Q2 2026 Oracle Corp Earnings Call

Speaker #1: Hello, and thank you for standing by. My name is Tiffany, and I will be your conference operator today. At this time, I would like to welcome everyone to the Oracle Corp Q2 FY26 earnings call.

Speaker 1: Hello, and thank you for standing by. My name is Tiffany, and I will be your conference operator today. At this time, I would like to welcome everyone to the Oracle Corporation Q2, FY26 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during that time, simply press star, then the number one on your telephone keypad. I would now like to turn the call over to Ken Bond, Head of Investor Relations. Sir, please go ahead.

Operator: Hello, and thank you for standing by. My name is Tiffany, and I will be your conference operator today. At this time, I would like to welcome everyone to the Oracle Corporation Q2, FY26 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during that time, simply press star, then the number one on your telephone keypad. I would now like to turn the call over to Ken Bond, Head of Investor Relations. Sir, please go ahead.

Speaker #1: All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. to ask a question, during If you would like that time, simply press star; then the number one on your telephone keypad.

Speaker #1: I would now like to turn the call over to Ken Bond, Head of Investor Relations. Sir, please go ahead.

Speaker #2: Thank you, Tiffany. Good afternoon, everyone, and welcome to Oracle's second quarter fiscal year 2026 earnings conference call. On the call today are Chairman and Chief Technology Officer Larry Ellison, Chief Executive Officer Mike Cecilia, Chief Executive Officer Clay McGuirk, and Principal Financial Officer Doug Kering.

Speaker 2: Thank you, Tiffany. Good afternoon, everyone, and welcome to Oracle's second quarter fiscal year 2026 earnings conference call. On the call today are Chairman and Chief Technology Officer Larry Ellison, Chief Executive Officer Mike Sicilia, Chief Executive Officer Clay Magouyrk, and Principal Financial Officer Doug Kehring. A copy of the press release and financial tables, which includes a GAAP to non-GAAP reconciliation, other supplemental financial information, and a list of many customers who purchased Oracle Cloud services or went live on Oracle Cloud recently, will be available from our Investor Relations website. As a reminder, today's discussion will include forward-looking statements, and we will discuss some important factors relating to our business. These forward-looking statements are also subject to risks and uncertainties that may cause actual results to differ materially from statements being made today.

Ken Bond: Thank you, Tiffany. Good afternoon, everyone, and welcome to Oracle's second quarter fiscal year 2026 earnings conference call. On the call today are Chairman and Chief Technology Officer Larry Ellison, Chief Executive Officer Mike Sicilia, Chief Executive Officer Clay Magouyrk, and Principal Financial Officer Doug Kehring. A copy of the press release and financial tables, which includes a GAAP to non-GAAP reconciliation, other supplemental financial information, and a list of many customers who purchased Oracle Cloud services or went live on Oracle Cloud recently, will be available from our Investor Relations website.

Speaker #2: A copy of the press release and financial tables, which includes a gap to non-gap reconciliation, other supplemental financial information, and a list of many customers who purchased Oracle Cloud Services or went live on Oracle Cloud recently, will be available from our Investor Relations website.

As a reminder, today's discussion will include forward-looking statements, and we will discuss some important factors relating to our business. 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 #2: today's discussion will include forward-looking statements and we will discuss some important factors relating to our business. 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 #2: As a result, we caution

Speaker 2: 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. Finally, we are not obligating ourselves to revise our results or these forward-looking statements. Before taking questions, we'll begin with a few prepared remarks, and I'll now turn the call over to Mike.

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. Finally, we are not obligating ourselves to revise our results or these forward-looking statements. Before taking questions, we'll begin with a few prepared remarks, and I'll now turn the call over to Mike.

Speaker 3: No, it's actually to me, Ken. Appreciate it. This is Doug. As it relates to the numbers we are about to present, the following apply to both the results for Q2, and to our guidance for Q3. First, we'll be discussing our financials using constant currency growth rates, as this is how we manage the business. Second, we'll be presenting our numbers on a non-GAAP basis, except where we indicate otherwise. Finally, as it relates to currency, it had a 1% positive impact on revenue and $0.03 positive impact on earnings in Q2. For Q3, assuming currency exchange rates remain the same as they are now, currency should have a 2% to 3% positive effect on revenue and have a $0.06 positive effect on EPS, depending on rounding. In terms of the results for Q2, we had another excellent quarter of execution.

Doug Kehring: No, it's actually to me, Ken. Appreciate it. This is Doug. As it relates to the numbers we are about to present, the following apply to both the results for Q2, and to our guidance for Q3. First, we'll be discussing our financials using constant currency growth rates, as this is how we manage the business. Second, we'll be presenting our numbers on a non-GAAP basis, except where we indicate otherwise.

Finally, as it relates to currency, it had a 1% positive impact on revenue and $0.03 positive impact on earnings in Q2. For Q3, assuming currency exchange rates remain the same as they are now, currency should have a 2% to 3% positive effect on revenue and have a $0.06 positive effect on EPS, depending on rounding. In terms of the results for Q2, we had another excellent quarter of execution.

Speaker #3: it relates to currency, it had a 1% positive impact on

Speaker #3: revenue and 3 cents positive As a reminder,

Speaker #3: Q2. For Q3, assuming currency exchange rates remain the same as they are now, currency should impact on earnings in have a 2 to 3% positive effect on revenue and have a 6 cents positive effect on EPS depending on rounding.

Speaker #3: In terms of the results for Q2, we had another excellent quarter of execution. Remaining performance obligations, or RPO, ended the quarter at 523.3 billion, up 433% from last year, and up 68 billion since the end of August.

Speaker 3: Remaining performance obligations, or RPO, ended the quarter at $523.3 billion, up 433% from last year, and up $68 billion since the end of August, driven by contracts signed with Meta, NVIDIA, and others as we continue to diversify our customer backlog. RPO expected to be recognized in the next 12 months grew 40% year over year, compared with 25% last quarter and 21% last year. Total cloud revenue, which includes both applications and infrastructure, was up 33% at $8 billion, representing a significant acceleration from the 24% growth rate reported last year. Cloud revenue now accounts for half of Oracle's overall revenue. Cloud infrastructure revenue was $4.1 billion, up 66%, with GPU-related revenue growing 177%. Oracle's cloud infrastructure businesses continue to grow much faster than our competitors. Cloud database services revenue was up 30%, with autonomous database revenue up 43% and multi-cloud consumption up 817%.

Remaining performance obligations, or RPO, ended the quarter at $523.3 billion, up 433% from last year, and up $68 billion since the end of August, driven by contracts signed with Meta, NVIDIA, and others as we continue to diversify our customer backlog. RPO expected to be recognized in the next 12 months grew 40% year over year, compared with 25% last quarter and 21% last year. Total cloud revenue, which includes both applications and infrastructure, was up 33% at $8 billion, representing a significant acceleration from the 24% growth rate reported last year. Cloud revenue now accounts for half of Oracle's overall revenue.

Speaker #3: Driven by contracts signed with Meta, NVIDIA, and others, as we continue to diversify our customer backlog. RPO expected to be recognized in the next 12 months grew 40% year over year, compared with 25% last quarter and 21% last year.

Speaker #3: Total cloud revenue, which includes both applications and infrastructure, was up 33% at $8 billion. Representing a significant acceleration from the 24% growth rate reported last year.

Speaker #3: Cloud revenue now accounts for half of Oracle's overall revenue. Cloud infrastructure revenue was $4.1 billion, up 66%, with GPU-related revenue growing 177%. Oracle's cloud infrastructure businesses continue to grow much faster than our competitors.

Cloud infrastructure revenue was $4.1 billion, up 66%, with GPU-related revenue growing 177%. Oracle's cloud infrastructure businesses continue to grow much faster than our competitors. Cloud database services revenue was up 30%, with autonomous database revenue up 43% and multi-cloud consumption up 817%.

Speaker #3: Cloud database services revenue was up 30%, with autonomous database revenue up 43% and multi-cloud consumption up 817%. Cloud applications revenue was $3.9 billion and up 11%.

Speaker 3: Cloud applications revenue was $3.9 billion and up 11%. Our strategic back office applications revenue was $2.4 billion and up 16%. As we finish combining our industry-based cloud apps and our fusion cloud apps under one selling organization in each region across the world, we have been seeing increasing cross-selling synergies that are expected to drive higher cloud applications growth rates in the future. All in, total revenues for the quarter were $16.1 billion, up 13%, and higher than the 9% growth reported in Q2 last year, continuing our trend of accelerating total revenue growth. Operating income grew 8% to $6.7 billion. Non-GAAP EPS was $2.26, up 51%, while GAAP EPS was $2.10, up 86%. We recognized a pre-tax gain of $2.7 billion in the quarter, stemming from the sale of our interest in Ampere.

Cloud applications revenue was $3.9 billion and up 11%. Our strategic back office applications revenue was $2.4 billion and up 16%. As we finish combining our industry-based cloud apps and our fusion cloud apps under one selling organization in each region across the world, we have been seeing increasing cross-selling synergies that are expected to drive higher cloud applications growth rates in the future.

Speaker #3: Our strategic back-office applications revenue was $2.4 billion and up 16%. As we finish combining our industry-based cloud apps and our Fusion Cloud apps under one selling organization in each region across the world, we have been seeing increasing cross-selling synergies that are expected to drive higher cloud applications growth rates in the future.

All in, total revenues for the quarter were $16.1 billion, up 13%, and higher than the 9% growth reported in Q2 last year, continuing our trend of accelerating total revenue growth. Operating income grew 8% to $6.7 billion. Non-GAAP EPS was $2.26, up 51%, while GAAP EPS was $2.10, up 86%. We recognized a pre-tax gain of $2.7 billion in the quarter, stemming from the sale of our interest in Ampere.

Speaker #3: All in, total revenues for the quarter were $16.1 billion, up 13% and higher than the 9% growth reported in Q2 last year, continuing our trend of accelerating total revenue growth.

Speaker #3: Operating income grew 8% to $6.7 billion. Non-GAAP EPS was 51%, while GAAP EPS was $2.10, up 86%. We recognized a pre-tax gain of $2.7 billion in the quarter, stemming from the sale of our interest in Ampere.

Speaker #3: Turning to cash flow, operating cash flow in Q2 was $2.1 billion, while free cash flow was a negative $10 billion, and CapEx was $12 billion.

Speaker 3: Turning to cash flow, operating cash flow in Q2 was $2.1 billion, while free cash flow was a negative $10 billion, and CapEx was $12 billion, reflecting the investments being made to support our accelerating growth. As a reminder, the vast majority of our CapEx investments are for revenue-generating equipment that is going into our data centers and not for land, buildings, or power that collectively are covered via leases. Oracle does not pay for these leases until the completed data centers and accompanying utilities are delivered to us. Rather, the equipment CapEx is purchased very late in the data center production cycle, allowing us to quickly convert cash spent into revenues earned as we provision cloud services to our contracted and committed customers.

Turning to cash flow, operating cash flow in Q2 was $2.1 billion, while free cash flow was a negative $10 billion, and CapEx was $12 billion, reflecting the investments being made to support our accelerating growth. As a reminder, the vast majority of our CapEx investments are for revenue-generating equipment that is going into our data centers and not for land, buildings, or power that collectively are covered via leases.

Speaker #3: Reflecting the investments being made to support our accelerating growth. As a reminder, the vast majority of our CapEx investments are for revenue-generating equipment that is going into our data centers, and not for land, buildings, or power that collectively are covered via leases.

Oracle does not pay for these leases until the completed data centers and accompanying utilities are delivered to us. Rather, the equipment CapEx is purchased very late in the data center production cycle, allowing us to quickly convert cash spent into revenues earned as we provision cloud services to our contracted and committed customers.

Speaker #3: Oracle does not pay for these leases until the completed data centers and accompanying utilities are delivered to us. Rather, the equipment CapEx is purchased very late in the data center production cycle, allowing us to quickly convert cash spent into revenues earned as we provision cloud services to our contracted and committed customers.

Speaker #3: In terms of funding our growth, there are a variety of sources available to us throughout our debt structure in the public bond, bank, and private debt markets.

