Q4 2019 Earnings Call
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These forward looking statements. These forward looking statements are also subject to risks and uncertainties that may cause actual results to differ materially from statements made today as a result, we caution you against placing undue reliance on these forward looking statements and we encourage you to review our most recent reports, including our 10-K and 10-Q and any applicable amendments for a complete discussion of these factors and other risks that may affect our future results or the market price of our stock and finally, we are not obligating ourselves to revise our results or publicly release any revisions of these forward looking statements in light of new information or future events before taking questions. We'll begin with a few prepared remarks and with that I'd like to turn the call over to Safra.
Thank you Ken Good afternoon, everyone. As you can see we had a terrific quarter with total revenue growth of one point above the high end my guidance and earnings per share seven cents above the high end of my U.S. dollar guidance.
I will first go over Q4 and recap fiscal year 2019.
Before moving on to my guidance I will then turn the call over to Larry and Mark for their comments.
As in prior quarters I'll review, our non-GAAP results using constant dollar growth rate unless I say, otherwise known as the effects of currency movements. In Q4 were largely as expected maybe a smidge more incremental headwind than expected, but that was not a full percentage more.
Anyway, total cloud services and license support revenues for the quarter were $6.8 billion up 3%, while cloud license and on premise license revenues were $2.5 billion up 15%.
In particular technology license growth was up 19%, making it abundantly clear the customers are investing in the Oracle platform. The key database options necessary to run the Oracle Autonomous database service grew 21% I cannot stress enough the stability and growth of our base of customers quarter after quarter.
Our customers are maintaining and expanding the oracle environment and the in our B Y O well bring your own license model. They have the portability to use their licenses on premise.
In the cloud or via hybrid environments. This popularity is largely because our products are capable of doing things others, just cant do whether its security performance or scale ability and in our cloud autonomous capabilities.
As our customers adopt our technologies, whether via licenses or cloud services. Our overall customer base is growing and that growth is starting to accelerate.
In addition, the recent interconnect 1.4 agreement with $19.4 here Microsoft will only help accelerate the transition from on premise database to be autonomous database service.
Now.
To the numbers the gross margin for cloud services and license support was 86% and as we continue to scale and grow I expect this will go even higher.
Total revenues for the quarter were 87.1 billion up 4% from last year.
non-GAAP operating income was 5.3 billion up 7% from last year and the operating margin was 47%, which was up from 46% last year.
The non-GAAP tax rate for the quarter was 16.4 slightly below our base tax rate of 20% as a result of some discrete items and EPS was $1.16 in us dollars and up 27% in constant currency and 23% in U.S. fee.
The GAAP tax rate was 3.3% also a result of some discrete items.
GAAP EPS was one dollar seven in us dollars and up 41% in constant currency.
36% in us dollars.
Now moving on to recap the full fiscal year total cloud services and license support revenue was $26.7 billion growing 4%.
Total company revenues for the year was $39.5 billion growing 3% as compared to 2% total revenue growth in that Fyeighteen.
non-GAAP EPS was $3.52 in us dollars up 19% in constant currency up 16% in us dollars driven by operating income growth share repurchases and lower tax rate.
This is mirrored in our operating margin percentage for the full year, which was up slightly to 44% this year.
As a reminder, our best ever full year operating margin was 47% and I expect we will surpass that in the coming years as our total revenue growth accelerate and we benefit from greater scale in our business.
Operating cash flow over the last four quarters was 14.6 billion lower than last year only because as you will see at the bottom of our cash flow statement in the 10-K F. Wind 19 cash tax payments were $1.3 billion higher this year, including the $610 million installment towards the transition tax in Q2, and nearly $540 million in higher tax payments in Q4.
Capital expenditures for the year were $1.7 billion and free cash flow over the last four quarters with 12.9 billion.
We now have approximately $38 billion in cash and marketable securities.
The short term deferred revenue balance is $8.4 billion up 3% in constant currency.
As we've said before we're committed to returning value to our shareholders through technical innovation strategic acquisitions stock repurchases.
Prudent use of debt and the dividends.
This quarter, we report, we repurchased 112 million shares for a total of $6 billion.
