Q2 2025 Oracle Corp Earnings Call
Prevent any background noise. After the Speakers' remarks, there will be a question and answer session. If you'd like to ask a question. During this time simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question again prestige Star one. Thank you I'd now like to turn the call over to Ken Bond head of Investor Relations you may begin.
And welcome to the Oracle Corporation second quarter fiscal year 2025 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you'd like to ask a question. During this time simply press star followed by the number one on your telephone keypad, if you'd like to be the.
Safra Catz: We are currently live in 17 cloud regions with database at cloud services and have another 35 planned with Azure, Google, and AWS. Database Subscription Services, which includes database license support, we're up 5%. Application subscription revenues, which includes product support, were $4.8 billion and up 7%. Our strategic back-office SaaS applications now have annualized revenue of $8.4 billion and were up 18%. Software license revenues were up 3% to $1.2 billion, including Java, which saw excellent growth. So all in, total revenues for the quarter were $14.1 billion, up 9% from last year. Now shifting to gross profit and operating income, the gross profit dollars of cloud services and license support grew 9% in Q2.
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Speaker Change: Draw your question again prestige Star one. Thank you I'd now like to turn the call over to Ken Bond head of Investor Relations you may begin.
Thank you, Rob and good afternoon, everyone and welcome to Oracle's second quarter fiscal year 2025 earnings conference call a copy of the press release and financial tables, which includes a GAAP to non-GAAP reconciliation and other supplemental financial information can be viewed and downloaded from our investor Relations website.
Speaker Change: Thank you, Rob and good afternoon, everyone and welcome to Oracle's second quarter fiscal year 2025 earnings conference call a copy of the press release and financial tables, which includes a GAAP to non-GAAP reconciliation and other supplemental financial information can be viewed and downloaded from our investor Relations website.
Speaker Change: Additionally, a list of many customers, who purchase Oracle cloud services or went live on Oracle cloud recently, we will be available from our Investor Relations website as well on the call today are chairman and Chief Technology Officer, Larry Ellison, and Chief Executive Officer Safra Cats.
Speaker Change: Additionally, a list of many customers, who purchase Oracle cloud services or went live on Oracle cloud recently will be available from our Investor Relations website as well 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 <unk>.
Speaker Change: As a reminder, today's discussion will include forward looking statements, including predictions expectations estimates or other information that might be considered forward looking.
Speaker Change: Throughout today's discussion we will present, some important factors relating to our business, which may potentially affect these forward looking statements and these forward looking statements are also subject to risks and uncertainties that may cause actual results to differ materially from statements being made today.
Speaker Change: We're looking statements, including predictions expectations estimates or other information that might be considered forward looking.
Throughout today's discussion we will present, some important factors relating to our business, which may potentially affect these forward looking statements and these forward. These statements are also subject to risks and uncertainties that may cause actual results to differ materially from statements being made today.
Speaker Change: As a result, we caution you from placing undue reliance on these forward looking statements and we encourage you to review our most recent reports, including our 10-K and 10-Q and any applicable amendments for a complete discussion of these factors and other risks that may affect our future results or the market price of our stock and finally, we're not obligating ourselves to.
Safra Catz: As our cloud businesses continue to scale, the gross margins of both cloud applications and cloud infrastructure have each been trending higher. We continue to display expense discipline, which of course we're known for, especially with R&D, sales and marketing, and G&A expenses, which collectively continue to grow slower than revenue, a trend that I expect to continue. The Q2 operating income grew 10% and the operating margin was 43%, up 60 basis points from last year. The non-gap tax rate for the quarter was actually 20.1%, which is higher than my 19% guidance. Even as the higher tax rate lowered EPS by 2 cents, we still hit the high end of my constant currency guidance.
Speaker Change: As a result, we caution you from placing undue reliance on these forward looking statements and we encourage you to review our most recent reports, including our 10-K and 10-Q and any applicable amendments for a complete discussion of these factors and other risks that may affect our future results or the market price of our stock and finally, we're not obligating ourselves.
Speaker Change: <unk> 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.
Speaker Change: To revise our results or these forward looking statements in light of new information or future events.
Speaker Change: Okay.
Safra: Thanks, Ken and good afternoon, everyone.
Speaker Change: Taking questions, we'll begin with a few prepared remarks and with that I'd like to turn the call over to Safra.
Safra: Q2 was another excellent quarter with total revenue at the high end of my constant currency guidance and EPS was actually above the high end. These results are being driven by the fact that our largest revenue component cloud server.
Speaker Change: Yeah.
Safra Cats: Thanks, Ken and good afternoon, everyone Q2 was another excellent quarter with total revenue at the high end of my constant currency guidance and EPS was actually effect above the high end. These results are being driven by the fat.
Safra: This isn't licensed support now referenced in 77% of total revenue and is also our fastest growing line item, which in turn is driving the acceleration of overall revenue growth.
Safra Cats: That our largest revenue component cloud services and license support now represent 77% of total revenue and is also our fastest growing line item, which in turn is driving the acceleration of overall revenue.
Safra Catz: Absolutely did better. The non-GAAP EPS was $1.47 in U.S. dollars, up 10% in USD and 10% in constant currency. The GAAP EPS was $1.10 in USD, and that's up 24% in USD and 23% in constant currency. At quarter end, we had $11.3 billion in cash and marketable securities. The short-term deferred revenue balance was $9.4 billion, up 8%. With CapEx at $4 billion for the quarter, free cash flow was negative $2.7 billion and operating cash flow was positive $1.3 billion. Given the demand that you see in our RPO numbers and the additional demand we see in our pipeline, I expect fiscal year 2025 CapEx will be double what it was in fiscal year FY24.
We expect cloud revenue to reach $25 billion this fiscal year.
Safra Cats: Growth.
Safra: This is happening for several reasons.
We expect cloud revenue to reach $25 billion this fiscal year.
Safra: First our cloud is faster and less expensive than other clouds, we remain the preferred cloud for AI workloads as well as for non GPU cloud infrastructure services.
Safra Cats: This is happening for several reasons.
Safra Cats: First our cloud is faster and less expensive than other clouds, we remained the preferred cloud for AI workloads.
Safra: In addition, our ability to deploy our cloud in many sizes gives our customers flexibility.
Safra Cats: Well as for non GPU cloud infrastructure services.
Safra Cats: In addition, our ability to deploy our cloud in many sizes gifts, our customers flexibility and our multi cloud agreements with Microsoft Google and AWS provide customers more choice in how they can.
Safra: Our multi cloud agreements with Microsoft Google and AWS provide customers more choice in how they can migrate their oracle databases to the cloud.
Safra: And our strategic SaaS applications.
Safra Cats: Migrate their oracle databases to the cloud.
Safra: <unk> to grow rapidly and we are also seeing more of our industry based cloud applications come online, which immediately contribute to revenue growth.
Safra Catz: As always, we remain careful to pace and align our CapEx investments appropriately and in line with booking trends. on a trailing 12-month space. Operating cash flow was up 19% at $20.3 billion and free cash flow was $9.5 billion. Our remaining performance obligation, or RPO, is now at $97.3 billion, up 50% in constant currency, and reflects the growing trend of customers wanting larger and longer contracts, as they see firsthand how Oracle Cloud Services are benefiting their business. Further, our cloud RPO grew nearly 80% and now represents nearly three-fourths of total RPO. Approximately 39% of the total RPO is expected to be recognized as revenue over the next 12 months, and we continue to see the growth of current RPO accelerate.
Safra Cats: And our strategic SAS applications continue to grow rapidly and we are also seeing more of our industry based cloud applications come online, which immediately contribute to revenue growth.
Safra: You can see all of this in the momentum in the acceleration of our cloud growth and the 50% growth of our $97 billion RPM number remaining performance obligation and today, we're telling you again.
Safra Cats: You can see all of this in the momentum in the acceleration of our cloud growth and the 50% growth of our $97 billion RPM number remaining performance obligation and today, we're telling you would get that revenue growth.
That revenue growth will accelerate further in the coming quarters.
Safra: Turning to Q2, and I want to remind you that our quarter ended on Saturday, a week ago and here, we are announcing our results and thats only possible because we use oracle fusion.
Safra Cats: It will accelerate further in the coming quarters.
Safra Cats: Turning to Q2, and I want to remind you that our quarter ended on Saturday a week ago and here, we are announcing our results and that's only possible because we use oracle fusion.
Now as for the numbers, we saw all segments exceeding our internal forecast.
Safra Cats: Now as for the numbers, we saw all segments exceeding our internal forecast.
Safra: Now as the dollar strengthened in the quarter, the 1% currency benefit for total revenue and the two to three cent benefit for EPS that were present in my August guidance retreated with total revenue and EPS in Q2 essentially unaffected.
Safra Cats: Now as the dollar strengthened in the quarter, the 1% currency benefit for total revenue and the two to three cent benefit for EPS that were present in my August guidance retreat with total revenue and EPS in Q2 essentially unaffected.
Safra Catz: We have now about 98 cloud regions live and many, many more to follow. that we have more cloud regions than any of the other hyperscaler reflects the strategic advantage of our Gen 2 architecture. We can start a new cloud region with a handful of racks and then scale up with customer demand. Additionally, our data centers are highly automated and identical in features and function. varying only in scale this sizing flexibility and deployment optionality of our cloud continue to be a significant advantage for us. As we've said before, we're committed to returning value to our shareholders through technical innovation, acquisitions, stock repurchases, prudent use of debt, and a dividend.
Safra: Effected by currency movements.
Safra: As usual as I go well for things today I'll be discussing our financials using constant currency growth rate. This is how we manage the business.
Safra Cats: Second by currency movements.
Safra Cats: As usual as I go well for things today I'll be discussing our financials using constant currency growth rate. This is how we manage the business. So.
Safra: Here It goes.
Safra: Total cloud revenue that SaaS and ISS was up 24% at $5 9 billion with SaaS revenue of $3 5 billion up 10% and <unk> revenue of $2 4 billion up 52% on top of the fifth.
Safra Cats: So here it goes.
Safra Cats: Total cloud revenue that SaaS and ISS was up 24% at $5 9 billion with SaaS revenue of $3 5 billion up 10% and <unk> revenue of $2 4 billion up 52% on top of the fifth.
Safra: 8% growth reported last year.
Safra: As a reminder, we exited the advertising business last quarter, which had the effect of lowering the total cloud revenue growth by 2% this quarter.