Speaker 3: In terms of funding our growth, there are a variety of sources available to us throughout our debt structure in public bond, bank, and private debt markets. In addition, there are other financing options through customers that may bring their own chips to be installed in our data centers and suppliers who may lease their chips rather than sell them. Both of these options enable Oracle to synchronize our payments with our receipts and borrow substantially less than most people are modeling. As a foundational principle, we expect and are committed to maintaining our investment-grade debt rating. Turning to guidance, let me start with the impact of the added RPO that occurred in Q2 on our future results. The vast majority of these bookings relate to opportunities where we have near-term capacity available, which means we can convert the added backlog to revenue sooner.

In terms of funding our growth, there are a variety of sources available to us throughout our debt structure in public bond, bank, and private debt markets. In addition, there are other financing options through customers that may bring their own chips to be installed in our data centers and suppliers who may lease their chips rather than sell them. Both of these options enable Oracle to synchronize our payments with our receipts and borrow substantially less than most people are modeling. As a foundational principle, we expect and are committed to maintaining our investment-grade debt rating.

Speaker #3: In addition, there are other financing options through customers that may bring their own ships to be installed in our data centers, and suppliers who may lease their chips rather than sell them.

Speaker #3: Both of these options enable Oracle to synchronize our payments with our receipts and borrow substantially less than most people are modeling. As a foundational principle, we expect and are committed to maintaining our investment-grade debt rating.

Turning to guidance, let me start with the impact of the added RPO that occurred in Q2 on our future results. The vast majority of these bookings relate to opportunities where we have near-term capacity available, which means we can convert the added backlog to revenue sooner.

Speaker #3: Turning to guidance, let me start with the impact of the added RPO that occurred in Q2 on our future results. The vast majority of these bookings relate to opportunities where we have near-term capacity available, which means we can convert the added backlog to revenue sooner.

Speaker #3: The result is we now expect $4 billion of additional revenue in FY27. Our full-year FY26 revenue expectation of $67 billion remains unchanged. However, given the added RPO this quarter that can be monetized quickly starting next year, we now expect fiscal 2026 CapEx will be about $15 billion higher than we forecasted after Q1.

Speaker 3: The result is we now expect $4 billion of additional revenue in FY27. Our full-year FY26 revenue expectation of $67 billion remains unchanged. However, given the added RPO this quarter that can be monetized quickly starting next year, we now expect fiscal 2026 CapEx will be about $15 billion higher than we forecasted after Q1. Finally, we are confident that our customer backlog is at a healthy level and that we have the operational and financial strength to execute successfully. While we continue to experience significant and unprecedented demand for our cloud services, we will pursue further business expansion only when it meets our profitability requirements and the capital is available on favorable terms. As it relates to specific guidance for Q3, total cloud revenue is expected to grow from 37% to 41% in constant currency and is expected to grow from 40% to 44% in USD.

The result is we now expect $4 billion of additional revenue in FY27. Our full-year FY26 revenue expectation of $67 billion remains unchanged. However, given the added RPO this quarter that can be monetized quickly starting next year, we now expect fiscal 2026 CapEx will be about $15 billion higher than we forecasted after Q1. Finally, we are confident that our customer backlog is at a healthy level and that we have the operational and financial strength to execute successfully.

Speaker #3: Finally, we are confident that our customer backlog is at a healthy level and that we have the operational and financial strength to execute successfully.

While we continue to experience significant and unprecedented demand for our cloud services, we will pursue further business expansion only when it meets our profitability requirements and the capital is available on favorable terms. As it relates to specific guidance for Q3, total cloud revenue is expected to grow from 37% to 41% in constant currency and is expected to grow from 40% to 44% in USD.

Speaker #3: While we continue to experience significant and unprecedented demand for our cloud services, we will pursue further business expansion only when it meets our profitability requirements and the capital is available on favorable terms.

Speaker #3: As it relates to specific guidance for Q3, total cloud revenue is expected to grow from $37% to $41% in constant currency, and is expected to grow from 40% to 44% in USD.

Speaker #3: Total revenues are expected to grow from 16% to 18% in constant currency, and are expected to grow from 19% to 21% in USD. Non-gap EPS is expected to grow between 12% to 14% and be between $1.64 and $1.68 in constant currency, and grow between 16% to 18% and be between $1.70 and $1.74 in USD.

Speaker 3: Total revenues are expected to grow from 16% to 18% in constant currency and are expected to grow from 19% to 21% in USD. Non-GAAP EPS is expected to grow between 12% to 14% and be between $1.64 and $1.68 in constant currency and grow between 16% to 18% and be between $1.70 and $1.74 in USD. With that, I'll turn it over to Clay.

Total revenues are expected to grow from 16% to 18% in constant currency and are expected to grow from 19% to 21% in USD. Non-GAAP EPS is expected to grow between 12% to 14% and be between $1.64 and $1.68 in constant currency and grow between 16% to 18% and be between $1.70 and $1.74 in USD. With that, I'll turn it over to Clay.

Speaker #3: I'll turn it over to Clay.

Speaker #2: Thank you,

Speaker 2: Thank you, Doug. Our infrastructure business has grown at an accelerating 66% year over year. You are well aware of the strong demand for AI infrastructure, but multiple segments across OCI are also contributing to this accelerating growth rate, including cloud natives, dedicated regions, and multi-cloud. Our diversity of capabilities within infrastructure differentiates us from AI infrastructure neoclouds. Our unique combination of infrastructure and applications differentiates us from other hyperscalers. We have ambitious, achievable goals for capacity delivery worldwide. OCI now operates 147 live customer-facing regions with 64 more regions planned. In the last quarter, we handed over close to 400MW of data center capacity to our customers. We also delivered 50% more GPU capacity this quarter than Q1. Our supercluster in Abilene, Texas, is on track with more than 96,000 NVIDIA Grace Blackwell GB200s delivered. We also began delivering AMD MI355 capacity to customers this quarter.

Clay Magouyrk: Thank you, Doug. Our infrastructure business has grown at an accelerating 66% year over year. You are well aware of the strong demand for AI infrastructure, but multiple segments across OCI are also contributing to this accelerating growth rate, including cloud natives, dedicated regions, and multi-cloud. Our diversity of capabilities within infrastructure differentiates us from AI infrastructure neoclouds. Our unique combination of infrastructure and applications differentiates us from other hyperscalers. We have ambitious, achievable goals for capacity delivery worldwide.

Speaker #2: grown at an accelerating And with that, 66% year over year. You are well Doug. Our infrastructure business has aware of the strong demand for AI infrastructure, but multiple segments across OCI are also contributing to this accelerating growth rate, including cloud natives, dedicated regions, and multi-cloud.

Speaker #2: Our diversity of capabilities within infrastructure differentiates us from AI infrastructure neoclouds. Our unique combination of infrastructure and applications differentiates us from other hyperscalers. We have ambitious, achievable goals for capacity delivery worldwide.

OCI now operates 147 live customer-facing regions with 64 more regions planned. In the last quarter, we handed over close to 400MW of data center capacity to our customers. We also delivered 50% more GPU capacity this quarter than Q1. Our supercluster in Abilene, Texas, is on track with more than 96,000 NVIDIA Grace Blackwell GB200s delivered. We also began delivering AMD MI355 capacity to customers this quarter.

Speaker #2: OCI now operates 147 live regions planned. In the last customer-facing regions with 64 more quarter, we handed over close to $400 megawatts of data center capacity to our customers.

Speaker #2: Delivered 50% more GPU capacity this quarter than Q1. Our supercluster in Abilene, Texas, is on track with more than 96,000 NVIDIA Grace Blackwell GB200s delivered.

Speaker #2: We also began delivering AMD MI355 capacity to customers this quarter. Our pace of capacity delivery continues to accelerate. We continue to see strong demand for AI infrastructure across training and inferencing.

Speaker 2: Our pace of capacity delivery continues to accelerate. We continue to see strong demand for AI infrastructure across training and inferencing. We follow a very rigorous process before accepting customer contracts. This process ensures that we have all the necessary ingredients to deliver to customer success at margins that make sense for our business. We analyze land and power for data center buildings, component supply, including GPUs, network gear, and optics, labor costs for all phases of construction and low-voltage work, engineering capacity to design, build, and operate, revenue and profitability, and capital investments required. Only when all these components come together do we accept customer contracts, having the confidence we can deliver on schedule with the highest quality. As Doug said, this quarter, we contracted for an additional $68 billion of RPO. These contracts will quickly add revenue and margin to our infrastructure business.

Our pace of capacity delivery continues to accelerate. We continue to see strong demand for AI infrastructure across training and inferencing. We follow a very rigorous process before accepting customer contracts. This process ensures that we have all the necessary ingredients to deliver to customer success at margins that make sense for our business. We analyze land and power for data center buildings, component supply, including GPUs, network gear, and optics, labor costs for all phases of construction and low-voltage work, engineering capacity to design, build, and operate, revenue and profitability, and capital investments required.

Speaker #2: We follow a very rigorous process before accepting customer contracts. This process ensures that we have all the necessary ingredients to deliver to customer success at margins that make sense for our business.

Speaker #2: We analyze land and power for data center buildings, component supply, including GPUs, network gear, and optics; labor costs for all phases of construction and low-voltage work; engineering capacity to design, build, and operate; revenue and profitability; and capital investments required.

Only when all these components come together do we accept customer contracts, having the confidence we can deliver on schedule with the highest quality. As Doug said, this quarter, we contracted for an additional $68 billion of RPO. These contracts will quickly add revenue and margin to our infrastructure business.

Speaker #2: Only when all these components come together do we accept customer contracts, having the confidence we can deliver on schedule with the highest quality. As Doug said, this quarter we contracted for an additional $68 billion of RPO.

Speaker #2: These contracts will quickly add revenue and margin to our infrastructure business. We continue to carefully evaluate all future have alignment across all necessary components to ensure profitable delivery for our customers.

Speaker 2: We continue to carefully evaluate all future infrastructure investments, investing only when we have alignment across all necessary components to ensure profitable delivery for our customers. The holiday season is a peak period for many of our retail and consumer customers. It is our responsibility at OCI to deliver the most secure, highest performance, and highest availability infrastructure to support these customers at the scale they need. Uber has now surpassed three million cores on OCI, powering their highest traffic ever this Halloween. Temu scaled to nearly one million cores for Black Friday and Cyber Monday. In addition, we also supported thousands of other customers across our retail and other applications through their largest and most successful holiday period yet. OCI is constantly expanding in features and services. We recently launched Acceleron, delivering enhanced networking to all OCI customers and other services like our AI agent service.

We continue to carefully evaluate all future infrastructure investments, investing only when we have alignment across all necessary components to ensure profitable delivery for our customers. The holiday season is a peak period for many of our retail and consumer customers. It is our responsibility at OCI to deliver the most secure, highest performance, and highest availability infrastructure to support these customers at the scale they need. Uber has now surpassed three million cores on OCI, powering their highest traffic ever this Halloween.

Speaker #2: The holiday season is the peak period for many of our retail and consumer customers. It is our responsibility at OCI to deliver the most secure, highest performance, and highest availability infrastructure to support these customers at the scale they need.

Speaker #2: Uber has now surpassed 3 million cores on OCI, powering their highest traffic ever this Halloween. T-Move scaled to nearly 1 million cores for Black Friday and Cyber Monday.

Temu scaled to nearly one million cores for Black Friday and Cyber Monday. In addition, we also supported thousands of other customers across our retail and other applications through their largest and most successful holiday period yet. OCI is constantly expanding in features and services. We recently launched Acceleron, delivering enhanced networking to all OCI customers and other services like our AI agent service.

Speaker #2: In addition, we also supported thousands of other customers across our retail applications through their largest and most successful holiday period yet. OCI is constantly expanding in features and services.

Speaker #2: OCI customers and other services, like our AI agent service, recently launched. However, we cannot deliver everything ourselves, and we rely on our rapidly expanding partner community to provide the best experience on OCI.

Speaker 2: However, we cannot deliver everything ourselves, and we rely on our rapidly expanding partner community to provide the best experience on OCI. We added new AI models from Google, OpenAI, and xAI to ensure our customers have the latest and greatest AI capabilities. Our marketplace consumption has grown 89% year over year, powered by partners like Broadcom and Palo Alto. Those same partners drive OCI consumption by building their SaaS businesses on OCI. Palo Alto released their SASE and Prisma Access platform on OCI, and Cybereason and Newfold Digital continue to scale their businesses rapidly. These partnerships make our ecosystem richer, which helps our customers, and that growth translates directly into more OCI growth as our partners build their solutions on our infrastructure. Oracle Database Services see increasing demand across all clouds. Multi-cloud database consumption has increased 817% year over year.