Over the last 12 months, we have repurchased 734 million shares for a total of $36 billion.
Over the last five years, we have reduced the shares outstanding by almost 25% with nearly 60% of the total reduction this past year in F line 19.
In addition, we've paid out dividends of 2.9 billion over the last 12 months and the board of directors again declared a quarterly dividend of 24 cents per share.
Now to the guidance Mike guidance today is a non-GAAP basis and in constant currency.
Assuming the current exchange rates remain the same as they are now currency should have about a 1% negative effect on total revenues and about one cents negative effect on EPS.
So for Q1 total revenues are expected to grow between 1% to 3% in constant currency and assuming a 1% currency headwind headwind total revenues are expected to grow between zero and 2% in us Steve.
non-GAAP EPS in constant currency is expected to grow between 14% to 16% and be between 81, and 83 cents in constant currency and assuming the one cents headwind non-GAAP EPS in Uxc is expected to grow between 12 and 14%.
And be between 80 and 82 cents in U.S.
Now this past year, we grew 3% and for fiscal year 2020, I expect total revenue will grow faster than last year constant currency of course and that we will once again reported double digit EPS growth.
Total capex for fiscal year, 20 is expected to be about $2.2 billion, but it could move a little depending on our bookings.
My EPS guidance for Q1 and fiscal year 20 assumes our base rate of 20%. However, one time tax events could cause actual tax rates for any given quarter to vary from our base growth higher or lower but I expect that in normalizing for these one time tax events, our tax rate will average around 20%.
For fiscal year 2020.
And with that I'll turn it over to Mark for his comments.
Thanks Sandra.
Really we just had a solid quarter from top to bottom.
Total revenue was up 4% in constant currency with cloud license and support up three and NSF.
37% in constant currency.
And apps, we had great momentum, we grew 6% for the year.
We're now at $11.5 billion and trailing 12 months revenue, 92% of that recurs.
We continue to grow revenue faster than market.
And we have just an enormous opportunity in front of us ERP and ERP and HCM and I'll talk to that in a second.
And fast revenue and bookings, let me just give you a few stats to give you some context of what of what happened overall European HCM annualized SaaS revenue is now 2.9 or toll of $3 billion and it was up in the high Twentys.
Fusion apps revenue was plus 36% in Q4.
And up 32% for the full year.
Fusion HCM was up 25% in Q4 solid growth with nice wins and I'll discuss again in the second.
Fusion ERP revenue was up 44% and also up 44% for the full year.
Net suite ERP was up 28% in Q4 has a strong momentum continues they had strong bookings.
In the quarter and I remind you that last Q4, they had 72% growth in bookings.
In addition, the well was plus 30% growth in bookings this Q4.
And that's what drove this revenue growth and when we acquired net suite, we had no roughly 15% growth rates and those darn near doubled now.
Since the acquisition.
In our verticals revenue was up 19% and 32% for the year.
And our data as a service just to give you. Some further context within our SaaS business, our change our challenges related to the broader privacy issues continued and revenue was down 15%.
Now I'm going to give you an idea quote that I have to read.
As is so I cant improvise.
Let me give you the quotes the words and then the clothes crowed.
Open quotes per Idcs latest annual market share results.
Looking gained the most market share globally.
Out of all enterprise applications SaaS vendors three years running.
In calendar year, 16, 17 and 18.
Close quotes.
And I can improvise on that quote although I'd like to.
So anyway, we us have strong momentum in the App space I will talk to you about some of the wins in the second.
In our infrastructure ecosystem Adaptec ecosystem was 21.1 billion on a trailing one.
Trailing 12 months basis in Q4 was up 7%.
With database up mid single digits, driven by mid teens database license growth only repeat that mid teens.
Database license growth.
Autonomous database and im telling it well the numbers helped us in Q4.
They were still small.
But the if you extrapolate them. They are relatively soon they've written at relatively they're very significant more than 5000, new trials were added in Q4 alone.
We've got a great pull through business with 40% of our Q4 wins so 40% of the time, we won an autonomous database, we pulled through analytics.