Safra Cats: 8% growth, we reported last year.
Safra Cats: As a reminder, we exited the advertising business last quarter, which had the effect of lowering the total cloud revenue growth by 2% this quarter.
Safra: Total cloud services and license support for the quarter was $10 8 billion up 12% driven again by OCI, our strategic cloud applications and autonomous database.
Safra Cats: Total cloud services and license support for the quarter was $10 8 billion up 12% driven again by OCI, our strategic cloud applications and autonomous database.
Safra Catz: This quarter we repurchased nearly a million shares for a total of $150 million. In addition, we paid out dividends of $4.4 billion over the last 12 months, and the Board of Directors again declared a dividend of $0.40 per share.
Safra: Infrastructure subscription revenues, which includes the license support were $6 billion up 17%.
Safra Cats: Infrastructure subscription revenues, which includes the license support were $6 billion up 17%.
Safra: Record level AI demand drove Oracle cloud infrastructure revenue up 52%, but excluding legacy hosting infrastructure cloud services revenue was up 55%.
Safra Catz: Before I dive into specific Q3 guides, I'd like to share some overarching thoughts about the financial benefits I expect we will see over the coming quarters and years. Start, we continue to see excellent demand for our cloud services, which you see in our RPO growth. And while this growth is stellar, our pipeline is actually growing even faster, and our win rates are growing higher, with the recent win at Meta being a prime example of why we expect that our RPO balance will climb again in Q3. Meta was not booked in the Q2 quarter, only in Q3.
Safra Cats: Record level AI demand drove Oracle cloud infrastructure revenue up 52%, but excluding legacy hosting infrastructure cloud services revenue was up 55%.
Safra: Our infrastructure cloud services now have an annualized revenue of $9 7 billion.
Safra: OCI consumption revenue was up 58% as demand continues to outstrip supply.
Safra Cats: Our infrastructure cloud services now have an annualized revenue of $9 7 billion.
Safra Cats: OCI consumption revenue was up 58%.
Safra: Growth in the <unk> segment of our infrastructure business was extraordinary GPU consumption was up 336% in the quarter and we delivered the world's largest and fastest AI.
Safra Cats: Demand continues to outstrip supply.
Safra Cats: Growth in the <unk> segment of our infrastructure business was extraordinary GPU consumption was up 336% in the quarter and we delivered the world's largest and fastest AI supercomputer scaling up too.
Safra Catz: In fiscal year 2024, we signed some big deals, and many have begun to generate revenue. We expect that those will continue to ramp higher in the second half and be a key contributor to revenue growth acceleration this year and next. In fiscal year 2025, we remain very confident and committed to full-year total revenue growing double-digit and full-year total cloud infrastructure growing faster than the 50% reported last year.
Safra: Hi, supercomputer scaling up to 65000 in <unk> H 200 Gpus.
Safra: Cloud database services, which were up 28% and now have an annualized revenue of $2 2 billion.
Safra Cats: 65000 in video H 200 Gpus.
Safra Cats: Cloud database services, which were up 28% and now have an annualized revenue of $2 2 billion.
Safra: As as on premise database to migrate to the cloud on OCI, either directly or through our database at cloud services with Azure, Google and AWS, We expect the cloud database revenues collectively will be the third leg of revenue growth.
Safra Cats: As as on premise database to migrate to the cloud on OCI, either directly or through our database at cloud services with Azure, Google and AWS, We expect the cloud database revenues collectively will be the third leg of revenue growth.
Safra Catz: Okay, let me now turn to guidance, which I'll review on a non-GAAP basis. In terms of currency, we've seen a dramatic shift due to significant strengthening of the U.S. dollar. To put this in perspective, in Q2, we expected currency to have a three-cent positive effect on EPS. For Q3, assuming exchange rates remain the same as they are now, currency should have a three-cent negative effect on EPS and a two-percent negative effect on revenue. However, As the dollar strengthened, it may not hold out the whole quarter and may be different. All right. Total revenue are expected to grow from 9% to 11% in constant currency and are expected to grow from 7% to 9% in USD at today's exchange rate.
Safra: Alongside OCI and strategic staff.
Safra: Currently we are currently live in 17 cloud regions with database at cloud services and have another 35 planned with Azure, Google and AWS.
Safra Cats: <unk> alongside OCI and strategic staff.
Safra Cats: We currently we are currently live in 17 cloud regions with database at cloud services and have another 35 planned with Azure, Google and AWS.
Safra: Database subscription services, which includes database license and support were up 5%.
Safra: Applications subscription revenues, which includes product support were $4 8 billion and up 7%.
Safra Cats: Database subscription services, which includes database license support were up 5%.
Safra Cats: Applications subscription revenues, which includes product support were $4 8 billion and up 7%.
Safra: Our strategic back office SaaS applications now have annualized revenue of $8 4 billion and were up 18%.
Safra Cats: Our strategic back office SaaS applications now have annualized revenue of $8 4 billion and were up 18%.
Safra: Software license revenues were up 3% to $1 2 billion, including Java, which saw excellent growth. So all in total revenues for the quarter were $14 1 billion up 9% from last year.
Safra Catz: Total cloud revenue is expected to grow from 25% to 27% in constant currency and is expected to grow from 23% to 25% in USD. Non-GAAP EPS is expected to grow between 7% to 9% and be between $1.50 and $1.54 in constant currency. Non-GAAP EPS is expected to grow between 4% to 6% and be between $1.47 and $1.41 in USD. I should mention that my Q3 EPS guidance is negatively impacted by 5 cents due to an investment loss in another company that we are a partial owner of. Lastly, my EPS guidance for Q3 assumes a base tax rate of 19%, however, like in Q2, one-time tax events and other things can cause actual tax rates to vary.
Safra Cats: Software license revenues were up 3% to $1 2 billion, including Java, which saw excellent growth. So all in total revenues for the quarter were $14 1 billion up 9% from last year.
Safra: Now shifting to gross profit and operating income the gross profit dollars of cloud services and license support grew 9% in Q2.
Safra Cats: Now shifting to gross profit and operating income the gross profit dollars of cloud services and license support grew 9% in Q2.
Safra: As our cloud businesses continue to scale the gross margins of both cloud applications and cloud infrastructure have each been trending higher.
As our cloud businesses continue to scale the gross margins of both cloud applications and cloud infrastructure have each been trending higher.
Safra: We continue to display expense discipline, which of course, we're known for.
Safra: Especially with R&D sales and marketing and G&A G&A expenses, which collectively continue to grow slower than revenue a trend that I expect to continue.
Safra Cats: We continue to display expense discipline, which of course, we're known for.
Safra Cats: Especially with R&D sales and marketing and G&A G&A expenses, which collectively continue to grow slower than revenue a trend that I expect to continue.
Safra: Q2, operating income grew 10% and the operating margin was 43% up 60 basis points from last year.
Safra Cats: The Q2 operating income grew 10% and the operating margin was 43%.
Safra: The non-GAAP tax rate for the quarter was actually 21%, which is higher than mine, 19% guidance.
Larry Ellison: And with that, I'll turn it over to Larry for his comments. Thank you, Safra. Oracle Cloud Infrastructure trains several of the world's most important generative AI models. Our major AI customers include OpenAI, XAI, NVIDIA, Cohere, and most recently Meta with their large scale LLAMA models. Oracle continues to win large AI training workloads because we're faster and less expensive than the other infrastructure clouds. And we just extended our AI performance advantage. by delivering the largest and fastest AI supercomputer in the world. scaling up to 65,000 NVIDIA H200 GPUs. The Oracle Cloud trains dozens of AI models and embeds hundreds of AI agents in cloud applications.
Safra Cats: 60 basis points from last year.
Speaker Change: The non-GAAP tax rate for the quarter was actually 21%, which is higher than mine, 19% guidance.
Safra: Even as the higher tax rate lowered EPS by two says we still hit the high end of my constant currency guidance.
Speaker Change: Even as a higher tax rate lowered EPS by two cents, we still hit the high end of my constant currency guidance.
Safra: So we did that the non-GAAP EPS was $1.47 in U S dollars.
Safra: Up 10% in USD and 10% in constant currency. The GAAP EPS was $1 10 in USD and that's up 24% in USD and 23% in constant currency.
Speaker Change: So we did that the non-GAAP EPS was $1.47 in U S dollars.
Speaker Change: Up 10% in USD and 10% in constant currency, the GAAP EPS was $1 10 and USD.
Safra: At quarter end, we had $11 3 billion in cash and marketable securities. The short term deferred revenue balance was $9 4 billion up 8%.
Speaker Change: That's up 24% in USD and 23% in constant currency.
Speaker Change: At quarter end, we had $11 3 billion in cash and marketable securities. The short term deferred revenue balance was $9 4 billion up 8%.
Safra: With Capex at $4 billion for the quarter free cash flow was negative $2 7 billion in operating cash flow was positive $1 3 billion.
Larry Ellison: Oracle's AI agents automate drug design, image and genomic analysis for cancer diagnostics. audio updates to electronic health records for patient care Satellite Image Analysis to Predict and Improve Agricultural Output Fraud and money laundering detection, dual-factor biometric computer logins, and real-time video weapons detection in schools. Furthermore, The better capabilities of the new AI version of our database, Oracle 23AI, enables our customers to easily use their existing data in their existing database. to augment and specialize the training of industry standard generative AI models like CAT GPT, GROK, and LOMS. The Oracle Cloud and the Oracle 23AI Vector Database makes it easy for our customers to build their own AI .
Speaker Change: With Capex at $4 billion for the quarter free cash flow was negative $2 7 billion and operating cash flow was positive $1 3 billion.
Safra: Given the demand that you see in our RPM numbers and the additional demand we see in our pipeline I expect fiscal year 2025, Capex will be double what it was in fiscal year FY 'twenty four.
Given the demand that you see in our RPM numbers and the additional demand we see in our pipeline I expect fiscal year 2025, Capex will be double what it was in fiscal year FY 'twenty for.
Safra: As always we remain careful to pace and align our capex investments appropriately and in line with booking trends.
Speaker Change: As always we remain careful to pace and align our capex investments appropriately and in line with booking trends.
Safra: On a trailing 12 month basis.
Safra: Operating cash flow was up 19%.
Speaker Change: On a trailing 12 month basis.
Safra: At 23 billion and free cash flow was $9 5 billion or.
Speaker Change: Operating cash flow was up 19%.