However, we cannot deliver everything ourselves, and we rely on our rapidly expanding partner community to provide the best experience on OCI. We added new AI models from Google, OpenAI, and xAI to ensure our customers have the latest and greatest AI capabilities. Our marketplace consumption has grown 89% year over year, powered by partners like Broadcom and Palo Alto. Those same partners drive OCI consumption by building their SaaS businesses on OCI. Palo Alto released their SASE and Prisma Access platform on OCI, and Cybereason and Newfold Digital continue to scale their businesses rapidly.

Speaker #2: We added new AI models from Google, OpenAI, and xAI to ensure our customers have the latest and greatest AI capabilities. Our marketplace consumption has grown 89% year-over-year, powered by partners like Broadcom and Palo Alto.

Speaker #2: Same partners drive OCI consumption by those building their SaaS businesses on OCI. Palo Alto released their SASE and Prisma Access platform on OCI, and Cyber Region and Newfold Digital continue to scale their businesses rapidly.

These partnerships make our ecosystem richer, which helps our customers, and that growth translates directly into more OCI growth as our partners build their solutions on our infrastructure. Oracle Database Services see increasing demand across all clouds. Multi-cloud database consumption has increased 817% year over year.

Speaker #2: These partnerships make our ecosystem richer, which helps our customers, and that growth translates directly into more OCI growth as our partners build their solutions on our infrastructure.

Speaker #2: Oracle Database Services see increasing demand across all clouds. Multi-cloud database consumption has increased 817% year over year. We launched 11 multi-cloud regions this quarter, bringing us to 45 regions live across AWS, Azure, and GCP, with 27 more planned over the next months.

Speaker 2: We launched 11 multi-cloud regions this quarter, bringing us to 45 regions live across AWS, Azure, and GCP, with 27 more planned over the next month. We see increasing customer demand with billions in identified pipeline. We launched two important programs this quarter for multi-cloud. The first is Multi-Cloud Universal Credits, which enables customers to commit once to Oracle Database Services and use them anywhere in any cloud with the same price and flexibility. The second is our Multi-Cloud Channel Reseller Program, which enables customers to procure Oracle Database Services through their preferred channel partners. We also launched nine services across the different clouds, such as Oracle Autonomous AI Lakehouse. This combination of the best services, universal availability, consistent and easy pricing and procurement, and partner support is accelerating the adoption of Oracle Database Services across our entire customer base. OCI is the only full cloud available to individual customers.

We launched 11 multi-cloud regions this quarter, bringing us to 45 regions live across AWS, Azure, and GCP, with 27 more planned over the next month. We see increasing customer demand with billions in identified pipeline. We launched two important programs this quarter for multi-cloud. The first is Multi-Cloud Universal Credits, which enables customers to commit once to Oracle Database Services and use them anywhere in any cloud with the same price and flexibility. The second is our Multi-Cloud Channel Reseller Program, which enables customers to procure Oracle Database Services through their preferred channel partners.

Speaker #2: We see increasing customer demand, with billions in identified pipeline. We launched two important programs this quarter for multi-cloud. The first is Multi-Cloud Universal Credits, which enables customers to commit once to Oracle Database Services and use them anywhere in any cloud with the same price and flexibility.

Speaker #2: The second is our multi-cloud channel reseller program, which enables customers to procure Oracle Database Services through their preferred channel partners. We also launched nine services across different AI Lakehouse clouds, such as Oracle and Autonomous.

We also launched nine services across the different clouds, such as Oracle Autonomous AI Lakehouse. This combination of the best services, universal availability, consistent and easy pricing and procurement, and partner support is accelerating the adoption of Oracle Database Services across our entire customer base. OCI is the only full cloud available to individual customers.

Speaker #2: This combination of the best services, universal availability, consistent and easy pricing and procurement, and partner support is accelerating the adoption of Oracle Database Services across our entire customer base.

Speaker #2: OCI is the only full cloud available to individual customers. We launched Dedicated Region 25, which provides the full capability of OCI in a tiny three-rack footprint.

Speaker 2: We launched Dedicated Region 25, which provides the full capability of OCI in a tiny three-rack footprint. OCI is also the only cloud that enables partners to become cloud providers themselves through our Alloy program, and our new footprint is available for all Alloy providers. Dedicated Region and Alloy consumption grew 69% year over year. We launched one dedicated region for Ithca Group in Oman, and both NTT DATA and SoftBank launched one Alloy region each this quarter. This brings our live dedicated regions to 39, with 25 more planned. In summary, the four segments of our infrastructure business are growing at incredible rates. This will contribute to a continued acceleration in our infrastructure revenue in the coming quarters. Customers are choosing OCI for its performance-optimized architecture, unrelenting focus on security, consistently low and predictable pricing, and unmatched depth in database and enterprise integrations.

We launched Dedicated Region 25, which provides the full capability of OCI in a tiny three-rack footprint. OCI is also the only cloud that enables partners to become cloud providers themselves through our Alloy program, and our new footprint is available for all Alloy providers. Dedicated Region and Alloy consumption grew 69% year over year. We launched one dedicated region for Ithca Group in Oman, and both NTT DATA and SoftBank launched one Alloy region each this quarter. This brings our live dedicated regions to 39, with 25 more planned. In summary, the four segments of our infrastructure business are growing at incredible rates.

Speaker #2: OCI is also the only cloud that enables partners to become cloud providers themselves through our Alloy program, and our new footprint is available for all Alloy providers.

Speaker #2: Dedicated Region and Alloy consumption grew 69% year over year. We launched one Dedicated Region for ISCA Group in Oman, and both NTT Data and SoftBank launched one Alloy region each this quarter.

Speaker #2: This brings our live dedicated regions to 39, with 25 more planned. In summary, the four segments of our infrastructure business are growing at incredible rates.

This will contribute to a continued acceleration in our infrastructure revenue in the coming quarters. Customers are choosing OCI for its performance-optimized architecture, unrelenting focus on security, consistently low and predictable pricing, and unmatched depth in database and enterprise integrations.

Speaker #2: This will contribute to a continued acceleration in our infrastructure revenue in the coming quarters. Customers are choosing OCI for its performance-optimized architecture, unrelenting focus on security, consistently low and predictable pricing, and unmatched depth in database and enterprise integrations.

Speaker #2: Those priorities have been our strategy from the beginning and are the driving force behind this growth. OCI is in a constant state of reinvention, and you can see the value that has for our customers.

Speaker 2: Those priorities have been our strategy from the beginning and are the driving force behind this growth. OCI is in a constant state of reinvention, and you can see the value that it has for our customers. When you combine our commitment to deliver the best in performance, efficiency, and security with the growing customer demand for cloud infrastructure services we are seeing, I couldn't be more excited about what's coming next. And with that, over to Doug.

Those priorities have been our strategy from the beginning and are the driving force behind this growth. OCI is in a constant state of reinvention, and you can see the value that it has for our customers. When you combine our commitment to deliver the best in performance, efficiency, and security with the growing customer demand for cloud infrastructure services we are seeing, I couldn't be more excited about what's coming next. And with that, over to Doug.

Speaker #2: When you combine our commitment to deliver the best in performance, efficiency, and security with the growing customer demand for cloud infrastructure services we are seeing, I couldn't be more excited about what's coming next.

Speaker #2: And with that, over to Larry. Thank you very much, Clay. Over the years, Oracle has developed software in three important areas. Database, applications, and the Oracle Cloud.

Speaker 3: Thank you very much, Clay. Over the years, Oracle has developed software in three important areas: database, applications, and the Oracle Cloud. We used AI to make our database software and our autonomous software eliminate human labor and human error, thus lowering operating costs and making our systems faster, more reliable, and more secure. Now, with the development of the Oracle AI Database and the Oracle AI Data Platform, we're bringing all three layers of our software stacked together to solve another very important problem: enabling the latest and most powerful AI models to do multi-step reasoning on all your private enterprise data while keeping that data private and secure. Training AI models on public data is the largest, fastest-growing business in history. AI models reasoning on private data will be an even larger and more valuable business. Oracle databases contain most of the world's high-value private data.

Larry Ellison: Thank you very much, Clay. Over the years, Oracle has developed software in three important areas: database, applications, and the Oracle Cloud. We used AI to make our database software and our autonomous software eliminate human labor and human error, thus lowering operating costs and making our systems faster, more reliable, and more secure.

Speaker #2: Our database software utilizes AI to create our autonomous software, which eliminates human labor and human error. This, in turn, lowers operating costs and makes our systems faster, more reliable, and more secure.

Now, with the development of the Oracle AI Database and the Oracle AI Data Platform, we're bringing all three layers of our software stacked together to solve another very important problem: enabling the latest and most powerful AI models to do multi-step reasoning on all your private enterprise data while keeping that data private and secure. Training AI models on public data is the largest, fastest-growing business in history. AI models reasoning on private data will be an even larger and more valuable business. Oracle databases contain most of the world's high-value private data.

Speaker #2: Now, with the development of the Oracle AI Database and the Oracle AI Data Platform, we're bringing all three layers of our software stack together to solve another very important problem.

Speaker #2: Enabling the latest and most powerful AI models to do multi-step reasoning on all your private enterprise data while keeping that data private and secure.

Speaker #2: Training AI models on public data is the largest and fastest-growing business in history. AI models reasoning on private data will be an even larger and more valuable business.

Speaker #2: Oracle databases contain most of the world's high-value private data. Oracle applications also hold huge amounts of exceptionally valuable private data. The Oracle Cloud includes all the top AI models: OpenAI ChatGPT, xAI Grok, Google Gemini, and Meta Llama.

Speaker 3: Oracle applications also hold huge amounts of exceptionally valuable private data. The Oracle Cloud includes all the top AI models: OpenAI ChatGPT, xAI Grok, Google Gemini, and Meta Llama. Oracle's new database and AI data platform, plus the latest versions of Oracle applications, enables all of those AI models to do multi-step reasoning on your database and application data while keeping that data private and secure. All our database and application customers want to do this because, for the first time, they get a unified view of all of their data. AI models can respond to a single inquiry by reasoning across all your databases, all of your applications. By treating all of your data holistically, the combination of AI models, plus the Oracle AI Database and AI Data Platform, breaks down the walls that isolate and fragment your data.

Oracle applications also hold huge amounts of exceptionally valuable private data. The Oracle Cloud includes all the top AI models: OpenAI ChatGPT, xAI Grok, Google Gemini, and Meta Llama. Oracle's new database and AI data platform, plus the latest versions of Oracle applications, enables all of those AI models to do multi-step reasoning on your database and application data while keeping that data private and secure. All our database and application customers want to do this because, for the first time, they get a unified view of all of their data.

Speaker #2: Oracle's new database and AI data platform, plus the latest versions of Oracle applications, enables all of those AI models to do multi-step reasoning on your database and application data, while keeping that data private and secure.

Speaker #2: All our database and application customers want to do this because, for the first time, they get a unified view of all of their data.

AI models can respond to a single inquiry by reasoning across all your databases, all of your applications. By treating all of your data holistically, the combination of AI models, plus the Oracle AI Database and AI Data Platform, breaks down the walls that isolate and fragment your data.

Speaker #2: AI models can respond to a single inquiry by reasoning across all your databases and applications. By treating all of your data holistically, the combination of AI models, the Oracle AI database, and the AI data platform breaks down the walls that isolate and fragment your data.

Speaker #2: The Oracle AI data platform makes all your data, all your data, accessible to AI models, not just Oracle databases and Oracle applications, the data in Oracle databases and Oracle applications, but data from other databases.

Speaker 3: The Oracle AI Data Platform makes all your data, all your data, accessible to AI models, not just Oracle databases and Oracle applications, the data in Oracle databases and Oracle applications, but data from other databases, cloud storage from any cloud, even data from your own custom applications are accessible to AI models using the Oracle AI Data Platform. Using our AI Data Platform, you can unify all your data and reason on all of your data using the very latest AI models. This is the key to finally unlocking all the value in all your data. Very soon, through the lens of AI, you will be able to see everything happening in your business as it happens. Mike, over to you.