We're adding many new customers so of all the customers ready with autonomous database and you might think we're replacing just or base, which by the way we explain it to do.
About 20% of our customers are just brand new normal.
They were not an oracle database customers.
When they bought the autonomous database.
And new workloads are 40%, meaning that I am an oracle database customer, but I'm, putting a different workload on the autonomous database.
That I had on the Oracle database.
So we have both new and existing customers doing both.
Now to Safra's point and she has hit it briefly I want to hit it just it's a little harder.
In the key database options that you need to run on Thomas.
So these b b b being wrapped in Multitenant and active data guard. If you want the delay our license growth was up 21%.
So.
What do you think the market's growing to three 3.5, whatever number you think from your favorite.
Analyst This was a huge share gain customer for us our share gain quarter for us in database.
It was a solid quarter, we exceeded our revenue target and saw 27% EPS growth our bookings growth climb with our renewal rates, meaning our continuing renewal rates of existing customers gives us confidence that our cloud apps business will also just continue to strengthen.
From here.
Now I thought I'd give you just a couple of key wins we had.
During the quarter and I'm going to try and give you a little more color of the typical size of the companies were selling to.
I am going to and try and give you a little bit about who we replaced.
In the deal and give you some rhythm so you get a feel for all of this some of our key wins and I'll focus on on some back office wins.
Argo insurance about a $2 billion.
Company.
Coronados per rock.
A mining company in Australia 2.3 billion dollar company.
The bold nixdorf, that's an interesting one because I used to compete with them. When I was at NCR Debold bought nixdorf and Debold was an MPS customer.
Nixdorf was an S&P customer.
They combine the two and they will be going to Oracle cloud ERP.
So the whole Diebold Nixdorf will run on Oracle cloud ERP.
Energy out of Brazil about a 31.3 billion dollar they bought ERP supply chain and procurement fantastic.
Win for us and they were running on Toyota's.
Brazilian ERP company and so they are net new to two to two Oracle.
Experian, which is a 1 billion dollar company bought our whole really our whole year peace Sweet ERP planning supply chain procurement.
They did it against a background of basically having a little bit of everything they had a little bit of VBS, a little bit of S&P in a little bit of Microsoft and replace at all with the Oracle cloud.
Now this company you may never heard of Talmer itch and pain. The reason I've heard of them is their stock symbol on the New York Stock Exchange was HP and for years I wanted their stock symbol and.
They are about a 1.6 billion dollar company and while I never got the stock symbol from them.
We have replaced Epicor.
With.
Oracle cloud ERP at home, Rick and pain, So anyway that would just give you some idea on that.
Ferguson, which is one of the largest plumbing wholesale and distribution companies are $21 billion company. They bought ERP EPM supply chain procurement.
Just a tremendous.
Tremendous win for Us and.
Very looking to partner with them on a San Tan Dare.
In the us.
Another tremendous win.
For us right medical which was which was.
Very competitive Emerson electric.
Rutgers University, which is deployed not only all of our financials in ERP, but are deploying our new students scheduling system, which deals with all of commissions and commissions, but grants and in discounting very difficult stuff to deal with in higher Ed So very key win for us.
In the quarter, a great HCM win at waste management.
Waste management as a $13 billion company in Houston.
This is HCM payroll talent.
Some amount of ERP.
Tiffany.
The I'm sure all of you have bought something from Tiffany for some important occasion.
Tiffany will be running on our.
Cm location, Okay, I'm getting assigned to stop here, but it was a very good quarter in terms of just quality logos and I think what what I was let me just try to do one maybe a couple of other things for you just to give you. Some flavor. We get asked this in Q1, a lot Im just reading down the list.
And.
Of of what I'm looking at as about 150 on my page.
I'd say, a 121 more than more bought more than one module for months.
And if I read the competitors the competitors are the incumbent the got replaced they start S&P EPS EPS.
Total us Microsoft Epicor Epicor in for Lawson Infinium, Microsoft as I mean, I could go on and off but that would give you a flavor that we're getting.
As many and I Didnt do this accounting exactly but as many of our logos from outside of the traditional local user base as we are from the Oracle user base with that I'll turn it over to Larry.