Safra: Our remaining performance obligation or our P. O is now at 97 3 billion up 50% in constant currency and reflects the growing trend of customers wanting larger and longer contracts as they see firsthand how oracle cloud services are.
Speaker Change: At 23 billion and free cash flow was $9 5 billion or.
Speaker Change: Our remaining performance obligation or our P O.
Speaker Change: Is now at 97 3 billion up 50% in constant currency and reflects the growing trend of customers wanting larger and longer contracts as they see firsthand how oracle cloud services are benefiting their businesses further our cloud.
Larry Ellison: . and use their own data to reap the benefits of the AI revolution. Oracle is training AI models and developing AI agents that will improve the rate of scientific discovery and economic development and corporate growth throughout the world. The scale of this opportunity is unimaginable. As Safra said, this fiscal year, total Oracle Cloud revenue should top $25 billion. And this is just the beginning of the beginning. That's you.
Safra: Benefiting their businesses further our cloud <unk> grew mirror, our cloud RP O grew nearly 80% and now represents nearly three fourth of total RP O.
Speaker Change: P O grew nearer or cloud RP O grew nearly 80% and now represents nearly three fourth of total RP O a.
Safra: Approximately 39% of the total ARPA is expected to be recognized as revenue over the next 12 months and we continue to see the growth.
Speaker Change: Approximately 39%.
Speaker Change: The total <unk> is expected to be recognized as revenue over the next 12 months.
Safra: Current RPI accelerate.
Safra: We have we have now about 98 cloud regions lives and many many more to follow.
Speaker Change: We continue to see the growth.
Speaker Change: Of current RP O accelerate.
Larry Ellison: Thank you, Larry.
Rob: Rob, if you could please poll the audience for questions. Thank you.
Speaker Change: We have we have now about 98 cloud regions lives and many many more to follow.
Safra: That we have more cloud regions than any of the other hyper scaler reflects the strategic advantage of our Gen. Two architecture, we can start a new cloud region with a handful of racks, and then scale up with customer demand.
Unknown Executive: We will now begin the question and answer session. If you would like to ask a question, please press star 1 in your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again.
Speaker Change: That we have more cloud regions than any of the other hyper scaler reflects the strategic advantage of our churn to architecture.
Mark Moerdler: Your first question today comes from the line of Mark Moerdler from Bernstein. Your line is open. Thank you very much for taking my question and congratulations on the quarter.
We can start a new cloud region with a handful of racks, and then scale up with customer demand.
Safra: Additionally, our data centers are highly automated and identical in features and function varying only in scale. This sizing flexibility and deployment optionality of our cloud regions continue to be a significant advance.
Larry Ellison: I'd like to gain better insight into OCI. OCI is designed differently from its larger peers, deliverable in just 10 and shortly 3 RACS servers. Could you explain how the architectural difference impacts how you build and deliver OCI RACS and how it will impact how many data center regions you could have compared to your peers? And then how might this affect your CapEx growth over the next 5 years? Thanks. Okay, well, all the data centers are the same racks. So you can think of it as completely modular. We have a basic rack, and to build a region, it takes six racks, the smallest region we can build.
Speaker Change: Additionally, our data centers are highly automated and identical adding features and function varying only in scale.
Speaker Change: This sizing flexibility and deployment optionality of our cloud regions continue to be a significant advantage for us.
Safra: <unk> for us.
Safra: As we've said before we're committed to returning value to our shareholders through technical innovation acquisitions stock repurchases prudent use of debt and a dividend this quarter, we repurchased nearly 1 million shares for a total of $150 million.
Speaker Change: As we've said before we're committed to returning value to our shareholders through technical innovation acquisitions stock repurchases prudent use of debt and a dividend this quarter, we repurchased nearly 1 million shares for a total of $150 million.
Safra: In addition, we paid out dividends of $4 4 billion over the last 12 months and the board of directors again declared a quarterly dividend of <unk> 40 cents per share.
Larry Ellison: So our racks, you know, start at, you know, under 50 kilowatts. And our biggest data center, so excuse me, so our basic small data centers, you know, 50 kilowatts. And our data centers, the largest data center we're currently building now is 1.6 gigawatts. So that's quite a range, you know, 50 megawatts to 1.6 gigawatts. and when we build them and we put them in inventory, the racks are pretty much the same. So it's very easy for us to manufacture these. It's lower cost to manufacture these. The inventory is less because they're all kind of the same.
Speaker Change: In addition, we paid out dividends of $4 4 billion over the last 12 months and the board of directors again declared a quarterly dividend of 40 <unk>.
Safra: Before I dive into specific Q3 guidance I'd like to share some overarching thoughts about the financial benefits I expect we will see over the coming quarters and years to start we continue to see excellent demand for our cloud services, which you see in our <unk> growth.
Speaker Change: Per share.
Speaker Change: Before I dive into specific Q3 guidance I'd like to share some overarching thoughts about the financial benefits I expect we will see over the coming quarters and years to start we continue to see excellent demand for our cloud services, which you see in our RPM growth.
Safra: And while this growth is stellar our pipeline is actually growing even faster and our win rates are growing higher.
Speaker Change: And while this growth is stellar our pipeline is actually growing even faster and our win rates are growing higher with the recent win at meta being a Prime example of why we expect that our RP O balance will climb again in Q3.
Safra: With the recent win at meta being a Prime example of why we expect that our RP O balance will climb again in Q3 meta was not booked in the Q2 quarter only in Q3.
Larry Ellison: Furthermore, every cloud region has all of our services. They all have all the same services, so it's easy for customers. We don't have to provision like our competitors do. Our competitors have some of their services in some regions and some of their services in other regions. We have all of our services in all of our regions, even though we are both smaller in terms of our smallest region and larger in terms of our largest region than our competitors. When all of our racks are the same and all of our services are the same, they become very easy, or I should say easier to automate.
Safra: In fiscal year 2024, we signed some big deals and many have begun to generate revenue. We expect that those will continue to ramp higher in the second half and be a key contributor to revenue growth acceleration this year and next.
Speaker Change: <unk> was not booked in the Q2 quarter only in Q3.
Speaker Change: In fiscal year 2024, we signed some big deals and many have begun to generate revenue. We expect that those will continue to ramp higher in the second half and be a key contributor to revenue growth acceleration this year and next.
Safra: For fiscal year 2025, we remain very confident and committed to full year total revenue growing double digit and full year total cloud infrastructure growing faster than the 50% reported last year.
Speaker Change: For fiscal year 2025, we remain very confident and committed to full year total revenue growing double digit and full year total cloud infrastructure growing faster than the 50% reported last year.
Larry Ellison: They're all identical. We have one suite of automation tools that works in all 100 of our current reach. And it makes it possible, because of the high degree of automation, to run not dozens of regions, but hundreds, or even theoretically thousands of regions, as individual customers are dedicating their own region. Individual customers are buying complete Oracle regions and installing them. What seems like it would be on-premise, though it is a full Oracle Cloud region, just happens to be in a dedicated data center to that customer. We are selling a lot of those as well. So, it allows us to address a market that our competitors can't reach.
Safra: Okay, Let me now turn to guidance, which I'll review on a non-GAAP basis in terms of currency, we've seen a dramatic shift due to significant strengthening of the U S. Dollar to put this in perspective in Q2 weeks for an expected currency to have a 3% positive.
Speaker Change: Okay, Let me now turn to guidance, which I'll review on a non-GAAP basis in terms of currency, we've seen a dramatic shift due to significant strengthening of the U S. Dollar to put this in perspective in Q2 weeks for an expected currency to have a three positives.
Safra: The effect on EPS for Q3, assuming exchange rates remain the same as they are now currency should have a 3% negative effect on the EPS and a 2% negative effect on revenue.
Speaker Change: The effect on EPS for Q3, assuming exchange rates remain the same as they are now currency should have a 3% negative effect on EPS and a 2% negative effect on revenues.
Safra: However.
Safra: As the dollar strengthened it may not hold out the whole quarter and may be different.
Larry Ellison: So, standardization. Automation and the small from the smallest to the largest data centers give us a huge advantage in competing in this market.
Speaker Change: However.
Safra: Total revenue are expected to grow from 9% to 11% in constant currency and are expected to grow from 7% to 9% in USD at today's exchange rate total cloud revenue is expected to grow from 25 to <unk>.
Speaker Change: As the dollar strengthened it may not hold out the whole quarter and may be different alright.
Speaker Change: Total revenue are expected to grow from 9% to 11% in constant currency and are expected to grow from 7% to 9% in USD at today's exchange rate.
Larry Ellison: On the CapEx side, what we can do, since our competitors always have to land with extremely large footprints before they can even get started, we can land with smaller footprints, have consumption, and expand as customers need it. And this allows us to really match our capital expenditure with ultimately our revenue, because we don't have to spend a long time with empty centers, because we literally can start small and just fill them up as our customers are consuming. And I think this is really something that is expressed also in the profitability of our cloud and keeps showing up because of that.
Safra: <unk>, 27% in constant currency and is expected to grow from 23 to 25 in USD.
Speaker Change: Total cloud revenue is expected to grow from 25% to 27% in constant currency and is expected to grow from 23 to 25 in the U S D.
Safra: non-GAAP EPS is expected to grow between 7% to 9% and be between $1 50, and $1 54 in constant currency non-GAAP EPS is expected to grow between 4% to 6% and be between $1 47.
Speaker Change: non-GAAP EPS is expected to grow between 7% to 9% and be between $1 50, and $1 54 in constant currency non-GAAP EPS is expected to grow between 4% to 6% and be between $1 47.
Safra: And $1 41 in USD.
Safra: I should mention that my Q3, EPS guidance is negatively impacted by a five cent by 5% due to an investment loss in another company that we are partial owner of lastly, my EPS guidance for Q3 assumes a base.
Speaker Change: And $1.41 in USD.
Speaker Change: I should mention that my Q3, EPS guidance is negatively impacted by a five cent by five cents due to an investment loss in another company that we are partial owner of lastly, my EPS guidance for Q3 assumes a base tan.
Safra: Tax rate of 19% however, like in Q2, one time tax events and other things can cause actual tax rates to vary and with that I'll turn it over to Larry for his comments.
Sitikantha Panigrahi: Your next question comes from the line of Siti Panigrahi from Mizuho. Your line is open.
<unk> rate of 19% however, like in Q2, one time tax events and other things can cause actual tax rates to vary.
Safra: Yeah.
Larry: Thank you Sabra.