The Oracle AI Data Platform makes all your data, all your data, accessible to AI models, not just Oracle databases and Oracle applications, the data in Oracle databases and Oracle applications, but data from other databases, cloud storage from any cloud, even data from your own custom applications are accessible to AI models using the Oracle AI Data Platform. Using our AI Data Platform, you can unify all your data and reason on all of your data using the very latest AI models. This is the key to finally unlocking all the value in all your data. Very soon, through the lens of AI, you will be able to see everything happening in your business as it happens. Mike, over to you.

Speaker #2: Cloud storage from any cloud, including data from your own custom applications, is accessible to AI models using the Oracle AI Data Platform. With our AI Data Platform, you can unify all your data and reason on all of your data using the very latest AI models.

Speaker #2: This is the key to finally unlocking all the value in all your data. Very soon, through the lens of AI, you will be able to see everything happening in your business as it happens.

Speaker #2: Mike, over to you.

Speaker #1: Thanks, Larry. As Doug shared, the total revenue growth is up 13% in constant dollars. I think it's worth noting that that's three consecutive quarters now, where total revenue growth has been in double digits.

Speaker 2: Thanks, Larry. As Doug shared, the total revenue growth is up 13% in constant dollars. I think it's worth noting that that's three consecutive quarters now where total revenue growth has been in double digits. So a solid quarter, and we see even better days ahead of us. So let me break down a few of the numbers a bit further, and I'll do so all in constant currency. Cloud applications revenue was up 11%, and that brings us to about a $16 billion annualized run rate. Within that, Fusion ERP is up 17%. Fusion SCM is up 18%. Fusion HCM is up 14%. NetSuite grew by 13%. Fusion CX is up 12%. In our industry clouds, specifically hospitality, construction, retail, banking, restaurants, local governments, and communications all combined, we're up 21% in the quarter. So big growth rates on a big base.

Mike Sicilia: Thanks, Larry. As Doug shared, the total revenue growth is up 13% in constant dollars. I think it's worth noting that that's three consecutive quarters now where total revenue growth has been in double digits. So a solid quarter, and we see even better days ahead of us. So let me break down a few of the numbers a bit further, and I'll do so all in constant currency. Cloud applications revenue was up 11%, and that brings us to about a $16 billion annualized run rate.

Speaker #1: Solid quarter, and we see even better days ahead of us. So let me break down a few of the numbers a bit further, and I'll do so all in constant currency.

Speaker #1: Cloud applications revenue was up 11%, and that brings us to about a $16 billion annualized run rate. Within that, Fusion ERP up 17%. Fusion SCM up 18%.

Within that, Fusion ERP is up 17%. Fusion SCM is up 18%. Fusion HCM is up 14%. NetSuite grew by 13%. Fusion CX is up 12%. In our industry clouds, specifically hospitality, construction, retail, banking, restaurants, local governments, and communications all combined, we're up 21% in the quarter. So big growth rates on a big base.

Speaker #1: Fusion HCM is up 14%. NetSuite grew by 13%. Fusion CX is up 12%. Our industry clouds, specifically hospitality, construction, retail, banking, restaurants, local governments, and communications, all combined, were up 21% in the quarter.

Speaker #1: So, big growth rates on a big base. In our healthcare business, we now have 274 customers live in production on our clinical AI agent, and that number continues to rise daily.

Speaker 2: In our healthcare business, we now have 274 customers live in production on our clinical AI agent, and that number continues to rise daily. Also in healthcare, our brand new AI-based ambulatory EHR is generally available, and it has received US regulatory approval. Finally, in healthcare, in Q3, we expect both our bookings and our revenue to accelerate materially. So overall, cloud apps are up 11% on a bigger base. This is very meaningful because we see this business as continuing to accelerate going forward. We achieved this growth while we also undertook a major Salesforce reorg in many regions throughout the world. This is something we've been talking about for many years, and that is the synergies between our back office applications and our industry applications. We're seeing more and more deals where our industry apps are pulling Fusion or the Fusion apps are pulling the industry apps.

In our healthcare business, we now have 274 customers live in production on our clinical AI agent, and that number continues to rise daily. Also in healthcare, our brand new AI-based ambulatory EHR is generally available, and it has received US regulatory approval. Finally, in healthcare, in Q3, we expect both our bookings and our revenue to accelerate materially. So overall, cloud apps are up 11% on a bigger base. This is very meaningful because we see this business as continuing to accelerate going forward. We achieved this growth while we also undertook a major Salesforce reorg in many regions throughout the world.

Speaker #1: Also in healthcare, our brand new AI-based ambulatory EHR is generally available, and it has received US regulatory approval. And finally, in healthcare, in Q3, we expect both our bookings and our revenue to accelerate materially.

Speaker #1: Overall, cloud apps were up 11% on a larger base. This is very meaningful because we see this business as continuing to accelerate going forward.

Speaker #1: We achieved this growth while we also undertook a major Salesforce reorganization in many regions throughout the world. This is something we've been talking about for many years: the synergies between our back-office applications and our industry applications.

This is something we've been talking about for many years, and that is the synergies between our back office applications and our industry applications. We're seeing more and more deals where our industry apps are pulling Fusion or the Fusion apps are pulling the industry apps.

Speaker #1: We're seeing more and more deals where our industry apps are pulling Fusion, or the Fusion apps are pulling the industry apps. As a result of seeing more and more deals, we're also seeing larger deals with more components.

Speaker 2: As a result of seeing more and more deals, we're also seeing larger deals with more components. Recently, we combined our industry application sales team and our Fusion sales teams into a single selling organization. This enables our sellers to have more strategic One Oracle conversations with our customers to sell higher and to sell more. When you think about our very large installed base of on-premise application customers, these strategic conversations are driving upgrades. You've heard us say before, just moving a customer to the cloud results in a 3 to 5x annual revenue lift compared to the support revenue. Now, on top of all of that, top of the sales force, the One Oracle go-to-market, One Oracle go-to-market motions, the industry suites, think about combining our AI data platform with this unmatched suite of applications.

As a result of seeing more and more deals, we're also seeing larger deals with more components. Recently, we combined our industry application sales team and our Fusion sales teams into a single selling organization. This enables our sellers to have more strategic One Oracle conversations with our customers to sell higher and to sell more. When you think about our very large installed base of on-premise application customers, these strategic conversations are driving upgrades.

Speaker #1: So recently, we combined our Industry Application Sales team and our Fusion Sales teams into a single selling organization. This enables our sellers to have more strategic "one Oracle" conversations with our customers to sell higher and to sell more.

Speaker #1: And then when you think about our very large install base of on-premise application customers, these strategic conversations are driving upgrades. And you've heard us say before, just moving a customer to the cloud results in a three to five X annual revenue lift compared to the support revenue.

You've heard us say before, just moving a customer to the cloud results in a 3 to 5x annual revenue lift compared to the support revenue. Now, on top of all of that, top of the sales force, the One Oracle go-to-market, One Oracle go-to-market motions, the industry suites, think about combining our AI data platform with this unmatched suite of applications.

Speaker #1: Now, on top of all that, on top of the Salesforce, the one Oracle go-to-market motions, the industry suites, think about combining our AI data platform with this unmatched suite of applications.

Speaker #1: This creates an incredibly unique opportunity for our customers to gain value very quickly from enterprise-grade AI. The combination allows customers to unite the industry-leading foundational models with company-specific proprietary data, as Larry mentioned, much of which comes from the Oracle applications. Of course, the AI data platform also ties in non-Oracle applications, competitive data sources like MongoDB or Snowflake, object stores, and even complete bespoke unstructured data.

Speaker 2: This creates an incredibly unique opportunity for our customers to gain value very quickly from enterprise-grade AI. The combination allows customers to unite the industry-leading foundational models with company-specific proprietary data, as Larry mentioned, much of which comes from the Oracle applications. And of course, the AI data platform also ties in non-Oracle applications, competitive data sources like MongoDB or Snowflake, object stores, and even complete bespoke unstructured data. So we think this allows our customers to very easily build enterprise lakehouses, AI agents, and applications that leverage built-in, not bolted on, but built-in AI to transform their business. So just to repeat, AI, of course, is a great OCI play, but it's also a broader software play for Oracle. It's driving growth in our applications and our database businesses as well. Let me highlight a few key wins.

This creates an incredibly unique opportunity for our customers to gain value very quickly from enterprise-grade AI. The combination allows customers to unite the industry-leading foundational models with company-specific proprietary data, as Larry mentioned, much of which comes from the Oracle applications. And of course, the AI data platform also ties in non-Oracle applications, competitive data sources like MongoDB or Snowflake, object stores, and even complete bespoke unstructured data.

So we think this allows our customers to very easily build enterprise lakehouses, AI agents, and applications that leverage built-in, not bolted on, but built-in AI to transform their business. So just to repeat, AI, of course, is a great OCI play, but it's also a broader software play for Oracle. It's driving growth in our applications and our database businesses as well. Let me highlight a few key wins.

Speaker #1: So we think this allows our customers to very easily build enterprise lakehouses, AI agents, and applications that leverage built-in, not bolted-on, but built-in AI to transform their business.

Speaker #1: So, just to repeat, AI, of course, is a great OCI play, but it's also a broader software play for Oracle. It's driving growth in our applications and our database businesses as well.

Speaker #1: Let me highlight a few key wins in communications. The communications industry, digital bridge holding selected ERP and SCM. At the hot salon, telecom, SCM.

Speaker 2: In communications, the communications industry, DigitalBridge Group selected ERP and SCM. Etihad Salam Telecom, SCM. Motorola Solutions, ERP, SCM, and CX. TIM Brasil, who is the country of Brazil's 5G leader, just signed a new five-year expansion to accelerate AI adoption and to transform customer experience at scale, all built on OCI. This five-year deal was an expansion, an extension of a partnership that began with TIM Brasil's full data center migration to OCI back in 2021. So they're now building AI agents that are powering real customer interactions, including the Conta agent, which compares bills for customers across months and explains variations automatically. Already in the pilot, 18% faster issue resolution with the AI agents built on OCI, expecting even further improvements as the rollout continues. They've got 24 projects in motion. Seven of them are already in production in just a matter of months.

In communications, the communications industry, DigitalBridge Group selected ERP and SCM. Etihad Salam Telecom, SCM. Motorola Solutions, ERP, SCM, and CX. TIM Brasil, who is the country of Brazil's 5G leader, just signed a new five-year expansion to accelerate AI adoption and to transform customer experience at scale, all built on OCI. This five-year deal was an expansion, an extension of a partnership that began with TIM Brasil's full data center migration to OCI back in 2021.

Speaker #1: Motorola Solutions, ERP, SCM, NCX. Tim Brazil, who's the country of Brazil's 5G leader, just signed a new five-year expansion to accelerate AI adoption and to transform customer experience at scale all built on OCI.

Speaker #1: This five-year deal was an expansion or extension of a partnership that began with Tim Brazil's full data center migration to OCI back in 2021.

So they're now building AI agents that are powering real customer interactions, including the Conta agent, which compares bills for customers across months and explains variations automatically. Already in the pilot, 18% faster issue resolution with the AI agents built on OCI, expecting even further improvements as the rollout continues. They've got 24 projects in motion. Seven of them are already in production in just a matter of months.

Speaker #1: So they're now building AI agents that are powering real customer interactions, including the contact agent which compares bills for customers across months and explains variations automatically.

Speaker #1: Already seeing an 18% faster issue resolution with the AI agents built on OCI. We expect even further improvements as the rollout continues. They've got 24 projects in motion, seven of which are already in production.

Speaker #1: It's just a matter of months—six more launching soon. All enabled by a multi-cloud architecture with Oracle as the key AI infrastructure partner. Already, as a result of this initial rollout, customer satisfaction is up, managing end-to-end with 90% accuracy in call center flows, resulting in 30% faster service times for customers and 15% fewer network failure interventions.

Speaker 2: Six more launching soon, all enabled by a multi-cloud architecture with Oracle as the key AI infrastructure partner. Already, as a result of this initial rollout, customer satisfaction is up 16%, and call center flows are managing end-to-end with 90% accuracy, resulting in 30% faster service times for customers and 15% fewer network failure interventions, all using predictive analytics and, again, AI copilots built in OCI. So we are the AI engine for TIM Brasil to enable personalization at national scale. In financial services, CoreCivic selected ERP, SCM, and HCM. Prime Life Technologies ERP. Jewelers Mutual Group ERP. In public sector, the City of Costa Mesa, ERP, SCM, HCM. The United States Space Force ERP and HCM. The City of Santa Ana ERP, SCM, and HCM. In the high-tech industry, SolarEdge Technologies ERP and SCM. Zscaler ERP, Dropbox ERP, and SCM.