Thank you Mark as Mark said in Q4, we saw a surge and database license sales.
We also saw a rather rapid growth and sales are better database options required to run our autonomous database.
We continue to gain overall database market share as we migrate our database users to the cloud.
In the quarter, we added over 5000, new autonomous database trials and our Gen two public cloud.
Our new Gen two cloud infrastructure.
Offered customers a compelling array of advanced technology features.
Including our self driving database.
But automatically encrypt all your data.
I could sell Bob.
Tunes itself.
Upgrades itself and automatically patches itself when a security threat is detected.
It does all of this.
Autonomously.
While running.
Without the need for any human intervention.
And without the need for any downtime.
No other cloud infrastructure provide anything CLO.
So these autonomous features.
Thank you Larry I think we can start the Q and a portion of the call. Please.
And ladies and gentlemen.
If you would like to ask a question at this time press Star one on your telephone keypad to withdraw your question press the pound key.
And our first question comes from the line of Michael Turits Raymond James.
Hi, good evening strong quarter lot of wasn't database stood out, but I'd like to ask about.
The recent Azure partnership.
In General your strategy has been to make sure that that on premise Oracle workloads move to Oracle cloud does this as your partnership represents an opening to Oracle workloads running on other clouds or is it more directed at just getting Azure services integrated with Oracle cloud workloads.
It really is.
Most customers have Microsoft technology.
And Oracle technology, so they might have a Microsoft analytics suite.
And are there data at an Oracle database and we want to make it as easy as possible for you to run those Microsoft analytics in as Youre.
Accessing the Oracle database and the Oracle public cloud and we've built these high speed interfaces and mid Con is we made we grew the technologies together, but we also have unified the customer experience. So the customers. It appeals to the customer like they're working in one cloud, but they have two suites of products and technologies. They have access to and they can interconnect those things, but that the Oracle database is still running in the Oracle cloud and the Microsoft our analytic technologies running in the Microsoft Cloud. They are just talking to each other that high speed and highly reliable.
Thank you next question please.
Our next question will come from the line of Mark Moerdler Bernstein research.
Congrats on the strong quarter I'd like to focus my question on the database business.
Especially economist David Mark Sacroc. Thanks for the dating gave autonomous this call on the call, but can you give us some more color on how we should think about the database. These revenue going forward is economist state adoption hitting the stride, we're going to visibly ceded license revenue on a quarter by quarter basis, and what's this impact going forward on.
Thanks.
Let me give you what I think is maybe the most interesting thing we can say about this.
We have two ways of forecasting our eponymous database business. One is the traditional way nor the field comes out with quarterly forecasts, we put together annual plans and that's in fact, what we've relied on relied upon for years in terms of giving you guidance.
But now that we're in the cloud business.
We have some interesting additional data not around the field sales have you will bookings for selling our cloud services and add on our technology, but rather we have real data about consumption.
Inside of our cloud and we started collecting the consumption data because to add capacity to the cloud SAP is that depending on bookings.
It out we might have to spend more money, let me be a little bit more precise.
It's not even brookings dry that our bookings, but lead to increased consumption.
Triggers our just in time provisioning of our hardware into our public clouds.
And right now we're getting signals from.
Our our usage in our den Gen two cloud, but its signaling a much faster autonomous database growth.
Then we're seeing from our sales forecast, it's just kind of interesting but encouraging.
And our next question is going to come from the line of Brad Zelnick Credit Suisse.
Excellent. Thanks, very much it's great seeing the business accelerating like this my question is for Larry Larry. It's it's so nice to see the early success and autonomous database and demand for database options, but as we think about the long term prospects of the database business in years past a lot of your success was tied to the ASV ecosystem.
And it would seem the future is increasingly about embracing software developers first would you agree with that statement and how do you see oracle attracting developers to your database and OCI more broadly.
Well I think.
I think you are saying the same thing.
Why is it attractive too.
Why it was a good to attract developers because developers write applications and the most important applications. The applications, which are used you know use across the board. So I don't think anything's changed at all developers were always if you will the foundation of our business, we have over 1 million developers in our ecosystem ready.