Larry: Oracle cloud infrastructure train several of the world's most important generated AI models.
Larry Ellison: And with that I'll turn it over to Larry for his comments.
Speaker Change: Okay.
Larry Ellison: Thank you Sabra.
Larry: Our major customers include open AI.
Larry Ellison: Oracle cloud infrastructure train several of the world's most important genre AI models.
Larry: AI and <unk>.
Larry: Co here and most recently matter.
Larry Ellison: Our major customers include open AI X AI and <unk>.
Larry: Where there are large scale Lama models.
Larry: Oracle continues to win large AI training workloads, because were faster and less expensive than the other infrastructure clouds.
Larry Ellison: Well, you go ahead, Larry, and then I'll finish. You go ahead. Nope, nope.
Speaker Change: Co here and most recently met up.
But there are large scale Lama models.
Safra Catz: All right, let me start. As I mentioned, you know, and as you caught in my talking, 28%, it's now annualized revenue, just the cloud database services of $2.2 billion. And imagine most of that is mostly nearly entirely OCI without even the database at AWS and Azure and Google. That also, though, has grown from zero to, you know, 100 million plus run rate already, past 100 million, and will be hundreds of millions probably as an exit. So these cloud regions have only started opening. As I mentioned, though, we do now have 17 open and twice as many opening.
Speaker Change: Oracle continues to win large AI training workloads, because were faster and less expensive than the other infrastructure clouds.
Larry: And with.
Larry: We just extended our AI performance advantage.
Larry: By delivering the largest and fastest AI.
Speaker Change:
Larry: Supercomputer in the world scaling up to 65000 in media H 200 Gpus.
Speaker Change: We just extended our AI performance advantage.
Speaker Change: By delivering the largest and fastest supercomputer in the world.
Speaker Change: The Oracle cloud frame dozens of AI models, and Embeds hundreds of agents and cloud applications.
Speaker Change: Scaling up to 65000 in media H 200 Gpus.
Speaker Change: The Oracle cloud trained dozens of AI models, and Embeds hundreds of agents and cloud applications.
Oracle's agents automate drug design.
Jim Gnomic analysis for cancer diagnostics.
Speaker Change: Audio updates to electronic health records for patient care.
Speaker Change: Oracle's AIA agents automate drug design.
Speaker Change: Jim Gnomic analysis for cancer diagnostics.
Speaker Change: Satellite image analysis to predict improve agricultural output.
Speaker Change: Audio updates to electronic health records for patient care.
Speaker Change: Rod and money laundering detection dual factor of biometric computer logins and real time video weapons detection in school.
Speaker Change: Satellite image analysis to predict improve agricultural output.
Speaker Change: Broad and money laundering detection dual factor of biometric computer login and real time video weapons detection school.
Larry Ellison: So I think what you're going to see is the database as it moves to the cloud is really only at the beginning. In addition, though, I want to remind you that clouded customers and our alloy partners are also contributing to this. And we have an enormous pipeline of customers who want to bring their databases to the cloud. But a number of them want to do it in their own dedicated regions that are just their own for either regulatory reasons or sovereignty reasons. Again, an offering that only we have that none of our competitors have.
Our major AI customers include OpenAI XAI Nvidia cohere and most recently Meta.
Speaker Change: Furthermore, the.
Speaker Change: The vector capabilities of the new AI version of our database, we're above 23 <unk>.
Speaker Change: Furthermore, the.
Speaker Change: Enables our customers to easily use their existing data and their existing databases to augment and specialized training of <unk>.
With their large scale llama models.
Speaker Change: The vector capabilities of the new AI version of our database Oracle 23, AI enables our customers to easily use <unk>.
Oracle continues to win large AI training workloads because we're faster and less expensive than the other infrastructure clouds.
Speaker Change: Industry standard regenerative AI models, like GPT, Grok and llama.
Speaker Change: Existing data and their existing databases.
And
We just extended our AI performance advantage.
Speaker Change: <unk> met and specialized training of industry standard regenerative AI models.
Speaker Change: The Oracle cloud.
Uh, by delivering the largest and fastest AI supercomputer in the world.
Speaker Change: And the Oracle 'twenty three 'twenty three AI vector database makes it easy for our customers to build their own.
Speaker Change: Scott GPT rock N llama.
Scaling up to 65,000 Nvidia H200 GPUs.
Speaker Change: The Oracle cloud.
Speaker Change: And use their own data to reap the benefits of the AI Revolution.
Speaker Change: And the Oracle 'twenty three 'twenty three AI vector database makes it easy for our customers to build their own.
The Oracle cloud trains dozens of AI models and embeds hundreds of AI agents and cloud applications.
Oracle is training AI models, and developing AI agents that will improve the rate of the scientific discovery and economic development and corporate growth throughout the world.
Speaker Change: And use their own data to reap the benefits.
Oracle's AI agents automate drug design.
Speaker Change: Of the AI Revolution.
Larry Ellison: Yeah, again, Microsoft is the only partner where we where the contract is more than a year old. So Google is much more recent and AWS even more recent than Google. So we're at the very beginning of multi cloud. And as Safra said, it's going to exit well over 100 million dollars in its first year. The of the first year starting when we got AWS, when we had all three. It will be a multi-billion dollar business. It'll be a combination of AWS and Google and Azure, plus all of these cloud at customer, dedicated region cloud at customer.
Speaker Change: Oracle is training AI models and developing AI agents.
Image and gymnomic analysis for cancer diagnostics.
Speaker Change: That will improve the rate of scientific discovery and economic development.
The scale of this opportunity is unimaginable.
Audio updates to electronic health records for patient care.
Satellite image analysis to predict and improve agricultural output.
Speaker Change: I presented this fiscal year total Oracle cloud revenue should top $25 billion.
Speaker Change: Corporate growth throughout the world.
Speaker Change: The scale of this opportunity is unimaginable.
Fraud and money laundering detection.
Duual factor biometric computer logins.
Speaker Change: And this is just the beginning of the beginning.
Speaker Change: As Safra said this fiscal year total Oracle cloud revenue should top $25 billion.
And real-time video weapons detection in schools.
Speaker Change: Back to you.
Speaker Change: Thank you Larry Rob if you could please poll the audience for questions.
Speaker Change: And this is just the beginning of the beginning.
Furthermore,
The vector capabilities of the new AI version of our database Oracle 23 AI.
Speaker Change: Thank you we will now begin the question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question simply press Star one again.
Speaker Change: Back to you.
Speaker Change: Thank you Larry Rob if you could please poll the audience for questions.
Enables our customers to easily use their existing data in their existing databases.
Rob: Thank you we will now begin the question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad to raise your hand and joined the queue. If you would like to withdraw your question simply press Star one again.
To augment and specialize the training of industry standard generative AI models like chat GPT Grock, and llama.
Larry Ellison: We're going to have hundreds of those regions. The demand from individual customers, large banks, telecommunication companies, building half a dozen or so data centers. They want us to build a half a dozen data centers, sometimes more, inside their own dedicated facilities. So they'll run the Oracle cloud in dedicated regions. And again, we'll end up with hundreds of those, and it clearly is going to be a multi, a very large, rapidly growing multi-billion dollar business.
Speaker Change: Your first question today comes from the line of Mark <unk> from Bernstein. Your line is open.
Okay. Thank you very much for taking my question and congratulations on the quarter I'd like to gain better insight into OCI.
Speaker Change: Your first question today comes from the line of Mark <unk> from Bernstein. Your line is open.
The Oracle cloud
And the Oracle 2323 AI vector database makes it easy for our customers to build their own AI agents and use their own data to reap the benefits.
Speaker Change: Thank you very much for taking my question and congratulations on the quarter I'd like to gain better insight into OCI.
Speaker Change: It is designed differently from its larger peers deliverable and just and then shortly three racks of servers you explain how the architectural difference impact how you build and deliver OCI racks and now it will impact how many data center regions you could have compared to your peers and then how might this affect.
Of the AI revolution.
Speaker Change: It is designed differently from its larger peers deliverable in just 10 and shortly through racks of servers you explain how the architectural difference impact how you build and deliver OCI, Iraq and now it will impact how many data center regions you could have compared to your peers and then how might this affect.
Oracle is training AI models and developing AI agents.
That will improve the rate of scientific discovery and economic development and corporate growth throughout the world.
Speaker Change: Your capex growth over the next five years. Thanks.
Larry Ellison: That's great color. Thanks, Larry and Safra. Thank you, Ken.
Speaker Change: Okay, well all of the data centers are the same racks. So you can think.
The scale of this opportunity is unimaginable.
Safra Catz: I think I misspoke. Could you actually say the line correctly that I was supposed to say about guidance? Sure, absolutely. Non-GAAP EPS is expected to grow between 4% to 6% and be between $1.47 and $1.51 in U.S. dollar. Thank you. Sorry, sorry, I don't know what I said exactly, but that is correct.
Speaker Change: <unk> is completely modular.
Speaker Change: Your capex growth over the next five years. Thanks.
As Sara said.
We have a basic rock.
This fiscal year, total oracle cloud revenue.
Speaker Change: Okay, well all the data centers are the same right. So you can think of is completely modular.
Speaker Change: And to build a region it takes six racks.
Should top $25 billion.
And this is just.
Speaker Change: The smallest region, we can build.
The beginning
Speaker Change: We have a basic rock.
Speaker Change: So our rux.
Of the beginning.
And to build a region it takes six racks.
Speaker Change: Started under 50 kilowatts, and our biggest data center.
Back to you.
Thank you, Larry. Rob, if you could please pull the audience for questions.
Speaker Change: The smallest region, we can build.
Speaker Change: Excuse me.
Speaker Change: So our rux.
Thank you. We will now begin the question and answer session. If you'd like to ask a question, please press star one in your telephone keypad to raise your hand and join the queue. If you'd like to withdraw your questions simply press star one again. Your first question today comes from the line of Mark Murler from Bernstein. Your line is open.
Speaker Change: Our basic small data centers 50, kilowatts, and our data centers with the largest data center. We're currently building now is one six gigawatts.
Speaker Change: Started.
Speaker Change: Under 50 kilowatts.
Speaker Change: And our biggest data centers.
Unknown Executive: Hey, we're next, you know what?