Six more launching soon, all enabled by a multi-cloud architecture with Oracle as the key AI infrastructure partner. Already, as a result of this initial rollout, customer satisfaction is up 16%, and call center flows are managing end-to-end with 90% accuracy, resulting in 30% faster service times for customers and 15% fewer network failure interventions, all using predictive analytics and, again, AI copilots built in OCI. So we are the AI engine for TIM Brasil to enable personalization at national scale.

Speaker #1: All using predictive analytics and, again, AI copilots built in OCI. So, we are the AI engine for Tim Brazil to enable personalization at national scale.

In financial services, CoreCivic selected ERP, SCM, and HCM. Prime Life Technologies ERP. Jewelers Mutual Group ERP. In public sector, the City of Costa Mesa, ERP, SCM, HCM. The United States Space Force ERP and HCM. The City of Santa Ana ERP, SCM, and HCM. In the high-tech industry, SolarEdge Technologies ERP and SCM. Zscaler ERP, Dropbox ERP, and SCM.

Speaker #1: In financial services, CoreCivic selected ERP, SCM, and HCM. Prime Life Technologies, ERP, Jewelers Mutual Insurance, ERP. In public sector, the City of Costa Mesa, ERP, SCM, HCM.

Speaker #1: The United States Space Force, ERP, and HCM; the City of Santa Ana, ERP, SCM, and HCM; in the high-tech industry, SolarEdge Technologies, ERP, and SCM.

Speaker #1: Zscaler, ERP; Dropbox, ERP; and SCM. I could go on and on about these wins, but I think it gives you the flavor of just the sheer amount of multi-pillar wins and why it's so important that we have so many different options for customers in back-office and front-office.

Speaker 2: I could go on and on about these wins, but I think it gives you the flavor of just the sheer amount of multi-pillar wins and why it's so important that we have so many different options for customers in back office and front office. In terms of go-lives, we had 330 cloud apps customer go-lives this quarter. That's multiple go-lives per day. Virgin Atlantic Airways went live in September on Fusion ERP, HCM, and payroll. Broadridge just recently relaunched their Fusion ERP and EPM go-live. LifePoint Health just went live on their third wave of Fusion ERP, SCM, and HCM. Saudi Telecom is live on Fusion SCM with ERP and HCM to follow soon. DocuSign is now live on Fusion Data Intelligence.

I could go on and on about these wins, but I think it gives you the flavor of just the sheer amount of multi-pillar wins and why it's so important that we have so many different options for customers in back office and front office. In terms of go-lives, we had 330 cloud apps customer go-lives this quarter. That's multiple go-lives per day. Virgin Atlantic Airways went live in September on Fusion ERP, HCM, and payroll. Broadridge just recently relaunched their Fusion ERP and EPM go-live. LifePoint Health just went live on their third wave of Fusion ERP, SCM, and HCM. Saudi Telecom is live on Fusion SCM with ERP and HCM to follow soon. DocuSign is now live on Fusion Data Intelligence.

Speaker #1: In terms of go-lives, we have 330 cloud app customer go-lives this quarter. That's multiple go-lives per day. Virgin Atlantic Airways went live in September on Fusion ERP.

Speaker #1: And HCM and payroll, Broad Ridge just recently relaunched their Fusion ERP and EPM go-live. Likepoint Health just went live on their third wave of Fusion ERP, SCM, and HCM.

Speaker #1: Saudi Telecom is live on Fusion SCM, with ERP and HCM to follow soon. DocuSign is now live on Fusion data intelligence. Again, I could go on about the go-lives.

Speaker 2: Again, I could go on about the Go Lives, so with 330 of them in the quarter, it gives you a flavor of some of the really important Go Lives that we had recently. The cloud application deferred revenue is up 14%. That is higher than the cloud apps revenue growth of 11%. Just to reinforce my earlier statements, we expect continued apps growth acceleration. So a solid quarter across the board. We're on the back end of a sales reorg that was focused on unified selling across our applications portfolio. We're seeing a clear AI halo effect for our cloud applications, which is driving upgrades. Our AI data platform, combined with our applications, is an absolute conversation changer, and it brings the Oracle Database and all of our applications into the center of the modern Agentic Enterprise.

Again, I could go on about the Go Lives, so with 330 of them in the quarter, it gives you a flavor of some of the really important Go Lives that we had recently. The cloud application deferred revenue is up 14%. That is higher than the cloud apps revenue growth of 11%. Just to reinforce my earlier statements, we expect continued apps growth acceleration. So a solid quarter across the board. We're on the back end of a sales reorg that was focused on unified selling across our applications portfolio. We're seeing a clear AI halo effect for our cloud applications, which is driving upgrades.

Speaker #1: So, with 330 of them in the quarter, it gives you a flavor of some of the really important go-lives that we had recently. The cloud application deferred revenue is up 14%.

Speaker #1: That is higher than the cloud apps revenue growth of 11%. Just to reinforce my earlier statements, we expect continued apps growth acceleration. So, a solid quarter across the board.

Speaker #1: We're on the back end of a sales reorg that was focused on unified selling across our applications portfolio. We're seeing a clear AI halo effect for our cloud applications, which is driving upgrades.

Our AI data platform, combined with our applications, is an absolute conversation changer, and it brings the Oracle Database and all of our applications into the center of the modern Agentic Enterprise. Looking ahead, we're executing well on a big and growing pipeline, and I expect revenue and earnings growth to accelerate off an even larger base. With that, Ken, I'll turn it back to you.

Speaker #1: Our AI data platform, combined with our applications, is an absolute conversation changer, bringing the Oracle database and all of our applications to the center of the modern agentic enterprise.

Speaker #1: Looking ahead, we're executing well on a big and growing pipeline, and I expect revenue and earnings growth to accelerate off an even larger base. With that, Ken, I'll turn it back to you.

Speaker 2: Looking ahead, we're executing well on a big and growing pipeline, and I expect revenue and earnings growth to accelerate off an even larger base. With that, Ken, I'll turn it back to you.

Speaker #2: Thanks, Mike. Tiffany, if you could please pull the audience for

Speaker 1: Thanks, Mike. Tiffany, if you could please hold the audience for questions.

Ken Bond: Thanks, Mike. Tiffany, if you could please hold the audience for questions.

Speaker #3: At this time, if you would like to...

Speaker 3: At this time, if you would like to ask a question, press Star, then the number one on your telephone keypad. To withdraw your question, simply press Star one again. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Brad Zelnick with Deutsche Bank. Please go ahead.

Operator: At this time, if you would like to ask a question, press Star, then the number one on your telephone keypad. To withdraw your question, simply press Star one again. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Brad Zelnick with Deutsche Bank. Please go ahead.

Speaker #3: Ask a question, press star, then the number one on your telephone keypad. To withdraw your question, simply press star one again. We will pause for just a moment to compile the Q&A roster.

Speaker #3: Your first question comes from the line of Brad Zelnick with Deutsche Bank. Please go ahead.

Speaker #3: ahead. Thank you.

Speaker 4: Thank you. Congratulations and a particular shout-out to Mahesh and the team for standing up a massive amount of capacity in this quarter. My question is for Clay, maybe Doug. Oracle is clearly the destination of choice for the most sophisticated AI customers, but this is a far more capital-intensive proposition, unlike any business Oracle has ever been in before. Very specifically, how much money does Oracle need to raise to fund its AI growth plans ahead? Thank you.

Brad Zelnick: Thank you. Congratulations and a particular shout-out to Mahesh and the team for standing up a massive amount of capacity in this quarter. My question is for Clay, maybe Doug. Oracle is clearly the destination of choice for the most sophisticated AI customers, but this is a far more capital-intensive proposition, unlike any business Oracle has ever been in before. Very specifically, how much money does Oracle need to raise to fund its AI growth plans ahead? Thank you.

Speaker #4: Congratulations in particular to Mahesh and the team for standing up a massive amount of capacity. In this quarter, my question is for Claire, maybe Doug.

Speaker #4: Oracle is clearly the destination of choice for the most sophisticated AI customers, but this is a far more capital-intensive proposition, unlike any business Oracle's ever been in before.

Speaker #4: How much money does Oracle need to raise? Very specifically, how much to fund its AI growth plans ahead? Thank you.

Speaker #5: Thanks for the question, Brad. This is Claire. So, look, I'll answer that question in two parts. First, let me give you kind of the reason why it's hard to answer that question exactly.

Speaker 5: Thanks for the question, Brad. This is Clay. So look, I'll answer that question in two parts. First, let me give you kind of the reason why it's hard to answer that question exactly. So the thing I think that a lot of people don't understand is that we actually have a lot of different options for how we go about delivering this capacity to customers. There's obviously the way that people think about it, which is we buy all the hardware upfront. And as I talked about at my financial analyst meeting, we don't actually incur any expenses for these large data centers until they're actually operational. So then it goes on to, well, how do you pay and what's the kind of cash flows look like for the stuff that goes into the data center? Well, we have some other interesting models that we've been working on.

Clay Magouyrk: Thanks for the question, Brad. This is Clay. So look, I'll answer that question in two parts. First, let me give you kind of the reason why it's hard to answer that question exactly. So the thing I think that a lot of people don't understand is that we actually have a lot of different options for how we go about delivering this capacity to customers. There's obviously the way that people think about it, which is we buy all the hardware upfront. And as I talked about at my financial analyst meeting, we don't actually incur any expenses for these large data centers until they're actually operational.

Speaker #5: So the thing I think that a lot of people don't understand is that we actually have a lot of different options for how we go about delivering this capacity to customers.

Speaker #5: There's obviously the way that people think about it, which is we buy all the hardware upfront. As I talked about in my financial analyst meeting, we don't actually incur any expenses for these large data centers until they're actually operational.

So then it goes on to, well, how do you pay and what's the kind of cash flows look like for the stuff that goes into the data center? Well, we have some other interesting models that we've been working on. One of them is that customers can actually bring their own chips. In those models, Oracle obviously doesn't have to incur any capital expenditures upfront for that model. Similarly, we have different models that we're working on with different vendors, where some vendors are actually very interested in a model where they rent their capacity rather than selling that capacity.

Speaker #5: So then it goes on to, well, how do you pay, and what's the kind of cash flow look like for the stuff that goes into the data center?

Speaker #5: Well, we have some other interesting models that we've been working on. One of them is that customers can actually bring their own chips. In those models, Oracle obviously doesn't have to incur any capital expenditures upfront for that model.

Speaker 5: One of them is that customers can actually bring their own chips. In those models, Oracle obviously doesn't have to incur any capital expenditures upfront for that model. Similarly, we have different models that we're working on with different vendors, where some vendors are actually very interested in a model where they rent their capacity rather than selling that capacity. As you can imagine, that comes with different cash flow impacts that are favorable and reduce the overall borrowing needs, and capital required for Oracle. As you can imagine, as we look at all of these kind of commitments, we will use a range and a variety of those such that we minimize the overall cost of capital, as well as in certain cases, we raise our own funds.

Speaker #5: Similarly, we have different models that we're working on with different vendors, where some vendors are actually very interested in a model where they rent their capacity rather than selling that capacity.

As you can imagine, that comes with different cash flow impacts that are favorable and reduce the overall borrowing needs, and capital required for Oracle. As you can imagine, as we look at all of these kind of commitments, we will use a range and a variety of those such that we minimize the overall cost of capital, as well as in certain cases, we raise our own funds. As part of that, I think it's important that everyone understand that we're committed to maintaining our investment-grade debt rating.

Speaker #5: And, as you can imagine, that comes with different cash flow impacts that are favorable and reduce the overall borrowing needs and capital required for Oracle.

Speaker #5: So, as you can imagine, as we look at all of these kinds of commitments, we will use a range and a variety of those, such that we minimize the overall cost of capital.

Speaker #5: As well as in certain cases, we'll be raising our own funds. As part of that, I think it's important that everyone understands that we're committed to maintaining our investment-grade debt rating.

Speaker 5: As part of that, I think it's important that everyone understand that we're committed to maintaining our investment-grade debt rating. So now to give you some more specifics. What I would say is we've been reading a lot of analyst reports, and we've read quite a few that show an expectation of upwards of $100 billion for Oracle to go out and kind of complete these buildouts. Based on what we see right now, we expect we will need less, if not substantially less money raised than that amount to go and fund this buildout. So hopefully that helps answer your question, Brad.