And.
And the and most isds most of the current I as these in the cloud use the Oracle database I mean, everything that Salesforce dot com runs pretty much as Ron is running on the Oracle database, our everything but thats a pea acquired to run in the cloud runs on the Oracle database now I know I think you said, they're going to move the Hana, but they said that 50 years ago haven't quite gotten there yet anyway the ER.
We go after developers that yesterday, where we were.
We we were putting the finishing touches of a program were going to be announcing to developers that are open world, which is basically three services to developers.
Broader if you will so developers in college entrepreneurs can those this free service will be able to provide this free service that will let developers has got on the Oracle cloud build their applications and graduated from being a maybe a sole entrepreneur someplace in the dorm in MIT.
So eventually being now.
In an entrepreneur start starting a company and then becoming an iOS.
Okay. That's the cycle, we want to sign up people early and we have also to cloud programs, we're putting in place to be able to do that.
Thanks next question please.
Our next question will come from the line of John Difucci Jefferies.
Thank you.
Okay.
I'm going to follow up with another database I know the apps was good too, but I can't help myself and waiting for this.
Yes, many journalists.
For Q.
I think we've been working on this for a long time and it's great to see just begin to show up in the numbers.
It is in the timing is kind of odd.
Larry because many infrastructure companies this quarter, if theyve struggled lately and and as you probably know the logical conclusion from the investment community was that we'd see some relative weakness out of Oracle, but your constant currency infrastructure growth was better than its been in.
Since you've been doing that certainly over the last since I went back looking back to 2006 fiscal 16, and this quarter. The constant currency growth is better than it's been since over that time period.
I guess, Larry you mentioned the options and that's something we don't sort of waiting for and looking for I guess can you give a little more detail on that and then and then maybe even more generally maybe mark if you can give us some detail on comments or comments on the general broad priest. These infrastructure a key demand out there were not we don't just cover Oracle right. We're just trying to figure out what's going on out there.
Okay. So let me.
The two options that I think mark mentioned them, but are absolutely required to use it on a Monday. This one is the multi tenancy option. This is the one where you can take an existing application could be a.
And I ask that you could take an existing application.
Never built to be multi Dennis you move it to the Oracle database you don't change a thing and you suddenly have a multi tenant database.
So thats one thing that is required for autonomous data, but the other thing is this real application clustering the application clustering.
Referred to the fact that we use multiple computers.
To run every database instance, silicates one of those computers should fail or theirs.
Our systems are both tolerant they keep running.
So the autonomous database.
Never breaks.
Let me say that never right.
Thank you, ladies and gentlemen standby.
And our next question is going to come from the line of Heather Bellini Goldman Sachs.
Hi, there could you have one remark Hello can you hear me. Okay go right ahead.
Yes can you hear me.
When you put aside for a minute before.
Okay, I apologize everybody.
While there would you want to use that to continue or.
Yes, I would like to ask the question, Yes, John did you get any of Larry's answer Headedly locked down by let me open up Joffe line.
Thank you Heather jumping back on the line and we'll kind of figure out policies for the logistics.
So in my mind to change seats.
Oh that'd be the network 18 now.
Looking now.
Okay. So.
Okay and everything if we heard you know started we're talking about the options. So let me I'm sorry, I know if I go back and repeat and repeat my answer. So the answer there are two options required for autonomous database. One is the multi tenancy option and that allows that let's say an existing ideas to be to take an application that was never meant for the cloud move it to our autonomous database.
With the multi tendency option and suddenly they are changing their application the application becomes a multitenant cloud application. That's one key feature and we've seen sales about skyrocket correct.
The other key feature of autonomous database, that's required to use it on a bus database is this feature called RAC RAC is the ability to use multiple computers.
To run a single application or a single database instant so case, one of those computers should fail.
We tolerate that failure big and the application keeps running goes we have multiple computers you might have 1234, but you lose one or two you still have 234 left whatever whatever year. However, you configure the system, we will only configure autonomous database with multiple computers autonomous database never fails you must have the rack option to ensure that RAC options are growing more rapidly than you would expect.