Brad Zelnick: Your next question comes from a line of Brad Zelnick from Deutsche Bank. Your line is open. Great, thank you and congrats on the continued acceleration at scale. Larry, as Oracle leads with larger and larger GPU clusters, there's healthy industry debate around scaling laws, with Elon Musk allegedly pushing the envelope of what's possible. I'm curious to hear your perspective as to whether there's diminishing returns on the amount of compute thrown at model training and Oracle's ongoing leadership in AI infrastructure and GPU superclusters. Thanks.
Speaker Change: Excuse me so we are basically small data centers.
Speaker Change: So that's quite a range.
Speaker Change: 50 kilowatts.
Speaker Change: Our data centers with the largest data center. We are currently building now is one six gigawatts.
Speaker Change: 50 megawatts to one one.
Speaker Change: One six gigawatts.
Speaker Change: And when we build them and you put them in inventory the rocks are pretty much the same.
Thank you very much for taking my question and congratulations on the quarter. Um, I'd like to gain better insight into OCI OCI is designed differently from its larger peers, deliverable in just 10 and shortly 3 racks of servers. You explain how the architectural difference impacts how you build and deliver OCI racks and how it will impact how many data center regions you could have compared to your peers. And then how might this affect your cap?
Speaker Change: So that's quite a range.
Speaker Change: 50 megawatts to one.
Speaker Change: So it's very easy for us to manufacture. These it's lower cost to manufacture. These inventory is less because they are all client per se.
Speaker Change: One six gigawatts.
And when we build them and you put them in inventory the rocks are pretty much the same.
Speaker Change: So it's very easy for us to manufacture. These it's lower cost to manufacture. These inventory is left because theyre all client per se.
Speaker Change: Furthermore, every every cloud region has all of our services.
Larry Ellison: Well, there's two elements to speeding up training. One is building larger and larger GPU clusters made up of faster and faster GPUs. So it's a GPU cluster itself. The second element, something Oracle has been very, very focused on, is building networks that rapidly move large volumes of data into those GPU clusters. As you make these GPU clusters larger and faster, it's putting more and more demands on the network to be able to move huge amounts of data into those GPU clusters so the GPU clusters aren't sitting there waiting for the data. If they're sitting there waiting for the data, it becomes very inefficient.
Speaker Change: Have all but they are all the same services. So it's easy for customers, we don't have to provision.
Furthermore, every every cloud region has all of our services.
growth over the next 5 years. Thanks.
Speaker Change: Like our competitors do a better job some of their services in some regions and some other services in other regions. We have all of our services in all of our regions. Even though we are both smaller in terms of the small our smallest region and larger in terms of our largest region than our than our competitors.
Speaker Change: Have all but they are all the same services. So it's easy for customers, we don't have to provision.
OK, well, all, all the data centers are the same racks, so you could think of this completely modular, uh, we have a basic rack, uh, and to build a region uh it takes 6 routes. Uh, the smallest region we can build, uh, so our racks, you know, started, you know, under 50 kilowatts and uh our biggest data center, so uh, uh, uh, excuse me, so our, our basic small data centers, you know, 50 kilowatts.
Speaker Change: Like our competitors do a better job some of their services in some regions and some of their services in other regions. We have all of our services in all of our regions. Even though we are both smaller in terms of the small our smallest region and larger in terms of our largest region than our than our competitors.
Speaker Change: When all of our racks are the same in all of our services are the same they become very easy or I should say easier to automate they're all identical we have one suite of automation tools that works in all 100 of our current regions.
Speaker Change: When all of our racks are the same in all of our services are the same they become very easy or I should say easier to automate.
And our data centers with the largest data center we're currently building now is 1.6 gigawatts.
Larry Ellison: If you're paying by the minute and half the time, half in 30 seconds, you don't have the data available. Obviously, that's a scaling problem. And that's an economic problem. And that's a performance problem.
They're all identical.
Speaker Change: And it makes it possible because of the high degree of automation to run not dozens of regions, but hundreds or even theoretically thousands of regions as individual customers are dedicating their own region individual customers are buying complete oracle regions and installing them if you would.
Speaker Change: One suite of automation tools that works in all 100 of our current regions and it makes it possible because of the high degree of automation to run not dozens of regions, but hundreds or even theoretically thousands of regions as individual customers.
So that's quite a range, 50, you know, 50 megawatts.
To 1, uh, 1.6 gigawatts.
Uh, and, and when we build them and we put them in inventory, the racks are pretty much the same.
Larry Ellison: Oracle differentiates itself in its data centers by investing heavily in building. Networks, and by the way, switch software, all sorts of network software, and network hardware to move data more quickly. We think we'll be able, the demand is really, as the GPU clusters get bigger and faster, the demand, the critical thing is for us to be able to move the data faster. And we are investing heavily in that, and we think we're going to maintain our advantage there, and that will, as we make our networks faster, the AI training will get faster. If we don't, if no one makes the networking faster, then I think there's a potential bottleneck.
So it's very easy for us to manufacture uh these it's lower cost, uh, to manufacture these, the inventory is less because they're all kind of the same, uh, furthermore, every, every cloud region has all of our services.
Speaker Change: Seems like it would be on premise, though it is a full oracle cloud region, just happens to be in a dedicated data center to that customer we are selling a lot of those as well so it allows us.
Dedicating their own region individual customers are buying complete oracle regions and installing them. If you seems like it would be on premise, though it is a full oracle cloud region, just happens to be in a dedicated data center to the customer we are selling a lot of those as well so it allows us.
Speaker Change: To address our market.
Speaker Change: Our competitors can't reach.
They all have all the, they have all the same services so it's easy for customers we don't have to provision, uh, like our competitors do, our competitors have some of their services in some regions and some of their services in other regions. We have all of our services in all of our regions even though we are both smaller in terms of the the small our smallest region and larger in terms of our largest region than our than our competitors when all of our racks are the same and all of our services are the same they become.
Speaker Change: Standardization.
Speaker Change: Automation.
Speaker Change: To address a market that our competitors can't reach.
Speaker Change: The smart from the smallest to the largest data centers gives us a huge advantage in competing in this marketplace.
Speaker Change: Standardization.
Speaker Change: Automation.
Speaker Change: And the small from the smallest to the largest data centers gives us a huge advantage in competing in this marketplace.
Speaker Change: On the Capex side.
Speaker Change: What we can do since our competitors always have to land with extremely large footprint before they can even get started we can land with smaller footprints have consumption and expand as.
Larry Ellison: But we're trying to, you know, avoid that bottleneck by speeding up our networking.
Speaker Change: On the Capex side.
Speaker Change: What we can do since our competitors always have to land with extremely large footprints before they can even get started we can land with smaller footprints have consumption and expand as.
very easy or I should say easier to automate.
Raimo Lenschow: Your next question comes from a line of Raimo Lenschow from Barclays, your line is open. Perfect. Thank you.
They're all identical. We have one suite of automation tools that works in all 100 of our current regions and I and it makes it possible because the high degree of automation to run not dozens of regions.
Speaker Change: As customers need it and this allows us to really match our capital expenditure with ultimately our revenue because it only we don't have to spend a long time with <unk> and with empty centers, because we literally can start small.
Safra Catz: Can I shift gear a little bit and go back to the SaaS part of the business? If you look there, if you look at your growth rates, I mean, we're at kind of a late-stage point of the cycle where people usually don't look at their back-office systems. But you guys are putting up like really solid growth numbers there, you're outgrowing your peers. Can you talk a little bit of what's going on there? Thank you. Actually, I don't agree with you that folks aren't looking at their back-office systems. In fact, I think there's enormous amount of pressure to be more efficient for many companies.
Speaker Change: As customers need it and this allows us to really match our capital expenditure with ultimately our revenue because it only we don't have to spend a long time with a with empty centers because we literally can start small.
But hundreds or even theoretically thousands of regions as individual customers are, are dedicating their own region. Individual customers are buying complete Oracle regions and installing them if you what what seems like it would be on premise though it is a full oracle cloud region just happens to be in a dedicated data center to that customer. We are selling a lot of those as well so it allows us to address a market that are our competitors can't reach.
Speaker Change: And just fill them up.
Speaker Change: As our customers are consuming and I think this is really <unk>.
Speaker Change: Something that is expressed also in the profitability of our cloud and keeps showing up because of that.
Speaker Change: And just fill them up.
Speaker Change: As our customers are consuming and I think this is really <unk>.
Speaker Change: Something that is expressed also in the profitability of our cloud and keeps showing up because of that.
Safra Catz: The competition is fierce in almost in basically all industries right now. And as companies, when they look at us, for example, that's why I always point out that it's, what is it, day nine? And that includes three weekends, three weekend days since our quarter closed. That just shows how efficient you can be in running your operations. And a lot of company executives actually come up to me and say, we need to do that. We need to do more and spend a lot less doing it. And we see enormous, really enormous pipeline in customers who understand that they can first automate and simplify their own businesses to spend less so they can invest in the things that differentiate them.
That's really helpful. I really do appreciate it thank you.
So standardization.
Speaker Change: Your next question comes from the line of city Pentagon from Mizuho. Your line is open.
Automation and the small from the smallest to the largest data centers give us a huge advantage in competing in this marketplace.
Speaker Change: That's really helpful. I really do appreciate it thank you.
Pentagon: Thanks for taking my question, it's impressive to see OCI.
Speaker Change: Your next question comes from the line of city Pentagon from Mizuho. Your line is open.
Pentagon: 2% and they've been database as a service up 28%. So as you execute on your multi cloud strategy can you provide some color on the database migration to cloud or even database as a service Jackson and what are you hearing from customer.
On the capex side that what we can do since our competitors always have to land with extremely large footprints before they can even get started, we can land with smaller footprints have consumption and expand as um as customers need it, and this allows us to really match our capital expenditure with ultimately
Speaker Change: Thanks for taking my question, it's impressive to see or see a girl.
Speaker Change: 2% and they've been database as a service up 28%. So as you execute on your multi cloud strategy can you provide some color on the date of this migration to cloud or even database as a service traction and what are you hearing from customer.
Pentagon: Mike.
Pentagon: On from device to cloud and how should we think about the contribution to revenue going forward.
Pentagon: Okay.
Speaker Change: Got to migrate on from device to cloud and how should we think about the contribution to revenue going forward.
Well.
Pentagon: You guys have clarity and then I'll finish. Please go ahead.
Our revenue because it only we don't have to spend a long time with an empty centers because we literally can start small and just fill them up.
Pentagon: No.
Yeah.
Pentagon: Alright, let me know.
Speaker Change: Well, our Oh, you got clarity and then I'll finish go ahead no no.