So now to give you some more specifics. What I would say is we've been reading a lot of analyst reports, and we've read quite a few that show an expectation of upwards of $100 billion for Oracle to go out and kind of complete these buildouts. Based on what we see right now, we expect we will need less, if not substantially less money raised than that amount to go and fund this buildout. So hopefully that helps answer your question, Brad.

Speaker #5: So now to give you some more specifics, what I would say is we've been reading a lot of analyst reports, and we've read quite a few that show an expectation of upwards of $100 billion for Oracle to go out and kind of complete these build-outs.

Speaker #5: And based on what we see right now, we expect we will need less, if not substantially less, money raised than that amount to fund this build-out.

Speaker #5: So hopefully that helps answer your question.

Speaker #5: Brad. It does.

Speaker 4: It does. Thank you. It's very helpful, and thanks for taking the question.

Brad Zelnick: It does. Thank you. It's very helpful, and thanks for taking the question.

Speaker #4: Thank you. It's very helpful, and thanks for taking the question.

Speaker #3: Your next question comes from the line of Ben Brightest with Melius Research. Please go ahead.

Speaker 3: Your next question comes from the line of Ben Reitzes with Melius Research. Please go ahead.

Operator: Your next question comes from the line of Ben Reitzes with Melius Research. Please go ahead.

Speaker #3: ahead. Hey,

Speaker 6: Hey, guys. Thanks a lot. Appreciate it. Good to speak with you. In light of the answer to that question, the path for OCI margins seems very important to improving the EBITDA and cash flow. At the analyst meeting, you said margins for AI workloads for OCI would be in the 30% to 40% range over the life of a customer contract. I guess my question is, how long will it take your AI margins across all your OCI data centers to ramp to that level, and what needs to happen to get there?

Ben Reitzes: Hey, guys. Thanks a lot. Appreciate it. Good to speak with you. In light of the answer to that question, the path for OCI margins seems very important to improving the EBITDA and cash flow. At the analyst meeting, you said margins for AI workloads for OCI would be in the 30% to 40% range over the life of a customer contract. I guess my question is, how long will it take your AI margins across all your OCI data centers to ramp to that level, and what needs to happen to get there?

Speaker #4: Guys, thanks a lot. I appreciate it. Good to speak with you. In light of the answer to that question, the path for OCI margins seems very important to improving EBITDA and cash flow.

Speaker #4: So at the analyst meeting, you said margins for AI workloads for OCI would be in the 30 to 40 percent range over the life of a customer contract.

Speaker #4: I guess my question is, how long will it take your AI margins across all your OCI data centers to ramp to that level? And what needs to happen to get there?

Speaker #4: there? Yeah.

Speaker 5: Yeah. Thanks for the question, Ben. Look, the answer is, it really depends. So the good thing is that, as I mentioned earlier, we don't actually incur any expenses for the data centers until they're actually built and up and running. And then we've highly optimized our process by which we actually put capacity in and then are able to hand that over to customers, which means that the period of time where we're incurring the expenses without that kind of revenue and the gross margin profile that we talked about is really on the order of a couple of months. So in that scenario, that time period is not material. So a couple of months is not a long time.

Clay Magouyrk: Yeah. Thanks for the question, Ben. Look, the answer is, it really depends. So the good thing is that, as I mentioned earlier, we don't actually incur any expenses for the data centers until they're actually built and up and running. And then we've highly optimized our process by which we actually put capacity in and then are able to hand that over to customers, which means that the period of time where we're incurring the expenses without that kind of revenue and the gross margin profile that we talked about is really on the order of a couple of months. So in that scenario, that time period is not material. So a couple of months is not a long time.

Speaker #5: Thanks for the question, Ben. Look, the answer is, it really depends. So the good thing is that, as I mentioned earlier, we don't actually incur any expenses for the data centers until they're actually built up and running.

Speaker #5: And then we've highly optimized our process by which we actually put capacity in and then are able to hand that over to customers. This means that the period of time where we're incurring the expenses without that kind of revenue—and the gross margin profile that we talked about—is really on the order of a couple of months.

Speaker #5: So in that scenario, that time period is not material. So a couple of months is not a long time. What actually matters much more is the overall mix of the data centers that we have online and how they're growing compared to the total amount that we're scaling across the world.

Speaker 5: What actually matters much more is the overall mix of the data centers that we have online, right, and how they're growing compared to the total amount that we're scaling across the world. And so I think as we go through this buildout phase, right, right now we're in a phase of very rapid buildout without the majority of the capacity online. Obviously, the aggregate mix is going to be lower. But as we actually get the majority of this capacity online, and that's really our focus, the best way to improve margins quickly is to actually go out and deliver capacity faster. That ends up very rapidly ensuring that we get to that 30% to 40% gross margin profile for all of the AI data centers.

What actually matters much more is the overall mix of the data centers that we have online, right, and how they're growing compared to the total amount that we're scaling across the world. And so I think as we go through this buildout phase, right, right now we're in a phase of very rapid buildout without the majority of the capacity online. Obviously, the aggregate mix is going to be lower. But as we actually get the majority of this capacity online, and that's really our focus, the best way to improve margins quickly is to actually go out and deliver capacity faster. That ends up very rapidly ensuring that we get to that 30% to 40% gross margin profile for all of the AI data centers.

Speaker #5: And so I think as we go through this build-out phase, right now we're in a phase of very rapid build-out without the majority of the capacity online. Obviously, the aggregate mix is going to be lower.

Speaker #5: But as we actually get the majority of this capacity online—and that's really our focus—the best way to improve margins quickly is to actually go out and deliver capacity faster.

Speaker #5: ends up very rapidly ensuring that we get to that 30% to 40% gross margin profile for all of the AI data centers.

Speaker #4: Thanks.

Speaker 4: Thanks.

Ben Reitzes: Thanks.

Speaker #3: Your next question comes

Speaker 3: Your next question comes from the line of Tyler Radke with Citi. Please go ahead.

Operator: Your next question comes from the line of Tyler Radke with Citi. Please go ahead.

Speaker #3: from the line of Tyler Radtke with Citi. Please go ahead.

Speaker #6: Yes, thank you for taking the question. This question is for Larry or Claire. Oracle has clearly established itself as a leading provider of AI infrastructure to AI labs and, in some cases, enterprise clients.

Speaker 7: Yes. Thank you for taking the question. This question's for Larry or Clay. Oracle has clearly established itself as a leading provider for AI infrastructure to AI labs and, in some cases, enterprise clients. How are you thinking about the opportunity to sell additional platform services such as database, middleware, other pieces of the portfolio, similar to how we saw cloud providers add that on at the early days of the public cloud space? What might be some of the similarities or differences that you see with the emerging AI platform as a service market versus the traditional cloud platform as a service market? Thank you.

Tyler Radke: Yes. Thank you for taking the question. This question's for Larry or Clay. Oracle has clearly established itself as a leading provider for AI infrastructure to AI labs and, in some cases, enterprise clients. How are you thinking about the opportunity to sell additional platform services such as database, middleware, other pieces of the portfolio, similar to how we saw cloud providers add that on at the early days of the public cloud space? What might be some of the similarities or differences that you see with the emerging AI platform as a service market versus the traditional cloud platform as a service market? Thank you.

Speaker #6: How are you thinking about the opportunity to sell additional platform services such as database middleware, similar to how we saw cloud other pieces of the portfolio, providers add that on at the early days of the public cloud space?

Speaker #6: And what might be some of the similarities or differences that you see with the emerging AI Platform as a Service market versus the traditional Cloud Platform as a Service market?

Speaker #6: Thank you.

Speaker #5: Well, let me start with traditional cloud and traditional Oracle Database. I think the biggest change we've made there was to make our database available in everyone's cloud.

Speaker 5: Well, let me start with traditional cloud and traditional Oracle Database. So I think the biggest change we've made there was to make our database available in everyone's cloud. So you can buy the Oracle Database at Google or Amazon. It's available at Microsoft Azure as well as OCI. So that was the most, maybe that was the first move we made. We call it multi-cloud, and we actually embed OCI data centers within the other clouds. So they get the latest, greatest version of the Oracle Database. Second thing we did is we actually converted the Oracle Database or added capabilities to the Oracle Database to allow you to vectorize all of your data. So it's a vector database. Some people call that an AI database. So it's designed to make data available to models.

Larry Ellison: Well, let me start with traditional cloud and traditional Oracle Database. So I think the biggest change we've made there was to make our database available in everyone's cloud. So you can buy the Oracle Database at Google or Amazon. It's available at Microsoft Azure as well as OCI. So that was the most, maybe that was the first move we made. We call it multi-cloud, and we actually embed OCI data centers within the other clouds. So they get the latest, greatest version of the Oracle Database.

Speaker #5: So you can buy the Oracle Database at Google or Amazon; it's available at Microsoft Azure as well as OCI. So, that was maybe the first move we made.

Speaker #5: We call it multi-cloud, and we actually embed OCI data centers within the other clouds. So they get the latest, greatest version of the Oracle Database.

Second thing we did is we actually converted the Oracle Database or added capabilities to the Oracle Database to allow you to vectorize all of your data. So it's a vector database. Some people call that an AI database. So it's designed to make data available to models.

Speaker #5: The second thing we did is we actually converted the Oracle database or added capabilities to the Oracle database to allow you to vectorize all of your data.

Speaker #5: So it's a vector database. Some people call that an AI database. It is designed to make data available to models. Once you vectorize your data, you can place AI models on top of that, and the AI models can understand what's in the database and reason with the data that's in the database.

Speaker 5: Once you vectorize your data, you can place AI models on top of that, and the AI models can understand what's in the database and reason with the data that's in the database. So we think that combination of making the data available in our database also accessible by AI models dramatically increases the value of the data. We think that's very, so far, none of the other large-scale databases have been able to do that. We can do that, not only we can do that and keep your data secure. That's one of the bigger issues. We have to scale it, keep everything reliable, keep it secure. And we actually have to add all of those capabilities and features to the Oracle Database. So that was step two. First, Multi-Cloud. Second, vectorize all the data and make it accessible by all of the popular AI models.

Once you vectorize your data, you can place AI models on top of that, and the AI models can understand what's in the database and reason with the data that's in the database. So we think that combination of making the data available in our database also accessible by AI models dramatically increases the value of the data. We think that's very, so far, none of the other large-scale databases have been able to do that. We can do that, not only we can do that and keep your data secure.

Speaker #5: So we think that the combination of making our data available on our database and also accessible by AI models dramatically increases the value of the data.

Speaker #5: We think that's very important. So far, none of the other large-scale databases have been able to do that. Not only can we do that, but we can also keep your data secure.

Speaker #5: That's one of the bigger issues. We have to scale it, keep everything reliable, keep it secure, and we actually have to vectorize all the data, and make it accessible add all of those capabilities and features to the Oracle database.

That's one of the bigger issues. We have to scale it, keep everything reliable, keep it secure. And we actually have to add all of those capabilities and features to the Oracle Database. So that was step two. First, Multi-Cloud. Second, vectorize all the data and make it accessible by all of the popular AI models.

Speaker #5: First, multi-cloud. By all means, second, that was step two of the popular AI models. Third step, well, it's great that we're making the Oracle Database data available to these AI models.

Speaker 5: Third step, well, you know it's great that we're making the Oracle data, Oracle Database data available to these AI models, but companies actually have data that's not stored in an Oracle Database, is not stored in an Oracle application. So we built an AI lakehouse we call the AI Data Platform that actually points to and vectorizes all of your data, whether it's in an object store in different clouds, whether it's a bespoke application, whether it's in another database. It really will take the universe of your data, catalog that data, vectorize it, and allow an LLM to do multi-step reasoning on all of that data. Now, the thing that's really remarkable about that is, think about asking one query, asking one question, and the model looks at all of your data.

Third step, well, you know it's great that we're making the Oracle data, Oracle Database data available to these AI models, but companies actually have data that's not stored in an Oracle Database, is not stored in an Oracle application. So we built an AI lakehouse we call the AI Data Platform that actually points to and vectorizes all of your data, whether it's in an object store in different clouds, whether it's a bespoke application, whether it's in another database.

Speaker #5: But companies actually have data that's not stored in an Oracle database, and it is not stored in an Oracle application. So we built an AI lakehouse.