Being driven again by consumption of the autonomous database.
So we're in there we're seeing we're seeing very very rapid adoption at that.
Another thing that so that will come out of this.
The initial transaction a lot of our existing customers might come in with a very small project, let's say a 30000 dollar.
Our our project and within.
60, 9100, 20 days that becomes a $120000 project and after another few months it becomes a half a million dollar project. So so we're really optimistic about this business.
And the optimism and I and is back to what I said earlier the optimism.
Was not an SAP is guidance, which is based on.
Sales forecasts.
The thing that I find fascinating are the consumption data curves, which shows our consumption rate growing much faster than the fields currently anticipating to me that just wonderfully encouraging and hopefully this is the beginning of a trend we'll find out soon.
Okay, Holly we cut down I think Mark I think market a follow on but then you have a question for mark as well.
Did you take just the general rule.
Hello.
Yes can you hear me.
Thank you John .
Okay. Yes. It was just do you know, we're seeing a lot of funky stuff out there for infrastructure software and just wondering I mean, you guys step a broad customer base just wondering what you're seeing in general are you seeing any I mean, your business was strong but theres a lot of companies that have struggled recently are you seeing anything any changes out there for infrastructure demand in general that beyond Oracle even.
Oh, yes, we have we have new hot products I mean, that's the difference I think that again I won't speak to everybody, but when you go out with with with the autonomous database.
Larry talked about a lot of different factors, but from a business perspective, we very rarely had a product that we can go talk to somebody at a senior level and say how would you like to get more secure.
Save money.
And get better performance all same time.
And how would you like to outsource the security detection and patching.
Responsibilities to somebody who does this for a living who never have to read the name of your company above the fold on the front page talking about how much data you just lost.
All right so.
We expect it.
Yes, I will let mark Mark I'm, sorry. So this is a really simple message. This is different from saying we've got a new we've got a new partitioning.
Anyway, its just a very different approach for us and so we've got new products you know about the strength John you mentioned in.
In cloud apps and.
We benefit from.
Set of competitors that are in different stages of maturation most of which are weak.
And we've got great product and what we're just now bringing out.
In autonomous database and so I think that's a bit different just in terms of the various product cycle that we're in versus what other people might be in.
Yes, let me limited close.
With.
I couldn't agree more with Mark are really good hot new products like autonomous data those fusion fusion.
Cloud application suite net suite are selling really well and back they're accelerating they're doing extremely well quite frankly, we have some other product lines that were quite naturally downsizing like some of the acquired selling the hardware. There are some old us on premise software products that aren't really doing well Mark mentioned data.
Data cloud because all the privacy issues. So yes, some of our businesses that are not if you will hot but the good news is the hot businesses are now bigger than the not so hot businesses and that's determining our future.
Okay. Thank you.
Great. Thank you Holly and headed my back of the patients Larry King John What Larry said is right I think it's worth noting our spark business declined 20, 425%.
This quarter, our next week business grew.
As we described in the high Twentys and they don't cancel out and that's what's now bigger, but but when we look at the aggregate growth rate of the company. It's made up of negative 20, fives and plus 27.
Like what I, just described and so.
It does create the phenomena that Larry described.
Yes.
Got it look like and I swear visibly the last part you answered your question.
It does look like the topline is moving up modestly but underneath that there's really a lot of activity. You have these very these modern business is like autonomous database fusion net suite growing very rapidly taking share.
Clearly clear number one in the overall marketplace focus is dominant number one and number one but probably our ERP.
And you have these other businesses that are.
Melting away and we just don't care if though.
We are focused on our star products and our star products are now driving our topline higher.
Great. Thank you.
Oh right and our next question will come from Heather Bellini Goldman Sachs.
Great. Thank you okay. So I guess, we should spend a little bit of time on the apps segment given.
Everyone's been focused on the infrastructure segment so far.
It's obviously looks like that was another strong quarter. There I was wondering mark if you could share with us in terms of how the SAS business is performing it you could look out next year I mean, you had tougher comps.