Pentagon: As I mentioned and as you caught in my in my talking 28%. It's now annualized revenue just the cloud database services of $2 2 billion and imagine most of that is mostly it nearly entirely.
Safra Catz: But there's also enormous interest in using their data for AI and using those systems. We have, I don't know, dozens and dozens of AI agents that can really help companies spend a lot less and really do a better job serving their customers. So we find enormous, enormous interest in this area. And no one has the capability and the data and the AI capability that Oracle can bring to a customer. So actually, I think it's been one of the most exciting times in back office and in front office, too. We have even our front office systems also taking advantage of so many of our capabilities for our customers.
Speaker Change: Yeah.
Speaker Change: Alright, let me know.
As I mentioned and as you caught in mice in my talking 28%. It's now annualized revenue just the cloud database services of $2 2 billion and imagine most of that is mostly it nearly entirely OCI.
As our customers are consuming and I think this is really something that is expressed also in the profitability of our cloud and keeps showing up because of that.
Pentagon: Ci without even the the database at.
Pentagon: At AWS and Azure and Google.
It's extremely helpful. I really do appreciate it. Thank you.
Speaker Change: OCI without even the the database.
Pentagon: That also though has grown from zero to you know hundreds.
Sure, next question comes from a line of Cenagrahi from Mizuho. Your line is open.
Speaker Change: At AWS and Azure and Google that also though has grown from zero to you know hundreds mid 100 million plus run rate already passed the $100 million and will be hundreds of millions probably as an exit so these cloud.
Pentagon: <unk> million plus run rate already passed the $100 million and will be hundreds of millions probably as an exit. So these cloud regions have only started opening as I mentioned, though we do now have 17 open.
Thanks for taking my question. Uh, it's impressive to see OCI got 52% and even database as a service up 28%. So, as you execute on your multi-cloud strategy. Can you provide some color on the database migration to cloud or even database such as service traction, and what are you hearing from customer as they prepare to migrate, uh, on-prem database to cloud and how should we think about the contribution to revenue going forward.
Pentagon: And and twice as many opening.
Speaker Change: Regions have only started opening as I mentioned, though we do now have 17 open.
Pentagon: So well I think what youre going to see is the database as it moves as it moves to the cloud is really only at the beginning in addition, though I want to remind you that cloud customers and to our alloy partners are also contributing.
Speaker Change: And and twice as many opening.
Safra Catz: So this has been a great time. And in fact, our booking trends, which you don't see yet in revenues because we wait until they're implemented. Our booking trends have taken a marked step up. We were going over those just today, and they've accelerated from last year quite significantly. Thank you.
Speaker Change: So well I think what you're going to see is the database as it moves as it moves to the cloud is really only at the beginning in addition, though I want to remind you that cloud customers.
Well, our, oh, you go ahead, Larry, and then I'll finish. You go ahead, no.
Pentagon: To this and we have an enormous pipeline of customers, who want to bring their databases to the cloud, but one of them, but a number of them wanted to do it in their own.
All right, let me start. As I mentioned, you know, and as you caught in my in my talking 28%, it's now annualized revenue, just the cloud database services of 2.2 billion. And imagine most that is mostly nearly entirely OCI without even the uh the database app um at AWS and Azure and Google.
Speaker Change: And our alloy partners are also contributing to this and we have an enormous pipeline of customers who want to bring their databases to the cloud, but one of them, but a number of them wanted to do it in their own.
Kirk Materne: Your next question comes from a line of Kirk Materne from Evercore ISI. Your line is open. Yes, thanks very much. And congrats on the results. Safra, you talked a little bit about the pipeline strength at the end of your prepared comments. Can you just talk about your line of sight in terms of capacity coming online so that you all can recognize some of the revenue that's associated with the demand that you're seeing, you know, specifically around on the OCI side? Thanks. Yes.
Pentagon: Dedicated reagents that are just their own for either regulatory reasons or sovereignty reasons again and offerings that only we have that none of our competitors have.
Speaker Change: Dedicated reagents that are just their own for either regulatory reasons or sovereignty reasons again and offering that only we have that.
Pentagon: Yeah.
Pentagon: Yes, again, Microsoft is the only partner.
That also though has grown from 0 to, you know, 100s 100 million plus run rate already past 100 million and will be hundreds of millions, probably as an exit. So these cloud regions have only started opening, as I mentioned though, we do now have 17 open, um, and, and twice as many opening, so I think what you're going
Speaker Change: None of our competitors have.
Pentagon: Where we where the contract is more than a year old. So Google is much more recent.
Speaker Change: Yes, again, Microsoft is the only partner.
Pentagon: W.
Pentagon: Even more recent than Google. So we are at the very beginning of multi cloud and as Safra said is going to exit well over 100 $100 million in its first year.
Safra Catz: So the second half of this year is and especially well, the second half we're in it is going to see a lot of a lot of capacity come online that we've been waiting for and that we've been working on. So we expect that you're going to see that turning into revenues. This is everything's accelerating even more. And in addition, though, we also expect our RPO to start moving up the actual base RPO number, which is, of course, up 50 percent year over year. But the number itself, we expect it to spike in this this quarter and for the end of the year.
Speaker Change: Where we where the contract is more than a year old. So Google is much more recent.
Speaker Change: AWS EBIT.
Speaker Change: Even more recent than Google. So we're at the very beginning of multi cloud and as Safra said, it's gonna exits well over a 100 $100 million in its first year.
Pentagon: This first year.
Pentagon: The.
Pentagon: The first year is starting when we got AWS when we had all three.
to see is the database as it moves, as it moves to the cloud is really only at the beginning. In addition, though, I want to remind you that clouded customers and our alloy partners are also contributing to this, and we, we have an enormous pipeline of customers who want to bring their databases to the cloud, but one of, but a number of them want to do.
Pentagon: It will be a multibillion dollar business and it'll be a combination of.
Speaker Change: First year.
Speaker Change: The.
Speaker Change: Uh huh.
Speaker Change: The first year is starting when we got AWS when we had all three.
Pentagon: AWS and Google and Azure plus all of these cloud at customer dedicated region cloud at customer.
Speaker Change: It will be a multibillion dollar business and it'll be a combination of <unk>.
Speaker Change: AWS and Google and Azure plus all of these cloud at customer dedicated region cloud at customer.
Pentagon: We're going to have hundreds of those regions, where the demand for from individual.
Pentagon: Customers large banks telecommunication companies building half a dozen or so datacenters they want us to build a half a dozen data centers, sometimes more inside.
We're going to have hundreds of those regions, where the demand for from.
Speaker Change: From individual customers large banks telecommunication companies building half a day.
Safra Catz: So we expect both capacity to come online for our customers, which it is. And so it'll burn down some of our RPO, but we also simultaneously expect to sign a number of very large contracts to that will make our RPO number go up.
it in their own um dedicated regions that are just their own for either regulatory reasons or sovereignty reasons. Again, and offering that only we have that uh none of our competitors have.
Pentagon: Inside their own dedicated facilities.
Speaker Change: Dozen or so datacenters, they want us to build a half a dozen data centers, sometimes more inside.
Pentagon: They will run the Oracle cloud and dedicated regions.
Pentagon: And again, we'll end up with one hundreds of those that clearly is going to be a multi a very large rapidly growing multi billion dollar business for us.
Speaker Change: Inside their own dedicated facilities.
Speaker Change: So they will run the Oracle cloud and dedicated regions.
Yeah, again, Microsoft is the only partner, uh, uh, where we, where the contract is more than a year old.
Speaker Change: And again, we'll end up with hundreds of those that clearly is going to be.
Speaker Change: That's great color, thanks, clay and suffer thank.
Speaker Change: A multi a very large rapidly growing multi billion dollar business for us.
Speaker Change: Thank you Ken I think I misspoke could you actually save the line correctly that I was supposed to say about guidance sure absolutely non-GAAP EPS is expected to grow between 4% to 6% and be between $1 47.
John DiFucci: And your final question comes from a line of John DiFucci from Guggenheim Securities. Your line is open. Thank you.
So Google is much more recent in AWS even more recent than Google, so we're at the very beginning of multi-cloud and as Zapper said it's gonna exit uh well over 100 $100 million in his first year in his first year, uh, the, um, uh,
Speaker Change: That's great color, thanks, Laurie and suffer.
Safra Catz: Safra, you've shown us, I'm going to switch gears a little bit and go down to the bottom line here versus the top line. You've shown us for years that Oracle's not going to do what I'll call empty business, that you don't make good profit on. It's been a while, but you've said that OCI gross margins have improved consistently. And you just mentioned it again in your prepared remarks. And I think the last time you actually threw out a number was a while ago, but it was in the low 30s for gross margins for OCI. And that was several quarters ago.
Speaker Change: Thank you Ken I think I misspoke could you actually save aligned correctly that I was supposed to say about guidance.
Speaker Change: Sure absolutely non-GAAP EPS is expected to grow between 4% to 6% and be between $1 47.
Speaker Change: A $1 51 in U S dollar thank you.
Of the first year is starting when we got AWS when we had all three, it will be a multibillion dollar business and it'll be a combination of uh AWS and Google and Azure plus all of these clouded customer dedicated region clouded customer, uh, we're going to have hundreds of those regions. We, the demand for from individual customers, large banks, telecommunication companies building half a dozen or so data centers they want us.
Speaker Change: Sorry, sorry, I don't know, what I said exactly but.
Speaker Change: That is correct.
Speaker Change: At $1 51 in U S dollar thank you.
Speaker Change: Yeah.
Speaker Change: Good morning Alexia.
Speaker Change: Alright, sorry, I don't know, what I said exactly but.
Speaker Change: Your next question comes from the line of Brad Zelnick from Deutsche Bank. Your line is open.
Speaker Change: That is correct.
Brad Zelnick: Great. Thank you and congrats on the continued acceleration at scale.
Speaker Change: Good morning.
Speaker Change: Your next question comes from the line of Brad Zelnick from Deutsche Bank. Your line is open.
Speaker Change: Larry as Oracle leads with larger and larger GPU clusters, theres healthy industry debate around scaling laws with Elon musk allegedly pushing the envelope of whats possible I'm curious to hear your perspective as to whether there's diminishing returns on the amount of compute is fronted model training and oracles ongoing leadership in AI and.
Safra Catz: Can you give us an update on the progress of that, especially given the massive growth you're seeing? really amazing, but we are continuing to benefit from a number of things in OCI. So our growth margin percentage continues to improve. And I know that many of you think that GPU business or OCI based infrastructure business is not as profitable. And yet our margins in that business just continue to improve because of the number of things that Larry mentioned, for example, the way we run our cloud, the way we set up our cloud, everything's automated, everything is run, because we are a software company to the core, we're always optimizing our software capabilities, which gives us really enormous leverage.
Great. Thank you and congrats on the continued acceleration at scale.
Speaker Change: Larry as Oracle leads with larger and larger GPU clusters, theres healthy industry debate around scaling laws with Elon musk allegedly pushing the envelope of whats possible.
build 6 data centers, sometimes more inside, uh, in, in, inside their own dedicated facilities, uh, so they'll run the Oracle cloud in dedicated regions, uh, and again we'll end up with hundreds of those and it clearly is going to be a multi, a very large rapidly growing multibillion dollar business for us.
Speaker Change: I'm curious to hear your perspective as to whether there's diminishing returns on the amount of compute thrown at model training and oracles ongoing leadership in AI infrastructure and GPU supercluster. Thanks.
Speaker Change: Infrastructure and GPU supercluster. Thanks.
Speaker Change: Well there is there is two elements to speeding up training one is <unk>.
Speaker Change: Building larger and larger GPU clusters made are made up of faster and faster Gpus, so to GPU cluster itself.
Speaker Change: Well, there's two elements to speeding up training one is built.
That's great color. Thankfully and Sara.
Thank you, Ken. I think I misspoke. Could you actually say the line correctly that I was supposed to say about guidance. Sure, absolutely. non-GAAP EPS is expected to grow between 4% to 6% and be between $1.47 and $1.51 in US dollar. Thank you.
Speaker Change: Second element.
Speaker Change: Building larger and larger GPU clusters made are made up of faster and faster Gpus, the GPU cluster itself.
Speaker Change: Something Oracle has been very very focused on is building networks that rapidly move large volumes of data into those GPU clusters. As you make these GPU cluster is larger and faster, it's putting more and more demands on the network to be able to move huge amounts of data into those GPU clusters.
Speaker Change: Second element.
Speaker Change: Something Oracle has been very very focused on is building networks that rapidly move large volumes of data into those GPU clusters. As you make these GPU bluster is larger and faster, it's putting more and more demands on the network to be able to move huge amounts of data into those GPU clusters.
Speaker Change: So the GPU clusters are sitting there waiting for the data if they're sitting there waiting waiting for the data it becomes very inefficient you pay if you are paying by the minute and youre in half. The time happened 30 seconds, you don't have the data available.
Sorry, sorry, I don't know what I said exactly, but that is correct. Thanks.
Safra Catz: The operating margins in OCI, again, improved. And, and it's, it's just gonna, you know, it's been really fantastic. So they improve in OCI, our SAS margins improve, everything is improving with scale for us, even in even as we're investing. So we just, it just continues to improve.
our next question.
Speaker Change: So the GPO clusters arent sitting there waiting for the data if they're sitting there waiting waiting for the data it becomes very inefficient you pay if you are paying by the minute and in half. The time happened 30 seconds, you don't have the data available.
Your next question comes from a line of Brad Zelnick from Deutsche Bank. Your line is open.
Great thank you and congrats on the the continued acceleration at scale.
Speaker Change: Obviously.
Speaker Change: That's a scaling problem.
Larry, as Oracle leads with larger and larger GPU clusters, there's healthy industry debate around scaling laws with Elon Musk allegedly pushing the envelope of what's possible. I'm curious to hear your perspective as to whether there's diminishing returns on the amount of compute thrown at model training and Oracle's ongoing leadership in AI infrastructure and GPU super clusters. Thanks.
Speaker Change: That's an economic problem and that's a performance problem.
Speaker Change: Oracle differentiates itself and its data centers by investing heavily in building.
Speaker Change: Obviously.
Speaker Change: That's a scaling problem I.
Speaker Change: And that's an economic problem and that's a performance problem.
Speaker Change: Networks.
John DiFucci: That's great to hear and we continue to watch closely, so thank you. Thank you, John.
Oracle differentiates itself and its data centers by investing heavily in building.
Speaker Change: And by the way, which software all sorts of network software and network hardware to move data more quickly. We think will be the demand is really as the GPU questions get bigger and faster than the.
Speaker Change: Networks.
Unknown Executive: A telephonic replay of this conference call will be available for 24 hours on our Investor Relations website. Thank you for joining us for the call today.
Speaker Change: And by the way, which software all sorts of network software and network hardware to move data more quickly.
Well, there's, there's two elements to speeding up training. One is, uh, building larger and larger GPU clusters made made up of faster and faster GPUs, so it's a GPU cluster itself.
Rob: With that, I'll turn the call back to Rob for closing. This concludes today's conference call. Thank you for your participation. You may now disconnect.
Speaker Change: The critical thing is for us to be able to move the data faster.
We think will be the demand is really as the GPU questions get bigger and faster the demand.
And we are investing heavily in that and we think we're going to maintain our advantage there and that will as we make our networks faster. The AI training will get faster. If we don't if no one makes the networking faster than I think theres a potential bottleneck.
The second element, uh, something Oracle has been very, very focused on is building networks that rapidly move large volumes of data into those GPU clusters as you make these GPU clusters larger and faster. It's putting more and more demands on the network to be able to move huge amounts of data into those GPU clusters, so the GPU clusters aren't sitting there waiting for the data if they're sitting there waiting, waiting for the data, uh, it becomes.
Speaker Change: The critical thing is for us to be able to move the data faster.
Speaker Change: And we are investing heavily in that and we think we're going to maintain our advantage there and that will as we make our networks faster. The AI training will get faster. If we don't if no one makes the networking faster than I think theres a potential bottleneck.
Speaker Change: We're trying to.
Speaker Change: Avoid that bottleneck by speeding up our never again.
Speaker Change: Yeah.
Speaker Change: Thank you.
Speaker Change: We're trying to.
Speaker Change: Your next question comes from the line of Raimo <unk> from Barclays. Your line is open.
Speaker Change: Avoid that bottleneck by speeding up our never again.
Speaker Change: Yeah.
Speaker Change: Thank you.
Speaker Change: Perfect. Thank you.
very inefficient. You pay if you're paying by the minute and you're and and half the time, half of that 30 seconds you don't have the data available, uh, obviously, uh, that's a scaling problem. I, uh, and that's an economic problem and that's a performance problem.
Speaker Change: Shift gear, a little bit and go back to the well go to the SaaS part of the business.
Speaker Change: Your next question comes from the line of Raimo <unk> from Barclays. Your line is open.
Speaker Change: Look if you look at your growth rates.
Speaker Change: Perfect. Thank you can I shift gears, a little bit and go back to the well go to the SaaS part of the business.
Speaker Change: It kind of.
Speaker Change: Each point of the cycle, where people usually don't look at our back office systems, but you guys, putting up really solid growth numbers that you're outgrowing. The peers can you talk a little bit of what's going on there. Thank you.
Speaker Change: Look if you look at your growth rates.
Uh, Oracle differentiates itself in its data centers by investing heavily in building.
Speaker Change: It kind of late stage point of the cycle, where people usually don't look at their back office systems, but you guys, putting up really solid growth numbers that you're outgrowing. The peers can you talk a little bit of what's going on there. Thank you.
Speaker Change: Actually I don't agree with you that folks arent looking at their back office systems. In fact, I think there is enormous amount of pressure to be more efficient for many companies.
Networks, uh, and, and, and by the way, which software all sorts of network software and network hardware to move data more quickly we think we'll be able if the demand is really as as the GPU clusters get bigger and faster, the uh, the, the critical thing is for us to be able to move the data faster, uh, and we are investing heavily in that and we and we think we're gonna maintain our our advantage there and that will.
Speaker Change: Actually I don't agree with you that folks arent looking at their back office systems. In fact, I think there is enormous amount of pressure to be more efficient for many companies. They is the competition is fierce in almost in basically all industries right now.
Speaker Change: Competition is fierce in almost in basically all industries right now.
Speaker Change: And as companies when they look at US for example, that's why I always point out that it's what is it day nine and that includes three weekends three weekend days since our quarter closed that just shows how efficient you can be in running your operations and a lot of company.
Speaker Change: And as companies when they look at US for example, that's why I always point out that it's what is it day nine and that includes three weekends three weekend days since our quarter closed that just shows how efficient you can be in running your operations and a lot of.
as we make our networks faster, uh, the AI training will get faster if we don't if no one makes the networking faster, then I think there's a potential bottleneck, but we're trying to, you know, avoid that bottleneck by speeding up our networking.
Speaker Change: Executives actually come up to me and say, we need to do that we need to do more and spend a lot less doing it and we see we see enormous.
Thank you.
Speaker Change: Company executives actually come up to me and say, we need to do that we need to do more and spend a lot less doing it and we see we see enormous.
Your next question comes from a line of Ramo Lynchel from Barclays. Your line is open.
Speaker Change: It really enormous pipeline in customers, who understand that they can first automate and simplify their own businesses to spend less so they can invest in the things that differentiate them, but there's also enormous interest in using <unk>.
Perfect, thank you. Can I shift gear a little bit and go back to the or go to the SARS part of the business and if you look there, if you look at your growth rates, I mean we're at kind of a late stage point of the cycle where people usually don't look at their back office systems, but you guys putting up like really solid growth numbers that you're outgrowing the peers. Can you talk a little bit of what's going on there? Thank you.
Speaker Change: It really enormous pipeline in customers, who understand that they can first automate and simplify their own businesses to spend less so they can invest in the things that differentiate them, but there's also enormous interest in using <unk>.
Speaker Change: Their data for AI and using those systems, we have I don't know what dozens and dozens of AI agents that can really help companies.
Actually, I, I don't agree with you that folks aren't looking at their back office systems. In fact, I think there's enormous amount of pressure to be more efficient for many companies they the competition is fierce in almost in basically all industries right now and as companies when they look at us, for example, that's why I always point out that it's, what is it, day 9, and that includes 3 weekends.
Speaker Change: Their data for AI and using those systems, we have I don't know what dozens and dozens of AI agent that can really help companies.
Speaker Change: And a lot less and really do a better job serving their customers. So we find enormous.
And a lot less and really do a better job serving their customers. So we find enormous.
