward looking statements, including predictions expectations estimates or other.
Ken Bond: Formation that might be considered forward looking.
Safra Ada Catz: 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.
Ken Bond: 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. Thanks, Ken. And good afternoon, everyone.
Safra Ada Catz: 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're not obligating ourselves to revise our results or these forward looking.
Safra Ada Catz: These 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.
Safra Ada Catz: Thanks, Ken and good afternoon, everyone.
Safra Ada Catz: We had another excellent quarter, with third-quarter revenue coming in as expected and EPS two cents above the high end of my guidance trend. 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 comes 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.
Safra Ada Catz: Had another excellent quarter with third quarter revenue coming in as expected and EPS two cents 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.
Safra Ada Catz: OCI has emerged as the largest driver of our overall revenue acceleration growing much much faster than our cloud competitors.
Safra Ada Catz: Customers have figured out that by moving to OCI.
Safra Ada Catz: Ken really get more while paying less but it's not just.
Safra Ada Catz: That matters to our customers.
Safra Ada Catz: Beyond the superior price performance of OCI customers are choosing Oracle and Oracle services for.
Safra Ada Catz: Multiple reasons first we know better than anyone what it takes to run the full stack of technology that goes into mission critical workloads.
Safra Ada Catz: Talking about running at enterprise scale with comprehensive security and unparalleled support and Thats from decades of experience running the world's most important workloads and optimizing clustering technology, which is critical to art.
Safra Ada Catz: Additional intelligence workloads and database services.
Safra Ada Catz: 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.
Safra Ada Catz: Secondly, our AI capabilities are unique as theyre 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 all.
Safra Ada Catz: Also about enabling and refining these aim <unk>.
Safra Ada Catz: <unk>.
Safra Ada Catz: The customers own data to better understand and serve their operations without them, losing control of their own data.
Safra Ada Catz: 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 that also offers a dedicated and complete clouded 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 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 the 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.
Safra Ada Catz: Third we provide deployment flexibility for customers based on how they want to run in the cloud.
Safra Ada Catz: In addition to offering public cloud services, we remain the only vendor, which also offers a dedicated and complete cloud customer dedicated regions sovereign clouds and alloy our partner cloud customers.
Safra Ada Catz: Don't have to compromise the services they receive while meeting their deployment needs.
Safra Ada Catz: Finally.
Safra Ada Catz: We provide multi cloud offerings, so customers can consume our cloud services in the public cloud of their choice, we offer Oracle database had azure with Microsoft as well as my sequel Heatwave.
Multiple clouds.
Safra Ada Catz: You can expect more multi cloud services.
Uh huh.
Safra Ada Catz: 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 couldnt help it I know a lot of cfos are pretty jealous as I.
Safra Ada Catz: 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 my guidance. As was the case when I gave guidance last quarter, currency had little effect in Q3, but I'll still discuss our results using constant currency growth rates in the few areas where the rates are slightly different. So, here we go.
Safra Ada Catz: 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 effect in Q3, but I'll still discuss our results using <unk>.
Safra Ada Catz: The currency growth rates in the few areas that the rates are slightly different.
Safra Ada Catz: So here, we got <unk>.
Safra Ada Catz: Cloud revenue, that is, 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 revenue. Court revenue. So we have crossed
Safra Ada Catz: <unk> revenue that SaaS and Ias, excluding cerner with $4 4 billion up 26%, including Cerner total cloud revenue was up 24% at $5 1 billion with Ias revenue of one eight.
Safra Ada Catz: <unk> up 49% and SaaS revenue of $3 3 billion up 14%.
Safra Ada Catz: This quarter marks the first time, our total cloud revenue is more than our total license support revenue.
Safra Ada Catz: So we have crossed over.
Safra Ada Catz: Total cloud services and license support revenue for the quarter was $10 billion, up 11%, driven again by our Strategic Cloud Applications, Autonomous Database, and OCI. Application subscription revenues, which include product support, were $4.6 billion and up 10%. Our strategic back office SaaS applications now have annualized revenue of $7.4 billion and were up 18%. Infrastructure revenues, which include licenses, were worth $5.4 billion and up 13%; infrastructure cloud services revenue was up 49 percent, 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 percent. Were it not for some continuing supply constraints, consumption growth would have been even higher.
Safra Ada Catz: Total cloud services and license support revenue for the quarter was 10 billion up 11% driven again by our strategic cloud applications Autonomous database and OCI.
Safra Ada Catz: Applications subscription revenues, which includes product support were $4 6 billion and up 10%.
Safra Ada Catz: Our strategic back office SaaS applications now have annualized revenue of $7 4 billion and were up 18%.
Safra Ada Catz: Infrastructure revenues, which includes license support were $5 4 billion and up 13%.
Safra Ada Catz: Infrastructure cloud services revenue was up 49%.
Safra Ada Catz: Excluding legacy hosting services.
Safra Ada Catz: <unk> Gen two infrastructure cloud services revenue.
Safra Ada Catz: Grew 52% with an annualized revenue of $6 7 billion.
Safra Ada Catz: OCI consumption revenue was up 63%.
Safra Ada Catz: Were it not for some continuing supply constraints.
Safra Ada Catz: Consumption growth would have been even higher.
Safra Ada Catz: Database Subscription Revenue, which includes database license support, was up 5%, and highlighted by cloud database services, which were up 34%, and now have annualized revenue of $1.9 billion. And 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 Page 6 and OCI. Software license revenues were $1.3 billion, down 3%.
Safra Ada Catz: Data base subscription revenues, which includes database license support were up 5% and highlighted by cloud database services, which were up 34% and now has annualized revenue of 1.9.
Safra Ada Catz: Billion.
Safra Ada Catz: Very importantly has on premise databases.
Safra Ada Catz: Database might and databases migrate to the cloud we expect these cloud database services will be the third leg of revenue growth alongside strategic SaaS.
Speaker Change: <unk> sorry.
Speaker Change: Software license revenues.
Speaker Change: Were $1 3 billion down 3%.