Speaker #5: We call the AI data platform that actually points to and vectorizes all of your data, whether it's in object stores in different clouds, whether it's a bespoke application, or whether it's in another database.

It really will take the universe of your data, catalog that data, vectorize it, and allow an LLM to do multi-step reasoning on all of that data. Now, the thing that's really remarkable about that is, think about asking one query, asking one question, and the model looks at all of your data.

Speaker #5: It really will take the universe of your data catalog, vectorize it, and allow an AI LLM to do multi-step reasoning on all of that data.

Speaker #5: Now, the thing that's really remarkable about that is, think about asking one query, asking one question. And the model looks at all of your data.

Speaker #5: Normally, when you ask a question, you have to direct it to this database or this application. You can't say, "Look, I'd just like to know who's the next customer I should be selling to." I'm a salesperson in territory.

Speaker 5: Normally, when you ask a question, you have to direct it to this database or this application. You can't say, "Look, I'd just like to know whose next customer I should be selling to. I'm a salesperson in territory. I want to look at all the accounts in my territory, and I want to see who's the best prospect in my territory." Well, that means looking at contractual data, means looking at publicly available data. That means looking at our sales system, at our support system, and all of these separate systems. Well, suddenly all of that data is unified. We take all of your data and unify it so you can ask a single question, and the AI models can find the answer to that question regardless of what data store it's in.

Normally, when you ask a question, you have to direct it to this database or this application. You can't say, "Look, I'd just like to know whose next customer I should be selling to. I'm a salesperson in territory. I want to look at all the accounts in my territory, and I want to see who's the best prospect in my territory." Well, that means looking at contractual data, means looking at publicly available data. That means looking at our sales system, at our support system, and all of these separate systems. Well, suddenly all of that data is unified.

Speaker #5: I'm looking to see all the accounts in my territory, and I want to identify who the best prospect is in my territory.

Speaker #5: Well, that means looking at contractual data; it means looking at publicly available data. That means looking at our sales system, at our support system—all of these separate systems.

Speaker #5: Well, suddenly all of that data is unified. We take all of your data and unify it, so you can ask a single question and the AI models can find the answer to that question, regardless of what data store it's in.

We take all of your data and unify it so you can ask a single question, and the AI models can find the answer to that question regardless of what data store it's in. That's really a unique proposition, and we think that thing is going to turbocharge the use of our database and the use of our cloud dramatically.

Speaker #5: That's really a unique proposition, and we think that thing is going to turbocharge the use of our database and the use of our cloud dramatically.

Speaker #5: That's really a unique proposition, and we think that thing is going to turbocharge the use of our database and the use of our cloud dramatically.

Speaker 5: That's really a unique proposition, and we think that thing is going to turbocharge the use of our database and the use of our cloud dramatically.

Speaker #4: Thank you.

Speaker 4: Thank you.

Tyler Radke: Thank you.

Speaker 3: Your next question comes from the line of Brent Thill with Jefferies and Company. Please go ahead.

Operator: Your next question comes from the line of Brent Thill with Jefferies and Company. Please go ahead.

Speaker #3: of Brent Field with Jefferies, and your next question comes from the line of Company. Please go ahead.

Speaker #4: Thanks. Question for Larry and Claire on the fungibility of your infrastructure. What would you have to do to convert a data center from one customer to another, such as if one of the larger customers was unable to pay?

Speaker 4: Thanks. Question for Larry and Clay on the fungibility of your infrastructure. What would you have to do to convert a data center from one customer to another, such as if one of the larger customers was unable to pay?

Brent Thill: Thanks. Question for Larry and Clay on the fungibility of your infrastructure. What would you have to do to convert a data center from one customer to another, such as if one of the larger customers was unable to pay?

Speaker #5: Yeah, thanks, Brent. So I think the first thing to understand is that what we deliver for our AI infrastructure is exactly the same cloud that we deliver for all of our customers.

Speaker 5: Yeah. Thanks, Brent. So I think the first thing to understand is that what we deliver for our AI infrastructure is exactly the same cloud that we deliver for all of our customers. We made specific choices at the beginning of OCI around bare metal virtualization and the way in which we do things like secure wipe of hardware, etc. But the reason I bring that up is that, take as an example, anyone right now with a credit card can show up and sign up for any one of those hundreds of regions that I talked about earlier, and you can spin up a bare metal computer in as quickly as a few minutes. And at the end of that, you can turn it off, and I will recycle that, and I can hand it to another customer in less than an hour.

Clay Magouyrk: Yeah. Thanks, Brent. So I think the first thing to understand is that what we deliver for our AI infrastructure is exactly the same cloud that we deliver for all of our customers. We made specific choices at the beginning of OCI around bare metal virtualization and the way in which we do things like secure wipe of hardware, etc.

Speaker #5: We made specific choices at the beginning of OCI around bare metal virtualization and the way in which we do things, like secure wipe of hardware, etc.

But the reason I bring that up is that, take as an example, anyone right now with a credit card can show up and sign up for any one of those hundreds of regions that I talked about earlier, and you can spin up a bare metal computer in as quickly as a few minutes. And at the end of that, you can turn it off, and I will recycle that, and I can hand it to another customer in less than an hour.

Speaker #5: But the reason I bring that up is that, take as an example, anyone right now with a credit card can show up and sign up for any one of those hundreds of regions that I talked about earlier, and you can spin up a bare metal computer in as quickly as a few minutes.

Speaker #5: And at the end of that, you can turn it off, and I will recycle that, and I can hand it to another customer in less than an hour.

Speaker #5: And so when you ask the question of, "Well, how long does it take to transfer capacity from one customer to another?" it's on the order of hours.

Speaker 5: When you ask the question of, "Well, how long does it take to transfer capacity from one customer to another?" It's on the order of hours. What actually I think is kind of a corollary to that question is, well, then how long does it take customers to adopt it? Thankfully, we have a lot of experience getting more than 700 AI customers on our platform, including the vast majority of the large model providers already run on OCI. When we give them capacity, they typically spin that capacity up in the order of two to three days. When I think about how long does it take for me to take capacity and hand it to another customer, it is not a laborious process. It is not a unique process.

When you ask the question of, "Well, how long does it take to transfer capacity from one customer to another?" It's on the order of hours. What actually I think is kind of a corollary to that question is, well, then how long does it take customers to adopt it? Thankfully, we have a lot of experience getting more than 700 AI customers on our platform, including the vast majority of the large model providers already run on OCI. When we give them capacity, they typically spin that capacity up in the order of two to three days. When I think about how long does it take for me to take capacity and hand it to another customer, it is not a laborious process. It is not a unique process.

Speaker #5: And what actually I think is kind of a corollary to that question is, well, then how long does it take customers to adopt it?

Speaker #5: And thankfully, we have a lot of experience getting more than 700 AI customers on our platform, including the vast majority of the large model providers.

Speaker #5: Already run on OCI. When we give them capacity, they typically spend that capacity up in the order of two to three days. When I think about how long it takes for me to take capacity and hand it to another customer, it is not a laborious process.

Speaker #5: It is not a unique process. And something else I would say that I think a lot of people don't realize about our cloud is that this is actually happening all the time.

Speaker 5: Something else I would say that I think a lot of people don't realize about our cloud is this is actually happening all the time. We have lots of customers that might sign up for a few thousand of one type of GPU, and then they'll come back and say, Well, actually, I'd like to get even more capacity somewhere else. Will you take this back? We do that all day, every day. We're constantly moving customers around and adding aggregate net capacity. We have the technology. We have a secure base from which to do that. We also have a customer base of a lot of demand such that whenever we find ourselves with capacity that's not being used, it very quickly gets allocated and provisioned.

Something else I would say that I think a lot of people don't realize about our cloud is this is actually happening all the time. We have lots of customers that might sign up for a few thousand of one type of GPU, and then they'll come back and say, Well, actually, I'd like to get even more capacity somewhere else. Will you take this back? We do that all day, every day. We're constantly moving customers around and adding aggregate net capacity. We have the technology. We have a secure base from which to do that. We also have a customer base of a lot of demand such that whenever we find ourselves with capacity that's not being used, it very quickly gets allocated and provisioned.

Speaker #5: So we have lots of customers that might sign up for a few thousand of one type of GPU, and then they'll come back and say, "Well, actually, I'd like to get even more capacity somewhere else." Well, you take this back.

Speaker #5: And we do that all day, every day. We're constantly moving customers around and adding aggregate net capacity. So we have the technology. We have a secure base from which to do that.

Speaker #5: base of a lot of And we also have a customer demand such that whenever we find ourselves with capacity that's not being used, it very quickly gets allocated and provisioned.

Speaker #3: Your next question comes from the line of Mark Mirdler with Sanford Bernstein. Please go ahead.

Speaker 3: Your next question comes from the line of Mark Moerdler with Sanford C. Bernstein. Please go ahead.

Operator: Your next question comes from the line of Mark Moerdler with Sanford C. Bernstein. Please go ahead.

Speaker #3: Thank you very much for your attention.

Speaker 4: Thank you very much for taking my question and congrats on the quarter. Doug, you gave some color earlier tonight that I'd like to dig in on. Clay presented a slide at the financial analyst meeting where he showed the revenue and expenses for a single data center. Doug and Clay, can you talk about the cash flow for that same data center, starting with the commitment for the data center and then the hardware and how that flows into becoming cash flow positive, and then how that rolls up across multiple data centers? Any color would be really appreciated.

Mark Moerdler: Thank you very much for taking my question and congrats on the quarter. Doug, you gave some color earlier tonight that I'd like to dig in on. Clay presented a slide at the financial analyst meeting where he showed the revenue and expenses for a single data center. Doug and Clay, can you talk about the cash flow for that same data center, starting with the commitment for the data center and then the hardware and how that flows into becoming cash flow positive, and then how that rolls up across multiple data centers? Any color would be really appreciated.

Speaker #4: Taking my question, and congrats on the quarter. Doug, you gave some color earlier tonight that I'd like to dig in on. Clay presented a slide at the financial analyst meeting where he showed the revenue and expenses for a single data center.

Speaker #4: Doug and Clay, can you talk about the cash flow for that same data center, starting with the commitment for the data center and then the hardware, and how that flows into becoming cash flow positive?

Speaker #4: And then how that rolls up across multiple data centers? Any color would be really appreciated.

Speaker #5: Sure. Happy to answer, Mark. So, as we talked about earlier in this call, it starts with the actual data center itself and the power capacity along with it.

Speaker 5: Sure. Happy to answer, Mark. So as we talked about earlier in this call, it starts with the actual data center itself and the power capacity along with it. And the way in which we structure that is that we incur no cash expenses until that's fully delivered, provisioned, and fit for purpose. So then it really comes down to what does the cash flow look like for the capacity that's going inside the data center? And as I talked about earlier, that really depends on kind of the business model and the financial model that we've used for procuring that. In some cases, customers actually want to bring their own hardware, in which case we don't have any capital expense, and it's really around the data center itself, possibly some networking gear, as well as human labor costs.

Clay Magouyrk: Sure. Happy to answer, Mark. So as we talked about earlier in this call, it starts with the actual data center itself and the power capacity along with it. And the way in which we structure that is that we incur no cash expenses until that's fully delivered, provisioned, and fit for purpose. So then it really comes down to what does the cash flow look like for the capacity that's going inside the data center?

Speaker #5: And the way in which we structure that is that we incur no cash expenses until that's fully delivered, provisioned, and fit for purpose.

Speaker #5: So then it really comes down to what the cash flow looks like for the capacity that's going inside the data center. As I talked about earlier, that really depends on the business model and the financial model that we've used for procuring that.

And as I talked about earlier, that really depends on kind of the business model and the financial model that we've used for procuring that. In some cases, customers actually want to bring their own hardware, in which case we don't have any capital expense, and it's really around the data center itself, possibly some networking gear, as well as human labor costs.

Speaker #5: In some cases, customers actually want to bring their own hardware, in which case we don't have any capital expense. It's really around the data center itself, possibly some networking gear, as well as human labor costs.

Speaker #5: We have other models where vendors want to rent that capacity, in which case those rent payments start when the capacity is provisioned for the customer.