Speaker Change: Enormous interest in this area and no one has the capability and the data and the AI capability that Oracle can bring to our customers. So actually I think it's been one of the most exciting times in back office and in front office too we.
Speaker Change: Enormous interest in this area and no one has the capability and the data and the AI capability that Oracle can bring to our customers. So actually I think it's been one of the most exciting time in back office and in front office too we.
3 weekend days since our quarter closed, that just shows how efficient you can be in running your operations and a lot of company executives actually come up to me and and say we need to do that. We need to do more and spend a lot less doing it, and we see, we see enormous, it really uh enormous pipeline in customers who understand that they can
Speaker Change: We have.
Speaker Change: Even our front office systems also taking advantage of so many of our capabilities for our customers. So this has been a great time and in fact, our booking trends, which you don't see yet in revenues because we wait until they are implemented.
We have.
Speaker Change: Even our front office systems also taking advantage of so many of our capabilities for our customers. So this has been a great time and in fact, our booking trends, which you don't see yet in revenues because we wait until they are implemented.
First automate and simplify their own businesses to spend less so they can invest in the things that differentiate them, but there's also enormous interest in using their data for AI and using those systems we have, I don't know, dozens and dozens of AI agents that can really help companies spend a lot less.
Speaker Change: Our booking trends have taken a mark Kidd.
Speaker Change: <unk> up we were going over those just today.
Speaker Change: And they've accelerated from last year quite significantly.
Speaker Change: Our booking trends have taken a mark Kidd.
Speaker Change: <unk> up we were going over those just today.
Speaker Change: Great. Thank you.
Speaker Change: And they've accelerated from last year quite significantly.
Kirk: Your next question comes from the line of Kirk <unk> from Evercore ISI. Your line is open.
Speaker Change: Alright, thank you.
Speaker Change: Thanks, very much and congrats on the results suffer you talked a little bit about the pipeline strength at the end of your prepared com.
Speaker Change: Yeah.
Speaker Change: Your next question comes from the line of Kirk <unk> from Evercore ISI. Your line is open.
And, um, really do a better job serving their customers, so we find enormous enormous interest in this area and no one has the capability and the data and the AI capability that Oracle can bring to a customer, so actually I think it's been one of the most exciting times in back office and in front office too we we have um even our
Speaker Change: Comments can you just talk about your line of sight in terms of capacity coming online. So that you all can recognize some.
Speaker Change: Yes, thanks, very much and congrats on the results suffer you talked a little bit about the pipeline strength at the end of your prepared comments.
Speaker Change: Some of the revenue that's associated with the demand that youre seeing specifically around on the OCI side, yes.
Speaker Change: Comments can you just talk about your line of sight in terms of capacity coming online. So that you all can recognize.
Speaker Change: Yes, so the second half of this year is and especially well the second half. We're in it is going to see a lot of a lot of capacity come online that we've been waiting for and that we've been working on so we expect that yeah.
Speaker Change: Some of the revenue that's that's associated with the demand that youre seeing specifically around on the OCI side, yes.
Speaker Change: Yes, so the second half of this year is and especially well the second half. We're in it is going to see a lot of a lot of capacity come online that we've been waiting for and that we've been working on so we expect that yeah.
front office systems also taking advantage of so many of our capabilities for our customers, so this has been a great time and in fact, our booking trends, which you don't see yet in revenues because it we wait until they're implemented, our booking trends have taken a marked step up. We were going over those just today and they've accelerated from last.
Speaker Change: You're going to see that turning into revenues. This is everything's accelerating even more and in addition, though we also expect our RP O to start moving up the actual base. Our P. O number which is of course up 50% year over year, but the number.
Speaker Change: You're going to see that turning into revenues. This is everything's accelerating even more and in addition, though we also expect our R. P O to start moving up the actual base. Our P. O number which is of course up 50% year over year, but the number.
Speaker Change: Itself, we expect it to spike.
year quite significantly.
In this in this quarter and.
Perfect thank you.
Speaker Change: For the end of the year. So we expect both capacity to come online for our customers, which it is and so it will burn down some of our RP O. But we also simultaneously expect to sign a number of very large contracts two that will make our RP O number go.
Speaker Change: Itself, we expect it to spike.
Speaker Change: In this in this quarter and.
Speaker Change: For the end of the year. So we expect both capacity to come online for our customers, which it is and so it'll burn down some of our our appeal, but we also simultaneously expect to sign a number of very large contracts two that will make our RP O number.
Speaker Change: Up to.
some of the revenue that's that's associated with the demand that you're seeing, you know, specifically around on, on the OCI side. Thanks.
Speaker Change: Yes.
Speaker Change: Okay.
John <unk>: And your final question comes from the line of John <unk> from Guggenheim Securities. Your line is open.
Speaker Change: Go up too.
Yes, so, um, the second half of this year is and especially well, the second half we're in it is going to see a lot of uh a lot of capacity come online that we've been waiting for and that we've been working on so we expect that um you're going to see that turning into revenues. This is everything's accelerating even more, and in addition, though, we also expect our RPO.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: Thank you.
Speaker Change: And your final question comes from the line of John <unk> from Guggenheim Securities. Your line is open.
John <unk>: Safra you.
Speaker Change: I'm going to switch gears, a little bit in.
Speaker Change: Go down to the bottom line here versus the topline you showed us for years said oracle's not going into what I'll call empty business that you don't make good profit on it's been a while but you've previously said that OCI gross margins have improved consistently and I think you just mentioned it again in your prepared remarks, and I think the last time.
Speaker Change: Thank you.
Safra Cats: Safra, you've shown us I'm going to switch gears, a little bit then.
Speaker Change: Go down to the bottom line here versus the topline you showed us for years said oracle's not going to do what I'll call empty business that that you don't make good profit on it's been a while but you've previously said that OCI gross margins have improved consistently and I think you just mentioned it again in your prepared remarks, and I think the last time.
To start moving up the actual base RPO number, which is of course up 50% year over year, but the number itself we expect it to spike in this, in this quarter and uh uh for the end of the year, so, um, we expect both capacity to come online for our customers, which it is, and so it'll burn down some of our RPO, but we also simultaneously.
Speaker Change: You're actually throughout a number was a while ago, but it was in the low thirties for.
Speaker Change: Gross margins for OCI.
Speaker Change: And that was several quarters ago can you give us an update on the progress of that especially given the massive growth youre seeing.
Speaker Change: You actually you threw out a number was a while ago, but it was in the low thirties for <unk>.
Speaker Change: Gross margins for OCI.
Speaker Change: It's really amazing, but we are continuing to benefit from a number of things in OCI. So our gross margin percentage continues to improve and I know that many of you that GPU business or OCI base based infrastructure.
Speaker Change: And that was several quarters ago can you give us an update on the progress of that especially given the massive growth youre seeing.
Speaker Change: It's really amazing, but we are continuing to benefit from a number of things you know OCI. So our gross margin percentage continues to improve and I know that many of you at GPU business or OCI base based infrastructure.
expect to sign a number of very large contracts to that will make our RPO number go up.
Speaker Change: <unk> business.
Speaker Change: Is not as profitable and yet our margins in that business just continue to improve because of the number of things that Larry mentioned for example, the way we run our cloud the way, we set up our cloud everything's automated everything.
2.
Thank you.
And your final question comes from a line of John DeFucci from Guggenheim Securities. Your line is open.
Speaker Change: Business.
Speaker Change: It is not as profitable and yet our margins in that business just.
Thank you, um, Safra you've shown us I'm gonna switch gears a little bit and go down to the bottom line here versus the top line. You you showed us for years that Oracle's not going to do what I'll call empty business that that you don't make good profit on.
Speaker Change: Can you two to improve because of the number of things that Larry mentioned for example, the way we run our cloud the way we set up our cloud every things automated everything is run because we are a software company to the core we're always optimize.
Speaker Change: Is run because we are a software company to the core we're always optimizing our software capabilities, which gives us really enormous leverage.
It's been a while, but you've previously said that OCI gross margins have improved consistently and I think you just mentioned it again and you're prepared remarks and I think the last time you actually threw out a number was a while ago but it was in the low 30s for gross margins for OCI, um, and that was several quarters ago. Can you give us an update on the progress of that, especially given the massive growth you're seeing.
Speaker Change: Our operating margins in OCI.
Speaker Change: I think our software capabilities, which gives us really enormous leverage the our operating margins in OCI Gen improved and and it's just going to you know its been really fantastic. So they improve in OCI are.
Speaker Change: <unk> improved and.
Speaker Change: And it's it's just going to you know its been really fantastic. So they improve in OCI, our SaaS margins improve everything is improving with scale for us even in even as we're investing.
It's really amazing, but we are continuing to benefit from a number of things, you know, CI, so our gross margin percentage continues to improve, and I know that many of you think that GPU business or OCI based based infrastructure business, it is not as profitable and yet our margins in that business just continue to to improve.
Speaker Change: SaaS margins improve everything is improving with scale for us even in even as we're investing.
Speaker Change: So we just it just continues to improve.
Speaker Change: That's great to hear and then we continue to watch closely so thank you.
Speaker Change: So we just it just continues to improve.
John <unk>: Thank you John.
John <unk>: Telephonic replay of this conference call will be available for 24 hours on our Investor Relations website, but thank you for joining us for the call today and with that I'll turn the call back to Rob for closing.
Speaker Change: That's great to hear and then we continue to watch closely so thank you.
Speaker Change: Thank you John.
Speaker Change: A telephonic replay of this conference call will be available for 24 hours on our Investor Relations website.
John <unk>: This concludes today's conference call. Thank you for your participation you may now disconnect.
Speaker Change: Thank you for joining us for the call today and with that I'll turn the call back to Rob for closing.
Because of the number of things that Larry mentioned, for example, the way we run our cloud, the way we set up our cloud everything's automated everything is run because we are a software company to the core we're always optimizing our software capabilities which give us really enormous leverage the um our operating margins in OCI again improve.
Rob: This concludes today's conference call. Thank you for your participation you may now disconnect.
And um and and it's, it's just gonna, you know, it's been really fantastic, so they improve in OCI. OurA margins improve. Everything is improving with scale for us, even in, even as we're investing.
So we, we just, it just continues to improve.
That's great to hear and we continue to watch closely, so thank you. Thank you, John. A telephonic replay of this conference call will be available for 24 hours on our investor relations website. Thank you for joining us the call today. With that, I'll turn the call back to Rob for closing.
This concludes today's conference call. Thank you for your participation. You may now disconnect.