Safra Ada Catz: So all in, total revenues for the quarter were $13.3 billion, up 7% including Cerner and up 9% excluding Cerner. Now to March. The gross margins for cloud services and licensed support were 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 SAS gross margin percentages are consistent with last year, while IAS gross margins improved substantially year over year. While we continue to build data center capacity, overall growth margins will go higher as more of our cloud regions fill up. We monitor these expenses carefully to ensure gross margin percentages. And to that point, gross profit dollars from cloud services and license support grew 8% in Q3. Non-GAAP operating income was $5.8 billion, up 12% from last year.
Speaker Change: So all in total revenues for the quarter with $13 3 billion up 7%, including Cerner and up 9% excluding cerner.
Speaker Change: Now to margins the gross margin 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.
Speaker Change: Support and SaaS gross margin percentages are consistent with last year, well I, yes gross margins improved.
Speaker Change: Stan Chile year over year.
Speaker Change: While we continue to build data center capacity overall gross margins will go higher as more of our cloud regions fill up with.
Speaker Change: 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.
Speaker Change: non-GAAP operating income was $5 8 billion up 12% from last year.
Safra Ada Catz: 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 percentage. 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.
Speaker Change: 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.
Speaker Change: Looking forward as we continue to benefit from economies of scale in the cloud and drive Cerner profitability to Oracle standard we will not only continue to grow operating income, but we will also expand the operating margin percentages.
Speaker Change: 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 <unk> 85.
Speaker Change: At quarter end, we had nearly $9 $9 billion in cash and marketable securities and.
Safra Ada Catz: At quarter end, we had nearly $9.9 billion in cash and marketable security, and a short-term deferred revenue balance of $8.9 billion, up 4%. Over the last four quarters, operating cash flow was $18.2 billion, up 18%.
In short term.
Speaker Change: Deferred revenue balance in the short term deferred revenue balance was $8 9 billion up 4%.
Speaker Change: Over the last four quarters operating cash flow was $18 2 billion up 18% and free cash flow was $12 3 billion up 68%.
Safra Ada Catz: 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 benefit from our cloud transformation. Our remaining performance obligation, or RPO, is now over $8 billion, with the portion excluding Cerner up 41% in constant current. 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. This reflects the growing trend of customers wanting larger contracts as they see firsthand 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 statement is slightly lower just due to the timing of payment.
Speaker Change: Capital expenditures were $6 billion over the same time period as we continue to see cash flow benefits from our cloud transformation.
Speaker Change: Our remaining performance obligation or RP O 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 approx.
Speaker Change: Approximately 43% of our total ARPA.
Speaker Change: Is expected to be recognized as revenue over the next 12 months and this reflects the growing trend of customers wanting to larger contracts.
Speaker Change: They see firsthand, how Oracle cloud services are benefiting their businesses.
Speaker Change: We expect to have some very nice joined announcements with Nvidia next week.
Speaker Change: Now, while we spent $2 1 billion on Capex this quarter, the $1 7 billion in the cash flow statement is slightly lower just due to the timing of payments.
Safra Ada Catz: So the $2.1 billion is actually what we spent, and we'll pay. 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 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.
Speaker Change: The $2 1 billion is actually what we spent.
Speaker Change: And we'll pay for it 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 seven to seven and a half a billion this fiscal year.
Speaker Change: <unk>, meaning our Q4 capex should be considerably higher.
Speaker Change: To that point, we now have 68 customer facing cloud regions lives with 47 public cloud regions around the world and another eight being built.
Safra Ada Catz: Twelve of these public cloud regions interconnect with Azure, and more locations with Microsoft are coming online soon. We also have 11 dedicated regions live and 13 more planned, several national security regions and 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.
Speaker Change: 12 of these public cloud regions interconnect with Azure and more locations with Microsoft are coming online. Soon we also have 11 dedicated region slide 13.
Speaker Change: 13, more planned several national security regions.
Speaker Change: He used sovereign region's life with increasing demand for more of each and finally, we already have two alloy cloud, reaching slides with five more planned where oracle <unk>.
Safra Ada Catz: Partners become cloud providers offering customized cloud services alongside Oracle Cloud, of course. We also have many, many, many cloud customer installations. As I mentioned earlier, the sizing, flexibility, and deployment optionality of our cloud regions continue to be an 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, and 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 40 cents per share today.
Speaker Change: Partners become cloud providers offering customized cloud services alongside Oracle cloud.
Speaker Change: And of course, we have also many many many cloud customer installations as I mentioned earlier, the sizing flexibility and deployment optionality of our cloud regions continues to be incredible advantage for us.
Speaker Change: In the marketplace.
Speaker Change: And as we've said before we're committed to returning value to our shareholders through technical innovation.
Speaker Change: Acquisitions stock repurchases.
Speaker Change: 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 <unk> 40.
Speaker Change: <unk> per share today.
Safra Ada Catz: 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 to get 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 that in FY 24, 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 FY25. In addition, Cerner, which is a significant headwind this year, we expect to return to growth. I remain firmly committed to our FY26 financial goals for revenue, operating margin, and EPS growth. However, some of these goals might prove to be too conservative, given our momentum.
Speaker Change: Before I dive into Q4 guidance I'd like to share some thoughts on what I see for the next 12 months or so.
Speaker Change: As demand for our cloud services continues getting stronger our pipeline is growing even faster and our win rates are going higher as well.
Speaker Change: As our supply constraints ease revenue growth rates will accelerate higher as our capacity expands and we get into fiscal year 'twenty five.
Speaker Change: I should also say that we continue to expect.
Speaker Change: FY 'twenty four.
Speaker Change: 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 'twenty five.
Speaker Change: In addition, cerner, which is a significant headwind this year, we expect to return to growth next year, and finally and I remain firmly committed to our FY 'twenty six financial goals for revenue <unk>.
Speaker Change: Operating margin and EPS growth. However, some of these goals might prove to be too conservative given our momentum.
Safra Ada Catz: Let me now turn to my guidance for Q4, which I'll review on an on-gap 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, the actual currency impact may be different.
Speaker Change: Let me now turn to my guidance for Q4, which I'll review on an non-GAAP basis as always.
Speaker Change: 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 at least right now all the numbers are the same.
Safra Ada Catz: 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 is expected to grow 6-8%.
Speaker Change: For constant currency and USD.
Speaker Change: Total revenues, including Cerner are expected to grow from 4% to 6%.
Speaker Change: Total revenue, excluding cerner are expected to grow 6% to 8%.
Speaker Change: Total revenue the total cloud revenue, excluding cerner is expected to grow from 22% to 24% as more capacity comes online.
Safra Ada Catz: 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 comparison, 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, like they did last.
Speaker Change: In Q4.
Speaker Change: The EPS growth rate will be affected by the compare.
Speaker Change: As our Q4 tax rate last year was nine 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%.
Speaker Change: As always one time tax events could cause actual tax rates vary from my guidance.
Speaker Change: They did last year.
Lawrence J. Ellison: So with that, non-GAAP EPS is expected to be down 2% or too flat, and B, between $1.62 and $1.50. And with that, I'll turn it over to Larry for his comment. Thank you, Safra. Well, Oracle is on 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.
Speaker Change: With that non-GAAP EPS is expected to be down 2% or.
Speaker Change: Two flat and be between $1 62, and $1 66, and with that I'll turn it over to Larry for his comments.
Thank you Sandra.
Lawrence J. Ellison: Well Oracle saw another big.
Lawrence J. Ellison: Generation, two cloud infrastructure contract with Nvidia in Q3.
Lawrence J. Ellison: Oracle's Gen two AI infrastructure business is booming.
Speaker Change: Some pretty clear to everybody.
Speaker Change: But in addition to selling infrastructure for trading.
Speaker Change: Large language models Oracle is also.
Speaker Change: Completely reengineering, it's industry specific applications to take full advantage of gender artificial intelligence.
Lawrence J. Ellison: The best example of this is in healthcare, where Oracle did not just add a bit of AI around the edges of 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. The prescription.
Speaker Change: The Best example of this is in health care.
Speaker Change: Our Oracle did not just to add a bit of AI around the edges of existing application.
Speaker Change: Instead, we develop completely new applications using our apex application generator.
Speaker Change: Our autonomous database.
Speaker Change: These are all new applications use generally true.
Speaker Change: Throughout the application.
Speaker Change: The Best example is in healthcare, where our new ambulatory clinics, Tristan is being delivered to customers. This Q4.
Lawrence J. Ellison: Doctor's orders and Doctor's notes then automatically update the patient's electronic health record. The Clinical Digital Assistance Voice Interface makes our new healthcare systems dramatically easier to use and saves hours of doctors' precious time every day, which can now be spent with patience rather than typing into a computer. The delivery of our new AI-centric healthcare cloud application, including the ambulatory clinic system, the Clinical Digital Assistant, and the Health Data Intelligence System, will enable the rapid modernization of our customers' healthcare system and transform Oracle Health and Cerner into a high-growth business for years to come. Ken, back to you. We don't hear you, Ken.
Speaker Change: This completely new application features a voice interface called the clinical digital assistant.
Speaker Change: Preclinical digital assistant listened to a doctor's consultations with the patient.
Speaker Change: <unk> generates.
Prescriptions.
Speaker Change: Doctors orders Doctor's notes.
Speaker Change: <unk> automatically updates the patient's electronic health records.
Speaker Change: The political digital assistant voice interface makes our new healthcare systems dramatically easier to use.
Speaker Change: Our doctors precious time every day.
Speaker Change: Which now can be spent with patients rather than typing into a computer.
Speaker Change: The delivery of our new AI centric healthcare cloud applications, including the ambulatory clinics system.
Speaker Change: The clinical digital assistant.
Operator: Thank you. Thank you, Larry. Sorry about that.
Speaker Change: And the health data intelligence system will enable the rapid modernization of our customers health care systems.
Operator: Krista, if you could please poll the audience for questions and if we can proceed from there, thank you. Absolutely.
Speaker Change: And transform Oracle health.
Speaker Change: And Cerner.
Speaker Change: And to a high growth business.
John Stephen DiFucci: If you would like to ask a question, please press star one on your telephone keypad. Your first question comes from the line of John DiFucci from Guggenheim Securities. Please go ahead.
Speaker Change: For years to come.
Speaker Change: Back to you.
Speaker Change: Okay.
Speaker Change: We don't hear you Ken.
Ken Bond: Thank you. Thank you Larry sorry about that Christy if you could please poll the audience for questions and if we can proceed from there. Thank you.
Absolutely if you'd like to ask a question. Please press star one on your telephone keypad you. Our first question comes from the line of John <unk> from Guggenheim Securities. Please go ahead.
John Stephen 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.
John: Thank you.
John: Safra.
John: Restructure as a service growth of 49% implies a herculean increase in new business coming online new air are the way we modeled it anyway.
Safra Ada Catz: Though we realize we don't know the timing of when deals come online, 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?
John: I just thought you wouldn't be able to do this quarter given.
John: Given how much you had to do but we realize we don't know the timing of when deals come online.
John: 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.
Safra Ada Catz: Is that what we're seeing? Or is that still to come? Honestly, John, that is still to come. So this is just pretty much our regular way business. That's what you're seeing.
John: What happened this quarter is that what we're seeing or is that still is that still to come.
Safra Ada Catz: We have enormous amounts of demand. I tried to make that clear last quarter, and we have more capacity coming online, but we had tried to, you know, focus on much larger chunks of data center capacity and electricity and all of that, and that's just, that's all to come. This is really our regular way business, and our customers are 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 to capacity yet. We've got at least 40 new AI bookings that are over a billion that haven't come online yet. That sounds... Go ahead, Larry. Sorry
Speaker Change: Honestly, John that is still to come.
Speaker Change: So this isn't just pretty much a regular way business. That's what you see and we have enormous amounts of demand I tried to make that clear last quarter and we have more capacity coming online, but we had tried to we tried to focus.
Speaker Change: On much larger chunks of data center capacity and electricity and all of that and that's just that's all telecom. This is really our regular way business and our customers just growing and a whole bunch of new.
Speaker Change: <unk> by the way I think there.
Lawrence J. Ellison: Okay, let me add that Oracle is building data centers at a record rate, 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 is that they're all identical except for scale. We do not have custom data. They all have all the Oracle services installed. They are all complete. One of the things that's unusual about them is that they're all completely automated. They come up on their own, and they kind of run themselves.
Speaker Change: There are many many customers who have come on and is that helping.
Speaker Change: Haven't gotten capacity yet we've got at least 40, new AI bookings that are over $1 billion that hasnt come online yet.
Speaker Change: John.
Speaker Change: Go ahead, Larry sorry.
John: Okay, let.
Lawrence J. Ellison: Let me let me add.
Lawrence J. Ellison: Ed.
Lawrence J. Ellison: Oracle has been in building data centers.
Lawrence J. Ellison: A record level and in a lot of people I think are aware that we can build fairly small data centers to get started when we want to.
Lawrence J. Ellison: The unique thing about oracle's data centers, they're all identical except for scale.
Lawrence J. Ellison: I mean, look, we do have a bunch of people, you know, working on these data centers. But they are extremely high-tech; they're highly automated. Our operating system is Autonomous Linux, and our database is the Oracle Autonomous Database. Our new HeatWave database, Microsoft MySQL HeatWave, is highly automated. And therefore, every time we build a data center, it's like the data center we built before. Except for one thing, scale. We can go very small.
Lawrence J. Ellison: We did not have custom data center.
Lawrence J. Ellison: They all have all of the Oracle services.
Lawrence J. Ellison: They are all complete one of the things that's unusual about them, they're all completely automated.
Lawrence J. Ellison: They come up on their own and they kind of run their yourself I mean look we do have a bunch of people.
Working on it working on it.
Lawrence J. Ellison: These data centers.
Lawrence J. Ellison: They are extremely high as they are highly automated our operating system is autonomous Olympics, our databases are Oracle autonomous database.
Lawrence J. Ellison: Our new heat wave database, Microsoft Advisory Board.
Lawrence J. Ellison: It's highly automated.
Lawrence J. Ellison: And therefore, we can build build every time, we build a data center, it's like the data center, we built before.
Lawrence J. Ellison: We can get a full cloud data center with all the services and 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 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, and we need to do that to satisfy our existing set of customers. To give you an idea of one more thing, in terms of data centers, we're building 20 data centers with Microsoft and Azure. They just ordered three more data centers this quarter. They're adding to that already.
Except for one thing scale, we can go very small we can get.
Lawrence J. Ellison: Our full cloud data center with Ultra services and rock rats, but this is what I wanted to point out. We're also building the largest data centers in the world that we know of.
Lawrence J. Ellison: We're building an AI data center in the United States, where you could park eight Boeing 740 sevens nose to tail and that one datacenter.
Lawrence J. Ellison: Okay.
Lawrence J. Ellison: So we are building large numbers of data centers and we were in some of those data centers are smallish, but some of those data centers are the largest AI data centers in the world.
Lawrence J. Ellison: Bring an enormous amount of capacity over the next 24 months.
Lawrence J. Ellison: Because.
Lawrence J. Ellison: The demand.
Lawrence J. Ellison: The demand is so high.
Lawrence J. Ellison: We need to do that to satisfy our existing set of customers.
Lawrence J. Ellison: Give me an idea on the one more thing in terms of data centers. We're building 20 data centers for Microsoft Azure. They just ordered three more data centers this quarter.
Lawrence J. Ellison: And there are other multi-cloud agreements that are being signed. For example, there are a number of multi-cloud agreements in Japan where computer manufacturers in Japan are adopting our cloud and will be reselling it as partners. And we think NRI is already doing that, but there are a number of other companies that are going to be doing that. So that's something we're seeing in the demand for data centers from 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.
Lawrence J. Ellison: They are adding to that already.
Lawrence J. Ellison: There are other multi cloud agreements.
Lawrence J. Ellison: That are being signed.
Lawrence J. Ellison: There are multi cloud a number of multi cloud agreements in Japan.
Lawrence J. Ellison: Where computer manufacturers in Japan are adopting our cloud there'll be reselling, our cloud as partners and we think.
Lawrence J. Ellison: <unk> is already doing that but there are a number of other.
Lawrence J. Ellison: Companies that are going to be doing that so that's something we're seeing over.
Lawrence J. Ellison: Demand for data centers that people, who bought a bi alloy and then resell our cloud services with their with their proprietary cloud services on top of it.
Lawrence J. Ellison: 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 telephone company. So they're building their own data centers, which are identical. Those are Oracle cloud data centers. They are all identical.
Lawrence J. Ellison: We're seeing that so.
Lawrence J. Ellison: Of our largest customers all over the world want their own Oracle region. They don't want to share a public cloud they want they want it.
Lawrence J. Ellison: Cloud region dedicated direction multiple cloud regions dedicated to that bank or that or that technology company.
Lawrence J. Ellison: I'll, let that company. So they are building their own data centers, which are those are those are oracle cloud data centers.
John Stephen DiFucci: So we're able to automate and run those with not a lot of additional labor costs. It's a huge advantage for us. Well, thank you, Larry and Safra. Listen, what you put out this quarter in Infrastructure as a Service looks pretty impressive, but it sounds like there's a lot more to come. Thank you for taking my question.
Lawrence J. Ellison: They're all identical.
Lawrence J. Ellison: We're able to automate and run those.
Lawrence J. Ellison: With not a bit lot of additional labor costs.
Lawrence J. Ellison: Huge advantage for us.
Speaker Change: Well, thank you, Larry Safra and listen what you put up this quarter and infrastructure as a service.
Speaker Change: Pretty impressive.
Speaker Change: But it sounds like those.
Safra Ada Catz: John, my last comment would be that growth in RPO is what's to come, and RPO is obviously faster than revenue because we can't meet the demand. That's the measure of demand.
Speaker Change: There's a lot more to Kevin. Thank you for taking my question.
Speaker Change: John My last comment will be would be.
Speaker Change: The growth in Rps is what's to come.
John: And RPM is obviously growing faster than revenue because we can't meet the demand that's the measure of demand the $80 billion IPO quite a.
Safra Ada Catz: The 80 billion RPO is quite an acceleration of demand. So demand is not slowing down. It's actually increasing quite a bit.
Speaker Change: An acceleration of demand so demand is not slowing down it's actually increasing quite a bit.
John Stephen DiFucci: Well, there were a lot of questions about that last quarter, and I guess there won't be any on this one. Thank you. Thank you, John.
Speaker Change: There were a lot of questions on that last quarter, and I guess, there wont be any on this one.
Speaker Change: Thank you thank.
Speaker Change: Thank you John.
Speaker Change: Next question. Please your next question comes from the line of Raimo <unk> from Barclays. Please go ahead.
Raimo Lenschow: Your next question comes from the line of Raimo Lenschow from Barclays. Please go ahead. Hey, thank you. And congratulations from me as well. I wanted to talk a little bit about Cerner.
Raimo: Okay. Thank you and congrats from me as well I wanted to talk a little bit about cerner.
Raimo Lenschow: In the announcement, you talked about that most of Cerner now is running out of UOCI. Well, first of all, let's do a very quick turnaround here. So, well done.
Raimo: India announcement, you talked about most of Suriname now its running out of your OCI Mark.
Raimo: First of all very quick turnaround he is a well done what's cut off the implications for that both from running efficiency, but also innovation on the platform. Thank you.
Lawrence J. Ellison: What's the implications for that, both from running efficiency and innovation on the platform? Thank you. Well, two things.
Raimo: Well two things one is we save a huge amount of money moving them into our standard data center IP, our ocs OCI clog costs are much lower than the cost of the Cerner a dedicated data center in Kansas City also the Big thing that we're excited about is OCI is highly secure.
Lawrence J. Ellison: One is we save a huge amount of money moving them into our standard data center, right? Because 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.
It's got a highly secure perimeter and therefore.
Lawrence J. Ellison: 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 that now that they're in our cloud, we're able to update those applications on a regular three-month cycle. So we're able to modernize those customers that are in the cloud on a regular basis and start delivering our brand new applications, the completely rewritten Cerner applications, first for ambulatory clinics and then eventually for acute care hospitals. But the ambulatory clinic system is coming out this quarter, and we're able to automatically deliver that system to existing customers. It's not a reimplementation.
Raimo: Don.
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.
Raimo: The third thing is now that they are in our cloud we're able to update those applications on a regular on a regular three months.
Raimo: So we were able to modernize those customers that are in the cloud on a regular basis and start delivering our brand new applications, but completely rewritten sooner application first for ambulatory clinics and then eventually for acute care hospitals and ambulatory clinics system is coming out this quarter.
Raimo: Order and we're able to automatically deliver.
Raimo: That system to existing customers, it's not every implementation.
Lawrence J. Ellison: It is literally an update to what they've already got running in the Oracle Cloud, even though it's an all-new application. I'm not going to get into too much technical detail, but it uses the same underlying data schema. So we literally can bring up the new application, you know, 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 an all-new version of the Cerner application to a Cerner customer in OCI.
Raimo: It is literally an update to what they've already got running on the Oracle cloud, even though it's an all new obligation.
Raimo: Technical detail, but it uses the same underlying data schema. So we literally can bring up the new application.
Raimo: 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 week analysis ship, a new version of an all new version of the Cerner application to a cerner cause customer at OCI. So it allows us to modernize their infrastructure.
Lawrence J. Ellison: So it allows us to modernize their infrastructure very, very rapidly, deliver the voice clinical digital assistant, make the system easier to use, save doctors time, deliver a lot more value, put in the diagnostic imaging systems, the health data intelligence system, and deliver all of that automatically on a regular three-month cadence. And it allows us to do all of that while keeping them safe from ransomware. Perfect. Thank you. Your next question comes from the line of Ben Reitz from Malias Research. Please go ahead. Yeah, thanks. It's a pleasure to be speaking with you this afternoon.
Raimo: We're very very rapidly deliver.
Raimo: The voice.
Raimo: Clinical digital assistant makes this system easier to use safe doctors time deliver a lot more value.
Raimo: It put into the diagnostic imaging systems to help data intelligence system deliver all of that automatically on a regular three months.
Raimo: So it allows us to modernize the Cerner base very very quickly, while keeping them safe from ransomware.
Speaker Change: Perfect. Thank you.
Speaker Change: Okay.
Speaker Change: Your next question comes from the line of Ben <unk> from Melius Research. Please go ahead.
Ben: Yes, thanks, it's a pleasure to be speaking with you. This afternoon.
Benjamin Alexander Reitzes: Larry and Safra, can you talk a little bit about CapEx? Your guidance implies an 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?
Ben: Larry Safra can you talk a little bit about capex.
Ben: But your guidance implies almost doubling of capex in the fourth quarter, and then what kind of trajectory as needed for the next fiscal year, given this RPM growth, what kind of uptick as needed and.
Safra Ada Catz: And Larry, if you don't mind, could you give some color on GPU availability and how that plays in versus data center requirements in terms of that spending? Thanks so much. So for fiscal year, for fiscal year 25, I'm looking at about $10 billion in CapEx because it involves not only some big centers, but it also involves the expansion of existing centers. So we've already got some areas that we'll be filling out. So, at least preliminarily, we're looking at $10 billion for next year. And then, you know, it's not too complicated to figure out the math here when I'm looking at somewhere between $7 and $7 and a half for the full year.
Larry if you don't mind.
Speaker Change: What if you can give some color on <unk>.
Larry: <unk> availability and how that plays in.
Larry: Versus data center requirements in terms of that spending.
Larry: Thanks, so much.
Larry: So.
Larry: For fiscal year for fiscal year 'twenty five.
Larry: Looking at about 10 billion in Capex, because it's also involves not only some big centers, but it also involves the expansion of existing centers. So we've already got some areas that we will be filling out so at least preliminarily we're looking.
Larry: Asked.
Larry: $10 billion for next year and then.
Larry: It's not too complicated to figure out the math here when im looking at somewhere between seven and seven and a half for the full for the full year and you've got all the numbers for Q1, two and three at this point and I would include for Q3. The one we just are.
Safra Ada Catz: And you've got all the numbers for Q1, Q2, and Q3 at this point. And I would, you know, add in the amount we haven't paid yet as the CapEx number for this quarter. Okay. And I guess that would be, and then Larry gets the second question. But anyway, so 2.1 for this quarter, and you've got Q1 and Q2, and I'm going to be somewhere between seven and seven and a half for the full year, which is actually a little bit lower than I thought. But we were pretty well prepared.
Larry: Now <unk>.
Larry: I would add in the amount we haven't paid yet as as the Capex number.
Larry: For this quarter.
Larry: <unk>.
Speaker Change: And that guess, yes that would be.
Speaker Change: And then Larry Yes, the second question, but anyway, so two <unk> one for this quarter.
Speaker Change: And you've got Q1, and Q2 and I'm going to be somewhere between seven and seven and a half for the full year, which is actually a little bit lower than than I thought, but we were able to do pretty well.
Safra Ada Catz: You know how we spend very carefully. Great, thanks. And Larry, the amount that, you know, how's the GPU availability in terms of hitting your goals? And, you know, vis-a-vis, you know, other bottlenecks that could be out there? Can I take at least part of this?
Speaker Change: You know, how we spend very carefully.
Speaker Change: Great Thanks and Larry.
Speaker Change: The amount that how's the GPU availability in terms of your hitting your goals and.
Speaker Change: These are the other bottlenecks that could be out there.
Speaker Change: Can I at least part of this the GPU, yes, Shawn Duffy our good we are actually very good.
Safra Ada Catz: We are actually very good at our GPU access and capability. So building the computers and that, it's much more making sure we've got the power on that. Yeah, thank you.
Speaker Change: In our GPU access and capability, so building the computers and and that it's much more making sure we've got the power hour on that.
Speaker Change: Yeah got it thank you <unk>.
Lawrence J. Ellison: Safra says we have a great relationship with NVIDIA, you know, 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, I mean, the scale of some of these data centers is breathtaking. Again, the one we're building in Salt Lake, you can park 8747 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's a tremendous amount of demand; the data centers take longer to build than we would like. That said, we are getting very good at building them quickly, and getting the building and the power and the communication links in faster than we ever have 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 all automated. It's very different than it used to be, so we're able to bring additional capacity online very quickly if we have the electric power and the communication. So the long pole in the tent is actually building the structure, connecting the electricity, and connecting... Thanks, Larry. I appreciate it.
Speaker Change: Severance is we have a great relationship with Nvidia.
Speaker Change: We're a customer of ours as well as outstanding customer of theirs.
And we worked very closely together.
Speaker Change: So that's going pretty well building. These one of them is the scale of some of these data centers is breathtaking again.
Speaker Change: The one we're building in Salt Lake again, you Eden Park 747 notes detail. We can give you a video of this of this thing under construction, but it is hard.
Speaker Change: Okay.
Speaker Change: So there is a tremendous amount of demand the datacenters take longer to build than we would like.
Speaker Change: That said, we are getting very good at building them quickly and.
Speaker Change: Getting the building and the power.
Speaker Change: Communication links and.
Speaker Change: <unk>.
Speaker Change: We're doing faster than we ever have 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 all automated.
Speaker Change: It's very different than it used to bake.
Speaker Change: So we're able to bring additional capacity online very quickly if we have that there'll be electric power and the communication links.
Speaker Change: <unk>.
The long pole in the tent is actually building the building the structure connecting the electricity connecting the communications.
Speaker Change: Thanks, Larry I appreciate it congrats on the OCI growth.
Benjamin Alexander Reitzes: Congratulations on the OCI growth. Thank you. Your next question comes from the line of Derek Wood from TD Cowan. Please go ahead.
Larry: Thank you.
Larry: Your next question comes from the line of Derrick Wood from TD Cowen. Please go ahead.
Derek 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 how the customer reception has been around this announcement? How do 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 databases?
Derrick Wood: Great. Thank you Larry just within the last few months you guys have been 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 do you think it could change the arc of new investments on <unk>.
Derrick Wood: Oracle database platform and what this means for potentially unlocking a.
Derrick Wood: Stronger adoption cycle for autonomous database.
Lawrence J. Ellison: Well, I think it is the key to unlocking a stronger adoption cycle for moving Oracle in general, to the cloud in general, and specifically the migration to autonomous databases. Oracle, we expect the multi-cloud initiative to continue to expand. We're seeing it expand in Japan, but we expect it to expand amongst other hyperscalers to adopt a similar multi-cloud approach, where we build OCI regions inside of and coexist with their existing cloud infrastructure. We think the era of walled gardens is coming to an end.
Larry: Well I think.
Larry: It is the key to unlocking a stronger.
Larry: Adoption cycle for <unk>.
Larry: It can move a moving Oracle in general to the cloud in general and specifically the migration to autonomous database.
Larry: Oracle, we expect the multi cloud initiative to continue to expand.
Larry: That we're seeing it expand in Japan, but we.
Larry: We expect it to do it.
Larry: Expand amongst other hyperscale.
Larry: To adopt a similar.
Larry: Similar a multi cloud approach where rebuild.
Larry: We built OCI regions insider been coexisting.
Larry: With their existing <unk>.
Larry: <unk> infrastructure.
Larry: We think the world.
Larry: Era of walled gardens is coming to women.
Lawrence J. Ellison: Where it used to be, okay, I'm going to move all my stuff to AWS, or I'm going 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 is really called cloud computing. It's not called a bunch of separate clouds.
Larry: Where it used to be okay, and move all my stuff to AWS for him to move all my talk to what you were what customers really want is the ability to use multiple clouds and for those multiples to talk to one another.
Larry: And I think I mean.
Larry: In the era of the Internet and now cloud computing really called cloud computing, it's not called a bunch of separate cloud.
Lawrence J. Ellison: So we expect multi-cloud to become the norm and Oracle to be available everywhere. And back to what you said, we think that will preserve our franchise and our 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's nothing like it in the world. And maybe the most interesting thing, no one else is working on anything like it. No one else is even trying to duplicate the Autonomous Data.
Larry: So we expect that multi cloud to become the norm and oracle to be available everywhere.
Larry: And.
Back to the UK, we think that will preserve our franchise and database, where we've been the number one database.
Larry: In the ICT ecosystem for a very long time, we think thats 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.
Larry: No one else we've been trying to duplicate the autonomous database. So we think it will be it will become a very successful product and every cloud.
Lawrence J. Ellison: So we think it will become a very successful product in every cloud. Thanks, Larry. Your next question comes from the line of Kirk Materne from Evercore ISI. Please go ahead.
Speaker Change: Thanks, Laura.
Speaker Change: Sure.
Speaker Change: Your next question comes from the line of Kirk <unk> from Evercore ISI. Please go ahead.
Kirk Materne: Yeah, thanks very much for taking the questions and congratulations on an incredible bookings quarter. Larry, I was wondering if you could just talk a little bit about the interest level for 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.
Kirk: Yeah, Thanks, very much for taking the questions and congrats on an incredible bookings quarter.
Kirk: Larry I was wonder 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 'twenty four.
Lawrence J. Ellison: Well, I think Japan is maybe the most interesting market where we had early success with NRI. You know, they run the Tokyo Stock Exchange. Now, what NRI has is just a couple of Oracle Cloud regions, which they resell to the financial services community inside of Japan. And one of their clients 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, and it's got to have extremely high transaction rates.
Larry: Well I think Japan is maybe the most interesting market.
Larry: We had early success with NRI.
Larry: They run the Tokyo stock exchange.
Larry: No <unk> is just an oracle a couple of Oracle cloud regions, which they resell.
Larry: In the financial services community inside of Japan, and one of their applications as a major stock exchange and the Tokyo stock exchange. So think about how many clouds run stock exchanges that would be ours.
Larry: It's got to be highly secure it can never go down its got to have extremely high transaction rates, we can do that and the success of MRI has caused other the other computer companies in Japan to become very very interested in also reselling our cloud with and then we also have the ability that they can add on some of your own test.
Lawrence J. Ellison: We can do that, and the success of NRI has caused other computer companies in Japan to become very, very interested in also reselling our cloud with, and we also have the ability for them to add on some of their own technology to our cloud, so that our cloud is open, so you can plug in other things into the cloud. So imagine a big computer company in Japan adopting the Oracle Cloud, reselling autonomous databases, reselling all of our technologies because all we do is 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 their customers. We think so.
Larry: Apologies to our cloud our cloud is open so you can plug in other things to the cloud.
Larry: So imagine a big computer company in Japan.
Larry: <unk>, the Oracle cloud reselling autonomous database could be selling.
Larry: All of our technologies, because all 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.
Larry: To defer their customers we think.
Lawrence J. Ellison: All of the cloud companies in Japan are going to adopt OCI, plus a lot of big companies; the big car companies in Japan will want their own. The phone companies in Japan will want their own, too. The technology companies in Japan will want their own Oracle region because they're sovereign, because they're highly secure, and because they're highly cost-effective. So we think this allows us to enter a variety of new markets. Every government, pretty much every government, is going to want a sovereign cloud and a dedicated region for that government. So we see a number of countries, you know; it's funny; we talk about winning business with companies. For the first time, we're beginning to win business for countries, you know, for sovereign clouds, 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 in case of disaster and disaster recovery.
Larry: All of the cloud companies in Japan are going to adopt.
Larry: Hi.
Larry: A lot of big companies, the big car companies in Japan will want or at work around the phone companies in Japan will want their own.
Larry: The technology companies in Japan will want their own Oracle regions.
Larry: And because they are sovereign because theyre highly secure and because they are highly cost effective.
Larry: So we think this allows us to enter a variety of new markets.
Larry: Government pretty much every government is going to want a sovereign cloud.
Larry: A dedicated region for that government for not only <unk>.
Larry: So we see a number of countries.
Larry: No.
Larry: It's funny, we talked about winning business with companies for the first time, we are beginning to win business.
Larry: For countries.
Larry: Our sovereign clouds, 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 for.
Larry: In case of disaster after disaster recovery. So we have a number of countries. We're in again, we're negotiating.
Lawrence J. Ellison: So we have a number of countries where we're negotiating, you know, sovereign regions with the national government. We see that time and time again, major companies, governments, you know, you've got a lot of computer suppliers reselling our, our ally 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. Yes, I think that's what I believe.
Larry: Sovereign sovereign regions with the National government.
Larry: We see that time and time again major companies governments.
Larry: A computer to computer suppliers, we are selling our alloy cloud the demand for our cloud regions is extraordinarily high.
Larry: Believe we will end up well this is a buddy prediction, but okay. We will end up with more data centers and cloud regions than all the other hyperscale. It is combined.
Larry: Okay.
Speaker Change: Yeah. Thanks, Thanks, what I believe.
Safra Ada Catz: So, just to make sure you have all the numbers, between Alloy and Dedicated Regions, we've got 13 live, we've got 18 under construction, and we've signed five new ones just this past quarter. So, for us, 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. 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 either.
Speaker Change: So just to make sure you have all the numbers between alloy and dedicated regions. We've got 13 live we've got 18 under construction.
Speaker Change: And we've signed five new ones just this past quarter.
Speaker Change: No.
Speaker Change: Even for us.
Speaker Change: They're just they're just the list, we're going through and trying to get them all because they are such a unique capability and in such high demand.
Speaker Change: And let me let me just add one last thing.
Speaker Change: 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.
Lawrence J. Ellison: We're the only ones in this business. Thank you all. Our final question today comes from Brad Zelnick from Deutsche Bank. Please go ahead.
Speaker Change: Okay. Thank you all.
Speaker Change: Okay.
Speaker Change: Our final question today comes from Brad Zelnick from Deutsche Bank. Please go ahead.
Brad Alan Zelnick: Thanks very much for taking my question. Larry, my question actually follows your answer to Kirk's question because I think it's so important. You know, 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 the likes of Starlink, the Tony Blair project, are building solutions on top of OCI, including Apps and Tech, and even Cerner, to literally run entire countries' digital operations. So I'm hoping you can add even a little bit more color about what you It's 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 deliver these cloud regions to medium-sized countries. So, for example, Serbia is standardizing these Oracle cloud regions for the national government.
Brad Alan Zelnick: Thanks very much for taking my question Larry My question actually follows on your answer to <unk> question, because I think it's so important and talking to one of your GSI partners, we heard about a global public sector solution.
Brad Alan Zelnick: They referred to as government in a box where oracle in partnership with our licensed store link to Tony Blair project, our building solutions on top of OCI, including absent check.
Speaker Change: Even senator to literally run entire countries digital operations. So hoping you can you can add even a little bit more color about what youre doing here, how big an opportunity. It is because it just seems like such a powerful example of the entire Oracle cloud stack coming together in a very meaningful way.
Speaker Change: It is really really it's very interesting and we've gone into the.
Speaker Change: Government National government and state government applications, and a very very big way to give you an idea a little glimpse of what we're doing.
Speaker Change: Yes.
Speaker Change: Because we can deliver these cloud regions.
Speaker Change: Medium sized countries. So for example, Serbia.
Speaker Change: <unk> standardizing on.
Speaker Change: These oracle cloud regions for that for the National government.
Lawrence J. Ellison: They're automating their healthcare, and people know that we're in the healthcare business. What they might not know is that, in cooperation with Starlink, we're able to deliver an internet service for the entire country, including the rural parts of the country. By the way, we can deliver the internet, and we have delivered the internet to, 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, and internet connectivity, even if they're rural; it doesn't matter. Every school, every hospital, it's 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 doing, this farm is growing coffee, this farm is growing maize, this farm...which part of the fields are getting enough nitrogen, which part of the fields are getting enough water, and what corrective actions you need to take to increase your agricultural output.
Speaker Change: We're automating their healthcare and people know that we're in the healthcare business, what they might not know is in cooperation with.
Speaker Change: Starlink, we're able to deliver.
Speaker Change: And Internet service.
Speaker Change: For the entire country rural.
Speaker Change: The rural part of the country by the way, we can deliver the internet and we have delivered the internet does like Energia, our robot that very inexpensively, using starlink and our and our sovereign cloud regions.
Speaker Change: To backhaul backhaul.
Internet traffic. So you can bring every school in Serbia online is the internet.
Speaker Change: Good activity.
Speaker Change: They're rural doesn't matter every school every hospital is a 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 Knapp.
Speaker Change: The country.
Speaker Change: We can show you each of the farms in the country. What they are this farmers growing copy thus far.
Speaker Change: As growing maze as far what's part of the fields are getting tougher end up nitrogen, which part of the fields are going to be getting enough water.
Speaker Change: What corrective actions you need to take to increase your agricultural output, we're doing that again.
Lawrence J. Ellison: We're doing that again in concert with Elon Musk and SpaceX to do this kind of mapping to provide this AI-assisted...and these maps are AI-assisted, helping them plan their agricultural output and predict their agricultural output, predict markets, the logistics of agricultural output, doing all of those things as next-generation national applications. And it is one of the most exciting things we're doing. Of course, we do procurement and accounting and human resources and recruiting, you know, 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 schools are online, and that rural hospitals are online. It's automating those rural hospitals. It's automating their vaccination program and their health care program across the board.
Speaker Change: In concert with Elon Musk.
Speaker Change: And Spacex.
To do this kind of mapping.
Speaker Change: <unk> provides us with this AI assisted and then these maps our AI assistant help them plan their agricultural output and predict their agricultural output predict markets.
Speaker Change: The logistics of the agricultural output doing all of the all of those things as next generation National application.
Speaker Change: And it is one of the most exciting things we're doing of course, we do procurement and accounting.
Speaker Change: And human resources recruiting for the government, we do all of those applications, but it's some of the newer applications.
Speaker Change: Regarding food security.
Speaker Change: Yes.
Speaker Change: Sure all the schools are online rural rural schools are online.
Speaker Change: Rural hospitals ROI online, it's automating those those rural hospital, it's automating their vaccination program.
Speaker Change: Their health care program across the board.
Lawrence J. Ellison: These next-generation applications are very attractive. I'll tell you one other crazy thing that we do, 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.
Speaker Change: These next generation applications.
Speaker Change: Our very attractive I'll tell you one of the other crazy thing that we do.
Speaker Change: 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.
Lawrence J. Ellison: But with generative AI, we can read the entire corpus of Albanian laws and actually harmonize their laws with the EU in 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 have probably never heard of before, at least I hadn't heard of before, until these last 12 months that we've worked on and we're now in the process of delivering. Really amazing stuff, Larry. Thank you. And congrats! And Safra, it is really great to see the firm reiteration of your fiscal 26 targets.
Speaker Change: And it actually.
Speaker Change: Harmonize their laws with the EU and.
Speaker Change: And probably more like 18 months to two years, rather than the eight years that took <unk>.
Speaker Change: Serbia.
Speaker Change: So there are all sorts of interesting new AI applications out there that people use.
Speaker Change: You probably never heard of before at least I hadn't heard of before until this last 12 months that we've worked on and we're now in the process of deliberate.
Speaker Change: Really amazing stuff, Larry Thank you and congrats and softer really great to see the <unk>.
Speaker Change: Firm reiteration of your fiscal 'twenty six targets. Thanks, so much for taking my question.
Brad Alan Zelnick: Thanks so much for taking my question. Thank you. 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. Thank you everyone. This does conclude today's conference call. Thank you for your participation, and you may now disconnect. Okay, with that.
Speaker Change: Thank you.
Speaker Change: 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 Christoph for closing.
Christoph: Thank you everyone. This does conclude today's conference call. Thank you for your participation and you may now disconnect.
Christoph: Okay.
Speaker Change: Okay with that.