The fiscal year that just ended right as the anniversary of net suite went on when you think about the types of acceleration we could see can can you walk us through kind of the puts and takes in terms of that tied to the acceleration we might be able to see in that business and also I wanted to ask you I mean, I think he's going through where they're trying to get customers to re platform how much of an opportunity is that for you.
Go and potentially.
Win back some of those customers there to win some of those customers for the first time, so wondering kind of the competitive environment, I guess workday and that's a key.
Hi, you're seeing that play out given some of the announcements from us. Thank you.
Okay, well that question would take me like an hour today.
No.
[laughter] from Spurs.
The abridged version I think to your point I think he is forcing all their customers through new platform by 20, beginning in 2025.
That forces all their customers to to move and all the changes not just the changes they just made but all the changes they made to the coke has to be we made to the code.
And.
What that means is they have to roll up a big new build to move to this thing Larry called.
Earlier, one off and it's a big Danville and so the poor CIO or CFO wherever this guy is as to show up to the board and says that the board of directors. We've got a 500 million dollar bill to move to Honda and you all on the phone or Smart My guess is the board member says something clever like what's wrong.
And then [laughter] and that Guy goes well, it's a platform and the Guy goes well, what's the platform you guys well, it's a new thing we run our ERP young guys, Okay, and it costs $500 million Guy goes I have and I guess, what do we get for you guys. When we get some new plumbing and we get some new this and I just think that maybe goes very badly and somewhere in the mean the customer goes.
Who else have you talked to.
Do we have an alternative could we not do it.
Could we go with somebody else.
So yeah, I mean, I think it's a it's a incredibly interesting strategy on their part to put all their customers at play do we get calls from customers that we haven't been cold or talked to in 20 years. The answer is yes.
Mhm and is it because and remember Heather you know this that when when we sold to two customers 15 years ago. They never really talked as if he after that and vice versa. Because you expected to stay with these ERP systems.
Forever. So yes, some percentage of their base will will will move.
As a result of just just this because it's a lot of money for not getting much real simple.
In the rest of the anything I would say yes.
I think workday does again, but my my sense of Workday is they do a decent job an up market HCM, where they can divorce the HCM buyer from the ERP buyer when the ERP buyer in the HCM buyer are aligned and combined they they really in a position with no chance because they didn't have much of a financials product.
And I know, they're high fit and they talk about it and all that but at the end of the day.
They are just not competitive so.
For us the market really is for us to keep moving ahead.
Well I don't know, what our market share and must be in cloud financials, now, but it must be plus 90% 90 to 93 94.
So yes, do I think we can accelerate I think the greatest store you can see here is the net suite story that we doubled the rate and if I didnt say enough things about net suite because I'm sure. The net suite teams listening, let me say net suite net suite net suite. They have just done a fabulous job and they're doing a fabulous job not discrete internationally, but growing domestically.
Yes, I mean, there's a lot of this performance in net suite is just pure us domestic performance more salespeople more industries micro industries that we've built for better execution.
And so between net suite infusion, we've just had a really good run I won't tell you everything is perfect which is what's really good news with these numbers, we can do better.
We can do better.
And I think we're just getting our stride so.
I feel very good about it.
Thank goodness fusion becomes a higher percentage fusion ERP is growing so quickly and is it become a.
Bigger percentage it just kind of overwhelms everything out.
Yeah, that's the mix change a method would that's what you are saying, yes really in this in this quarter does the beginning of the fact that our hot rapidly growing product on a bigger.
Than some of those products again like Sun spot market.
That are in decline and you know we can across those two curves of cost one another.
Yes fusion fusion is it a bunch more.
Distributions in international product in a lot of countries and now we've moved net suite.
To a lot of countries and quite frankly, we haven't really started to get the benefits of that just yet so thats going to kick in this fiscal year and that will have a big impact.
Great. Thanks question. Please.
Our next question is going to come from the line of Phil Winslow with Wells Fargo.
Yeah. Thanks for taking my question and congrats on great finish to the year.
A lot of time has been spent on platform and then for spend and applications. One of the focus on infrastructure and hoping you give us an update on just what you're seeing on the Oracle cloud infrastructure to what's the feedback from customers. How do we think about sort of where we are on the adoption lifecycle and then one question I get from investors is how should we think about OCI to relative to the announcement with with Microsoft If theres any sort of impact there.
Well.
Yes, I would say to you know we had two infrastructure products you know, we we have now.
Classic.
Which really is.
Frozen and we've moved or moving all of our customers almost all of our customers to our gen. Two cloud.
Our Gen two cloud.
Is dramatically better I think not only that our gen one cloud, but other people's existing clouds.
We have without going to a lot of a lot on this we have an architecture, where we have two separate computers.
In each computer that you rent if you will.
And.
We have the Intel computer that you read and then we have another you know another processor with separate memory that has all of our cloud control code.
So thats very different than Amazon or Google or is your.
As an architecture, that's true of every single computer and our Gen. Two cloud is really two computers.
The one that the customer uses and the one and another one that we use to manage the cloud and then Chris the data and calculate the message messaging and virtualize the messaging and do all of that.
The.
It's impossible for a cloud.
Customer.
To get at our code.
And Hackett.
And it's also impossible for arc.
Our programmers.
To look at.
Our customers data.
So we did this we redid our architecture, because we've decided that.
Existing architectures infrastructure architectures had just too many vulnerabilities.
And so we bought the bullet so okay, we're going to freeze.
Let's see our classic we're going to invest in Gen. Two that gives us a much more secure much more reliable platform as a quite frankly, a much faster. It's also much faster.
We are much faster network and I'm going to be able to go into all of that but this is a huge differentiator between us and everybody else.
And customers are beginning to see that they are big and they are beginning to understand the architectural differences with who you love the real security agencies are now coming to open saying, Hey, this looks really good.
No we're going to go with this or not.
Amazon or somebody else.
The.
Because of these architectural distinctions.
Also a bunch of people are running high performance workloads on our cloud we have a much fancier network.
We have already made capability built into our network.
But the other guys don't have that's because we did that we didnt have in Gen. One we haven't done too loud us to have to run large machine learning workloads, our rendering our simulations all sorts of the high performance computing way better than our competitors. So so there are a bunch of applications. We just do better and people are beginning to notice that they're beginning to them.
Move and by.
Great. Thanks.
And our final question for today comes from Rhino Lenschow with Barclays.
Hey, Thanks for taking my question I wanted to go back to the net suite strength.
Mark you talked already a lot about it in terms of geographic and going deep into industry, but I just wanted to see like how sustainable is that where are we in that innings.
In terms of going against certain countries or going against certain industries like is that kind of.
The initial investment and it's coming through now and then we're done or are we on the beginning of a journey here. Thank you.
A first time I think one thing that add to Larrys Gen. Two point is.
Customers loved into.
Uh-huh.
And it.
It's got a great thing it works really well.
It's it's reliable it scales were hiring people.
In our engineering group continuing to expand and so just to add to Phil's point I mean, it is very well received by our Salesforce our field and it's it's been fantastic.
On on net suite, Yeah, we're just at the beginning to Larry's point, we really havent seen the acceleration internationally that weve seen domestically.
So we're adding salespeople internationally, we've done that we've got some more to do.
So there is growth there, we're adding more countries. There is more to do there and we are adding what we call suite success, which is where we take a.
In industry, not even an industry a micro industry, so instead of taking retail.
We would take retail bookstores in campus bookstores in in universities and we would.
Refining the solution for campus bookstores, and then put a consulting offer around it that we would deliver so it was a complete one stop shop for the customer and we're continuing to build those out so we've increased our R&D yet again to do more of those.
Increased their sales force, yet again to get after more customers and our expectation is that we continue to drive.
Significant growth and its weight.
Perfect. Thank you from going on here for now.
Okay. Okay.
Thank you Mark a telephonic replay of this conference call will be available for 24 hours dial in information can be found in the press release issued earlier today. Please call the Investor Relations Department with any follow up questions from the call. We look forward to speaking with you.
Thank you for joining us today with that I'll turn the call back to hobby for closing.
Thank you and thank you for joining todays oracles fourth quarter 2019 earnings Conference call. We appreciate your participation you may now disconnect.