Speaker 5: We have other models where vendors want to rent that capacity, in which case those rent payments start when the capacity is provisioned for the customer. Customer cash flow comes in. We're then taking that cash flow and pushing that out to all of the different suppliers. Obviously, you've got the model where Oracle takes its own cash, pays upfront for the hardware, and then puts the capacity in. That's obviously the most cash-intensive upfront. There's an appreciation schedule over the next several years. It really depends on the exact business and financial model used for each of the data centers. You ask, "Well, how do they layer together?" Well, thankfully, we don't need calculus for this one. Basic arithmetic is enough because they actually just layer on top of each other.

We have other models where vendors want to rent that capacity, in which case those rent payments start when the capacity is provisioned for the customer. Customer cash flow comes in. We're then taking that cash flow and pushing that out to all of the different suppliers. Obviously, you've got the model where Oracle takes its own cash, pays upfront for the hardware, and then puts the capacity in. That's obviously the most cash-intensive upfront. There's an appreciation schedule over the next several years. It really depends on the exact business and financial model used for each of the data centers.

Speaker #5: And so customer cash flow comes in. We're then taking that cash flow and pushing that out to all of the different suppliers. And then, obviously, you've got the model where Oracle takes its own cash, pays upfront for the hardware, and then puts the capacity in.

Speaker #5: That's obviously the most cash-intensive upfront. And then there's an appreciation schedule over the next several years. So it really depends on the exact business and financial model used for each of the data centers.

You ask, "Well, how do they layer together?" Well, thankfully, we don't need calculus for this one. Basic arithmetic is enough because they actually just layer on top of each other. If you have a time schedule for one data center and a time schedule for a second data center, the cash flows add together. Obviously, if a data center comes in sooner, you'll have the expenses as well as the revenue coming in sooner. If a data center moves out, then the expenses and the revenue also move out.

Speaker #5: And then you ask, well, how do they layer together? Well, thankfully, they're not—we don't need calculus for this one. Basic arithmetic is enough because they actually just layer on top of each other.

Speaker #5: So, if you have a time schedule for one data center and a time schedule for a second data center, the cash flows add together.

Speaker 5: If you have a time schedule for one data center and a time schedule for a second data center, the cash flows add together. Obviously, if a data center comes in sooner, you'll have the expenses as well as the revenue coming in sooner. If a data center moves out, then the expenses and the revenue also move out.

Speaker #5: And obviously, if a data center comes in sooner, you'll have the expenses as well as the revenue coming in sooner. If a data center moves out, then the expenses and the revenue also move out.

Speaker #4: That's very helpful. I it.

Speaker 4: That's very helpful. I appreciate it.

Mark Moerdler: That's very helpful. I appreciate it.

Speaker #4: appreciate Your final

Speaker 3: Your final question comes from John DiFucci with Guggenheim Securities. Please go ahead.

Operator: Your final question comes from John DiFucci with Guggenheim Securities. Please go ahead.

Speaker #3: Question comes from Don Difucci with Guggenheim Securities. Please go ahead.

Speaker #3: ahead.

Speaker #4: Okay.

Speaker 8: Okay. I won't make you kiss my ring. It's actually John DiFucci. Anyway, I'm sorry. Listen, a lot of my questions on infrastructure have already been asked, and they're really important questions because that's a big part of your growth. But I have a question on the applications business. Mike, you said applications are going to accelerate this year. Why the confidence in this business when all your large SaaS peers are seeing just the opposite where growth is decelerating? Especially because we thought that something similar about Oracle's application business last year, and we didn't really start to see it until the fourth quarter. We've heard some things in the field around One Oracle, your go-to-market motion where apps and infrastructure are more combined versus separate. And you also talked about combining vertical and horizontal apps teams here. Is that it? Is it mostly go-to-market?

John DiFucci: Okay. I won't make you kiss my ring. It's actually John DiFucci. Anyway, I'm sorry. Listen, a lot of my questions on infrastructure have already been asked, and they're really important questions because that's a big part of your growth. But I have a question on the applications business. Mike, you said applications are going to accelerate this year. Why the confidence in this business when all your large SaaS peers are seeing just the opposite where growth is decelerating? Especially because we thought that something similar about Oracle's application business last year, and we didn't really start to see it until the fourth quarter.

Speaker #4: Ring. It's actually John. I won't make you kiss my Difucci. Anyway, I'm sorry. Infrastructure has already been listened to. Listen, a lot of my questions have already been asked.

Speaker #4: And they're really important questions because that's a big part—that's a big part of your growth. But I have a question on the applications business.

Speaker #4: Mike, you said applications are going to accelerate this year. Why the confidence in this business when all your large SaaS peers are seeing just the opposite, where growth is decelerating? Especially because we thought that something similar about Oracle's application business last year, and we didn't really start to see it until the fourth quarter.

We've heard some things in the field around One Oracle, your go-to-market motion where apps and infrastructure are more combined versus separate. And you also talked about combining vertical and horizontal apps teams here. Is that it? Is it mostly go-to-market? Is there something more about the products or something else that we should be thinking about? Thank you.

Speaker #4: We've heard some things in the field around One Oracle, your go-to-market motion where apps and infrastructure are more combined versus separate. And you also talked about combining vertical and horizontal apps teams here.

Speaker #4: Is that it? Is it mostly go-to-market? Is there something more about the products or something else that we should be thinking about? Thank you.

Speaker 8: Is there something more about the products or something else that we should be thinking about? Thank you.

Speaker #5: Well, yep. Thanks for the question, Doug. First, I think it's a combination of things. But let me just start with what I think is happening in the industry.

Speaker 5: Well, yep, thanks for the question. First, I think it's a combination of things, but let me just start with what I think is happening in the industry. All of our competitors are largely in the best-of-breed business because they're not in the applications business in totality. They're not in the back-office business. They're not in the industry business, and they're not in everything in between. They're not in the front of the house, the back of the house, and the middle of the house. We are the only applications company in the world that's selling complete application suites. Then you add in baked-in AI, the AI Halo, baked-in AI right into our application. So we're over 400 AI features live in Fusion already. I mentioned 274 customers live on our Clinical AI Agent.

Mike Sicilia: Well, yep, thanks for the question. First, I think it's a combination of things, but let me just start with what I think is happening in the industry. All of our competitors are largely in the best-of-breed business because they're not in the applications business in totality. They're not in the back-office business. They're not in the industry business, and they're not in everything in between. They're not in the front of the house, the back of the house, and the middle of the house.

Speaker #5: All of our competitors are largely in the best-of-breed business because they're not in the applications business in totality. They're not in the back-office business.

Speaker #5: They're not in the industry business, and they're not in everything in between. They're not in the front of the house, the back of the house, or in the middle of the house.

Mike Sicilia: We are the only applications company in the world that's selling complete application suites. Then you add in baked-in AI, the AI Halo, baked-in AI right into our application. So we're over 400 AI features live in Fusion already. I mentioned 274 customers live on our Clinical AI Agent.

Speaker #5: The only applications company in the world that's selling complete application suites. Then you add in baked-in AI, the AI halo, baked-in AI right into our applications.

Speaker #5: So, we have over 400 AI features live in Fusion already. I mentioned 274 customers live on our clinical AI agent. The go-lives for these clinical AI agents, which are a new breed of SaaS applications for us, are measured in a matter of weeks.

Speaker 5: The go-lives for these clinical AI agents, which are a new breed of SaaS applications for us, are measured in the matter of weeks. You're looking at an industry like healthcare where it would take months or years to get anything done of that magnitude. By the way, John, the customers are implementing these things all by themselves. They don't need us to help them. You just roll them out, and they work. So we're in the applications industry suite business. We're building AI into our back-office applications, our front-office applications, and we are building applications that are also AI agents themselves. They are, in fact, AI agents. That's why you see the growth rates in our industry applications of 21% in the quarter. Our Fusion ERP is up 17%, SCM up 18%, HCM up 14%, CX up 12%. Again, all on a bigger base.

The go-lives for these clinical AI agents, which are a new breed of SaaS applications for us, are measured in the matter of weeks. You're looking at an industry like healthcare where it would take months or years to get anything done of that magnitude. By the way, John, the customers are implementing these things all by themselves. They don't need us to help them. You just roll them out, and they work. So we're in the applications industry suite business.

Speaker #5: And you're looking at an industry like healthcare where it would take months or years to get anything done of that magnitude.

Speaker #1: need Don't help them . us to You roll them they work . out and So we're in the we're in . We're in the building into industry suite .

Speaker #1: We're our back office applications , our front office applications And we building applications that are are AI agents themselves . That are , in fact AI agents .

We're building AI into our back-office applications, our front-office applications, and we are building applications that are also AI agents themselves. They are, in fact, AI agents. That's why you see the growth rates in our industry applications of 21% in the quarter. Our Fusion ERP is up 17%, SCM up 18%, HCM up 14%, CX up 12%. Again, all on a bigger base.

Speaker #1: And that's why you see the growth rates in our industry applications 21% in the quarter . of fusion . Fusion ERP is up 17% , Eskom up 18% , HCM up 14% , CK up 12% .

Speaker #1: Again, all on a bigger base. Think then I next piece of you is this add in the AI data platform.

Speaker #1: So, if you'd like an industry of applications suite, you'd like to then create your own AI. You'd create an unlock your data on your own, like to top of all, enterprise it are the.

Speaker 5: Then I think the next piece of this is you add in the AI Data Platform. So if you'd like an industry suite of applications, then you'd like to create your own AI agents. You'd like to create and unlock your own enterprise data on top of it all. We are the only. All of those ingredients for a customer. And I think as you look at customers tiring of spend on best-of-breed because the integration costs are so high, and it's hard to bolt AI onto all of that because you're actually not retiring anything in the process, we're in a very unique position. And I think we're starting to see it in the numbers too, John, with the deferred revenue for apps growing at 14% now, faster than the in-quarter revenue growth of 11%.

Then I think the next piece of this is you add in the AI Data Platform. So if you'd like an industry suite of applications, then you'd like to create your own AI agents. You'd like to create and unlock your own enterprise data on top of it all. We are the only. All of those ingredients for a customer. And I think as you look at customers tiring of spend on best-of-breed because the integration costs are so high, and it's hard to bolt AI onto all of that because you're actually not retiring anything in the process, we're in a very unique position.

Speaker #1: All of those ingredients for for a customer . And I think as you as you look at you know , tiring breed because the spend on Best of costs are so high of and it's hard to bolt retiring anything you're in the AI actually not .

Speaker #1: All of those ingredients for for a customer . And I think as you as you look at you know , tiring breed because the spend on Best of costs are so high of and it's hard to bolt retiring anything you're in the AI actually not that because in a onto all of very unique position , think we're and I too .

Speaker #1: All of those ingredients for for a customer . And I think as you as you look at you know , tiring breed because the spend on Best of costs are so high of and it's hard to bolt retiring anything you're in the AI actually not that because in a onto all of very unique position , think we're and I see it in the with the starting to for APS at growing you 14% now , know , faster than the in quarter revenue growth of 11% .

And I think we're starting to see it in the numbers too, John, with the deferred revenue for apps growing at 14% now, faster than the in-quarter revenue growth of 11%. So for all those reasons, I'm optimistic on our apps business going forward that it's a continued growth engine for Oracle.

Speaker #1: For all these reasons, I'm optimistic about our APS business going forward. It's a continued growth engine for Oracle.

Speaker 5: So for all those reasons, I'm optimistic on our apps business going forward that it's a continued growth engine for Oracle.

Speaker #2: Thank you Mike . When you as you were talking clarified in my sort of mind , when I think of an oracle , I used to think of , I thought of it when I started to hear about it as a go to market motion .

Speaker 8: Thank you, Mike. As you were talking, I sort of clarified in my mind. When I think of One Oracle, I used to think of it when I started to hear about it as a go-to-market motion. But it's more than that. It's actually a product thing too. It's everything. So thanks a lot.

John DiFucci: Thank you, Mike. As you were talking, I sort of clarified in my mind. When I think of One Oracle, I used to think of it when I started to hear about it as a go-to-market motion. But it's more than that. It's actually a product thing too. It's everything. So thanks a lot.

Speaker #2: But it's more than that . actually It's a it's a product thing , too . It's everything . So lot thanks a .

Speaker #1: Thank you .

Speaker #3: 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 today .

Speaker 5: 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 today. With that, I'll now turn the call back to Tiffany for closing.

Mike Sicilia: Thank you.

Ken Bond: 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 today. With that, I'll now turn the call back to Tiffany for closing.

Speaker #3: And with I'll now turn the that , call back to Tiffany for closing .

Speaker 3: Ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect.

Operator: Ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect.