Ken Bond:

Thank you, Krista. Good afternoon, everyone, and welcome to Oracle's Fourth Quarter and Fiscal Year 2024 Earnings Conference Call. A copy of the press release and financial tables, which includes a GAAP to non-GAAP reconciliation and other supplemental financial information, can be viewed and downloaded from our Investor Relations website. Additionally, a list of many customers who purchased Oracle Cloud services or went live on Oracle Cloud recently will be available from the Investor Relations website. On the call today are Chairman and Chief Technology Officer, Larry Ellison, and Chief Executive Officer, Safra Catz. As a reminder, today's discussion will include forward-looking statements, including predictions, expectations, estimates, or other information that might be considered forward-looking. Throughout today's discussion, we will present some important factors relating to our business, which may potentially affect these forward-looking statements. These forward-looking statements are also subject to risks and uncertainties that may cause actual results to differ materially from statements being made today. As a result, we caution you against placing undue reliance on these 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 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.

Larry Ellison:

Thank you, Safra. I'm going to start by repeating something Safra said. In Q4, Oracle's company-wide RPO increased 44% to $98 billion. In AI alone, we signed contracts with 30 different customers for $12.5 billion in new AI business. These astonishing RPO numbers 44% and $98 billion were driven by massive increases in sales of Oracle Cloud Infrastructure, OCI. So who are the companies choosing to use Oracle Cloud Services and Oracle data centers. Well, here are a few names

Operator:

Thank you. Our first question comes from Raimo Lenschow with Barclays. Please go ahead.

Safra Catz:

It's all about capacity. It is -- as we bring the capacity online wherever it's going online around the world is when those workloads are coming over. A lot of the engineering work is done in advance so that those customers know how they can operate. They bring smaller workloads, but the bigger workloads, they are just waiting for us to go online and make it available to them. It is really that level. We are scheduling them on our availability. And as I mentioned, our pipeline to take more deals is all about us just getting the capacity up and live and moving forward.

Safra Catz:

Yes. Well, it's not a problem. It's just the schedule. As things come online, as the data centers go live or as we deliver the computers, they are just getting -- it's just very straightforward. There's no magic here. These customers have done a lot of the analysis in the engineering in advance and have tested us or competed us against our competitors and have chosen us very -- already understanding how we work, and they're just waiting for us to give them more capacity.

Operator:

Your next question comes from Brad Zelnick with Deutsche Bank. Please go ahead.

Larry Ellison:

Okay. Well, I think in OCI, we've talked for a while about our ability to build very small data centers, one you could put in a shipper, a submarine or a full cloud, a full Oracle cloud, we will soon have in six standard half racks to go into a conventional data center. So virtually any one of our customers could choose to have the full Oracle Cloud in their data center with every service, every service in the cloud. And they could scale that up quite extraordinarily large. So we talk about the fact that we can start very small and that's a huge difference between us and our competitors. So we can actually put it again customer by customer, small countries, we can do. What we haven't talked so much about is we're also building the largest data centers in the world. We talked about -- I think we talked briefly about one last call, where we can park -- it's a 70-megawatt data center where we can park eight 747s nose to tail in the data center, the huge AI training data center. While we're also building a 200-megawatt data center. In fact, this past quarter, we sold about half of that data center for the -- for a period of time. So we're now bringing 200 megawatt data centers online. So we are literally building the smallest, most portable, most affordable cloud data centers, all the way up to 200 megawatt data centers ideal for training very large language models and keeping them up to-date. This AI race is going to go on for a long time. It's not a matter of getting ahead, just simply getting ahead in AI, but you also have to keep your model current. And that's going to take larger and larger data centers. And some of the data centers we have that we're planning are actually even bigger. There -- some are getting very close to our there, say a 1 gigawatt, which is a pretty good-sized city or one enormous AI cloud training data center. No one else can span this range. And in every case, we have unbelievably fast networks that are part of this, the data centers we are building include the power plants and the transmission of the power directly into the data center and liquid cooling. And because these modern data centers are moving from air cooled to liquid cooled, and you have to engineer them from scratch. And that's what we've been doing for some time. And that's what we'll continue to do. And currently, we are leading the pack and being able to deliver that quality and that scale of data center.

Operator:

Next question comes from Siti Panigrahi with Mizuho. Please go ahead.

Safra Catz:

I don't know, Larry you wanted – started with that.

Siti Panigrahi:

Thank you.

Alex Zukin:

Hi guys. Thanks for taking the question. I wanted to dive a bit deeper on just precisely how many deployment models you guys are offering for OCI because it feels as though that is getting particularly differentiated as we start to think of sovereign cloud, GovCloud, more private cloud, given the conservative posture for AI and data privacy. So how do we think about how much of an advantage that is providing in sales cycles? And maybe in that massive $30-plus billion in the second half RPO, but also just comment on the magnitude of that opportunity going forward.

Safra Catz:

Yes. And because as Larry said, because whatever the deployment model is you don't have to compromise. Some of our competitors may offer some level of sovereignty or some level of disconnected, but they don't actually have all the services for us, and the reason we've been so successful is whether it's disconnected or sovereign or whatever it is, the customer always gets everything. All services, not just some services and they get to deploy it any way they want, and they get the security or the regulatory requirements, sovereignty may be very critical. And for most governments, they don't want their data in the public cloud out and about. They want to have its sovereign to their country. And so no compromises, no compromises on the services and no compromises on security.

Safra Catz:

Much, because we are so much faster when you use our cloud, it is new. It's modern, but it also is technical advantages and so it runs your workload so much more quickly. And when you pay by the minute, the second, the hour, if your workload ends in [1/10] (ph) time, you pay a 1/10th the price. That's very hard to compete with.

Operator:

Your next question comes from Kirk Materne with Evercore ISI. Please go ahead.

Safra Catz:

Well. Go ahead. No, you can. Go ahead.

Kirk Materne:

Thank you.

John DiFucci:

Thank you for taking my question. My question, I think, is for Safra. Safra, the IaaS revenue growth has been really impressive and it has been for a while here, but perhaps even more so the last couple of quarters, especially is the backlog given its scale. And this may be somewhat of an obvious question for you, but it's based on my conversation with investors. There's two high-profile topics that I want to make sure we understand what the contribution has been today versus next year. And that's Oracle database at Azure and AI in general. We've heard a lot of conversation about the former when we speak to partners and customers in the field. And you've spoken a lot about the latter today. So beyond conversation volume, can you talk a little bit more about what the contribution of these two topics has been to that impressive IaaS revenue growth in this quarter versus what we should expect that contribution to be in fiscal 2025.

John DiFucci:

That is really clear, and it really speaks to, I think, what you started talking about a long time ago, especially a lot more publicly, I don't know in the fall of 2022, but thanks. That's really clear.

Operator:

Ladies and gentlemen this does conclude today's conference call. Thank you for your participation and you may now disconnect.

Ken Bond:

Thank you, Krista. Good afternoon, everyone, and welcome to Oracle's third quarter fiscal year 2024 earnings conference call. A copy of the press release and financial tables, which includes a GAAP to non-GAAP reconciliation and other supplemental financial information can be viewed and downloaded from our investor relations website. Additionally, a list of many customers who purchased Oracle Cloud Services or went live on Oracle Cloud recently will be available from our Investor Relations website. On the call today, our Chairman and Chief Technology Officer, Larry Ellison; and Chief Executive Officer, Safra Catz. As a reminder, today's discussion will include forward-looking statements, including predictions, expectations, estimates, or other information that might be considered forward-looking. Throughout today's discussion, we will provide some important factors relating to our business, which may potentially affect these forward-looking statements. These forward-looking statements are also subject to risks and uncertainties that may cause actual results to differ materially from statements being 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, which may affect our future results or the market price of our stock. And finally, we are not obligating ourselves to revise our results or these forward-looking statements in light of new information or future events. Before taking questions, we'll begin with a few prepared remarks. And with that, I'd like to turn the call over to Safra.

Larry Ellison:

Thank you, Safra. Well, Oracle signed another big Generation 2 cloud infrastructure contract with NVIDIA in Q3. Oracle's Gen2 AI infrastructure business is booming. That's become pretty clear to everybody. But in addition to selling infrastructure for training AI large language models, Oracle is also completely re-engineering its industry-specific applications to take full advantage of generative Artificial Intelligence. The best example of this is in Healthcare where Oracle did not just add a bit of AI around the edges of the existing applications. Instead, we developed completely new applications using our Apex Application Generator and our Autonomous Database. These all new applications use generative AI throughout the application. The best example is in Healthcare where our new Ambulatory Clinic System is being delivered to customers this Q4. This completely new application features a voice interface called the Clinical Digital Assistant. The Clinical Digital Assistant listens to a doctor's consultations with a patient and automatically generates prescriptions, Doctor's orders, doctor's notes, then automatically updates the patient's electronic health records. The Clinical Digital Assistant's voice interface makes our new healthcare systems dramatically easier to use and saves hours of doctors precious time every day which now can be spent with patients rather than typing into a computer. The delivery of our new AI-centric healthcare cloud applications, including the Ambulatory Clinic System, the Clinical Digital Assistant, and the Health Data Intelligence System will enable the rapid modernization of our customers' healthcare systems and transform Oracle Health and Cerner into a high-growth business for years to come. Ken, back to you.

Ken Bond:

Thank you. Thank you, Larry. Sorry about that. Krista, if you could please poll the audience for questions and if we can proceed from there? Thank you.

John DiFucci:

Thank you. Safra, the infrastructure as a service growth of 49% implies a herculean increase in new business coming online, new ARR the way we model it anyway something I just thought you wouldn't be able to do this quarter given how much you had to do though we've realized we don't know the timing of when deals come online. But last quarter you said you were going to reallocate resources to focus on some of these very large OCI deals to get them implemented earlier so you start to get revenue earlier. Is that what happened this quarter? Is that what we're seeing or is that still to come?

Larry Ellison:

Okay, let me add that Oracle has been building data centers at a record level and a lot of people I think are aware that we can build fairly small data centers to get started when we want to. But the unique thing about Oracle's data centers, they're all identical except for scale. We did not have custom data center. They all have all the Oracle services. They are all complete. One of the things that's unusual about them, they are all completely automated. They come up on their own and they kind of run their selves. I mean, look, we do have a bunch of people working on these data centers but they are extremely highly automated. Our operating system is Autonomous Linux. Our database is the Oracle Autonomous Database. Our new HeatWave database, Microsoft - MySQL HeatWave, it's highly automated. And therefore, we can build every time we build a data center, it's like the data center we've built before except for one thing, scale. We can go very small. We can get a full cloud data center with all the services in [10 racks]. But this is what I want to point out. We're also building the largest data centers in the world that we know of. We're building an AI data center in the United States where you could park eight Boeing 747s nose-to-tail in that one data center. So, we are building large numbers of data centers, and we were - and some of those data centers are smallish, but some of those data centers are the largest AI data centers in the world. So, we're bringing on enormous amounts of capacity over the next 24 months because the demand is so high, we need to do that to satisfy our existing set of customers. To give you an idea. One more thing, in terms of data centers we're building 20 data centers from Microsoft and Azure. They just ordered three more data centers this quarter. They're adding to that already. And there are other multi-cloud agreements that are being signed. There are multicloud - a number of multicloud agreements in Japan where computer manufacturers in Japan are adopting our cloud and will be reselling our cloud as partners. And we think NRI is already doing that, but there a number of other companies that are going to be doing that. So that's something we're seeing over demand for data centers or people who want to buy Alloy and then resell our cloud services with their proprietary cloud services on top of it. We're seeing that. So some of our largest customers all over the world want their own Oracle region. They don't want to share a public cloud, they want a cloud region dedicated or actually multiple cloud regions dedicated to that bank or that technology company or that telecom company. So they are building their own data centers which are - those are Oracle cloud data centers, they are that - yes, they're all identical. So we're able to automate and run those with not a lot of additional labor costs. It's a huge advantage for us.

Larry Ellison:

John, my last comment will be - would be the growth in RPO is what's to come. And RPO is obviously growing faster than revenue because we can't meet the demand. That's the measure of demand, the $80 billion RPO is quite a - an acceleration of demand. So demand is not slowing down, it's actually increasing quite a bit.

Ken Bond:

Thank you, John. Next question, please.

Raimo Lenschow:

Hi, thank you, and congrats from me as well. I wanted to talk a little bit about Cerner. In the announcements, you talked about that most of Cerner now it's - is running out of your OCI. Well, first of all, let a very quick turnaround here, so well done. What's kind of the implications for that both from running efficiency but also innovation on the platform? Thank you.

Raimo Lenschow:

Perfect. Thank you.

Ben Reitzes:

Yes, thanks. It's a pleasure to be speaking with you this afternoon. Larry and Safra, can you talk a little bit about CapEx? Your guidance implies almost doubling of CapEx in the fourth quarter and then what kind of trajectory is needed for the next fiscal year given this RPO growth? What kind of uptick is needed? And Larry, if you don't mind, what - if you can give some color on GPU availability and how that plays in versus data center requirements in terms of that spending? Thanks so much.

Ben Reitzes:

Great, thanks. And Larry, the amount that - how is the GPU availability in terms of hitting your goals and vis-a-vis other bottlenecks that could be out there?

Ben Reitzes:

Oh, yes, sure.

Larry Ellison:

Yes.

Larry Ellison:

And as Safra says, we have - so, as Safra says, we have a great relationship with NVIDIA. They're a customer of ours as well as us being a customer of theirs and we work very closely together. So, that's going pretty well. Building these let them is the scale of some of these data centers is breathtaking. Again the one we're building in Salt Lake. Again, you can park 8747s nose-to-tail. We can give you a video of this thing under construction, but it's hard, I mean, it's breathtaking. So, there is a tremendous amount of demand, the data centers take longer to build, and we would like that said, we are getting very good at building them quickly and getting the building the power and the communication links in, we're doing faster than we have ever happened in the past. And the thing is once we deliver the hardware, the hardware comes up very, very quickly because the process of bringing up the hardware is now automated. It's very different than it used to be. So, we're able to bring additional capacity online very quickly if we have that the electric power and the communication lines. So, is the long pole in the tent is actually building the structure, connecting the electricity, connecting the communication lines.

Larry Ellison:

Thank you.

Derrick Wood:

Great, thank you. Larry, just within the last few months you guys have enabled Oracle Database and OCI to be run on top of Azure, which seems like a fairly significant development. Can you talk about what the customer reception has been around this announcement? How you think it could change the arc of new investments on the Oracle Database platform? And what this means for potentially unlocking a stronger adoption cycle for Autonomous Database?

Derrick Wood:

Thanks, Larry.

Kirk Materne:

Yes, thanks very much for taking the questions and congrats on a incredible bookings this quarter. Larry, I was wondering if you could just talk a little bit about the interest level on Alloy in international markets where there might be a bit of a premium on data sovereignty and maybe how that's impacting the growth opportunity for OCI when we look out towards the balance of calendar '24? Thanks.

Safra Catz:

Yes. I think that's the story.

Safra Catz:

So, just to make sure you have all the numbers between Alloy and dedicated regions, we've got 13 lives. We've got 18 under-construction. And we've signed five new ones just this past quarter. So for us, it's - they're just - there's just a list we're going through and trying to get them all because they are such a unique capability and in such high demand.

Kirk Materne:

Thank you, all.

Brad Zelnick:

Thanks very much for taking my question. Larry, my question actually follows on your answer to Kirk's question because I think it's so important. In talking to one of your GSI partners we heard about a global public sector solution that they referred to as government in a box where Oracle in partnership with likes Starlink, the Tony Blair Project, our building solutions on top of OCI including [Absence Check] and even Cerner. So, literally run the entire country's digital operations. So, hoping you can add even a little bit more color about what you're doing here. How big an opportunity it is because it just seems like it's such a powerful example of the entire Oracle Cloud Stack coming together in a very meaningful way?

Brad Zelnick:

Really amazing stuff. Larry, thank you and congrats. And Safra, really great to see the firm reiteration of your fiscal '26 targets. Thanks so much for taking my question.

Ken Bond:

Thank you, Brad. A telephonic replay of this conference call will be available for 24 hours on our Investor Relations website. Thank you for joining us today. And with that, I'll turn the call back to Krista for closing.

Ken Bond:

Thank you, Emma. Good afternoon, everyone, and welcome to Oracle's second quarter fiscal year 2024 earnings conference call. A copy of the press release and financial tables, which includes a GAAP to non-GAAP reconciliation and other supplemental financial information can be viewed and downloaded from our Investor Relations website. Additionally, a list of many customers who purchased Oracle Cloud services or went live on Oracle Cloud recently will be available from our Investor Relations website. On the call today, our Chairman and Chief Technology Officer, Larry Ellison, and Chief Executive Officer, Safra Catz. As a reminder, today's discussion will include forward-looking statements, including predictions, expectations, estimates, or other information that might be considered forward-looking. Throughout today's discussion, we will present some important factors relating to our business, which may potentially affect these forward-looking statements. These forward-looking statements are also subject to risks and uncertainties that may cause actual results to differ materially from statements being made today. As a result, we caution you against placing undue reliance on these 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 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.

Larry Ellison:

Thank you, Safra. The demand for Oracle's Cloud Infrastructure and Generative AI is consistently increasing quarter after quarter. Oracle's total remaining performance obligations, or RPO, has now reached $65 billion, slightly more than our annual revenue. In response to this sharply increasing demand, Oracle is in the process of expanding 66 of our existing cloud data centers and building 100 new cloud data centers. We have to build 100 additional cloud data centers because there are billions of dollars more in contracted demand than we currently can supply. Cloud Infrastructure demand is huge and growing at an unprecedented rate. In the next few weeks, we expect to sign a couple more billion dollar Cloud Infrastructure contracts. Gartner recently named Oracle OCI as a leader in cloud platform and infrastructure services. The demand for Cloud Infrastructure services and new Oracle cloud data centers is broad-based, driven not only by Generative AI customers, but also by nation states buying sovereign Oracle cloud data centers, plus large banks, telecommunications companies, and industrial companies, buying dedicated cloud data centers, dedicated Oracle cloud data centers, and perhaps most interestingly, demand from other hyperscalers and other cloud service providers, co-locating and connecting their clouds with Oracle cloud data centers. Customers don't want clouds to be walled gardens. In the next few months, we will turn on 20 new Oracle cloud data centers, co-located with and connected to Microsoft Azure as a part of our joint multi-cloud initiative. These 20 new multi-cloud data centers will house over 2,000 full racks of Exadata database machines designed to meet pent-up demand for the Oracle cloud database. We're able to build new data centers rapidly and operate them inexpensively because all of our data centers are architecturally identical, highly automated, with an identical high-performance RDMA network, autonomous services, and applications. Oracle cloud data centers vary only by scale. Again, several nation states have ordered multiple sovereign data centers to be built within their country so that they can move their government, healthcare, and commercial workloads to the Oracle cloud. These new countries include Japan, Italy, Saudi Arabia, Bangladesh, New Zealand, and others. Some of the world's largest banks, telecommunications and industrial companies, have also contracted with us to build Oracle cloud data centers dedicated entirely to them so that they can migrate their workloads to an Oracle cloud data center. These companies include Nomura, Vodafone, Telecom Italia Mobile, Saudi Telecom, a huge Korean conglomerate, and a huge US defense contractor. These are but a few examples that demonstrate the diversity of the growing demand for Oracle's highly differentiated Gen2 cloud infrastructure and data center technology. Back to you, Ken.

Operator:

Thank you. [Operator Instructions] Your first question today comes from the line of Ben Reitzes with Melius Research. Your line is open.

Safra Catz:

Larry, you want me to take it or you?

Safra Catz:

How about I get started? So, where do we expect OCI to go from here? Frankly, the only limiting factor is our ability to get the data centers handed over and filled up fast enough. This quarter alone, we're talking about hundreds of millions of dollars that we would have been able to recognize if our capacity was available. So the reality is, as we roll out and we've got just so many moving parts as you can hear from us, we have a lot of capacity coming online. And as you can see in my CapEx guidance, we expect OCI to just grow astronomically, frankly. It is the ideal infrastructure for so much use. And of course, also as more GPUs become available, and we can put those in, we have just a really unlimited amount of demand. Larry, I don't know if you want to say anything else?

Safra Catz:

Yes, we're not demand limited in any way right now.

Operator:

Your next question comes from the line of John DiFucci with Guggenheim. Your line is open.

Safra Catz:

Yes, and I'm really glad you asked. I'm really glad you asked because one of the lines that we show you, even though I give you more detail, is I show you a number that is a mix of cloud and support. And obviously, support is extremely profitable because of the structure of the way it works, and because we are at such a large scale. But the reality is that our cloud businesses are also very profitable. Our SaaS cloud business is very profitable, and our IaaS, our OCI business, is improving profitability as it grows. And so the target gross margins for it are much higher than I think you expect because you're probably comparing it to some of the more pure play cloud folks who somehow don't end up making as much money in all of this. As we grow, our gross margin percentage goes up. So yes, we make a lot of investments and we'll be making a lot of investments, but our profitability continues to go up. Because once the day -- the worst moment is at the moment where the data center is full of computers and you don't have any tenants that first day, but that's not actually how we work. Yes, we have the floor space, but we grow in pieces. Unlike some of the others that they have to do a full out build out and put everything there before they have a penny of revenue, that's not how we work. We -- and more and more of our -- so we start small and build up and that allows us to match our spending with the revenues much better. And that's because we have that engineering deployment flexibility that the first generation folks don't have. I don't know, Larry, if you want to add anything to that?

John DiFucci:

If I might, and Safra, go back to something you said, is it fair to assume that OCI gross margins have consistently grown over time, quarter to quarter?

John DiFucci:

Okay, and then, and then, and then…

John DiFucci:

Grown a lot, okay. And then finally, the -- what Larry just said about the database, Safra, I've heard you say at times, we're at the beginning of the beginning of the transition of the database to cloud. So I know you have database in cloud today but that migration of the on-prem that's still to come pretty much.

John DiFucci:

And per Larry's comments, and I'll stop talking, but for Larry's comments, the database gross margins, given the autonomous nature of it, we should expect that to be different than the OCI core Infrastructure as a Service gross margin?

Larry Ellison:

I don't want to go into detail, but the autonomous database is, one, autonomous, there's no labor associated with it, but it's also the only database that's fully elastic. In other words, if you're not using it, no one's using it. I mean, there are no cores, there's no cores occupied. It goes back into the pool. So if you as a customer aren't doing something with the database, literally no cores are occupied. It's very different than an Amazon database where you allocate. I always need 64 cores or 64 processors to run my database and that's seven days a week, 24 hours a day. We only charge you for what you use when you're using it. We only consume what you use when you're using it. Otherwise, it goes to other customers. It's totally different. That allows us to have dramatically higher gross margins.

Safra Catz:

Our pleasure.

Mark Moerdler:

Thank you very much for taking the question. I really appreciate it. I want to change gears a little bit and turn to Cerner, which people don't really focus on that much. Cerner license revenue has been down, likely in preparation for customer shifting to SaaS, but Oracle does not yet have a full multi-tenant scalable Cerner SaaS solution. So what I'd like to ask is couple parts. How should we think about the timing of, one, the availability of -- yep.

Mark Moerdler:

Okay.

Mark Moerdler:

So that's very helpful. So that starts to answer the question I was asking was how should we think about the timing of the transition, Millennium you're saying is going to be an OCI. Is that going to be a fully SaaS version? When will the rest of the solutions be fully SaaS? And how should we think about the revenue lift as the license and maintenance moves to the cloud -- to SaaS?

Mark Moerdler:

Right, that's where I'm going with the question.

Mark Moerdler:

Perfect. Thank you so much. I really appreciate it. It was very helpful.

Operator:

Your next question comes from the line of Siti Panigrahi with Mizuho. Your line is open.

Safra Catz:

Larry, why don't you start with this?

Safra Catz:

No, yes, I do. You go.

Ken Bond:

Next question, please.

Operator:

Your next question comes from the line…

Siti Panigrahi:

Thanks, Larry, for the color.

Operator:

Your next question comes from the line of Alex Zukin with Wolfe Research. Your line is open.

Larry Ellison:

Yeah, well, we're using it every place. Perhaps the most stunning is our new tele -- again, I mentioned it, and then it's Cerner that we're doing a lot of things that Cerner never did in what is now called Oracle Health. One of those things is our new telecommunication module summarizes a consultation between a doctor and a patient and writes the doctor's notes for the doctor automatically. In fact, for the first time we've done it, we now have our large language model generating the summary without a scribe that the doctor can edit in a couple of minutes. So, it's actually succeeded in doing one of the very hardest tasks we assigned it. And of course, we're using it in all in an -- everything from as simple as doing product descriptions or job descriptions, all of those, you've read about all of those, we've actually got those implemented and are delivering those to customers. But even in the most challenging areas, in drug design, we're having success with pharmaceutical companies. But actually writing the doctor's notes without a scribe has shocked a great many people and well, another area in terms of diagnosing cancer from biopsy, just biopsy images, being able to do that very, very quickly where the patient knows weeks sooner than they would otherwise, and then they get the news weeks sooner, from just the immediate AI processing of the biopsy image, they find out weeks sooner whether they have to go on chemotherapy or whether they're cancer-free. And we're doing that with an Israeli partner called Imaging. So, no, we're seeing a huge uptake of this technology, everything from complex healthcare and health science to more mundane tasks that you find throughout an enterprise, but still very important in making your employees in your company more efficient and more competitive.

Larry Ellison:

Well, we think inside of our -- remember we're a little bit different than Microsoft. We have a lot more enterprise applications, for example, in healthcare. We run clinical trials. We run hospitals. We run ambulatory clinics. We run -- we have diagnostic databases for -- image processing databases, conventional blood testing databases, all of those. So our monetization is really at the highest end of the value chain, which is we actually supply the application with our partner that does cancer diagnosis, that does the doctor's notes, that does the doctor's orders, that actually automatically generates the prescriptions, that reminds the patient to take the subscription so you get compliance. Right now, without once again, I can't spend too much time on it. Right now, doctors don't know if patients have refilled their prescriptions. The doctors aren't notified and the patients aren't notified, reminding, we're doing all of that. We're doing a bunch of things with and that's the high end, that's the high value end of AI when you're preventing someone from being re-hospitalized, which has a huge cost in terms of human suffering and money.

Safra Catz:

Now we have multiple ways, by the way, to monetize it, not only as part of our application, but also as part of our infrastructure. Because one of the unique capabilities we allow is for customers when they use our product to basically use their private data in some of these models for them to learn, but then to ultimately keep control of their data. And this is applicable in many, many different types of applications, and this is a service we provide in addition. So there's just a lot of…

Safra Catz:

Okay.

Safra Catz:

Thank you.

Brad Zelnick:

Great. Thanks so much. Larry, it's taken Oracle several years to reach 66 cloud data centers. And you're now talking about plans to build 100 new ones, which frankly seems very ambitious. What is it that you're seeing that maybe we don't see? And then related, perhaps, Safra, if you could speak to the capital requirements and time frame for that, especially in light of CapEx this quarter, that was a bit less than we had expected? Thank you.

Safra Catz:

Yeah, and also one of the things is in that number, it doesn't include the many, many clouded customers, which started small, and now companies have decided they want their own region. So they had a clouded customer, which is smaller, and they decide, no, no, no, now I want a dedicated region of my own. I get it. This is working. I've saved millions, tens of millions, sometimes hundreds of millions. Now I want my own. Also really, it is absolutely true, we did not bring up as much capacity as we could have used this past quarter because we had to make some audible calls on the field to decide how to allocate, whether to build something small which was available, which I could have recognized revenue in right in the quarter, or instead to go much bigger and to wait until some larger capacity was going to be available to hand over to me. So as I think I've hinted and we're talking about demand, had we had capacity this quarter in the hundreds of millions of dollars more that was just sitting there waiting to take it, and we had made some deployment choices because we need more and we need it bigger, instead of taking small pieces or smaller pieces, we decided to focus on the bigger parts and try to also treat our customers fairly and work with them to meet their needs.

Brad Zelnick:

Thanks very much.

Operator:

This concludes today's conference call. Thank you for attending. You may now disconnect.

Ken Bond:

Thank you, Lisa, and good afternoon, everyone, and welcome to Oracle's first quarter fiscal year 2024 earnings conference call. A copy of the press release and financial tables, which includes a GAAP to non-GAAP reconciliation and other supplemental financial information can be viewed and downloaded from our Investor Relations website. Additionally, a list of many customers who purchased Oracle Cloud Services or went live on Oracle Cloud recently will be available from our investor relations website. On the call today are Chairman and Chief Technology Officer, Larry Ellison, and Chief Executive Officer, Safra Catz. As a reminder, today's discussion will include forward-looking statements, including predictions, expectations, estimates, or other information that might be considered forward-looking. Throughout today's discussion, we will present some important factors relating to our business, which may potentially affect these forward-looking statements. These forward-looking statements are also subject to risks and uncertainties that may cause actual results to differ materially from statements made today. As a result, we caution you from placing undue reliance on these forward-looking statements and we encourage you to review our most recent reports including our 10-K and 10-Q and any applicable amendments for a complete discussion of these factors and other risks that may affect our future results or the market price of our stock. And finally, we are not obligating ourselves to revise our results or these forward-looking statements in light of new information or future events. Before taking questions, we'll begin with a few prepared remarks. And with that, I'd like to turn the call over to Safra.

Larry Ellison:

Thank you, Safra. So, is generative AI is the most important new computer technology ever? Maybe, and we are about to find out. Self-driving cars, computer-designed antiviral drugs, voice user interfaces. Generative AI is changing the automobile industry, the pharmaceutical industry, how people communicate with their computers. Generative AI is changing everything. As of today, AI development companies have signed contracts to purchase more than $4 billion of AI training capacity in Oracle's Generation 2 cloud. That's twice as much AI training as we had booked at the end of the last Q4. I'm also very pleased to announce that Exai has signed the contract to do training in Oracle's Gen 2 Cloud. The largest AI technology companies and the leading AI startups continue to expand their business with Oracle for one simple reason, Oracle's RDMA interconnected NVIDIA superclusters train AI models at twice the speed and much less than half the cost of other clouds but growth in our AI cloud infrastructure business is not the only exciting news we have to report at Oracle. Our cloud applications business is doing quite well and it's about to get even better. In the current quarter we expect our Cerner Health business to be awarded two large new contracts with a total value of over $1 billion. And I’m now able to announce that all nine utility companies owned by Berkshire Hathaway are in the process of replacing all their existing ERP systems, and standardizing on Oracle's Fusion Cloud applications. Let me conclude with a few words about our database business and our upcoming announcement with Microsoft later this week. We will be substantially expanding our existing multi-cloud partnership with Microsoft by making it easier for Microsoft Azure customers to buy and use the latest Oracle cloud database technology in combination with Microsoft Azure cloud services. Satya and I will discuss the details of our expanding partnership at Microsoft headquarters in Redmond on the 14th. Please tune in, and thank you. Back to you, Safra.

Ken Bond:

Absolutely. Before we do that, Lisa, just one quick clarification, that we currently have two EU sovereign regions live with more to come. Lisa, please poll the audience for questions.

Brad Zelnick:

Great. Thanks very much, and congrats on the strong start to the year. Larry, I think it's fair to say that you understand the laws of data gravity better than anyone and you have monetized this fundamental concept as well as anyone over the years. And I recently heard someone say, we are moving from a world of data gravity to one of AI gravity, and I'm not sure exactly what that means, or they even knew what that meant, but with AI and other use cases attracting more and more data to central clouds, with many vendors preaching data sharing instead of what used to be making multiple copies of things and keeping them synchronized, does AI plus cloud in any way break what we've always understood about data gravity? And what does that mean for Oracle?

Brad Zelnick:

Thank you so much for your perspective, Larry.

Mark Murphy:

Thank you so much. So Larry, companies are starting to understand that OCI has a very fundamentally different architecture than anything else out there in the market because of the non-blocking, low-latency network design. I'm wondering, if you think it's possible to actually pull further ahead through some of your other initiatives. For instance, the Azure Interconnect, it sounds like you're going to expand that. Having more regions, running a stronger database, providing greater isolation, just wondering if you think there is a possibility of extending the lead?

Mark Murphy:

Thank you very much.

Raimo Lenschow:

Thank you. Larry, you mentioned Berkshire, and them moving over to Fusion. I just wanted to talk in -- more bigger picture on the back-office systems, like, in the olden days, back-office, you wouldn't touch, in kind of tougher times because they are big complex project. But you guys are still kind of growing this nicely with over 20%. Like what are you seeing there? And do you see a change in pipelines, change in customer interest of doing something there? Thank you.

Raimo Lenschow:

Okay. Thank you.

Mark Moerdler:

Thank you so much for taking my question. The top-of-mind questions I'm getting are related to AI in general as you'd expect and were specifically as it relates to Oracle, what the impact of AI will be on OCI Gen 2. Two related parts to the question. The first is the profitability of AI supercomputers and whether if some clients try to tell me, it's low-calorie, empty-calorie revenue or can you maintain margins as this business grows? And the second part is about the Oracle ecosystem, and is it strong enough that its workloads transition from model training to inferencing and grounding, could AI compute create a revenue air pocket or [is the ecosystem] (ph) strong enough so you don't have that. Thank you.

Mark Moerdler:

Thank you. That's very helpful.

Keith Weiss:

Excellent. Thank you, guys, and thank you for taking the question. I wanted to drill in on Cerner, basically, the one-year anniversary of that acquisition. And maybe from Larry, get an update on where we are with modernizing that solution and modernizing that product? And basically then whether Cerner has kind of lived up to your expectations thus far? And then maybe for Safra. If we could dig into the expense synergy side of the equation, you guys have done a great job increasing margins on a year-on-year basis in this quarter, how much is left to go within Cerner and getting that margin profile to match the broader Oracle margin profile?

Safra Catz:

And on the expense side, we still have a ways to go, but I think it will become more obvious to you next quarter the changes we've made, as they play out through the income statement more clearly. And so you'll have a better comparison, Q2 to Q2, which will be a full non-deal quarter for you to look at. But you know us, we are always looking to save as much as we can, and to spend as little while still really transforming Cerner into a modern system in its entirety.

Keith Weiss:

Helpful. Thank you, guys.

John DiFucci:

Thank you. My question is for Safra, I think. Safra, if the organic constant currency cloud growth was in line with what you did last year and what you want to do for this year at 29%, while license, though it was a difficult comp it was a bit weaker, at least than the street was expecting. And I also -- we also realize that cloud revenue for the same amount of business booked will be a lot less than the equivalent license revenue in the quarter. But does this mean we are seeing a move with stronger momentum to the cloud this quarter than we have seen? And I guess just to clarify, given your guidance for the second quarter, you said you're maintaining your longer-term. Safra, I just wanted to clarify. Are you maintaining your constant currency organic cloud guidance for the year?

John DiFucci:

Okay, great. Very clear. Yes and yes. Got it. Thanks.

Operator:

And that does conclude today's presentation. Thank you for your participation and you may now disconnect.

Ken Bond:

Thank you, Lisa. Good afternoon, everyone, and welcome to Oracle's fourth quarter and fiscal year 2023 earnings conference call. A copy of the press release and financial tables, which includes a GAAP to non-GAAP reconciliation and other supplemental financial information, can be viewed and downloaded from our Investor Relations website. Additionally, a list of many customers who purchased Oracle Cloud Services or went live on Oracle Cloud recently will be available from our Investor Relations website. On the call today are Chairman and Chief Technology Officer, Larry Ellison; and Chief Executive Officer, Safra Catz. As a reminder, today's discussion will include forward-looking statements, including predictions, expectations, estimates or other information that might be cause actual results to differ from what we are talking about today. Throughout today’s discussion we will present some important factors relating to our business which may potentially affect these forward-looking statements. These forward-looking statements are also subject to risks and uncertainties that may cause actual results to differ materially from statements being made today. As a result, we caution you against placing undue reliance on these 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 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.

Larry Ellison:

Thank you, Safra. The hardware and software in Oracle's Gen2 Cloud is fundamentally different than other hyperscalers' clouds. The CPUs and GPUs we rent to customers are interconnected using an ultra-high-performance RDMA network, plus a dedicated set of cloud-controlled computers that manage security and data privacy. Oracle's unique set of hardware and software building blocks enable our Gen2 Cloud to deliver much higher performance than any of our cloud competitors. And in the cloud, since you pay by the minute, if you run twice as fast, and we do, you pay half as much. What is especially interesting in today's world is that all of Oracle's cloud data centers have a high-bandwidth, low-latency RDMA network that is perfectly optimized for building the large-scale GPU clusters that are used to train generative large-language models. NVIDIA themselves are doing AI development in the Oracle Gen2 Cloud. And we are partnering with NVIDIA to build the world's largest high-performance computer, an AI computer, with 16,000 GPUs. The extreme high performance and related cost savings of running generative AI workloads in our Gen2 Cloud has made Oracle the number one choice among cutting-edge AI development companies, including Mosaic ML, Adept AI, Fouhear [Ph], Modal Labs, Character, HyperReal, SliceX, Vector Space Bio, Falconry, Respeacher, Altair, InfoWorld, 12 Labs, Layton Space, plus many, many others. In the aggregate, our generative AI cloud customers have recently signed contracts to purchase more than $2 billion of capacity in Oracle's Gen2 Cloud. One last thing. In partnership with Cohere Oracle is launching a generative AI cloud service for enterprise customers. This new service protects the privacy of our enterprise customers' training data, enabling those customers to safely use their own private data to train their own private specialized large language models. Oracle's application development teams were early adopters of this new AI cloud service. We used our own private data to improve and extend the training of existing Cohere large language models. This supplementary training resulted in two new specialized large language models, one for medical professionals and one for first responders. Specialized large language models will be instrumental in helping highly trained professionals use their precious time more efficiently. As I said, Cohere and Oracle are working together to make it very, very easy for enterprise customers to train their own specialized large language models while protecting the privacy of their training data. Over the next few years, lots of companies are going to train their own specialized large language models. Our partner, Cohere, is also using the Oracle Gen2 Cloud for training their own large language models. In health care alone, specialized large language models will speed the discovery of new life-saving drugs, improve the quality of patient care, and increase access to health care by lowering costs. A technology revolution is dawning. Back to you, Safra.

Ken Bond:

Yes, thank you, Safra. Thank you, Larry. Lisa, if we could please prepare the audience for Q&A.

John DiFucci:

Thank you. My question's for, I think, mainly for Safra, but maybe Larry has some thoughts, too. It's somewhat surprising to see the acceleration across all your cloud businesses when others, whether it's the other hyperscalers or even other cloud-based vendors, are seeing just the opposite effects in this environment today, in today's environment. And that's important. We get the better performance at a lower price. That makes a lot of sense, at least in, I've been around quite a while, I guess. And usually, in tough environments, we see people just freeze. But that's not what's happening here. So the question, in addition to what I just said, better performance at lower price, why? Is there anything else, outside of like Oracle, even, that would show your cloud business accelerating when other pretty good companies are doing just the opposite?

Larry Ellison:

Well, I'm just going to be a little more specific, because Safra says, I said, if we run twice as fast, we cost twice as much. No, we cost half as much, half as much. We run twice as fast, we cost half as much. But sometimes we do run a lot more than twice as fast. And we cost a lot less than half as much. We announced a new database, a new version of MySQL with a fast query processor called HeatWave. And we have customers moving from Amazon Aurora, where they're experiencing 1,000 times speedup, versus Aurora, we're 1,000 times faster in query processing than Amazon's version of MySQL. It's an open source database that we added a fast query processor to. We're much, much cheaper. And that's one example. In a lot of cases, it's much more than two to one. We can build GPUs that other people can't build because we have a fast network. We use this very fast RDMA network, and we started with that. In our Gen2 cloud, we had nothing but our entire network was a super-fast network, which means most of the applications, most of the things you run in the Oracle cloud are going to be much faster than our competitors' clouds because they don't use that kind of network. So we have huge cost advantages, huge cost advantages across a broad portfolio of applications. Let me throw in one thing. It cost one-tenth, one-tenth to implement Fusion ERP versus SAP's new ERP system with HANA. So the cost of implementing our applications are dramatically lower than our competitors. So we have a lot of people moving from AWS to our cloud for infrastructure services, a lot of people continuing to move from SAP to Fusion. We're seeing that migration, and we're taking a lot of market share from our competitors. That's why we're doing better, and they're not doing quite as well.

Larry Ellison:

Thank you.

Brad Zelnick:

Great, thank you so much. Congrats on a strong finish to the year. Larry, Oracle is somewhat unique in being a leader in both infrastructure and applications. And when we look back, I don't know, maybe five years from now, how much of the generative AI opportunity will have been captured on the infrastructure side of your business versus within apps? And I'm not just thinking strategic back office apps. I'm thinking front office, Cerner, and all the other verticals as well.

Brad Zelnick:

Very helpful, color. Thank you, Larry.

Siti Panigrahi:

Thank you and congrats on a great quarter. I want to dig into the application part of the business. Very impressive SaaS growth, especially in Fusion Apps and Cloud ERP in this macro environment. So, what are you hearing from your customer in terms of migrating to the SaaS application and what's driving that? And also, the CloudWorld last year, you talked about the opportunity in combining horizontal application with vertical offering. So, how is that helping SaaS growth?

Larry Ellison:

Let me just add one example to Safra's comments, which I think are right on. But there's an interesting example. Everyone knows we compete with Workday in HCM or HR, whatever. When we bought Cerner, we decided that we were going to take our HCM system, our HR system, and specialize it, add features specifically for the healthcare industry. Now, it turns out managing a workforce in a hospital is very complex because the nurses might have private patients at home that they're seeing. They might work for two or three different hospitals. They might do some work in clinics as well. So, scheduling these people who have multiple jobs, doctors may have teaching assignments in universities. Obviously, they travel and they also have their own office hours. They may have a private practice in addition to working at the hospital. Scheduling these professionals is very, very tricky. Recruiting the professionals is very, very tricky. Paying them when you're working three days a week, one week, two days the next week, six days the following week, paying them can be very complex. So we have had a major effort in our HCM system, the Oracle Fusion HCM system, and adding all the features that hospitals need to manage their professional staff. Now, there's no way, there's no way we would have done that unless we had a focus in the healthcare industry. So we not only have all the Cerner healthcare apps for hospitals, we've specialized our ERP system for hospitals, we've specialized our HCM for managing the hospital workforce. We've done a bunch of things around the healthcare industry. One of the things we want to do is, we're the largest provider of clinical trial software. But the clinical, the results of the clinical trial goes to a government regulator. And we're now working with the government regulators to develop the software that allows them to take the clinical trial output in digital form and get it through the regulatory process much faster at a much lower cost. So we're looking at the entire healthcare ecosystem and trying to automate both sides of the transaction. The pharmaceutical company that's designing the drug, the hospitals that are testing the drug, and the regulators that are approving the drug should all be digitized. And we are well on our way to doing that because of our investment in Cerner. And now what has blossomed into an investment across the entire healthcare ecosystem.

Operator:

We'll take our next question from Raimo Lenschow with Barclays.

Safra Catz:

Thank you. I actually feel like we're still at the beginning if you want to know the truth. We wanted to stabilize the operation. We definitely didn't want to risk breaking anything. You will be seeing some more significant changes and we have legal entity combination imminently and that actually gives us a lot more flexibility regarding the way we operate the business. We are just at the very beginning of it. Their margins are nowhere close to the way we run our company and we are right at the, I'd say we're at the beginning-ish, sort of at the beginning of the middle at most. We've got a long way to go on just operationally and we've got a lot of work going on on the development side as we bring our technical capabilities into the product and move them into the Oracle Cloud. There are a lot of savings as we do that also.

Safra Catz:

Thank you.

Mark Moerdler:

Thank you very much for taking my question. Congratulations on the quarter and frankly on the guidance. I'd like to get a better understanding about the underpinning of the OCI Gen 2 business. Specifically, can you give us some color on the customer concentration, industry concentration, both in the existing customer base as well as the pipeline and how you think that's going to change over time? Thanks.

Larry Ellison:

Yes, maybe the most interesting industry that's adopting the Oracle Cloud are people who are in the technology business. So a lot of our customers are, I mean, their business, I mean, Zoom, in the early days of Oracle, it wasn't long ago we were talking about Zoom and still very excited about Zoom. And they came to us, one of our earliest, very, very large customers. And a lot of their business is just running an app, if you will, an application on the cloud. And a huge amount of their expense is running that application in the cloud and doing it efficiently. And where we're most obvious, I mean, NVIDIA is an extraordinary company, but Cohere is a great company. But a lot of their expense is running AI training in the cloud. And when it's that much of your expense, if we're a lot faster, they do a lot of due diligence about the technology. And it became very apparent, a lot of the early adopters, if you will, and we're still in the early stages, a lot of the early adopters at scale of the Oracle Cloud were highly technical companies like a Zoom or an NVIDIA, I can name a bunch of others, or a highly technical industry like phone companies, telecommunication companies, where they see the advantages, not only, by the way, the performance and cost advantages. Another thing that we're very proud of is because of our network, we're highly reliable. And because of the autonomy, we're highly reliable. If, for example, the Oracle Autonomous Database doesn't lose your data, because you can't make a pilot. Usually a lot of the data loss is caused by pilot error. Well, with the Oracle Autonomous Database, the driver is the system. It's a self-driving database. So you can't make a human error that causes you to lose data. So it's very, where a phone company has to be up 24 hours a day, where a bank really is not supposed to lose your data, where a huge percentage of your expenses are your own cloud expenses, and your technology company delivering technology services from somebody else's cloud. In those areas is where we've seen adoption of Oracle at scale. And the less technical companies are now beginning their journey of looking more closely at the Oracle cloud. And when they do look closely, we compare very favorably with the other clouds.

Operator:

And we'll take the last question from Kirk Materne of Evercore ISI.

Safra Catz:

Yes. I mean, this past year was a big CapEx number as compared to usual. And we put out a lot of capacity. It is getting filled up, and getting used up. And I think we're getting real economies. In addition, one of the things you don't realize is that our underlying infrastructure, for example, I'll give you one example, our underlying infrastructure becomes more and more efficient, even under the best example actually is under Fusion. As we move, as we've moved to OCI, we are also moving to Autonomous Database Serverless, which again gives us added capacity. So we're constantly, constantly becoming more efficient. Our original landing was 12 racks. We're moving to 10 racks to have all the services. We're just continuing to sort of miniaturize our capabilities and it's giving us enormous efficiencies and cost savings. So staying the same as this year, again, if it just becomes overwhelming, it may go up higher, but I think we've got it very much in hand. We've laid out a lot this past year and I think if we stay where we're at, we're going to be able to fit a lot more workloads within that envelope, straightforwardly.

Safra Catz:

Thank you.

Operator:

Thank you. And that does conclude today's presentation. Thank you for your participation and you may now disconnect.

Ken Bond:

Thank you, Emma. Good afternoon, everyone, and welcome to Oracle's third quarter fiscal year 2023 earnings conference call. A copy of the press release and financial tables, which includes a GAAP to non-GAAP reconciliation and other supplemental financial information, can be viewed and downloaded from our Investor Relations website. Additionally, a list of many customers who purchased Oracle Cloud Services or went live on Oracle Cloud recently will be available from the Investor Relations website. On the call today are Chairman and Chief Technology Officer, Larry Ellison; and CEO, Safra Catz. As a reminder, today's discussion will include forward-looking statements, including predictions, expectations, estimates or other information that might be considered forward-looking. Throughout today's discussion, we will present some important factors relating to our business, which may potentially affect these forward-looking statements. These forward-looking statements are also subject to risks and uncertainties that may cause actual results to differ materially from statements being made today. As a result, we caution you against placing undue reliance on these 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 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.

Larry Ellison :

Thank you, Safra. Since June of last year, when we acquired Cerner, that business has increased its health care contract base by approximately $5 billion. We have signed a diverse set of new and expanding domestic and international customers, including the U.S. Department of Defense, the U.S. Department of Veterans Affairs, hospital groups in a dozen U.S. states, multiple hospitals in the United Kingdom, multiple provinces in Canada, the Australian Defence Forces, multiple hospitals in Puerto Rico and multiple countries in the Middle East. While we are pleased with this early success of the Cerner business, we expect the signing of new health care contracts to accelerate over the next few quarters. Well, the Cerner business has been booking billions of dollars in Millennium Clinical and electronic health record systems for hundreds of hospitals and ambulatory clinics. The overall Oracle Healthcare application portfolio is actually much broader, covering virtually the entire health care ecosystem. Hospitals are also buying the Oracle Fusion ERP system to manage their revenue cycle and from reimbursements -- from insurance companies to patient billing, plus their medical supply chain from ordering to inventory. Hospitals are buying Fusion HCM to manage their complex high-value workforce of doctors, nurses and technicians. Pharmaceutical companies are buying Oracle Clinical One to manage clinical trials. Government health organizations, public health organizations are using aggregated EHR data to monitor infectious disease and respond to outbreaks quickly and efficiently. Now I'd like to take a couple of minutes and go over a little more specifically some of the Cerner wins since we bought the company. One was a huge win at Labcorp and Ascension Health to deploy a single lab information system domain for 96 separate hospital-based labs across 10 states. Another one in Puerto Rico, Auxilio Mutuo, is an all-new electronic health record footprint to deploy in a 600-plus bed academic private hospital, replacing Altera, Paragon with Cerner Millennium. Vandalia Health, formerly Charleston Area Medical Center, consolidated all their EMRs into a single unified domain and added four new hospitals. UHS modernized their revenue cycle, migrated to CareAware with the CareAware Cloud and -- for their hospitals and ambulatory clinics. Banner Health implemented a complete revenue cycle management for their health business. The VA deployed our unified electronic health record system to 19 additional sites. The Department of Defense deployed Oracle Cerner EHR to all the OCONUS locations in the Department of Defense, the U.S. Department of Defense. In the UK, at the National Health Service, Sheffield Teaching Hospital deployed the full suite of Cerner applications across three additional sites and the Sheffield Teaching Hospitals. The Princess Alexandra Hospital, also in the NHS, is a 430-bed hospital that added the full Cerner suite. Mubadala Health was the first Cerner Millennium client to move from the Cerner data center directly now to the OCI Cloud. As we move our Cerner patients from the Cerner data centers into the Oracle OCI Cloud, we expect to get much better security, much better reliability, much better performance and dramatically lower our costs of providing that cloud service. OCI is just much more efficient than the Cerner data centers that we acquired. We've deployed the full EHR footprint, Cerner footprint to four Sheikh Khalifa Hospitals in the U.A.E. with a capacity of 1,200 beds, serving a population of 1.4 million citizens, again, in the U.A.E. The Australian Department of Defense, we delivered acute care capabilities and deployed an environment for all of the Australian Defence hospitals and field hospitals. In Canada, starting in Nova Scotia, we deployed a one-patient, one-record EHR system across the province for the citizens of Nova Scotia. One-patient, one-record, as you know, I've discussed a long time the fact that patient electronic health records are scattered across every provider they visit. That problem is now being solved in Nova Scotia by having a single unified patient record for every patient regardless of which provider they visit. Their records are still all in one place. Same thing in Niagara Health, a new HR footprint to support delivery of care for 450,000 citizens, again, in Canada. Okay. I'm going to stop with that. I mean those are direct Cerner wins since we acquired Cerner. But on top of that, we have all of the -- all of -- if you will, the rest of the health care suite, which is made up of Oracle ERP, Oracle HCM, Oracle Clinical One for clinical trials. Oracle ERP for managing everything from procurement and inventory, the entire supply chain or HCM from managing the enormously complicated scheduling and paying of their professional workforce and doctors, nurses, technicians, et cetera. We're very strong in this part of the business. Our customers include the Cleveland Clinic, who use our ERP system in their hospitals and our supply chain systems; the Mayo Clinic, also ERP, supply chain and HCM to manage the workforce; Mount Sinai Hospital, ERP, SCM and HCM; then Providence St. Joseph Health, ERP, SCM, HCM and actually -- and CX customer engagement; Adventist Health, Adventist Health uses Oracle ERP, SCM, HCM and CX; Kaiser Permanente, a huge Oracle HCM user, to manage their workforce; the NHS in the UK, ERP and SCM; UnitedHealthcare, ERP and HCM; BlueCross BlueShield, ERP, HCM, HCM and CX; Humana, ERP and SCM; Highmark Health, ERP, SCM, all Fusion products or HCM; Health Care Service Corporation, you see a pattern here, ERP, HCM and CX; Independence Blue Cross, ERP and HCM; Bright Health Care, ERP. Now in this past quarter, we had major wins at Ascension Health buying ERP, HCM, SCM and HCM, where the primary competitor in HCM was Workday. As we add specific features to manage the health care workforce to our HCM product, Oracle becomes more and more successful in selling our HCM products within the health care ecosystem. So our win rates are going up dramatically. Our sales cycles are going down. University of Texas Health in San Antonio was a big HCM win there. Labcorp bought ERP and HCM, where the competitor in ERP was SAP. And the -- we won BlueRock Therapeutics, where they bought ERP, SCM and Fusion Analytic Warehouse. Again, the competitor there was SAP. And this, by the way, is a wholly owned subsidiary of Bayer AG. So it was nice to win in a German company, German-owned company, ICU -- against SAP. ICU Medical expanded their HCM for vascular therapy and oncology. Dexcom, ERP, EPM, SCM; Sitel, ERP, EPM, SCM, a winner over SAP. We had some huge go-lives in the quarter. Providence Health, huge SCM customer, rolled out to 12 additional ministries. The National Healthcare in the UK, supply -- I have all the trust -- all the trust hospitals are all now live with ERP. Baptist Healthcare has now 10,000 employees live on HCM; Texas Children's Hospital, 21,000 employees live on HCM. Kelsey-Seybold Clinics are now completely live in HCM. I can go on and on, but rather than doing that, I'm just going to turn it over -- back over to Safra.

Operator:

[Operator Instructions] Your first question today comes from the line of Mark Moerdler with Bernstein.

Larry Ellison :

All right. I'd like to take a crack at that. So I'll start by check with Jensen over at NVIDIA. He and I had a very interesting conversation. Oracle's Gen 2 Cloud is quite different than the other hyperscalers. We have an RDMA network, a non-blocking RDMA network. Our network is very much faster than the other guys' network. What this means is if you're running a large group of NVIDIA GPUs in a cluster doing a large AI problem at Oracle, we can build these AI clusters, these NVIDIA GPU clusters and run them. We can build those things dynamically because we use -- our standard network supports the clustering, the large clustering of GPUs and allows them to communicate very quickly. So we can create these groups of GPUs. We can marshal them together. The other guys can't do that. They can build clusters, but they actually literally are physically building a new cluster. They're building new hardware. Our existing hardware, standard network, allows us to group these things together dynamically, these GPUs together dynamically, to attack AI problems. No one else can do that. So we have a lot of business, a lot of new AI companies coming to Oracle because we're the only ones who can run their workloads. And by the way -- and we are cheaper. But so we're faster and we're cheaper. Let me give you an example where we use it ourselves. We have a partnership in health care -- back to this health care thing. We have a partnership with health care with MD Anderson Hospital, and one of our independent software vendors called Ronan, where we built these AI -- disease-specific AI modules that make recommendations to doctors about care. And then what they really say at MD Anderson, if we see a patient with these symptoms, this is how we respond. And that's a big AI model that's built by MD Anderson working with Ronan running in the Oracle Cloud. And we've actually shown or I should say MD Anderson has actually shown, if you use the system, you reduce hospital admissions and readmissions by 30%. That's a stunning number. People talk about ChatGPT being really cool because they can write my high school essay for me. Well, how about reducing the hospital readmissions at MD Anderson by 30%? You decide which is more important. But AI is fabulous stuff, yes. And ChatGPT is very cool. There are other applications other than generative language in these large language models. We've really focused on on health care in the last year or so since the acquisition of Cerner and are working diligently with others to apply AI to health care and especially the management of the complex diseases like cancer. This is a cancer AI system. But we're also doing wellness, heart disease, et cetera, down the road. We think -- so our platform runs AI very, very well because we create these clusters of GPUs that we -- that can attack big problems very quickly. We do it economically, then we build the applications on top of that. We provide the service to a lot of the startups in the AI world. This is one example of where we're just way ahead of the other hyperscalers in terms of our network and our ability to do AI. Let me point out one last AI thing. The Oracle Autonomous Database doesn't have any database administrators. It's completely self-driving. The Oracle Autonomous Database is self-driving because it is driven by -- it is an AI module that is the DBA. We've replaced the DBAs with AI inside of our own cloud. The Oracle Autonomous Database actually it runs all the databases inside of the administrative part of our cloud, keeps track of all of our users, our billing, all of those things, recovery data sets, all of that stuff is now done using AI and our autonomous database. So we're a huge consumer of AI. We're a huge vendor of AI, GPU capacity, clustered capacity is -- we build AI modules in health care. And people are coming to us. NVIDIA is often recommending us as the best cloud for AI, and this is a good time to be there.

Mark Murphy :

Thank you, Larry. My question was very much related to that, but maybe from a slightly different angle. I'm wondering if you could drill into the opportunity that you do see on the generative AI side? We're repeatedly hearing that companies are running those kinds of models on OCI. NVIDIA is moving some of those workloads to the Oracle Cloud. And the other concept being that these AI models are so data hungry and that you have all the data already contained in the Fusion applications. I am curious if that piece of it, the generative AI piece, is something that you see lining up as a growth driver that is material overall on the entire business.

Operator:

Your next question comes from the line of Derrick Wood with TD Cowen.

Operator:

Your next question comes from the line of John DiFucci with Guggenheim.

Safra Catz :

So as Larry was touching on it, we have many, many enterprise customers, phone companies, banks, governments who make commitments to us as part of their move to cloud. So we do have some pay-as-you-go customers, but the bulk of our revenue, first of all, our SaaS revenue, as you know, you implement an accounting system, you're not going to pay less tomorrow. You still have to run your accounting system. So the SaaS side of the business, again, is fully committed. And then because we have so many important enterprise customers who are bringing basically their crown jewels into our cloud and had been waiting really for us to be in the position to receive those, they want to have a two-way commitment. They want to know that we have the capacity for them, and they want to get a slightly better price. So first of all, those that go into the public cloud, whether it's Telecom Italia or Verizon or some of these others, they obviously would like a better price, so they make commitments to come in, usually committing less than they expect to use, and almost always, over using more than they expected. However, other customers have cloud customers, as Larry mentioned, or other different arrangements, the alloy arrangement where we have a combination with the telco or a data center provider, those are all committed. And so we're very -- we're very strong in the commitments from our customers. And by the way, they want to make sure we have available capacity back for them because many of them get rid of their data centers when they're finished. And that's the ultimate goal for them. They don't want to be running back and forth. These aren't toy workloads. These are critical workloads for their business, and they want to know that they've got a place to put those.

Safra Catz :

Yes.

Safra Catz:

Yes. Just so that we're clear here. Pay-as-you-go at Oracle is less than 5% of our business. Okay?

Safra Catz :

Okay. Is that helpful?

Operator:

Your last question today comes from the line of Brad Zelnick with Deutsche Bank.

Larry Ellison :

Well, I think there are two things. One is the system we're putting in for the DoD and for the VA is one patient, one record. So that's a model of it. The one going in, in Nova Scotia is the same. We are bidding on a huge contract for the NHS. Again, some of these contracts are enormous and the responsibility to go along with the contracts is also enormous. But our system, that's how our system works. Our standard system that we have built is one patient, one record in the database. So if you visit Stanford and UCLA and Mayo Clinic and Cleveland Clinic, even if you go to these four different providers for a variety of different issues, all of your data will be in one database. All your patient data will be in one place immediately accessible in a time of emergency or just a routine visit to the doctor. That's how our system is architected. That's how we're delivering it to us to customers right now. It's attracted a lot of attention. Actually, it's not only much better for the patient, helps deliver better -- gives doctors better information, deliver better outcomes, but it's also less expensive to do it that way than every hospital maintaining their own system to -- rather -- it's better that they should share a system in the cloud and integrate their data for the benefit of the patient. Saving lives is exactly what it's doing -- what's happening with our partner at Ronan and our partner at MD Anderson and other partnerships I could go into in more detail, and I'm happy to but not on this call, is these disease-specific AI modules where -- and the telemedicine modules that we're delivering, allows a patient in a community hospital in Montana to get the benefits of the wisdom of the best specialty cancer specialists at MD Anderson Hospital in Texas or a Memorial Sloan Kettering doc in New York or a Mass General doctor who's on faculty at Harvard Medical School. The fact that we're now using AI and telemedicine and instrumenting these diagnostic devices so the docs -- so -- in the community hospital, we have diagnostic devices that the Harvard faculty, then there at Mass General can look at and then they inspect the AI module to, a, gather much better information. And with that better information, have the best minds and AI -- real minds and artificial intelligence processing that information and prescribing, hopefully, the best procedure or the best medication for that particular patient, which translates into reducing readmission to the hospital as they did at MD Anderson and ultimately saving lives.

Safra Catz :

Well, remember, as I told you, we have dropped a large number of data centers. And as they become available, we have customers waiting to get started and use them. So we have commitments from customers to quite an enormous amount of consumption. And so they've basically been waiting for us. We've -- it's taken a while in all these different countries to open these data centers and to make them available to our customers. And so we know they are actually very impatient to use the capacity as it becomes available. And we just have a lot of momentum and a lot of commitment from our customers and a lot of enthusiasm around our offerings. And so this is -- that's how the math works.

Operator:

Thank you. This concludes today's conference call. Thank you for attending. You may now disconnect.

Ken Bond:

Thank you, Bo. Good afternoon, everyone, and welcome to Oracle’s Second Quarter Fiscal Year 2023 Earnings Conference Call. A copy of the press release and financial tables, which includes a GAAP to non-GAAP reconciliation and other supplemental financial information can be viewed and downloaded from our Investor Relations website. Additionally, a list of many customers who purchased Oracle Cloud services or went live on Oracle Cloud recently will be available from our Investor Relations website as well. On the call today are Chairman and Chief Technology Officer, Larry Ellison; and CEO, Safra Catz. As a reminder, today’s discussion will include forward-looking statements, including predictions, expectations, estimates or other information that might be considered forward-looking. Throughout today’s discussion, we will present some important factors relating to our business which may potentially affect these forward-looking statements. These forward-looking statements are also subject to risks and uncertainties that may cause actual results to differ materially from the statements being 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 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.

Larry Ellison:

Thank you, Safra. Okay. I’m going to go over -- primarily, I’m going to go over customers and new wins in infrastructure and then customers and wins and go-lives in applications. But I’m going to start with infrastructure. So, during Q2, we signed multiple customers to contracts exceeding $1 billion, infrastructure contracts exceeding $1 billion. Let me be clear, multiple customers signed contracts for $1 billion worth of infrastructure. So, given -- that’s been added to our backlog, we expect our infrastructure business to continue to grow very, very strongly into the future. We now have 22,000 infrastructure customers. We have a total of 55 regions. That’s public regions plus national security regions and the other kinds of regions and that’s more than AWS or Microsoft or anybody, which may surprise some people. Gartner, as Safra mentioned, moved us into the Visionary Quadrant for the first time. So, let me just start naming specific customers and give you a flavor. I’m going to name large customers, small customers. I’m going to focus a little bit on a bunch of international customers to let you know that our investment in data centers all over the world is really paying off. So, our customers include -- big customers include, FedEx, Deutsche Bank, Tokyo Stock Exchange. Let me take a moment to emphasize Tokyo Stock Exchange. We’re the only ones running a major stock exchange. And this is -- Tokyo is not the only one because our cloud is very secure and extremely reliable. It doesn’t go down. In fact, my favorite quote from a big phone company in the United States was the difference between Oracle’s Cloud and the other clouds are simply that Oracle Cloud doesn’t go down. I think that’s a very important issue when you have enterprise applications like a stock exchange where you can’t ever go down. Fujitsu is another big customer; Vodafone that’s phone company has similar problems. If you’re a phone company, the phone system can’t go down. Vodafone, Deutsche Telekom, Enbridge; Kaiser, a huge health care company in the -- primarily in the United States. NVIDIA has moved and a bunch of others have moved, lots of AI, artificial intelligence and machine learning workloads to the Oracle Cloud because it turns out we’re really good at that. We’re better than that than any of the other clouds, which may surprise some people. Schneider Electric, Telecom Italia, Verizon and lots, lots more. I’m not just going to list them all. We publish a big list at oracle.com and every quarter, we add new customers to that. So, in the quarter, we added United Airlines -- database wins in the quarter, United Airlines, migrating all flight operations to the Oracle Exadata cloud. Albertsons, again, moving to the Exadata cloud service database. Mitsui in Japan, again, moving their databases to Oracle. Again, this is the beginning of a very major, very large business for us as our database franchise moves primarily from on-premise into the Oracle Cloud. Persol Career, a big professional services company in Japan, migrating to -- or moving their Oracle databases to the cloud. Unimed, LAD Healthcare, once again moving their databases to the Oracle Cloud. Penske Truck Leasing, doing using -- moving to autonomous database. HomeServe plc in the UK, government agency is moving the autonomous transaction processing system. So, they’re not just moving an existing Oracle database to the cloud, they’re upgrading from our on-premise Oracle database to our autonomous database, which is only available in the cloud. Iberia Express, a big telco, same thing moving to autonomous data warehouse. They just -- the idea is the autonomous data warehouse makes database administration very simple. In fact, it’s entirely automated. There is no database administration. Delgado [ph] Auto Taxi, again, in APAC, a smaller company, again, moving their databases to autonomous system. MaxiTRANS, big transportation company in Australia, same thing, autonomous transaction processing. The Scroll, [ph] a big Japanese wholesale company, autonomous -- moving to autonomous database. Banco Safra, this is -- by the way, this is not -- our CEO does not own a bank. This is not an internal -- she didn’t not buy our database. But there’s a big bank in Latin America called Banco Safra and they’re moving all their mission-critical apps to OCI, as is Bradesco, same thing. Yorkshire Building Society in the UK, again, autonomous data warehouse. And Nestlé, a food giant in EMEA is moving their analytics systems to autonomous data warehouse and that’s a huge customer. Okay. I mentioned a couple of calls ago that we have a new version of our MySQL open source database, and we added a new ultrafast query processor called HeatWave to MySQL and that’s doing extremely well. We have a number of companies doing that migration. Medallia, Infonow [ph] Credit Club. It’s a long list of people that are moving to MySQL to take advantage of the fact that our query processor in our version of MySQL is 100 times faster. I really mean that. And we have all the benchmarks. We publish all the benchmarks, and we publish the source code of the benchmarks, so you can duplicate those results, 100 times faster than queries than the Amazon equivalent called Aurora; Aurora, Amazon’s version of MySQL. As Safra mentioned earlier, our partnership with Microsoft Azure is going extremely well. We have a number of companies running applications in Azure. And then Azure is connected to OCI, so the database is in OCI and the application is in Azure. The Belgium Railways is one. Honeywell in the United States, Petronas [ph] the big energy and utility company, Telecom Italia Mobile A [ph], but that multi-cloud system is doing extremely well. And we think that is the future of cloud. We think the future of cloud is not 4-walled gardens, AWS, Microsoft, Google and Oracle. We think those clouds are all going to interconnect. And then customers will pick the most appropriate service for their particular needs and mix and match between the clouds. Okay. A lot more -- a major city in the southwest, which I’m not allowed to mention is literally migrating everything to OCI. Lambda, which is a big AI machine learning specialist company is moving the bulk of their workloads to OCI using NVIDIA GPUs and our fast -- our very, very fast network to interconnect them. And this is a pattern. Lambda is doing that, Latent Space is doing that. NVIDIA themselves are doing that. So we’re seeing a lot of machine learning and artificial intelligence workloads moving from other clouds to OCI because we’re faster. And again, in the cloud business faster -- when you charge by the minute, faster means cheaper. Give me 1 second. Alexa, be quite. Sorry about that. I think Jeff Bezos did that. Okay. So, Minnesota State Colleges and Universities, National Institute of Health. These are all new cloud customers, new infrastructure cloud customers -- again from very large to medium-sized companies are moving to OCI and lots of them. Twist Biosciences is moving healthcare -- again, AI workloads to OCI using NVIDIA GPUs. AIA Life Insurance Company, a big financial services company, again, is moving to OCI and databases to OCI. In India, Uttar Pradesh Power Corporation, a giant utility, is moving all of their metering and billing applications to OCI. Win Win [ph] Intelligent Information Technology is moving their IoT platform from AWS to OCI, and they’re also using MySQL HeatWave. Algar Telecom, Brazilian Stock Exchange, Claro, again, big media telco, moving to OCI; Ncell. Unimed Curitiba, a large health care company in Latin America moving to OCI; Vivo, again, moving to OCI. Banco de Chile, E-Banks [ph] another financial services company; Rabobank. DP World, the transportation and logistics company in the Middle East, Austin TranSit Partnership, a municipality in Texas they’re perfect -- an interesting customer because they’ve been using Oracle ERP and EPM and our applications for a long time. Now they’re moving their infrastructure to OCI. Oman Telecommunications. A huge French telecommunication company, I’m not allowed to mention. They’re moving to OCI. Oxford Nanopore, a big -- a gene sequencing company is moving from AWS to OCI where they are going to store gene sequencing, but not only just store gene sequences in OCI, they also do analytics to figure out if -- what they’ve sequenced is a new version of COVID-19 or another pathogen, if the pathogen they’ve never seen before, extremely important application for world health. Reed Exhibitions, Saudi Ministry of Media, Ecobank, financial services in EMEA, GlobeMed Limited, Morrisons, a big retail operation, again, all moving to on OCI. HDFC Bank and Waafi Bank, I’m going to stop there, but we published a long list, but there’s tremendous momentum, tremendous momentum and a large number of customers from all over the world, very large and medium-sized companies moving to OCI, and the business is growing very strongly, as Safra pointed out in the numbers. Okay. In the back -- in applications, I’ll try to do this quickly. We’re just winning in the back office. We have 22,000 customers in infrastructure and the cloud. We have 11,000 Fusion ERP and HCM customers alone in applications, just Fusion customers. We have 11,000 now. We have probably close to 30,000, 30,000 NetSuite customers on top of that. So, we have a lot of customers and applications. We’ve been in the Applications Cloud business for longer than we’ve been in the infrastructure cloud business. We’re extremely strong in healthcare, Cleveland Clinic, Mayo Clinic, Mount Sinai, Providence Saint Joseph, Adventist Health, Kaiser Permanente, National Health Service in the UK, long list of providers, that’s a partial list, are using Oracle ERP, supply chain and HCM applications. But it’s not just the clinical providers that are using our systems, the payers, the healthcare payers. So again, as we tackle healthcare with -- in conjunction with our Cerner acquisition, we’re not just automating providers, we’re also automating payers. We’re also automating pharmaceutical companies as they do clinical trials. We’re trying, to automate the entire ecosystem, not just a fraction of it. So I mentioned a list of providers and payers, UnitedHealthcare, Blue Cross Blue Shield, Humana, Highmark Health, Health Care Service Corporations, Independence Blue Cross, Bright Health, so payers as well as providers. We’re extremely strong in that. I mean, we -- again, I’ll just leave it with extremely strong. Healthcare wins in the quarter in Q2, Cigna, a huge payer win; Emirates Health Services, big provider where we beat SAP; Cross Country Health Services where we beat Workday and SAP. Henry Schein is a provider of healthcare products for -- and there -- we won there. But again, it is the entire healthcare infrastructure that we are focusing on as we try to automate healthcare systems around the world. Go-lives, go-lives in the quarter, Tenet Health, 65 hospitals, 235,000 employees, they went live on HR payroll and recruiting. Cleveland Clinic, is going live. I know it’s called Cleveland Clinic, but they also -- they own hospitals all over the place. They’ve gone live in a bunch of regional hospitals in Florida. University of Chicago Medical Center has gone live. Baptist Health Care has gone live, 12 hospitals with 26,000 employees. Lakeview Center has gone live in the quarter. So, we’re just getting stronger and stronger in health care. And so, let me move on to financial services, our other -- another industry that we deem very, very strategic and key to Oracle’s future is financial services, specifically banking. And we’re very, very strong there, Bank of -- in terms of ERP, HCM, supply chain, our customers include Bank of America, JPMorgan Chase, Citigroup, Bank of New York Mellon, Vanguard, Santander, TD Bank in Canada, HSBC in the UK, UBS, Credit Agricole, Societe Generale, Credit Suisse, Sumitomo Mitsui. It’s a partial list. We are extremely strong in the banking sector. And what you’re going to see in Oracle ERP with our strength in the banking sector is we will be offering loan origination for B2B commerce. One of the things we’re doing with the new version of Oracle ERP is if you’re a customer that’s buying something and you have Oracle ERP, and we -- and you are a company that’s selling something and you have Oracle ERP, the way that B2B transaction will occur, it will be entirely automated within the cloud. So you’ll submit a purchase order, the buying ERP system will submit a purchase order to the selling ERP system. And if you need to borrow money, we will originate a loan with one of our banking partners. If the product has to be shipped, we will schedule the shipping and track the shipment with one of our logistic partners. And our ambition here is to completely automate B2B commerce between buying and selling companies that are running Oracle Cloud ERP and manage all of the financing and insurance and logistics associated with that transaction. We do a really good job, I think, of automating B2C transactions. Amazon does that extremely well. Walmart does that extremely well. But we don’t do a great job of automating B2B transactions. And that’s what Oracle’s ambition is to do that. And we’re in a great position because we are so strong in cloud ERP. So, it’s an Oracle system that’s -- an Oracle procurement system on one end of that transaction. It’s an Oracle order management system on the other end of that transaction. We have very strong partners in finance, insurance and logistics so we can completely automate the entire transaction, where B2B transactions begin to look like B2C transactions. They’re fully end-to-end automated. And that’s a huge new business for us and our partners. Okay. Let’s see. Financial Services wins in the quarter. We’ve added M&T Bank, TD Bank, Daiwa Securities -- Farmers Insurance. Nexi, which is where we replaced SAP at Nexi, it’s an Italian bank. We replaced SAP at TD Bank. Let’s see what else. Financial services go lives. AmTrust, BlackRock, a big go live. They are -- they have $10 trillion of managed assets. Oracle now has 9 of the top 10 asset management firms, running on the Oracle Cloud ERP. FirstRand Bank, a bunch of other banks. I don’t want to take up all the time. So, I’m going to stop there. We have a lot more data on our website that will tell you -- that will enumerate still more customers that we acquired in this very strong second quarter and that went live in the second quarter. With that, I’m going to turn it back over to Safra.

Operator:

[Operator Instructions] We’ll take our first question today from Brad Zelnick of Deutsche Bank.

Larry Ellison:

Well, maybe the most interesting thing is we have a much faster network than anybody else. We have a fundamentally different network than any of the other cloud providers. We have what’s called an RDMA network that we had to build because our Exadata machines and our database -- actually glued together a lot of computers. And when you had a single database application, that could run on one computer or it could run on a cluster of computers, the 2 computers, 4 computers, 8 computers, whatever, so that there was no single point of failure. One of the beauties of the Oracle database, one of the big differences between the Oracle database and other databases is that the Oracle database, a single application could run on multiple computers. If one of those computers would fail, the application would keep running. It was fall tolerant. It would tolerate a failure of a machine. Other people don’t have that. But in order to do that, we had to make our network, if we’re going to have a cluster of 4 machines running a single database app, we have to make that network between those 4 machines very fast. And that’s called an RDMA network. It means that one computer can immediately access the memory of another computer without going through an interrupt. It’s a very fast way to interconnect computers and have them act as a group. We built that for our entire cloud, so we can run our database, our Oracle real application cluster database on any of the computers in our cloud. Now because we’ve built this hyper-fast network, it turns out it has more utility than just running the Oracle database. So, if you’re running a cluster of computers doing a simulation, a car crash simulation, that was one of the first applications people noticed, ran much faster on Oracle. Now, a much bigger application they noticed ran much faster on Oracle was on neural networks and machine learning workloads run much faster on Oracle. So, because our network is just intrinsically much faster and -- by the way, also there are security and reliability advantages to go along with that. So, our network configured. We actually have -- all of our computers actually have two networks. I’m not going to go into all the details. But our computers are fundamentally different than any other cloud company. We have two networks, one of which is on the Internet -- I’d say, one of which interconnects all of our customers’ computers. And the other, which is our -- if you will, our control network where our -- and computers that run our cloud control software, which is isolated from the customer software. So, the customer can’t tamper with our cloud control software. They can’t get control of it. And we can’t see the customers’ data. That is unique to Oracle. But the -- because we have the two networks and because one of the networks is RDMA, we just run much, much faster, much more reliably than they do. And it’s a fundamental advantage that they can’t compete with unless they rebuild their cloud from scratch.

Phil Winslow:

Congrats on another strong quarter. And really two metrics jumped out to me this quarter. First was IaaS revenue accelerated at 59% from 58% and 39% in the prior two quarters. And organic ERP growth also accelerated to 28%, which is pretty phenomenal this quarter from 22% and 17% in the prior two quarters. Can you just give us sort of a breakdown of what’s driving this continued strength compared to some of your cloud competitors in the past in IaaS world that have experienced decelerating growth in recent months? Are there any workloads in particular that are driving the relative strength of OCI?

Larry Ellison:

You can take it. I mean the workloads, I’ll just say on the workloads. AI and machine learning is a huge -- is exploding NVIDIA. NVIDIA, the people who provide the GPUs for most AI workloads are -- they’re moving a huge amount of stuff to the Oracle Cloud and a bunch of other companies that are doing that. But that’s one new one. I mean, obviously, database, but I’ll let that question really go onto Safra.

Phil Winslow:

Great. Well, it’s awesome to see everything that you’ve been talking about the past couple of years playing out. So keep up a great work.

John DiFucci:

Larry, to the answer to the first question, that’s actually something we’ve been thinking about. That’s going to help as we dig in to better understand the benefits of OCI. But it’s amazing to hear the core differentiation of RAC continues to drive differentiation even 20 years later. My question is actually for Safra. Safra, you mentioned your flexible business model in your prepared remarks and which is unique. BYOL, you were a pioneer in doing that. And license was surprisingly strong again. Can you talk in a little more detail about what’s really driving that license strength?

John DiFucci:

Okay. That makes sense. It sounds like a lot of things are working together here. Thank you. Thank you very much.

Operator:

And we’ll go next now to Mark Moerdler at Sanford Bernstein.

Safra Catz:

Sure. So Mark, we’ve owned Cerner for about five months. And I will tell you that they continue to do better than we had projected internally. So, we’re very, very happy. But we are still at the beginning. We don’t want to do anything that will damage the business. And of course, we’re very, very focused on those customers. But we are already having some level of savings. But ultimately, just so that you understand, our expectation is we will run them at typical Oracle margins. So, we’ve got quite a way to go. And I think over the next couple of quarters, you’ll see continued improvement as we’ve done some of our operational integration. And simultaneously, I think they continue to over perform for us. So, we are doing this in a very careful way. So, it’s not to put any issues for our customers and making sure they’re successful. On the technical side, Larry, that’s for you.

Operator:

And we’ll take our final question this afternoon from Raimo Lenschow at Barclays.

Safra Catz:

Yes. Let me start that, and Larry can add if you want. So I want to remind you that we are global, right, which includes whether we’re in Europe and in the United States, but we’re also in the Gulf states and really in Asia, different parts, Latin America. And there are always companies that get to the point where their business, they cannot afford to keep using their older systems. They spend too much using them. They spend too much running them. And they are actually holding them back, and they know that. And I think one of the things many companies learned during COVID was those companies that did not get on some sort of a track to get a digital connection with their customers, employees and suppliers that were at a huge disadvantage. And so that momentum continues. And it is possible that any individual country or location there could be some little slowdown here or there. And yet there are other countries and industries that are doing incredibly well and they view this as critical. When customers move to SaaS they end up spending less but also have much better capabilities to sell more to work with their employees and their suppliers, and of course, as I said, their customers. So that momentum has started, has started, and it just continues very, very strongly. And again, we are global. So, even when there are some issues in some regions, we’re in other regions that are doing phenomenally well right now.

Operator:

Thank you very much, Mr. Bond. Ladies and gentlemen, that will conclude Oracle’s Q2 2023 earnings conference call. Again, we’d like to thank you so much for joining us and wish you all a great remainder of your day. Goodbye.

Ken Bond:

Thank you, Josh. Good afternoon, everyone, and welcome to Oracle's first quarter fiscal year 2023 earnings conference call. A copy of the press release and financial tables, which includes a GAAP to non-GAAP reconciliation and other supplemental financial information can be viewed and downloaded from our Investor Relations website. Additionally, a list of many customers who purchased Oracle Cloud services or went live on Oracle Cloud recently will be available from the Investor Relations website. On the call today are Chairman and Chief Technology Officer, Larry Ellison; and CEO, Safra Catz. As a reminder, today's discussion will include forward-looking statements, including predictions, expectations, estimates or other information that might be considered forward-looking. Throughout today's discussion, we will present some important factors relating to our business, which may potentially affect these forward-looking statements. These forward-looking statements are also subject to risks and uncertainties that may cause actual results to differ materially from statements being made today. As a result, we caution you from placing undue reliance on these forward-looking statements, and we encourage you to review our most recent reports, including our 10-K and 10-Q and any applicable amendments for a complete discussion of these factors and other risks that may affect our future results or the market price of our stock. And finally, we are not obligating ourselves to revise our results or these forward-looking statements in light of new information or future events. Before taking questions, we will begin with a few prepared remarks. And with that, I'd like to turn the call over to Safra.

Larry Ellison:

Thank you, Safra. Last quarter, Microsoft and Oracle announced that we had built a high speed interconnect between Microsoft Azure Cloud and the Oracle Cloud. The purpose of this Multi-cloud interconnect is to enable Azure customers to directly use the very latest Oracle Database technology, even if their application is running in Azure. In other words, customers can now use any combination of Microsoft and Oracle Cloud services together as if they were in one cloud. That was last quarter. This quarter, Oracle is making the latest version of our mice MySQL HeatWave database available in Amazon's AWS cloud. Multiple published customer benchmarks have shown that MySQL HeatWave delivers 7x better performance than Amazon Redshift. 10x better performance than Snowflake and up to 10x higher throughput than Amazon's own MySQL database called Aurora. The Multi-cloud era has begun. Customers are already buying applications and cloud infrastructure from several different providers, including Microsoft, Amazon, Salesforce, Oracle and others. Our job is to give our customers the ability to choose application and infrastructure technology from multiple clouds and then have those different clouds coexist and interoperate gracefully. Multi-cloud interoperability is an important step in the evolution of cloud computing. Multi-cloud interoperability is one of the reasons our infrastructure business is booming, growing over 50% in U.S dollars, and almost 60% in constant dollars. We expect Oracle's total cloud business to exceed a $20 billion annual run rate next year. Now I'll highlight some of our big new infrastructure wins in Q1. Overall, we added about 1,000 new paying customers for infrastructure in Q1. Let's start off with NVIDIA. NVIDIA chose OCI to build their SaaS products for data scientists for machine learning and inferencing along with moving their entire health care platform called Clara to OCI. Mosaic has developed a state-of-the-art neural network on OCI, and they picked OCI because OCI outperformed all of the other clouds when running machine learning and AI. The Avis car rental company is moving their entire Oracle estate, along with their Oracle applications to OCI. The Chicago public schools are closing data centers and migrating their Oracle estate to the Oracle Cloud. Tanium, a leader in cybersecurity chose Oracle Cloud Infrastructure to help safeguard their customers with industry-leading security. OCI deployment will be a part of its multi-cloud strategy and delivering its SaaS platform Tanium as a service. Cigna, a health care company is migrating their existing Exadata on-premise to the Oracle Cloud. Additionally, their SaaS ERP system is being integrated with Oracle Cloud Digital Assistant. Tennessee and Oklahoma are both new government cloud customers. This was the first group of customers were all from North America. I just finished my list beginning with NVIDIA and North America and Tennessee and Oklahoma in North America. I'm now going to move to wins in LAD. AT&T in Mexico is the first case of any telco to move their entire Amdocs stack to a cloud and they're moving it their Amdocs stack to OCI's New Mexico cloud region. Avianca, one of the largest airlines in Latin America will move all of their workloads to OCI. Entel, another telecom, in fact, the largest telecom in Chile is now moving all of their critical workloads from AWS to OCI. Banco Digimais, a fintech bank in Brazil is moving their entire on-premises VMware estate to run in OCI 100%. Serasa Experian, a financial services company is moving AI training for OCR biometrics and facial recognition to OCI. Bionexo, another infotech company -- in the health care business, serving 1,500 -- 15,000 hospitals and clinics is migrating their data lake and their data warehouses from Amazon Web Services to OCI. Santander, a large bank is moving all of their databases from mainframes and Oracle databases all to the Oracle Exadata Cloud Service. Unimed, also a health care, a company health care insurance company is beginning the migration of all of their applications and database to OCI. Sky Mexico, the largest satellite paid TV producer in Mexico will move all of their data lakes and all of their data warehouses to OCI in the New Mexico region. That's Latin America. In JPAC, and maybe this is the most interesting customer I'll talk about, NRI, Nomura Research, is continuously expanding their dedicated cloud region. In Japan, they've just added a second data center NRI has. The Oracle Cloud in Japan, the NRI Oracle Cloud in Japan already runs 50% of all transactions on the Tokyo Stock Exchange. That's a mission critical application. ICI [ph] Bank Financial Services is the new customer in JPAC, Japan, Asia Pacific. Hitachi construction in Japan is moving their manufacturing, their critical manufacturing systems to OCI. [Indiscernible] timing technology, an infotech company is the new customer in Asia Pacific. Daiichi Sankyo is the first big pharma in Japan that is moving their database -- their Oracle Database workloads to the cloud. Pacific International Lines, the big transportation company is the new customer in Asia Pac. Li & Fung, a trading company, another new customer, we had -- again, eventually, we had a 1,000 new customers this quarter in OCI. [Indiscernible] another fintech company is again another big new customer for us in Asia Pacific. H2O Retailing is moving their entire VMware on-premise VMware estate to OCI. They're one of the largest retailers in Japan. Again, Asian Development Bank is the new customer in Asia Pac. [Indiscernible] Vision is an infotech company new customer. We have, again, a bunch of new customers in OCI all over the world. That's JPAC. Now let me move to EMEA. Dojo, a financial services company chose Oracle Cloud Infrastructure for their payment platform because their benchmark showed that the Oracle Cloud OCI is more secure and has better availability than the competition. Al Rajhi Bank, the world's largest Islamic Bank is in the process of moving all of its applications and databases to the Oracle Cloud. Unilever is integrating a few -- their Oracle Fusion Applications with the autonomous database to build a next generation super secure, super agile platform for Unilever. Atlantic Financial Group, an infotech company, hosts core banking functions on the Oracle Cloud Infrastructure, which to many of their banking customers. Centrico [ph], an infotech company is moving all their workloads from their old data centers to a combination of OCI using OCI's multi-cloud services to access other clouds. Mio [ph], big telephone company moving over 300 Oracle Databases to the Oracle Exadata cloud. [Indiscernible], the government agency migrating all databases off their IBM mainframes and UNIX systems to the Oracle Database and to the Oracle Cloud. And I'll close with the U.K Home Office, the department is moving to the Oracle Gen2 Cloud Infrastructure with a focus on dramatically improving both security and reliability. With that, I will turn it back over to Safra.

Operator:

[Operator Instructions] Your first question comes from John DiFucci with Guggenheim. Your line is open.

Safra Catz:

So let me tell you, it is all of the above. But let me tell you what's really happening down at each customer level. When customers try us for some reason whether they're using Fusion and they start using OCI for their own applications, or they hear really from word of mouth and from really a need to run some of their Oracle workloads or otherwise, when they give a try to Gen2 OCI or to Fusion, for that matter, what they find is that it is phenomenal. Our Gen2 cloud is so much better than what they're used to, and is so much more flexible, and can be much more local, gives them so many more opportunities to really match to their own needs. But they're overwhelmed by the technical capabilities of our cloud and how great it is. So what happens is, they may start small, and then they accelerate in their consumption. And they sign larger and larger and more significant contracts. As you see in our RPO, there's a lot already contracted and that's without us adding a single additional customer or expanding the use. But we have, as I said so much company-specific or product specific momentum that as customers discover us, use us, give us a chance they become honestly overwhelmed by our capabilities and how much less expensive, more flexible, more secure and how differently we’re architected such that we're also more sustainable for them. And so it's just incredible company-specific, product specific momentum. And nothing really has to happen for us to continue to do very, very well here. And whether they're trying to save cost or expand growth, we help them do that in an incredibly flexible way and super, super cost competitively for them.

John DiFucci:

So it sounds like that the expansion within your customer base of cloud services is becoming or has become more predictable. And that makes a lot of sense. Thank you.

Operator:

Your next question comes from the line of Phil Winslow with Credit Suisse. Your line is open.

Safra Catz:

Larry, why don't you go first, and then I'll fill in if you've missed any. Yes.

Safra Catz:

And the answering for you on how is the Oracle database doing? Well, you saw we had an amazing Q4. And in Q1, again, the Oracle database is what people choose if they have real work to do. It's very secure. It's very performant and they know it has so many capabilities that you don't have to have 16 different databases to get a complicated job done. You can do everything with it in different ways. And the database options are continued to be acquired. Many more customers still want enterprise agreements, so they can BYOL, bring your own license to the Oracle Cloud. Our technology remains unbelievably strong with Java. And so the business overall, our tech business remains incredibly strong, even though it's enormous. And for many, many of the reasons I think there was a period a few years back, where folks were thinking they would try lots of other things and things that were maybe more " fashionable". I think they've realized that actually getting your job done securely, performantly, sustainably, and also really least expensive is to actually use our products to do that. And so they've been doubling down and committing and bringing those workloads to the Oracle Cloud again, propelling just incredible momentum, whether it's Cloud@Customer, dedicated regions or our public cloud.

Operator:

Your next question comes from the line of Mark Moerdler with Bernstein Research. Your line is open.

Safra Catz:

Sure. So let me start by since I'm also the Principal Financial Officer, if I would say that in another company, I'd be the one making the decision to buy fusion ERP, and Fusion HCM. And what is absolutely clear, is that saving money in the back office is basically automatic when you use our products, when you move from, from especially from our competitors products, which are so expensive to maintain and run. When you move to fusion, you can save so much in your back office, that you can use that money to invest in things that help you extend the differentiation of your business. Now, today's the 12 of September. In fact, I signed off with our auditors on Friday, but we don't do our earnings on Friday. So we had to wait all the way till Monday. Now no other companies report on the 9th or the 8th. In fact, most companies were reporting their July quarter on last week. And here we are announcing an August quarter. Well, what does that have to do with costs? Well, I can tell you that when you are in a position to know your results, and to announce them, and to file your earnings with the Securities and Exchange Commission, you've not only saved time, you've saved millions in process dollars, and in the way you run your business. And I just want to point out that we were able to do this after acquiring in the quarter, Cerner by putting their data from their old system into Fusion and consolidating it in fusion. So we actually believe that one of the most important ways to drive business transformation is to move to a much more streamlined cloud product than running old back office systems.

Mark Moerdler:

I'll stop there. Amazing.

Operator:

Your next question comes from Derrick Wood with Cowen and Company. Your line is open.

Larry Ellison:

Yes, because with 58% growth, it certainly seems like you're now gaining share in the cloud infrastructure market. It's a big market to go after. So any color on that would be helpful.

Larry Ellison:

Okay, so. …

Larry Ellison:

Yes, I think exactly what Safra said, and I'll add what I just repeat what I said earlier. The amount of money, these huge companies, these very famous companies spend with Amazon is kind of staggering. I mean, everyone assumes, hey, I move to the cloud, and I'd save a lot of money. It depends which cloud you move to. And Oracle is much less expensive than the competition. One, partially because we're faster, which time is money when you're when you're paying by the hour. So again, I'm going to repeat, we're talking to the most famous brands that are running at Amazon, and some of them are going to be moving very soon.

Ken Bond:

Thanks, Derrick. Next question, please.

Brad Zelnick:

Excellent. Thank you, and congrats on the solid execution. Larry, we've heard of some very exciting things happening with Cerner pretty quickly after the deal just closed with some hospital networks, we heard from significantly expanding their existing contracts. Can you talk about the unique value you're able to deliver now that Cerner is a part of Oracle and the broader expansion opportunity that you see ahead. And if I could just sneak in one for you as well, Safra $1.7 billion in CapEx and q1 is a pretty big number. And I know very well that you don't spend frivolously What can you tell us about the big step up here?

Brad Zelnick:

Cerner, he asked you all about Cerner. Cerner. a big other part. Yes, one of the things I think that we don't really talk about, but I alluded to the fact that we both build applications, and we run them with on our infrastructure. The tools we use for building applications, our latest generation of tools, are the autonomous database very different than from all the Oracle databases or any other database that came before. There are no DBAs. There is no human labor associated with running the Oracle Database anymore. So there can be no human error. The costs are so much cheaper. Our own internal cloud, our own cloud OCI, uses autonomous database to run all the control systems, because claim [indiscernible] doesn't want to hire a lot of DBAs to lower costs. Also, he doesn't want any errors of commission. It's much more reliable than when you have human beings driving the car. We use that for the next generation of Cerner, the Oracle Autonomous database. We pair that with an all new application development tool called Apex [ph], which is a low code tool. So our newest applications, our very newest applications that we were built, we are building, we're building any autonomous database with Apex, which allows us to do stuff that would have taken three or four years in less than a year. So we expect to have our first pretty complete new Cerner health management product out within 12 months, which I think is going to, again, it's something we never could have done with the previous generation of databases or the previous generation of application development tools. But all of that has changed. We have these phenomenal low code tools. I mean, one of the things about the low code tool is you almost -- you don't have to do security audits because security is built into the tool. You can't build an insecure applications using Apex [Indiscernible] tolerance is built into the tool, if the application should fail, it's a stateless application. So it immediately failover into another data center in a millisecond and keep running, no one will even know about the failure. So our new generation of application development tools is going to enable us to modernize the server -- the Cerner technology at a rate that would be inconceivable a couple of years ago.

Ken Bond:

Thank you, Brad. That does appear to be our last question. So a telephonic replay of this conference call will be available for 24 hours on our Investor Relations website. Thank you for joining us today. And with that, I'll turn the call back to Josh for closing.

Ken Bond:

Great. Thank you, David. Good afternoon, everyone, and welcome to Oracle's fourth quarter and fiscal year 2022 earnings conference call. A copy of the press release and financial tables, which includes a GAAP to non-GAAP reconciliation and other supplemental financial information can be viewed and downloaded from our Investor Relations website. Additionally, a list of many customers who purchased Oracle Cloud services or went live on Oracle Cloud recently will be available from the Investor Relations website. On the call today are Chairman and Chief Technology Officer, Larry Ellison; and Chief Executive Officer, Safra Catz. As a reminder, today's discussion will include forward-looking statements, including predictions, expectations, estimates or other information that might be considered forward-looking. Throughout today's discussion, we will present some important factors relating to our business, which may potentially affect these forward-looking statements. And these forward-looking statements are also subject to risks and uncertainties that may cause actual results to differ materially from statements being made today. 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 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.

Lawrence Ellison:

Thank you, Safra. As Safra said, our plan is to accelerate cloud revenue growth, while continuing to grow earnings per share. First, let me provide some detail on how we plan to accelerate cloud revenue growth. It all starts with our two most important verticals

Operator:

[Operator Instructions] We'll take our first question from Mark Murphy with JP Morgan.

Lawrence Ellison:

Well, the national health records database solves 2 problems, and it allows patients in the case of an emergency to have their caregivers get immediate access to all of their health records, which will deliver way better outcomes for people. The other is public health officials will get much better information about the state of health in their country. So I mean, the amount of -- having this knowledge, it's -- we dramatically improved healthcare but we also save an enormous amount of money by doing that. I don't know if you remember when we sent that hospital [shipped] (ph) in New York City because the officials in New York thought they were about to run out of the hospital beds. It turns out they were wrong. We didn't run out of hospital beds, but they didn't know. They don't have -- public health officials don't have access to that kind of information. They're a bit flying -- it was very clear there are -- in a lot of cases, they were flying blind during the pandemic. By providing this information, we save a lot of lives and we save a lot of money. The scale of the opportunity is gigantic because it's not -- people think of it as a national opportunity. It's a global opportunity. Every country -- I mean, if you look at Western Europe, the Western Europe budgets are dominated by health care. If they can save lives and save money by putting in modern information systems, they'll do it and they'll do it quickly. It's clearly going to be our largest business.

Keith Weiss:

Congratulations on a really solid quarter. So Safra, you mentioned on the conference call that you guys are putting up this type of result even on the backdrop, that's not the most stable kind of macro backdrop. And we're seeing a lot of other software companies seeing slipped deals, seeing issues with the consumer, Internet companies lowering their spend. You guys seem to be working through this very well. Can you give us some color into how you're doing it? Is it better execution? Is the Oracle value proposition going through more clearly? Can you help us understand where you're able to put up a bigger beat when a lot of guys are working with skinnier beat if at all during this period?

Operator:

Next, we'll go to Brad Zelnick with Deutsche Bank.

Lawrence Ellison :

Yes. With the exception of Workday, most of the big application companies maybe conspicuously, salesforce.com is a very large Oracle user. And they license our database for use in their cloud. But they're not the only ones. There are a lot of SaaS companies that use our database in the cloud. And that keeps our license business very, very strong. Our database license business is very, very strong. We don't confuse a license for on-premise. Some licenses classically are used on-premise, but a lot of the new licenses that we're selling allow our customers to take those licenses and run them in the cloud, whether it's our cloud or other people's clouds or in the case of Salesforce in their own cloud. So it's -- the Oracle database is still the #1 database in the world by a significant margin. And it's the #1 database in the cloud when you start counting all of the SaaS companies that use the Oracle Database.

Mark Moerdler:

Congratulations on the strong quarter and the very positive commentary and guidance. I'd like to drill a little more on this question of people's concerns. With the increasing concerns of recession by many, can you tell me what you're seeing for the apps part of the business and more specifically for ERP? What I'm trying to understand is how will the shift in ERP to the cloud be impacted by any economic slowdown or won't it be? How should we think about that?

Safra Catz :

No. You go ahead, Larry. You go ahead.

Safra Catz :

Yes. I think people don't realize how exorbitantly expensive it is to run those large SAP systems. They have data centers associated with them. They have hundreds, sometimes thousands of technicians to run them. They're old, they're clunky and moving to Fusion ERP. It's just a totally different world and costs So - the costs are tiny in comparison. I think people sort of forget that. And this applies really to all on-premise systems, but even more so to those old SAP systems. And our cloud offering in that area really is unrivaled. Frankly, unrivaled. And we -- our win rates just continue. And we're very optimistic about it, and we've sold a lot. A lot is still being implemented, and we expect that you'll see that in the numbers, while our customers end up spending less than what they use to spend with on-premise.

Philip Winslow:

Last quarter, Safra, you expected organic revenue growth to reach double digits next fiscal year. And so congratulations on reaching that double-digit milestone this quarter. Now within today's results, 2 numbers really stood out to us. First was the upside to license revenue. And then second was your commentary about total database revenue growing in the double digits. So my question is, Safra, Larry, can you give us more color on what's driving that reacceleration in license revenue in particular? Even as cloud revenue inflected to its highest growth rate in more than 4 years, is this BYOL bringing the heat? Is this autonomous database getting big enough and growing fast enough to lift the overall number, et cetera. And is this the broad-based demand that you mentioned on the Q3 call? Or is this more big deal driven?

Lawrence Ellison:

I'll add 1 thing to that, which is the Oracle Autonomous Database is interesting because it's autonomous. In other words, it doesn't require human beings to run it like database administrators, things like that. Recently, inside of Oracle, inside of our cloud, virtually every database going up for -- to run our cloud, the autonomous database because people don't want to hire database administrators inside of Oracle Corporation. It's just much cheaper to run. And I think in that sense, the Autonomous database is countercyclical. You do save a huge amount of money just by moving from conventional Oracle database to the autonomous database. It's actually more secure, more reliable and cost Wales to run. You don't need a bunch of experts running it. You don't need anyone to run it. There is a programming language called APEX, which uses -- it's a low code programming environment where you use 10% the name amount of programmers that you would use if you were programming in our other programming language called Java. And APEX is also becoming very popular inside of Oracle to build applications. I see this as 2 interesting trends as people using more modern technology to dramatically reduce their labor costs, which I think will play very well in the next couple of years in this economy.

Kirk Materne:

Thanks for taking the questions and congrats on a good quarter. Safra, can you just give any additional color on the CapEx outlook for fiscal '23 relative to what we saw this year? And then just to clarify on the buyback, I just want to make sure I heard it correctly. Is the pace of buyback that we saw this last quarter still reasonable for the near term, even with the incremental debt from Cerner?

Ken Bond:

A telephonic replay of this conference call will be available for 24 hours on the Investor Relations website. Thanks for joining today. With that, I'll turn it back to David for closing.

Ken Bond:

Thank you, Holly. Good afternoon, everyone, and welcome to Oracle's third quarter fiscal year 2022 earnings conference call. A copy of the press release and financial tables, which includes a GAAP to non-GAAP reconciliation and other supplemental financial information, can be viewed and downloaded from the Investor Relations website. Additionally, a list of many customers who purchased Oracle Cloud services or went live on Oracle Cloud recently will be available from the Investor Relations website following this call. On the call today are Chairman and Chief Technology Officer, Larry Ellison; and CEO, Safra Catz. As a reminder, today's discussion will include forward-looking statements, including predictions, expectations, estimates or other information that might be considered forward-looking. Throughout today's discussion, we will present some important factors relating to our business, which may potentially affect these forward-looking statements. These forward-looking statements are also subject to risks and uncertainties that may cause actual results to differ materially from statements being made today. As a result, we caution you against placing undue reliance on these 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 these forward-looking statements in light of new information or future events. Before taking questions, we'll begin with a few prepared remarks. However, we will be making no comments regarding Cerner. With that, I'd like to turn the call over to Safra.

Lawrence Ellison:

Thank you, Safra. I have 2 parts to my comments. I'm going to start with, if you will, business as usual. And that is going from strength to strength in our ERP and HCM cloud businesses. I'm going to go over the wins and the go-lives for our SaaS -- strategic SaaS business. Second, I'm going to talk about our brand-new MySQL HeatWave product. I think it's fair to say, and I'm going to read the quotes -- what I'm going to do is speak a little bit about it, and then I'm going to read the quotes from analysts and customers. And I think you'll find that we've never had a product so well received by customers and analysts in our history. I'm not sure the industry has either. These are really -- it's a remarkable innovation, but I'm going to get to that in a second. First, how is our SaaS business doing right now? Overall, we have incredible progress, winning more and more in the ERP and HCM back office. Q3 was an exceptionally strong quarter for ERP cloud sales. We now have over 10,000 Fusion ERP, HCM customers. And for the first time, we're beginning to see -- we've been in this business long enough. We're beginning to see us roll up certain industries, starting with the largest industry on Earth, health care. Okay. So how are we doing in health care? We already have Tenet Health, Kaiser, Mayo Clinic, Cleveland Clinic, Northwell Health, Mount Sinai, Atrium Health. I can go a long list of ERP and HCM wins in the health care -- those are all health care providers. We've added some additional health care providers, mainly hospitals and clinics. We've added the CHS Community Health Services. That's a consortium, that's 83 hospitals, and it's an ERP, HCM, SCM win there. And we're replacing Kronos. I call that out because Kronos -- hospitals really are -- while they're not recognized having some similarities to Uber, they have a lot of people that work at hospitals that are not employees at the hospitals. Hospitals have a gig economy. Doctors work in multiple hospitals, multiple clinics, have their own offices. Nurses, same thing. Scheduling and paying the workforce in hospitals is one of the most complicated things ongoing in our changing economy. And we have adapted our HCM systems so that we do help the hospitals recruit, track, schedule and pay for their health professionals. The only other company that was doing that, someone not very well known is Kronos. And we're beginning to replace out Kronos in the hospital space, and we did it to community health systems. We won an HCM deal over Workday at TriHealth. Loma Linda University's health care, health centers, we won an HCM over there, and they already have our ERP. Health care is interesting. I started by talking about hospitals, provide -- people who provide health care. Health care industry is much bigger than that. There are medical device manufacturers. They are pharmaceutical companies. They are the payers, insurance companies and government agencies that are all part of this health care ecosystem. So we're not just focused on providers like hospitals and clinics, but also we won a big ERP deal over SAP at Johnson & Johnson -- at J&J. We won a big ERP deal over SAP at the medical device company, Haemonetics. We won an ERP deal at Saskatchewan Health Authority, one of the government payer, and most of the payers in health care are governments. So it's this entire ecosystem that we're building specific features and functions for to automate health care across the board. No one has been able to roll up health care. It was pack a little bit. This portion of just the providers, just the ambulatory clinics, just the inpatient hospitals, just the payers, just the pharmaceutical company, just the medical device. We're going after the entire integrated ecosystem, and we're having some great results. Obviously, that influenced our decision to buy Cerner. We have great go-lives at Franciscan Missionaries health system. That's a consortium of over 20 hospitals. We wanted INTEGRIS Health. They went live on our ERP, HCM, FCM, 16 hospitals. Nemours Children's Health went live in HCM with 34,000 users. So health care has been a real strength for us. And obviously, we'll get stronger with Cerner as we provide additional capability to providers. Okay. The other industry that we've always outlined as being a key strategic target of ours in addition to health care are -- is financial services. And we have a very strong position in financial services, Bank of America, JPMorgan Chase, Santander, Bank New York Mellon, HSBC, Lloyds, Macquarie, Credit Suisse, UBS, Crédit Agricole and a lot more are our customers in ERP and HCM. We just won TD Bank, ERP win over SAP at TD Bank. We just won Silicon Valley Bank, another win over SAP. We won Societe Generale in France. We now have 2 of the 3 largest banks after winning Crédit Agricole in Q2, and we will get the other one. We will get Paribas very soon. JPMorgan Chase just did a huge expansion of our -- on our HCM product. Discover, the credit card, just went live on ERP. So again, strong in financial services, getting even stronger. In Communications, our big customers, AT&T, Orange, MTN, Birdie, [Ultra], all around the world -- we just added a big ERP win at Rogers Communications. Huge go-live at Windtree, and that was a replacement. The go-live at Windtree was a replacement of SAP, not a win over SAP, but replacing an existing SAP system. In logistics and transportation, we had -- where -- our big customers are UPS, FedEx, Knight Swift, Yellow, Schneider National and so on. We had a big ERP HCM win over SAP at U.S. Express. We had an HCM win at TD for its freight where we replaced Workday. Didn't beat Workday. We replaced an existing Workday system. Go-live at DHL. DHL is really interesting. It was a go-live in Germany and Austria right in SAP's backyard. And we have a number of wins in Germany. I think this is why we're pretty confident these days against the former winner -- the winner on the on-premise ERP wars, SAP. In Germany, in SAP's backyard, we won DHL. We won Deutsche Post. We won Deutsche Bahn. We won Dürr IT Services, and we just added a win at Daimler truck over SAP. In Japan, a country really not known for buying package application software very much, we've got a pretty good position in Panasonic. We're in Panasonic. We're in Toyota. We're at Mizuho Financial Services. This quarter, big wins at Canon -- a big ERP win over SAP at Canon. A big win at Taisei that's one of the 5 largest general contractors in Japan. So doing well in Germany, doing well in Japan, doing well in these big economies where, historically, we have not done that well in applications, but we are now. In grocery, where we have Sainsbury, Kellogg, Tesco, Auchan, Kroger and Albertsons. We had a huge ERP expansion at Kroger and a big go-live at Albertson with 280,000 users. Albertsons is now live on both HCM and financials. So very strong in grocery. Hotels and resorts were our big logos are Marriott, Hilton, Caesars, MGM. We just won Intercontinental Hotels and Resorts replacing as an HCM win -- replacing -- we're not allowed to name who we replaced in HCM other than to say they're a very large cloud competitor of ours. Hilton, we went live with HCM, the biggest HCM expansion in the UK. Higher ed. Higher ed where our big logos are UCLA, Princeton, Rutgers, Vanderbilt, Penn State, University of Texas. We added an HCM win at the University of Cambridge in the U.K. We added 3 more campuses of the University of California system for ERP. We now have 6 of their 9 -- of the 9 campuses for ERP. Tennessee, University of Tennessee, we won ERP and HCM. The University of Arizona, big ERP win, all higher ed. But some of the other industries, in consumer goods, we had a really important win in ERP HCM at a division of Unilever. And that was an SAP replacement, not a win over SAP. We replaced them. In aerospace and defense, we won ERP and SCM at BAE Systems, a win over SAP. We won HCM over SAP at Tata Steel. We won a big -- a full suite expansion at Cummins. Eni, in oil and gas, which has always been an SAP -- very, very strong industry for SAP. We beat them, Eni, at a gas company. In the public sector, we got, well, a very important agency these days. The IOM, the UN agency, International Organization from Migrants. This, again, was a replacement of SAP. We also won the U.K. Ministry of Defense. We went live with a big bang, ERP, HCM, SCM for over 50,000 user go-live. In high tech, Zoom went live on ERP and SCM. Iron Mountain went live on ERP, SCM. Bed, Bath and Beyond went live on ERP. Tiffany went live on an HCM expansion for 300 of their stores. In engineering and construction, Jacobs went live on ERP and SCM. Environmental services, waste management, big suite go-live on ERP and supply chain. And I'll finish it off in professional services where ABM went live. Okay. So very, very strong quarter for us in the back office in ERP and HCM. Now I'd like to switch from SaaS to infrastructure. And we had a major announcement and -- are making a major announcement about our other database. The 2 much popular databases in the world are Oracle and MySQL. MySQL is the world's most popular open source database. MySQL is very good at transaction processing, but historically, has not been good at query processing. So MySQL customers usually use the MySQL database for query -- for transaction processing. And then they'll move their data from the MySQL database into Redshift, at Amazon or into Snowflake to do the query processing. That's how it's typically used. MySQL for transaction processing, Redshift, Snowflake for query processing. By the way, the AWS has their own version of MySQL. They call it Aurora. And the AWS, my Redshift, MySQL Aurora, Redshift business is a multibillion-dollar business. Oracle -- now we're going after that business in 2 ways. We built a product, MySQL HeatWave, which is different than earlier versions of MySQL. MySQL HeatWave is good at both transaction processing and query processing. So MySQL HeatWave doesn't simply replace Aurora. It replaces both Aurora and Redshift or it replaces both Aurora and Snowflake because MySQL HeatWave does transaction processing very well, replacing Aurora. And it does query processing a lot better than Redshift or Snowflake. Because HeatWave runs -- and we decided for the first time to make this a multicloud product. So Oracle HeatWave will run already in the Oracle Cloud, but it is -- we also have it up and running in AWS. And Azure users will be able to use it as well. So it is a multicloud product. AWS users -- why did we do that? We did that because we're going after the Aurora user base and the Redshift and Snowflake user base. We want to make it really easy to convert from Aurora and Redshift or Aurora and Snowflake to Oracle HeatWave. And if we're running an AWS, for example, you press a button, a couple of buttons, and your data is moved immediately to Oracle, MySQL HeatWave. You do not have to change your application at all. You press a couple of buttons, and you move it. Okay. Why would you do that? Well, because the cost performance benefits. So moving to MySQL HeatWave are extraordinary. Now I'm going to stop talking, and I'm going to start reading. And I'm going to start reading analyst quotes, and I'm going to read them word for word. So when I say the benefits are extraordinary, I'm understating what they're saying. So let me bring up the slides. I'm going to just start reading a few quotes. Okay. One industry analyst, combined with HeatWave and Autopilot, combined with HeatWave and Autopilot, MySQL database service may very well be the single greatest innovation in open source cloud databases in the past 20 years. MySQL HeatWave and Autopilot represent a quantum leap with top light query performance and superb transaction support. Oracle wants to open up a second front in the battle for the database market leadership. They're attracting an entirely different user base with this product. Wikibon believes that the technology underlying MySQL HeatWave is an inflection point in database design and architecture. The MySQL HeatWave technology is by far the best in the market. Oracle have shown AWS and Snowflake how to design and architect a true MySQL cloud database. Customers can expect MySQL HeatWave to outperform about 7x faster than Amazon Redshift or Snowflake at 2.5 -- 2 to 5x lower cost. The benefits against Amazon and Aurora are even greater. New entrants such as Snowflake will need to improve their cloud technology fast to stay competitive with HeatWave. This is all word for word what analysts are saying. And these are the most distinguished database analysts in the business. The bottom line is we believe the competition just got outplayed in every measurable metric imaginable. This represents a wake-up call for the industry and a rude awakening to the database cloud competition as they all must respond now to the MySQL innovation juggernaut. HeatWave is the physical manifestation of nearly 10 years of deep database engineering techniques, over 5 dozen patents and demonstrates what real cloud database innovation looks like in 2021. Oracle introduced MySQL HeatWave, and they did send shock waves because they named and shamed basically every database company out there. And my favorite is what they talked about with Snowflake. You can spend $80,000 on HeatWave, and that would cost you $420,000 to run on Snowflake. It's a no-brainer. These new fully transparent benchmarks -- by the way, we put all of our benchmarks on GitHub. It's all public. The code, the data, the customers can reproduce all of these benchmarks that the analysts are talking about. That's what the analysts did. The analysts went out and ran their own benchmarks. And they were shocked. These new fully transparent benchmarks demonstrate HeatWave's performance, price and scale advantages over all other MySQL and cloud databases. Clearly, the cloud data warehouse market wasn't ready for this. And now the competition needs to scramble as they grapple for answers. For organizations using MySQL, Oracle has given them yet another reason to invest in its HeatWave offering by delivering 7x the performance at 1/5 the cost of solutions such as Snowflake. Together with massive scale-out capabilities, this combination makes MySQL HeatWave melt down Snowflake and vaporize -- it sounds like I wrote it, but I didn't. These are -- and we'll provide you with all of these quotes, all in -- full context, names, quotes. These are all analyst quotes. Taken together with massive scale-out capabilities, this combination makes MySQL HeatWave melt down Snowflake and vaporize Amazon Redshift with AQUA. MySQL HeatWave's TPC-H analytics testing literally blows away Amazon's Redshift with AQUA in both performance and cost performance. It's 6.8x faster and 47% less expensive. Amazon Redshift with AQUA is 18x slower, resulting in MySQL HeatWave coming in at an extraordinary 17x better, 17x better cost performance. MySQL HeatWave with Autopilot sets the bar orders of magnitude higher than AWS, Azure, Google and Snowflake. I think I'll stop right there and turn it back to Safra.

Operator:

[Operator Instructions] And our first question for the day will come from the line of Brad Zelnick with Deutsche Bank.

Safra Catz:

Yes. You've got that right. And it's basically because of what I've been telling you all for a while, which is our fastest-growing business, which is our cloud, is now getting to be very big. And when you're growing different parts of the business, 25%, 30%, 40%, 60%, and it's a big number. It causes these -- it's just math here. It increases the overall rate of growth of the business.

Lawrence Ellison:

Well, I think it's broad based. I think one of -- the back office -- one of our partners -- we're working with one of the largest banks on the planet with -- on a payment system, a B2B payment system because the ERP customers are coming to Oracle. So if you look at the future with the fact that we're so strong, dominant, I'd argue, in Cloud ERP, what does the B2B purchase look like? A B2B purchase looks like in a modern cloud world, one Oracle ERP system making a purchase from another Oracle ERP system. And we want to automate that B2B transaction. There's 2 Oracle ERP systems are talking to one another. To automate that transaction, we have to be able to pay for that. We have to be able to check credit, finance the payments, a range of logistics. So we're working with large -- a very large bank and a very large logistics company to automate that aspect of our ERP business. Some of it's never been -- you don't think of ERP doing that, but it's this network of these ERP systems talking to one another. That's a huge business revenue opportunity to turn on that B2B payment system. So the banks are joining in. Logistic companies are joining in because the customers are here. Once the ERP customers started coming to Oracle, all of the adjacent applications and all the ISVs with adjacent applications wanted to be in the same cloud as the ERP customers. The integrators had to become familiar with the cloud because that's where the customers are, and that's where customers are going. The ISVs -- and these are kind of interesting ISVs. Giant banks, giant logistics companies putting up their logistics and payment systems in our cloud to facilitate B2B transactions between our ERP system is just a gigantic business opportunity that no one really had ever thought about before.

Raimo Lenschow:

I'm trying my luck here, Safra, but like any comments on the TikTok rumors that came out today? And then in case you want to answer that. Larry, one for you on, on that success in the back office systems, like is that driven by post-pandemic people realizing, oh, shoot, I really need to update that. So that's kind of more temporary boom that you're seeing here? Or do you think there's more legs to that?

Lawrence Ellison:

Yes. I'll second that. It's excellent. Let me take the other part of your question, which is, do I think this is a kind of a year 2000 like pandemic boom, people rushing to get to the cloud, and it's going to slow down after? Now that the pandemic, thank God, it's beginning to recede. Just the opposite, we're really still in the early days. We're in the early days of either understanding how different Cloud ERP is from on-premise ERP. And I just mentioned this one interesting example in that in the modern world, as more and more people go to Cloud ERP and you buy -- you procure something, that it's really one Oracle ERP system talking to another Oracle ERP system, but it needs to be facilitated through -- with a financial -- a finance partner and probably multiple finance partners and multiple logistics partners and -- to automate and finance and move that product from A to B and finance that product and understand when it's going to be delivered, all of those things. And so no, I think we're really in the early -- really early days. Even though we now have 10,000 customers in Oracle ERP Fusion, another -- almost 30,000 customers in total, including NetSuite, I still think we're in the very early days of doing this. It's just getting faster. I mean the growth -- our growth is accelerating, accelerating, accelerating. You look at our growth rate, it's not going down. We're getting bigger and the growth rate, and we're sustaining that mid-30s -- high 20s, mid-30s growth rate with NetSuite and Fusion in spite of the fact we've more than doubled.

Philip Winslow:

Congrats on another quarter of accelerating growth. One comment from your script today really stood out to me, and that was continued to grow profits while we push our top line growth into the double digits next year. Now obviously, this is continued reacceleration from the 6% to 8% the past 2 quarters and your guidance, obviously, on a constant currency basis for Q4. So my question to you, Safra and Larry is, can you help just unpack this for us in terms of the puts and takes between database and apps, cloud on-premise, et cetera, that give you confidence for continued acceleration in the double digits, but also, like you said, while growing profits?

Operator:

Our next question is going to come from the line of Keith Weiss with Morgan Stanley.

Lawrence Ellison:

Well, let me just start with health care because you think of health care as a vertical, and Cerner is certainly in a vertical, which is an epic they compete for providers. And people think of that as, well, that's health care. But that's not health care. There's clinical trials for -- in pharmaceutical companies. You want to integrate -- the clinical trials the pharmaceutical companies pay for and run, but actually not really. The providers run those clinical trials. So the whole ecosystem -- no one's ever tried to do the entire ecosystem. But to answer your question, we had -- we are greatly enhancing our HCM system for hospitals so that they can have nurses that work 3 days a week or 4 days a week and doctors that work in a couple of different hospitals. And scheduling these independent contractors, if you will, is very complicated. You don't of think of hospitals as being a collection of independent contractors, but it's full-time workers and independent contractors, and scheduling that is complex. Paying them is complex. Some of them are unionized. The rules are complex. So we're doing a massive -- we're doing a lot of industry-specific features for hospitals to help them manage their workforce. In inventory -- hospital inventory isn't in a warehouse. Hospital inventory -- the drug, they're scattered all throughout the hospital. Nurses stations have drugs -- there's an interesting drug called tranexamic acid, which is used to stop bleeding. Where you can't go to the warehouse, someone's bleeding, you can't go to the warehouse and look for the drug. You've got to be able to find it immediately, and it's got to be close to the operating room. It's got to be close to -- where intensive -- the intensive care unit. So the inventory is distributed all throughout the hospital. So we are paying RFID tags in all the inventory so you can find things very, very quickly. So how we handle inventory is being enhanced specifically for hospitals. And I can go on and on. One thing a doctor does is before I can authorize a test, before I can authorize prescribing a drug for a patient, I have to check with the insurance company to make sure they'll pay for it. Now -- so the doctors and hospitals spend a lot of time negotiating with the payer, the insurance company. Well, okay, given these symptoms, can I get this test paid for? Yes, no? Given these symptoms, can I get this drug paid for? Yes, no? We're automating that interaction between the payers and the providers. So yes, we're adding a lot of industry-specific features to automate the interactions in the entire ecosystem. And that's why we think we're in a good position to roll up health care, which is a gigantic industry. No one's ever really tried this before, but we have all the pieces. We have the payment pieces. We automate a lot of the insurers. We have HCM, which allows us to help them manage their workforce. We have ERP, which helps them keep track of inventory. And soon, we will have Cerner, which will help them to deliver care to patients. So we'll be -- and we have clinical trial system for the pharmaceutical noise. We have the entire portfolio, and we're interconnecting all the pieces so we can make that ecosystem work efficiently for the first time. And actually, the pandemic has showed we're in desperate need of such an integrated system.

Lawrence Ellison:

I think we can do it. We're on our way to do it. And the benefits to Oracle are great. But actually, it's -- this is -- at least for me, personally, this is a mission. I think the benefits to every patient in the world is going to be enormous. We need to do this. The pandemic has shown a variety of weaknesses in our health care systems. We have the technology to address those weaknesses, and that's what we're going to do.

Operator:

Our last question for the day will come from the line of Kirk Materne with Evercore ISI.

Safra Catz:

Well, I will admit that the past couple of years have been really challenging, and I'm incredibly proud of our team. I think our excellent relationships with our wonderful suppliers made it possible for us to build out our cloud as well as provide hardware to our customers. We couldn't meet every need as quickly as we would have liked, and we have an extremely large backlog. That is absolutely true. That backlog also gives me enormous visibility because those customers have told us they want Cloud at Customer or they want hardware. And I have a line of sight to get it landed in their facilities. The reality is that we have so much going on at the same time. We've built out our cloud internationally. We've built a number of private clouds where it is exactly the same capability as our public cloud for our customers who have regulatory requirements that require something special or whether it's data sovereignty or otherwise. And we are meeting everyone's needs. And I think that, again, the incredible optimism you hear from me and Larry is very much because we have line of sight to the massive demand that has been coming our way and that we've been handling and a line of sight on how to deliver it. So now I read the newspapers -- actually, I don't read the newspaper. I read the computer that used to be a newspaper, and so we see everything that's going on. But I'm extremely confident in the capabilities of my team to execute.

Ken Bond:

Thank you, Holly. A telephonic replay of this conference call will be available for 24 hours on our Investor Relations website. Thank you for joining us today. And with that, I'll turn it back to Holly to close the call.

Ken Bond:

Thank you, Erica. Good afternoon, everyone, and welcome to Oracle's second quarter fiscal year 2022 earnings conference call. A copy of the press release and financial tables, which includes a GAAP to non-GAAP reconciliation and other supplemental financial information, can be viewed and downloaded from our Investor Relations website. Additionally, a list of many customers who purchased Oracle Cloud Services or went live on Oracle Cloud recently will be available from the Investor Relations website following this call. On the call today are Chairman and Chief Technology Officer, Larry Ellison; and CEO, Safra Catz. As a reminder, today's discussion will include forward-looking statements including predictions, expectations, estimates or other information that might be considered forward-looking. Throughout today's discussion, we will present some important factors relating to our business which may potentially affect these forward-looking statements. These forward-looking statements are also subject to risks and uncertainties that may cause actual results to differ materially from the statements being made today. As a result, we would 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 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.

Lawrence Ellison:

Thank you, Safra. All right, I'm going to discuss Oracle's Cloud ERP status and strategy. So how big is our on-premise ERP business today? I mean a lot of the people – a lot of the companies like Microsoft did a great job of moving their entire Microsoft Office installed base into the cloud to dramatically increase the size of their cloud business. Unfortunately, we didn't have the same option or opportunity, so I think it's – to me, I think you are going to find this interesting. So how big is our on-premise business today? Well, we had 7,500 customers in Oracle on-premise, their ERP made up of E-Business Suite, PeopleSoft and JD Edwards. Only 1,000 of those 7,500 have moved to Fusion Cloud ERP. Now we have not lost any of these customers to competitors. We expect all the remaining 6,500 to move to Fusion ERP, but it hasn't happened yet. That's all upside. That's all upside. And I think a lot of people don't really realize that how – so now let's migrate over and look at how big is our cloud ERP business today. Well, round number is $5 billion a year revenue, and we have 8,500 Fusion customers. But remember only 1,000 of those 8,500 came from our old on-premise business. 6,500, plenty to come. So 7,500 of these 8,500 were not running Oracle ERP before we came out with our cloud product. Those are all new customers. Add to that the 28,000 new NetSuite customers. So Oracle has a total of 35,500 cloud ERP customers that are new to Oracle. Only 1,000 of our on-premise installed base has migrated so far. Let me repeat that. 35,500 net new cloud ERP customers we got in the last few years. Only 1,000 from our installed base that's going to be coming to us later on. So how fast is cloud ERP revenue growing about? So growing about 30% a year. And so let's look out five years and ask the question, how big will we be in five years? And I think the number would be approaching $20 billion in cloud ERP, where the majority of those customers are not people who are migrating, our customers that are migrating from Oracle's on-prem business, but they're migrating from other people's on-prem business. Whether it's a small company like Infor or a large company like SAP or a variety of other companies, the vast majority of our cloud ERP customers are not coming from our installed base, they are coming from someone else's installed base. And again, yes – 85% of our current – that we have are from someone else's installed base. So what are our margins in this five year? Let's say, we are estimating $20 billion cloud ERP business. Well, it's scale, at that scale, that's about an 85% margin in that business. And as Safra pointed out earlier in her comments, the cloud business is inherently much more profitable and much more predictable than our old on-premise business. So we expect five years from now – and again, these are just estimates. But based on growth rates and the size of our current business, we expect to have about 30,000, five years now, 30,000 Fusion customers plus 100,000 NetSuite customers bringing in $20 billion at 85% margins. All right. So what's happening? I mean how are we winning so many new customers? Where are they coming from? Who are we competing? Well, we have – really we only have two significant competitors. We have two significant competitors, SAP and Workday. I've said this before. SAP did not build a true cloud product, and I'm going to explain what a true cloud product is in just a minute. But SAP, because they didn't build the cloud product, they bought some edge products around the cloud, but they didn't actually rebuild their software for the cloud. That's the same old 35-year-old software they've been selling forever. Their goal is simply to hold on to their installed base, but they are losing customers to us. For example, this quarter Petronas, oil and gas – big oil and gas customer moved over. I gave a long presentation about a couple of us taking already a couple of hundred pretty good-sized SAP customers. So we are doing very well against SAP and continue to do it well SAP, winning Petronas and others this quarter. But Workday is very interesting because Workday does have a cloud product. And they've done quite well in HCM, but they have very few live. Try to go out and find live Workday ERP customers. Try to find any. So we're winning almost everything in cloud ERP. We are beating Workday 90 – I don't know, 98% of the time, we beat Workday and we are taking customers from SAP's installed base. They are still holding on to more of their base than we are taking, but we are making inroads. So again, what's going on? Why are we winning? Well, we are winning because we have a true cloud product that is very, very feature-rich and Burberry has a very low cost of ownership. So it's enormously capable, and it's not expensive compared with the old on-premise systems. Our implementations, I mean we've got implementations of medium, large companies that sometimes take six months. Now don't get me wrong. Someone like Bank of America took a few years. That was an SAP customer that we won. And that was just doing the Merrill Lynch division. It took a few years. And then hopefully, we are going to continue to make progress at Bank of America. So in general, it's much faster and lower cost to implement our cloud product than implement, let's say, SAP or even Workday, but a gigantic difference was SAP. Very easy to use. We have the user interface. There is two aspects. There's the computer interface that works on mobile phones and tablets and things like that. And then we have a voice digital assistant. You talk to our applications. You talk to all of our applications. You ask for reports. You ask questions. And I think it's like Alexa for the enterprise. All our apps run on smartphones, tablets, desktops, every app. Not a handful of apps are mobile, every single app runs on smartphones, tablets, desktops, every single app has a voice interface. And this is what I mean by a true cloud product. We deliver a new version of Oracle Cloud ERP to 100% of our customers, all 8,500 customers for Fusion every three months. That's right. They get a new version with sometime hundreds or sometimes even thousands of new features. Every three months, they get that. Now why is that important? Well, I mean because our customers want – specifically in different industry, they don't all want the same new feature depending on the industry you're in, depending on your size, depending on the country you're in, your three most important new features you must have are different among a lot of different customers. So in the old days with SAP, customers built this themselves. They went out and hired Accenture or somebody else, IBM Services when it was IBM Services to build these features for them. Now the new model is – it don't customize your product. You don't have to. Give us your list of new features that you need and we'll build them and put them in the next release, and we can build them faster than you can. And you might have to wait three months or four months or five months before you get a new version. But you get them quickly, and we are the ones that build them. And they are part of the standard product. They are not some customization you have to maintain forever. So they're not expensive. In fact, they're free. They come with the product. This is radically different than what SAP offers in their and what they call their cloud product, which I say is not a true cloud product because they don't have new versions every three months. They don't have new versions every three years in their so-called cloud product. You make all the same modifications you used to make by hiring people and customize. That's not the new model. That's not how it works in a real cloud system. That's a fundamental and every time they go in and modify the system, what if they make a mistake? What if they have a bug? That's going to make the system less reliable and more expensive, potentially slower. That doesn't happen with real cloud systems. We, the vendor, are responsible for enhancing it and testing it on a regular cadence and responding to their requirements and delivering things to them in months, not years. We are also on schedule to deliver some unprecedented new technology. We won't be long before when our customers upgrade every three months, they upgrade. And sometimes they are down for an hour or so, and we are on schedule to deliver zero downtime upgrades. So it won't be long now when our customers move to the new version, there will be no downtime. Nobody else has this. Nobody else is working on. And soon all of our applications will be on the autonomous self-tuning Maximum Security database. I've said this before, what's the most important thing about the Autonomous Database? The money you save because there's no human labor. No actually, the money is good – the money you have to save is no human labor is good. But no human labor, no human errors, no security risks, no stolen data. Almost all of the – not all, but almost all of the data that's been hacked out of other clouds has been hacked because some human being made a mistake, left a port open, created a vulnerability. You can't do that with the Autonomous Database because human beings don't touch it. It’s just like a self-driving car is safer than a car driven by human being, a self-driving database is much safer and more secure than a database that is managed by human beings who make mistakes and cause problems. Okay. So I'll stop there and I’m going to slightly turn a little bit and describe what's going on in the marketplace kind of on an, in from an industry perspective. Fusion ERP has been out for a while, and we are beginning to roll up entire industries. We are adding the features for banking. I think on an earlier quarterly call, I said our two largest and most – strategic industries going forward in ERP would be banking and healthcare. Maybe not just ERP, but for the company in total will be banking and healthcare, and we are doing extremely well in those industries. Some of our live banking and financial service customers include JPMorgan, Bank of America, Bank of New York Mellon, HSBC, State Street, NatWest, Santander, Macquarie. I can go on and on and on with a long list of banks all over the world. But also we have insurance customers, USAA, Nationwide, AAA and again and a lot more. I'm not going to list everybody. In fact, we provide a printed list at the end of every quarter of our all the new wins we had in the quarter. And we had a lot of new logos in banking and financial services in Q2. We won Barclays. That was another big bank that we won. First Bank, in insurance. We won Ameritas, MoneyGram. And we had some major go-lives, huge go-lives at MetLife, Blackstone and Assurant. We are doing very well in financial services and specifically banking. Healthcare, the other industry I identified as being strategic and above the – and on par with banking in terms of the importance to our future. So large healthcare customers include Kaiser, Cleveland Clinic, Providence Saint Joe. I would say that we have a lot of healthcare wins around the world, but I'd say our healthcare wins are concentrated more in North America as compared with banking. New healthcare wins this quarter

Ken Bond:

Yes. Erica, if you could queue the audience, please?

Brad Zelnick:

Great. Thank you so much and congrats on a great quarter with accelerating growth. Larry, you shared quite a bit with us, really, really helpful. But I wanted to ask you about OCI because we continue to hear great things from customers. And I think people understand Oracle's cloud is hypersecure, highly automated, and there's real price performance advantage. But as we think about your product road map and what it takes for Oracle to capture more than its fair share of the broader public cloud market, how much are you investing in breadth versus depth? Because we just see in this quarter alone, like the partnership with Airtel in India, Orange in West Africa, new regions in Singapore, UAE, France, and I'm probably missing some. But clearly there's demand. Otherwise, I know Safra wouldn't be making these investments. But when a new competitor posts – Larry, when your main competitor posts over 200 services up the stack, how far should we expect to see you build up the stack competing on functionality versus continuing to go broad with what you already have? Thanks.

Brad Zelnick:

Larry, that's super helpful. Thank you, again and congrats.

Safra Catz:

Brad, you're not going to believe this, I've got more to add to that answer. So first of all, you missed a few data centers, not the least of which is Israel, France and another one in Italy. But the real answer is the fact that I'm sure you've seen Gartner's scorecard where we actually passed Google this year and are higher than where Microsoft, who's been in this longer than us, was a year ago. But in addition, that scorecard doesn't even measure the capabilities we have in handling very large databases which, of course, we do uniquely of all the other hyperscalers. So it's all very interesting, but we have things in addition to applications in the infrastructure world that they cannot handle. And that has just put us in an incredible position, and that's why customers are coming to us. All right, I will stop right there.

Operator:

Our next question comes from Raimo Lenschow with Barclays Capital.

Lawrence Ellison:

Yes, thank you very much. I think we spend a lot of time in automating our install. Installing the product, making it very easy to configure, having – I think our consulting infrastructure, the implementers around our products now are much more experienced. The products have gotten much better. The people have got more experienced. The customers themselves have gotten more experienced. So the cost of putting one of these things in has dropped precipitously. The time it takes to put it in, obviously related to the cost has also dropped precipitously. There's just no comparison to the way it used to be to the way it is now. Well, the way it used to be a customer bought his own unique computer configuration and added some modifications to the ERP system and installed it over a period of – I mean, it wasn't unusual back in the day for an SAP implementation to take five to seven years. I know it sounds crazy, but some of them cost billions, billions of dollars. Now for a medium-sized company, six months is not unreasonable to get you live on – maybe not your entire business, but financials and procurement and a big chunk of your business, we can get live very, very quickly at a very, very low cost. So it's just a totally different world. And then the other thing I'm going to mention one more time. Customers are not encouraged to go ahead and build their own extensions. If you need an extension, tell us what you need, and maybe we can schedule it in the next quarter or two in the upcoming releases. That's a fundamentally different model. It's so much less expensive to have us do it for nothing, than to try to do it yourself.

Ken Bond:

Next question, please.

Keith Weiss:

Excellent. Thank you for taking the question, guys, and really impressive quarter. I think Brad had a really good point earlier that investors are more and more looking at sort of your CapEx intentions and looking at data center count, frankly, as a leading indicator of growth for Oracle. So I was hoping you could update us on that. And maybe digging into that data center side, capacity expansion isn't just in data center expansion. You could expand within data centers as well. Can you help us think about how we should think about overall capacity to deliver through both data center expansion and expanding those existing data centers to really capture all of these investments that you're making?

Keith Weiss:

Okay. Super helpful. Thank you.

Mark Moerdler:

Thank you very much. I'm going to follow-up on the discussion on OCI Gen 2. Oracle's dedicated regions seem to be reasonably unique offerings and a different spin on the hybrid cloud, which the largest hyperscale providers are not offering. Can you explain how you're able to deliver this successfully with good margins, and why others cannot? And can you give us any sense of how large do you see that opportunity? Thanks.

Mark Moerdler:

That makes a lot of sense.

Lawrence Ellison:

Yes, a lot of people talk about – they talk about – I think its hilarious. I hear people talk about hybrid cloud. So a hybrid cloud means there's someone's public cloud. And then whatever you have in your data center is the hybrid. This is ridiculous. That's not a cloud. People say, well, that's the most common cloud there is, whatever you got plus some link to a public cloud. That is not a hybrid cloud. We offer identical hardware, the identical automation software. We'll put a region. It runs all of our apps, it runs all of our services, 100% of them. And we'll put it in your data center. We can do that now because we can run that – we have the automation software to run that on your floor behind your firewall. We can build that. So it's true. So our notion of a hybrid cloud is basically the same thing, but it's located on your data center floor behind your firewall with high-speed network interconnects where you're comfortable and feel safe, safer than if you were in the public cloud. That's the only hybridy thing about it. Otherwise, it's exactly the same thing. You can move a workload from a public cloud into your private region and then back out of your private region back in the public cloud. They are identical in every way except for the security protection and some firewalls in your private data center. That's a real hybrid cloud. The other guys don't have it.

Lawrence Ellison:

Thank you.

Philip Winslow:

Hi, guys. Thanks for taking my question and congrats on a great quarter and outlook. In a quarter where a lot of numbers jumped out, I mean, the one that jumped out to me the most was the license growth year-over-year. I had to go back nine years to my model to find a quarter that was actually higher than this. And obviously, when I think about license for Oracle, I was assuming its being driven by the database business. And then when you think about that…

Philip Winslow:

That's great. That partially answers one of my questions. But when you think about that license and your example of the – for example, like Salesforce together with just the cloud services and the acceleration you see there, I mean just that overall business seem to accelerate during Q2 here and even versus Q1. And if we think about some of the other smaller competitors in the space, they've seen acceleration as well. So I guess what my question is there's seems to be something going on in the data world and the data infrastructure stack. And obviously when Oracle moves at your scale at these percentages, there definitely seems to be something going on. So what is that? And how do you think about the sustainability of those drivers?

Lawrence Ellison:

Yes. And I would say that as SAP moves their applications to S/4HANA in the cloud and they do what I call hosting and they call cloud. The vast majority of those SAP databases do not run HANA. Way over 95% of them still run Oracle. It's a big business for us, even when it migrates to the cloud. I mean Amazon has customers who have taken their Oracle database licenses, and they're running those Oracle database licenses in the cloud. So license does not mean on-premise, and license does not mean the cloud. It's a bit of a – it's a mixed bag, right? Some of that license revenue and most of the new license revenue is on its way to the cloud.

Ken Bond:

A telephonic replay of this conference call will be available for 24 hours on the Investor Relations website. Thank you for joining us today. And with that, I'll turn the call back to Erica for closing.

Ken Bond:

Thank you, Erica. Good afternoon, everyone, and welcome to Oracle's first quarter fiscal year 2022 earnings conference call. A copy of the press release and financial tables, which includes a GAAP to non-GAAP reconciliation and other supplemental financial information, can be viewed and downloaded from our Investor Relations website. Additionally, a list of many customers who purchased Oracle Cloud Services or went live on Oracle Cloud recently will be available from Investor Relations website following this call. On the call today are Chairman and Chief Technology Officer, Larry Ellison; and CEO, Safra Catz. As a reminder, today's discussion will include forward-looking statements including predictions, expectations, estimates or other information that might be considered forward-looking. Throughout today's discussion, we will present some important factors relating to our business which may potentially affect these forward-looking statements. These forward-looking statements are also subject to risks and uncertainties that may cause actual results to differ materially from statements being made today. As a result, we caution you from placing undue reliance on these forward-looking statements and we encourage you to review our most recent reports including our 10-K and 10-Q and any applicable amendments for a complete discussion of these factors and other risks that may affect our future results or the market price of our stock. And finally, we are not obligating ourselves to revise our results or these forward-looking statements in light of new information or future events. Before taking questions, we'll begin with a few prepared remarks. And with that, I'd like to turn the call over to Safra.

Lawrence Ellison:

Thank you, Safra. Oracle Cloud business, infrastructure plus applications has rapidly grown to $10 billion a year. Oracle and NetSuite were pioneers in cloud application. Oracle and NetSuite being the very first cloud company of any kind. Several years later, Amazon launched the very first cloud infrastructure company. Oracle Fusion ERP has over 8,000 cloud customers. NetSuite ERP has over 28,000 cloud applications customers. Oracle is the overwhelming market leader in the global cloud ERP market. Oracle Cloud ERP is currently used by many of the largest, most complex companies on Earth. This past quarter, in Q1, a company I couldn't name until now, major portion of Bank of America went live on Oracle Fusion ERP consolidating ledgers in 33 separate countries into one global cloud ledger. Also in Q1, another huge bank, Macquarie, the largest investment bank in Australia went live with Oracle Fusion ERP. Also in Q1, Vanguard, the largest global mutual fund provider went live with Oracle Fusion ERP, not just in Q1. Oracle Fusion is building a very strong position in the world's largest financial services company. HSBC, Bank of New York Mellon, JPMorgan Chase, they are all live on Oracle's Fusion applications. We have started working with our strategic partners and banking to develop a new generation of cloud B2B financing and payment systems. There are things you can do on the cloud you could never do on-premise. There are opportunities in the cloud. If you are the largest ERP supplier, there are opportunities to go into new businesses like financing and payments with banking partners that would have been impossible with the old on-premise systems, and those are opportunities we are aggressively pursuing with the world's money center banks. Banking and healthcare will be Oracle's two largest verticals going forward. Speaking of healthcare, Humana was an important Fusion ERP win in Q1. In the infrastructure part of our cloud business, we continue to innovate in several technical areas. We have made great progress and we are now on our way into the big four global hyperscalers, and I'll give you a list of those in case you don't know. They are Amazon, Microsoft, Oracle and Google, note the order. I was not the one who sorted that list. Oracle has come a long way in the cloud infrastructure business. Our technology is getting really good and very competitive. And of course, we continue to deliver breakthrough innovations in areas where we have long been strongest like database. The Oracle Database remains unrivaled and running the world's biggest and most critical systems. And our other database, the open-source system, MySQL, is now on a new generation, and it now includes an ultra-high performance in-memory query processor called HeatWave, plus a new set of management tools called the AutoPilot. Amazon's version of MySQL, again MySQL is an open-source database, anyone can have it. Amazon took the version of MySQL renamed it Aurora and put it up in AWS. Now, the open-source version of MySQL, the old version of MySQL pre-HeatWave is very, very slow with query processing. In fact, the way you use Aurora typically in Amazon over the years is you do your transaction processing in Aurora, also known as MySQL. And then when you do your query processing, you moved your data out of Amazon's MySQL on to Aurora and put into a thing called RedShift, a data warehouse system from Amazon. Recently, SnowFlake has come up with a data warehouse that runs at AWS and SnowFlake competing quite effectively against RedShift because SnowFlake runs on multiple clouds, and SnowFlake like RedShift is way faster at queries than the old MySQL or Aurora. Okay. So Oracle introduces this new version of MySQL, this new generation of MySQL with HeatWave. And the customer reaction has been stupendous simply for the reason that over and over again, they measure Oracle's MySQL to be 100x faster than Amazon's Aurora for query processing. Now, this was actually not unexpected. The old MySQL, which is Aurora, that's what Aurora is, the old MySQL, it's terrible for query processing. What was unexpected is that Oracle MySQL proved to be more than 10x faster than Amazon RedShift or SnowFlake for query processing. So suddenly, there is one database, you can do transaction – one open-source database, you can do transaction processing on, MySQL with HeatWave. And that same database, MySQL with HeatWave is the fastest place to run your queries. So you don't need to move your data into RedShift or SnowFlake anymore just to do query. This is excited so many customers that they asked us over and over again. We made it available this quarter Oracle's MySQL with HeatWave is available at the Oracle Public Cloud, but they asked if we would make it available on other public clouds. And we thought that's what our customers want, that's what we are going to do. So we plan to make Oracle MySQL with HeatWave available on other public clouds in addition to the Oracle Public Cloud and compete aggressively where we have huge technical advantages over Amazon Aurora, Amazon RedShift and perhaps most interestingly, huge technical advantages, performance and cost over SnowFlake. I'll turn it back to Safra.

Ken Bond:

Yes, absolutely. Erica, if you could please prepare the audience for questions, please.

Raimo Lenschow:

Thank you, and congrats from me as well, and especially on the RPO disclosure and growth there. My question is around Fusion and NetSuite. We obviously are in a somewhat recovery scenario. And I'm looking at your professional services as well, which is kind of very strong there. Can you talk a little bit about what you're seeing there in terms of people wanting to do now that they're coming out of the pandemic, more around digital transformation and hence you had actually an extra boost on demand despite what you saw already beforehand? Or how do we have to think about the dynamic there? Thank you.

Lawrence Ellison:

Yes, I'll add. Your question about services, we have pretty much made the migration away from on-premise implementations where all of our staff is focused on cloud implementations. And during that transition, every time we go through one of these transitions, it looks like something isn't growing or worse yet something is shrinking. Well, in this case, the on-premise stuff went down until it almost went away. And basically all of the implementation services you see for applications are cloud implementations. We've now made the migration and that should just grow steadily as demand for those systems increases. We really don't have a lot of competition. That's the understatement of the year in cloud ERP. I'd love to know who the competitors are. SAP doesn't have a product. When we – we're in a competition with the SAP right now and we've just gotten – we just found out, we're vendor of choice and their big thing was SAP doesn't have a cloud product. They have hosting. They're willing to put a custom computer in Amazon and just build a specialized version for the customer. That's not the cloud. We update our applications every three months, the entire fleet of 8,000 Fusion customers are updated every three months. The entire fleet of 28,000 NetSuite customers are updated every six months. You get SAP, they install it and then they probably will update it again five years now. It's an on-premise system. They don't have a cloud system. We're winning every deal against them, everyone, and we're taking a lot of their customers away.

Operator:

Our next question comes from Mark Moerdler with Sanford Bernstein.

Lawrence Ellison:

Well, I think the big question was, I think, the big issue that remains open about Oracle – I would say, it probably still remains open about Oracle is can Oracle compete with database against Amazon? It's interesting question because Amazon doesn't really have it. Well, Amazon has like 13 separate databases where the Oracle data, we do everything in a single database. We don't think an application should talk to five or six separate databases. We think it's a very risky security architecture. But the question is Amazon is the big leader in cloud. We're the big leader in databases. Well, if forced to choose, will they pick the Amazon Cloud and a database other than the Oracle Database? And - or are they willing to move to migrate their Oracle applications to the Oracle Cloud to get the Oracle – all the security and performance advantages of the Oracle Database? That’s been the big question out there. And with our cloud good enough to compete with Amazon and Google and Microsoft, and I think we have answered those questions. It's not only good enough to compete. It’s - in many cases, it's much better for security, for performance, for reliability, for cost, we're cheaper. And that's one of the reasons we have such a big ISV business. And so many people have left Amazon and come to the Oracle Cloud was because we cost less. So we have significant cost advantages. And I think this is another big step to proving that the Oracle Cloud is part of the big four. It's not a big three. It's a big four. I'm not including the Chinese players because they're regional or not global. I'm counting the Gartner sequence and the Gartner sequence is Amazon, Microsoft, Oracle, Google. And if we're in the big four and virtually every important database application on Earth runs – I mean, not everyone, but the vast majority run on the Oracle Database. If those migrate to the Oracle Cloud, we have a very, very large business, and we're seeing people moving more and more things to the Oracle Cloud. Now in this Gartner report, we will just help – we'll move that along quite nicely.

Lawrence Ellison:

By the way, it's not just the Gartner report. If they come and look and they run, if they do a comparison, a straighter comparison us, Google, us, Amazon, they test the application in both places. We win all of those. It's when they don't come and look that we have a problem.

Operator:

Our next question comes from Derrick Wood with Cowen and Company.

Safra Catz:

Well, you and your colleagues have been following Oracle for a long time and you know that when we talk about investing, we still focus on increasing profitability, okay. We're not like many of these other companies that when they invest, they lose money or they don't make more money. We will make more money this year, while investing and accelerating than we did before. So that's our expectation is we don't have to pick. We've never believed we have to pick because we have differentiated products that are very high value. You know how we run the company. We don't waste money. We spend it on things that bring returns, and we're very careful about that, but we have so much demand worldwide right now for really our cloud product lines pretty much across the Board, whether it's our Database Services, our Cloud at Customer, our OCI Gen 2, our Fusion products, it's just such a great time that even though we're going to invest more, we will make more. And so we just don't think you have to pick one or the other. It's just a matter of – this is an important time for us to invest, but we're going to make more money.

Derrick Wood:

Understood. Thanks for the color.

Operator:

Our next question comes from Kirk Materne with Evercore ISI.

Lawrence Ellison:

Absolutely. We have corporate customers. They've been with us for a while that are expanding. Maybe the most interesting thing about this is, are the ISVs because the ISVs, I mean they are in the cloud business. I mean, that's their whole business. They run – their primary expense is running their cloud operations. And when a number of those companies move from Amazon to Oracle, I mean, I'll give you a bunch of examples, then they really take a close look at the economics of what they're doing the reliability of the system. Zoom is a famous example, but there are a bunch of other ISV examples of companies that have moved from Amazon to Oracle. So that is really very encouraging. But we're seeing it now in our corporate customers as well. They move a workload. That works, they wait. They move in two or three more workloads. That’s continuing. So we think again, as Gartner report is one more step in the right direction in terms of encouraging our corporate customers to move even more workloads and accelerate the rate. But have we seen a pattern? Yes. We move a workload for a customer, and move a second workload to third workload. Once they understand, it works smoothly and the economics are advantageous. They just move more workloads on a continuous basis and that's what we are experiencing.

Ken Bond:

Okay. Next question please.

Michael Turits:

Hey, Larry and Safra. I wanted to ask about Cloud at Customer. I think you mentioned, Safra, it's growing 40%. So what tailwinds and if there are any headwinds is this Cloud at Customer seeing. And is that now able to start driving sustainable database acceleration beyond the acceleration that you saw this quarter?

Michael Turits:

Great. Thanks, Safra.

Operator:

Our final question comes from Mark Murphy with JPMorgan.

Safra Catz:

Well, I don't like to be cut short. That's for sure. And so I want to make sure I have enough, but we do have enormous demand frankly. So this is what I always call a high-class problem, but we try to make sure that we manage it very, very carefully. I thought it was worth it to take on quite a bit more inventory, but it is getting used up very quickly all the time. And we stay very, very focused on being able to deliver to our customers, the demand, but we have such accelerating demand that we have to stay vigilant to make sure we've got what we need, where we need it and in the quantities that we need it.

Safra Catz:

Thank you. Ken, we can't hear you.

Operator:

Thank you for joining today's Oracle first quarter 2022 earnings conference call. We appreciate your participation. You may now disconnect.

Ken Bond:

Thank you, Erica. Good afternoon, everyone, and welcome to Oracle’s fourth quarter and fiscal year 2021 earnings conference call. A copy of the press release and financial tables, which includes a GAAP to non-GAAP reconciliation and other supplemental financial information, can be viewed and downloaded from our Investor Relations website. Additionally, a list of many customers who purchased Oracle Cloud Services or went live on Oracle Cloud recently will be available from our Investor Relations website as well. On the call today are Chairman and Chief Technology Officer, Larry Ellison; and CEO, Safra Catz. As a reminder, today’s discussion will include forward-looking statements including predictions, expectations, estimates or other information that might be considered forward-looking. Throughout today’s discussion, we will present some important factors relating to our business which may potentially affect these forward-looking statements. These forward-looking statements are also subject to risks and uncertainties that may cause actual results to differ materially from the statements being made today. As a result, we caution you from placing undue reliance on these you from placing undue reliance on these forward-looking statements and encouraging 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 these forward-looking statements in light of new information or future events. Before taking the questions, we’ll begin with a few prepared remarks. And with that, I’ll turn the call over to Safra.

Larry Ellison:

Thanks, Safra, and great job. Your team delivered a spectacular Q4. Clearly, our strategy to develop cloud applications with cloud infrastructure is now beginning to drive top line revenue growth to go along with years of consistent double-digit earnings per share growth. Our strategy is as easy to explain as it is technically challenging to implement. That’s a good thing. If it wasn’t hard to do, others would be able to do it. Our strategy and applications depends on Oracle becoming the world’s largest provider of cloud ERP systems. Then, building upon that strong ERP foundation, we’re going to expand into manufacturing, CRM and industry-specific applications. We are successfully executing this strategy. Oracle Fusion and NetSuite are now the world’s two most popular cloud ERP systems. SAP, the leader in on-premise ERP, never rewrote their ERP system for the cloud. This has caused hundreds of customers to abandon SAP and migrate to Oracle Fusion ERP. That’s already happened. But over the coming months, several more major banks and utilities and a lot of other companies will complete their Oracle Fusion implementation projects and go live on Fusion ERP. Oracle is taking massive amounts of share away from SAP ERP. It’s crucial to our future. While our Fusion and NetSuite [Technical Difficulty] have long been growing, we have also developed a complete new generation of cloud application suites. Our new manufacturing systems fully support and manage automated robotic factories. No one else does that. Our new cloud CRM applications help you sell more by fully automated internet advertising, lead generation and qualification. Nobody else does that. And we’re launching cloud application suites for 2 new industries, health care, and state and local government. Our health care initiative is an outgrowth of the national public health management systems that we built to manage the COVID-19 vaccine clinical trials and vaccine distribution in the United States and in other countries around the world. In summary, our cloud application portfolio is more complete than other apps vendors and better integrated because almost all of our applications were developed internally, not acquired. Our infrastructure strategy depends on AI technology, specifically, neural networks and machine learning that we use to develop second generation autonomous cloud services, such as the Oracle Autonomous Database, the Oracle Autonomous Linux operating system and an array of autonomous cybersecurity defense bots that automatically identify and neutralize cyber attacks. All of Oracle’s cloud applications then run within the defensive perimeter of Oracle’s autonomous cloud infrastructure, the most reliable and secure platform in the world. And that’s increasingly important in a world plagued by cyber warfare, data theft and ransomware. Oracle’s Autonomous Database and other autonomous services eliminate human labor. No human labor means no human error or opportunity for human mischief. Autonomy makes computer systems and cars much safer and more reliable. The Oracle Autonomous Database offers 99.995% availability. That means only a few minutes of downtime a year. And we have zero downtime security patching and upgrades, available today for infrastructure and very soon available for all of our applications. Economics is also important. OCI has, by far, the best cost performance of any infrastructure hyperscaler. That’s why so many service providers, like Zoom, have chosen to expand into OCI. OCI’s cost performance is continuously getting better. Our new version of MySQL, the world’s most popular open-source database, just got between 10 and 100 times faster. And when you charge by the minute, every minute you don’t use is money saved. Our new ARM microprocessors from technology partner Ampere delivers much better compute cost performance than either Intel or AMD, and by far, the lowest energy usage of any server microprocessor in the world. So, our latest infrastructure technologies are Good for our applications, good for your budget, good for the health of the planet and very good for Oracle’s future. Back to you, Safra.

Operator:

[Operator Instructions] Our first question comes from Mark Moerdler with Bernstein Research.

Larry Ellison:

Yes. This is Larry. There are more new customers than upgrades from on-premise ERP with Oracle Fusion. So, it’s probably about 60-40, in the 60s, it’s probably not quite two to one new customers, but most of the -- a majority of the business is coming from new customers. We’re also upgrading our installed base of the E-Business Suite and PeopleSoft and JD Edwards to Fusion. But again, more revenue is coming from new customers, [Technical Difficulty] customers, people like that. They are coming from our on-premise installed base. So, that’s really the trend. And we think that trend is actually going to accelerate in favor of new customers because the SAP migration phenomenon is relatively recent in the last 12 months -- over the last two years, but it’s really accelerating now in the last 12 months. So, we think that’s going to hold. So, another way to look at it is it’s a very -- as people migrate to Oracle Fusion ERP and smaller companies migrate to NetSuite ERP, these are both enormous businesses. Fusion ERP, I mean, it is certainly much bigger than $10 billion -- and NetSuite is bigger than $10 billion, Fusion is probably bigger than $20 billion as these businesses mature.

Larry Ellison:

I’d like to add one thing. We almost never lose a competitive ERP deal in the cloud, virtually never.

Keith Weiss:

Excellent. Thank you, guys, for taking the questions, and congratulations on another year of 20% -- or a year of 20% plus earnings growth. And frankly, nice to see the stock starting to reflect the durability of earnings growth you guys have seen over the past couple of years. So, it’s nice to see that. I wanted to dig in a little bit on the infrastructure side of the equation, and in particular, OCI. Another quarter of, I think you said, 103% growth in OCI consumption. Can you dig in a little bit on sort of what are the workloads that are being done on OCI? Is this just all Oracle Database workloads? We know there’s a lot of those out there that just run so well on OCI, or is there a broader perspective of the big workloads that guys are bringing over, not looking for commentary on any specific customer, but just broadly what do you see in this space? Where do you guys do well? Where do you win with OCI?

Safra Catz:

Keith, thank you. First of all, thank you for [Technical Difficulty]. The reality is that any customer that is really focused on performance, security like Larry mentioned, and cost, which happens to show up in many, many workloads, one of the areas we’re doing particularly well are ISVs who are obviously experts at running their workloads. They’re in the business and they are coming to us extensively because they’re really studying the benefits that we bring them. And of course, as I mentioned and as we never stop mentioning, security with what’s going on these days. You really have to be in a cloud that is basically obsessed with security while still giving you incredible performance at lower cost. I mean, once we are given a try, what happens is the workload comes, one workload comes, and it’s usually followed by many others. And so, it’s -- we’ve got a lot of momentum, let’s say.

Operator:

Our next question comes from Derrick Wood with Cowen & Company.

Safra Catz:

Okay. Let me get it started, and then Larry can finish. So, Derrick, I’m glad you asked because when customers move from running their own dozen or 100 Exadatas, when it’s time for a refresh or a new set, we prefer that they go to Cloud@Customer and -- or have a dedicated region. However, just so that you know since you all focus on the numbers, you have to understand that when we sell hardware, regular way, we recognize all that revenue once it’s delivered, all that hardware is delivered. But, when we install Cloud@Customer, Exadata Cloud@Customer or dedicated region, we don’t recognize that revenue upfront. And so, -- and you don’t even see that that is all happening right now in our income statement and yet we’re still growing. So, as a general matter, first of all, it is much -- even though we believe we make around 3 times, maybe more, in revenue in the case of Cloud@Customer versus selling -- just selling the hardware can be anywhere from 3 to 5 times, the customer actually ends up spending less because we manage their entire estate. We update their databases, et cetera, depending on what services they’re using, and they get the benefit of always having capacity, always having the most up-to-date system, the most secure system and patched and fully managed by us. So, though, ultimately, they give us significantly more money 3 to 5 times as much, in fact, they end up spending much less to maintain that estate. So, for -- it’s kind of a win-win because we’re much more efficient, fully automated and save them the immense amount of labor it takes to run these very critical production systems. Okay. I guess, Larry’s question, what was it again, Derrick?

Larry Ellison:

Well, the Autonomous Database only runs in the cloud. It does not run on-premise. It doesn’t run on -- even at the Exadata appliance. It runs on [Technical Difficulty] or public cloud. So right now, the public cloud is the most popular route for Autonomous Database and Cloud@Customer is becoming more popular as people scale up, so. But right now, the most popular way to use Autonomous Database is in the OCI public cloud.

Kirk Materne:

Thanks very much. And thanks for taking the question. I was wondering, Safra, could you just talk about sort of the performance in Europe this quarter? It looks like it bounced back nicely. And I guess, along those same lines, can you just talk about cloud adoption on certain [Technical Difficulty] just maybe what you’re seeing in the -- I assume you guys are probably leading the charge. But what you’re seeing in other regions just following maybe close behind it? Thanks.

Operator:

Our final question comes from Raimo Lenschow with Barclays.

Safra Catz:

Yes, Raimo, you are so right. Q4, but really, it’s just coming together all around, the RPO. I’m glad [Technical Difficulty] really, really strong bookings are -- were truly enormous. Obviously, they don’t show up in the income statement right away, but they -- the future is just so positive. And you might have heard me, I was hinting to that in my comments. And one of the reasons we’re so comfortable leaning into our investment because we really want to make sure we’ve got the capacity to take on the enormous amount of bookings that are flying in and that both were [Technical Difficulty] during the year and are going on line, and so, will be recognized over this next year and beyond. But, there is just an enormous backlog for us of customers that are going live and that will start consuming and we’re very optimistic. So, thank you so much for asking, and I’m glad you noticed that.

Ken Bond:

Thank you, Safra. If there are any questions coming out of this call, please feel free to call the Investor Relations hotline. Otherwise, I’ll turn the call back to Erica for closing.

Ken Bond:

Thank you, Erica. Good afternoon, everyone. And welcome to Oracle's third quarter fiscal year 2021 earnings conference call. A copy of the press release and financial tables, which includes a GAAP to non-GAAP reconciliation and other supplemental financial information, can be viewed and downloaded from our Investor Relations website. Additionally, a list of customers mentioned on this customer conference call as well as many others which have purchased Oracle Cloud services or went live on Oracle Cloud recently will also be available from the Investor Relations website. On the call today are Chairman and Chief Technology Officer, Larry Ellison; and CEO, Safra Catz. As a reminder, today's discussion will include forward-looking statements, including predictions, expectations, estimates or other information that might be considered forward-looking. Throughout today's discussion, we will present some important factors relating to our business which may potentially affect these forward-looking statements. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from statements being made today. As a result, we caution you against placing undue reliance on these 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 these forward-looking statements in light of new information or future events. We'll begin with a few prepared remarks, and then I'll turn the call over to Safra. Safra?

Larry Ellison:

Thank you, Safra. Three months ago, Bob Evans posted an article on the Cloud Wars’ website in which he quotes SAP, CFO, Luka Mucic making the following statement at an investors conference. And I quote, “I have checked and we have not lost a single ERP customer to Oracle.” In other words, after personally, checking SAP’s Chief Financial Officer could not find a single example of an SAP ERP customer move into Oracle Fusion on ERP, not one. Perhaps he should have checked a little bit more carefully. In Q3 alone we signed contracts, totaling hundreds of millions of dollars to migrate several very large SAP ERP customers, to Oracle Fusion ERP. But this was not just a recent Q3 event. This has been going on for a couple of years. I'm now going to go and present a list of over a 100 companies and government agencies that have already moved from SAP ERP to Fusion ERP, or currently in the process of doing so. I've divided the list of SAP customers who are moving to Oracle Fusion ERP into two distinct groups. I want to be very precise here. The first group is moving their entire company to the fusion ERP suite, including core financials, it's Oracle wall-to-wall. The second group has started deploying Fusion ERP applications, but has not yet put in the entire suite and may still be running SAP financials in some places. They have begun the migration, but they are not committed to doing the entire suite as yet, or they are not in the process of doing the entire suite as yet. Okay. So let me go to start the list. TPS Company, an industrial manufacturer of rail cars in North America replaced out all of the SAP ERP with Oracle Fusion, including financial accounting, procurement, enterprise performance management, supply chain, HCM, everything with the fusion cloud, complete replacement of SAP ERP to fusion ERP. G4S plc security services firm, the world's largest security company by revenue, complete replacement of SAP R/3 with Oracle ERP and Oracle HCM. First Solar, North America’s only remaining maker of solar panels in the United States replaced SAP's S4/HANA, Ariba, Concur third-party apps, all of SAP ERP with Oracle Fusion ERP, Oracle Fusion EPM, Oracle Fusion, HCM, and supply chain management. Transit Wireless, a North American telco completely replaced out SAP R/3 with Oracle Fusion ERP and Oracle Fusion HCM. West Sussex County Council, a complete SAP replacement with Oracle ERP, Oracle HCM and Oracle EPM. ERP now, HCM, EPM is Oracle Enterprise Performance Management, complete wall-to-wall Oracle at West Sussex County Council, no more SAP. CEMEX, a concrete company in Mexico, completely replaced SAP with Oracle ERP and supply chain. Niagara Bottling, a North American beverage manufacturer, private labels bottled water, replaced SAP with Oracle ERP, supply chain, transportation management, et cetera. New Zealand Inland Revenue, complete SAP R/3 replacement with Oracle ERP and Oracle HCM. University of The Andes in Latin America, the number one university in Colombia, a complete replacement of – they had SAP for 10 years, replaced it with Oracle ERP, HCM, EPM, supply chain, sales, everything. Bip&Drive, a travel and transportation company in EMEA, electronic toll payment provider for the roadways in Spain, again, replaced – was offered a free S/4HANA upgrade, instead chose Oracle Fusion Cloud. GE Grid Software, an industrial manufacturer software for utilities and power transmissions, complete SAP replacement with Oracle ERP Fusion Cloud. Postcon, let’s say the second largest mail carrier in Germany, SAP complete replacement of RP, replaced them with Oracle Fusion ERP and the cloud plus supply chain management. Birmingham City Council, complete SAP replacement using Oracle ERP, Oracle HCM. They are the biggest city council in the UK. Metro Pacific Tollways Corporation, a toll road developer in Asia. SAP replacement got rid of SAP and replaced with Oracle ERP and Oracle EPM. Africa World Airlines replaced SAP with Oracle ERP, EPM, HCM, sales, service and marketing. Batelco, that’s the Bahrain telephone company, they had been running SAP for a decade and they moved to Fusion Cloud, ERP, EPM and HCM. European Logistics and Applied Engineering group, actually the name – they don’t want their name specifically mentioned. They are the largest private company in Belgium. And they completely replaced SAP R/3 and they thought the cost of moving to S/4HANA and the cloud was much too high and they instead went with Oracle Fusion ERP. TICO Logistica, a logistics company in Latin America had SAP – had SAP replaced with Oracle ERP at the end of the sales. FedEx, FedEx had SAP ERP in some places and Oracle ERP in some places. They replaced out all of the – they are in the process of replacing out all of the SAP ERP and standardizing on Oracle Fusion ERP and supply chain management. Grupo Bimbo had SAP in some divisions and Oracle in other divisions. They’re replacing out all of the SAP and standardizing on Oracle Fusion ERP and supply chain management. Western Digital, a complete replacement, they had SAP. Western Digital had SAP and SanDisk. They had SAP at HGST, replaced all of that out and have standardized an Oracle Fusion in the – Fusion ERP in the cloud. VP World, they had SAP S/4HANA, SAP HR, R/3. They eliminated all of that. By the way in EMEA marine terminal operator, they are located in EMEA. They are global. They replaced out all of their SAP and standardized an Oracle Fusion ERP and the cloud. Cohu, they are a semiconductor test and handling equipment company in North America. They had a combination of Oracle ERP and SAP ERP replaced out all of the SAP ERP and are standardized on Oracle. This one is interesting. They don’t want their name mentioned. They are a huge European – North American and European manufacturer of ATMs and they’ve replaced out all of SAP and the German subsidiary BOSSY throughout the world and they standardized on Fusion ERP, SCM and HCM and they have added Oracle Performance Management, Fusion Performance Management. Let’s see. Another company whose name they don’t want to be mentioned, let’s see, they are a high-tech manufacturer in North America. They replaced out SAP R/3, ERP, HCM and standardized an Oracle Fusion, Oracle Fusion in the cloud. Albelli Group, they are a manufacturer of photo products in the UK. They replaced an SAP with, guess what Fusion ERP. Consol Energy, utilities company in Pittsburgh replaced out SAP with Oracle Fusion in the cloud. Enbridge, Enbridge is an oil and gas multinational based in Calgary, Canada, replaced out all of SAP with Oracle Fusion ERP. Gemini Industries – Gemini Energy, they are an LAV, they are an energy transmission system, the largest in Brazil with substations all across Brazil, replaced SAP with Fusion ERP. GoodStorage in Latin America, the self-storage company in Brazil, again, got rid of SAP, put Infusion ERP. Grupo Globo, they are on media and entertainment, Latin America’s largest media and entertainment company, replaced SAP with Oracle ERP and HCM standardized on Oracle ERP and HCM. IQVIA, a complete SAP replacement. They are manufacturing pharmaceutical company in North America. They’ve moved away from SAP standardizing on Fusion in the cloud. Corrigan, a healthcare company in EMEA, long-term care nursing homes, 300,000 senior citizens across Western Europe replaced SAP with Oracle Fusion. NatWest Group, NatWest Group includes NatWest, ABN AMRO, Royal Bank of Scotland, Ulster Bank and more. They had a combination of Oracle ERP and SAP ERP. They’re replacing out all of the SAP ERP and standardizing on Oracle Fusion in the cloud. Wind Tre, Wind Tre is a telecommunications company, the largest mobile operator in Italy, again completely replacing out SAP with Oracle Fusion ERP, SCM and EPM. Okay. Now I want to go onto the second group – second group of companies and these are companies that had started putting in Oracle Fusion modules but have yet – they have not replaced core financials as yet. So they’re buying our supply chain. They’re buying our procurement, They’re buying our transportation management. They’re buying our global trade management. But they have not yet bought Oracle Financials. So I want to be very specific that they are buying lots and lots of Fusion products. GN Airlines, Apollo Tyres, Achema, an adhesive solutions company in the UK, Aarhus Kommune, their municipality in Central Denmark, Caesars Enterprise Services, they have an idea – they bought Procurement in Supply Chain, a big hospitality company obviously in North America. Sheppard Danaher a product lifecycle management, they are a healthcare company. Department of Education and Training in Australia, they bought procurement. DHL with an SAP replacement in some countries. So some countries are still running on SAP, but the new implementations they’re going in are in other countries, not in Germany as yet, in other countries are, Oracle Fusion ERP. Dove bought supply chain management and transportation management. Temsa [ph] bought – replaced all of SAP and some of their subsidiaries and bought supply chain warehouse management, supply chain planning, ERP. Again in some – and some subsidiaries all of ERP including an accounting procurement, all of that. Fujitsu Services, a manufacturer in Japan. Again the parent is running SAP financials but subs all over the world are moving to Oracle Fusion ERP. Keurig Dr Pepper, again – bought supply chain. Guardian bought all of – financial services company in North America, bought all of ERP. Honda bought supply [indiscernible] SAP Financials just recently bought Fusion supply chain, Fusion transportation management and has moved into the – from on-premise to the cloud. InvoTech, again a North American company – again, but parent still running SAP financials but the subs are running Oracle Fusion. Jackson Life, Lakshmi Cement, I’m not going to – I am going to read this faster now, Juniper Networks, Lloyds Bank, Move Incorporated, Munich Re, the largest food company in the world, bought – just bought Oracle performance management. News America Marketing, Orlando International, PG&E, Porcelanosa, Republic Services, SAC Wireless and Nokia Company, Samsonite, Puma, Santander Bank, Therma-Tru Doors. Okay. I am going to stop right there or I’ll take up all of the time you won’t be able to ask Safra questions. Okay. I don’t want to do that. Okay. All right. So again, the list is actually longer than 100-plus companies. I did read over 100 companies as I’m sure you painfully aware of. List is actually longer than the 100 companies I have just read. Some are most important wins and are very largest companies in regulated industries such as banking and utilities who are currently in the process of migrating from SAP ERP to Fusion ERP, prefer not to be publicly named on this call for obvious reasons. They don’t – even though they are often a reference for us, private reference where people are considering the same move, they don’t want to be on – their name on this call, because they want to maintain the best possible relations with SAP as they – even though they are in the process of transitioning away from SAP. All right. So I’d like to make one last point and then turn it back over to Safra. Specifically trying to answer one key question. How come so many customers are moving from SAP ERP to Fusion ERP? This has never happened before. A major migration between ERP vendors. Well, if you want to know the answer read the Gartner report comparing Oracle ERP to SAP ERP. Please don’t take my word for it. Read the report, it’s very short and it’s to the point. Gartner ranks Oracle Fusion ERP far in front, I mean far – you can find a magic quadrant where there is more a bigger gap between number one and number two. And so, Gartner ranks Oracle Fusion ERP far in front of all the other cloud ERP systems. But what’s surprising is SAP isn’t number two. SAP is at number three. SAP is listed among the leaders. SAP is listed among the lagger. Gartner – if you read the text, Gartner points out, and I quote, SAP’s own reference customers scored SAP in the lower half of cloud ERP vendors. I want to read that again. “SAP’s own reference customers scored SAP in the lower half of cloud ERP vendors.” SAP, the once-dominant on-premise ERP market leader is currently not competitive in the cloud ERP market. How could that has happened because SAP never rewrote their ERP system for the cloud. It’s that same with 30-year-old code. They never rewrote their ERP system for the cloud and it’s too late for them to start now. I'll turn it back over to Safra.

Operator:

[Operator Instructions] Our first question comes from Michael Turits with KeyBanc Capital.

Larry Ellison:

The answer is I think there's no question. You're going to see a lot of database growth – a lot of database acceleration starting next year which we're a quarter away from. But we'll be fine in Q4. Again, its autonomous databases is growing pretty rapidly. But we expect it really to explode next year. And I really do mean very, very rapid growth next year. I'm not really ready to disclose our plans as to why I think it's going to suddenly spike but we expect very, very rapid database growth next year.

Operator:

Our next question comes from Mark Murphy with JPMorgan.

Larry Ellison:

I acknowledge for interrupting. The really spectacular logos [indiscernible] there's some of them are pretty spectacular on there. But we have some that are much larger and much – and absolutely shocking. I've been alluding to these, but sometimes we're in the middle of an 18-month implementation. And the customer doesn't want any mention. If I could mention them all, it would be – it’s front page news. I mean it's a very big deal. Yes. I agree with you. It's an historic event. It is – I think a long time ago, I said there are two technologies that will drive Oracle's future, one is the autonomous database and the other is ERP. We are – reading the Gartner report, we are so dominant. Our product is so much better than anyone else's product in the cloud. We expect to get a significant number more than half of SAP's customers we’ll get. But keeping our own, yes, plus getting a lot of it from the smaller companies like M4 and Lawson.

Larry Ellison:

Okay. So there are two lists. One, the first half of the list that I read and they're about equal sized lists where people that are already moved from SAP financials to Oracle financials. The second list where people that had partially moved to Oracle, but still were running SAP financials in some places. In other words, we don't consider it a complete win until we replace out. If we just sell procurement and supply chain and manufacturing and things like that, but they still run SAP financials we don't consider that a complete win. That's what we call our surround strategy. But once you start using our cloud products and compare that with SAPs on premise products, we think the vast majority of these companies that it started the journey, we'll finish the journey. And they'll want financials in the cloud, just like they have supply chain in the cloud, in procurement in the cloud. So yes, we expect company – we've already seen companies migrate off the second list. They buy procurement, they buy supply chain and they see, okay, I like that. And I'm going to buy financials. So yes, we expect all of those or excuse me, the vast majority of those customers to eventually standardize on Fusion Cloud ERP for everything.

Operator:

Our next question is from Mark Moerdler with Sanford Bernstein.

Larry Ellison:

Yes. Well I think there are two things that are interesting about OCI. One on the security front. One is we believe security should be always be turned on and in other words, there is no light switch, security on, security off. We have these things called max security zones in OCI where you cannot turn security off and max security is always turned on. It's a safe place to go inside of OCI. No one has anything like this, where security is always turned on. You cannot turn it off. You cannot open up a link – a network link that puts your infrastructure and your data in jeopardy. That's one thing. So security is always on. The second thing is autonomy is very interesting, because the Oracle autonomous database, by the way, the Oracle autonomous database is not the only autonomous product we have. We have autonomous Linux that is the foundation of OCS, the foundation operating system inside of the OCI network. Oracle autonomous, Linux, Oracle autonomous database has no human labor associated with them. Okay. So everyone says, well, that's a huge cost saving. It is, but that's not the most important benefit. The most important benefit if there is no human labor, there is no human error. If there's no human labor, there's no human mission, there's no opportunity for an insider to corrupt the system. There's no opportunity for a user to misconfigure a system that creates a security vulnerability that will lead to the loss of data. So, we think one of the most attractive aspects of OCI, other than its high performance, low cost, all of that, everyone likes to pay less and they do with OCI. But we do a better job of securing your data than any other cloud vendor. We've seen that be the decisive feature in winning a lot of these deals with ISVs and end user customers.

Operator:

Our next question comes from Phil Winslow with Wells Fargo.

Safra Catz:

So let me take that. So the Oracle database remains very strong and what's good about the Oracle database is you can also bring your own license to the cloud. So it's both on-premise and in the cloud can be used there. And it remains very, very strong. The installed base of the Oracle database continues to grow. And that is of course our central piece. Now, in addition, Java on-premise continues to do very well as more and more companies continue to invest in Java and trust Java for their own applications. And in addition, our vertical applications, some of our industry applications still require on-premise license for the customers’ use. We also have cloud services in many of these verticals, but especially in telecommunications, as many of the communications companies move to 5G, we are a very central part of their transition to 5G and need our license in those areas. So database tops, doing incredibly well, Java doing very, very well and our vertical applications. And then pretty much everything else of course as you know is offered just in the cloud.

Operator:

Our final question comes from Brad Zelnick with Crédit Suisse.

Larry Ellison:

So well we started 10 years ago to build fusion financials for the cloud to rewrite all – PeopleSoft ERP, JD Edwards ERP, and of course, Oracle E-Business Suite, we had these three separate on-premise ERP systems, and we decided a decade ago to rewrite all of that with the cloud. And SAP unbelievably, they just, I mean – and we did a very good job. We started a decade ago and we did, I think, a very good job redoing a big job, to say the least, redoing our ERP products for the cloud. That said, SAP chose not to rewrite their ERP products. Instead, they made a bunch of acquisitions. They bought Concur, they bought Ariba, they bought SuccessFactors, but they never – and we made some acquisitions also by the way, [indiscernible] and others right now at other things. But we rewrote everything for the cloud. SAP instead, embedded their own database called HANA and focused on this new database and never really rewrote their ERP code for the cloud. I mean, it's just an unbelievable error. They worked on a new database and the, the thing we're competing with at so-called S/4HANA in the cloud, is what the SAP calls it, is not a cloud product at all. It is the 35-year-old ABAP, this is written in a programming language called ABAP. Oracle Fusion is written entirely in Java. And it's been entirely rewritten overload over the last decade. SAP stuff is literally 30 years old. The same that they've always had, that they now will host for you. So I would say we did a competent job rewriting for the cloud, SAP just entirely missed the boat. So SAP really is more responsible for our leadership position than we are. Again, they never rewrote their application for the cloud. It's unbelievable what's happened. And their customers are noticing. We offer a new release of our ERP system every 90 days. We offer new features and functions. That's how the cloud works. You are on the cloud, you get new features and functions, you are on this 90-day cadence. We give you more features and more capabilities every 90 days. SAP has nothing like that. It's not a cloud system. It's simply is okay, you can get the SAP S/4HANA and you can get it hosted by somebody, but they don't even have a cloud. They never built a cloud. That's what happened.

Larry Ellison:

It’s amazing.

Operator:

Thank you for joining today's Oracle's third quarter of 2021 earnings conference call. We appreciate your participation. You may now disconnect.

Ken Bond:

Thank you, Erica, and good afternoon, everyone, and welcome to Oracle's Second Quarter Fiscal Year 2021 Earnings Conference Call. A copy of the press release and financial tables, which includes a GAAP to non-GAAP reconciliation and other supplemental financial information, can be viewed and downloaded from our Investor Relations website. Additionally, a list of customers mentioned on this conference call as well as many others which have purchased Oracle Cloud services or went live on Oracle Cloud recently will also be available from the Investor Relations website. On the call today are Chairman and Chief Technology Officer, Larry Ellison; and CEO, Safra Catz. As a reminder, today's discussion will include forward-looking statements, including predictions, expectations, estimates or other information that might be considered forward-looking. Throughout today's discussion, we will present some important factors relating to our business which may potentially affect those forward-looking statements. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from statements being made today. As a result, we caution you against placing undue reliance on these forward-looking statements, and we encourage you to review our most recent reports, including our 10-Q and 10-K 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 these forward-looking statements in light of new information or future events. We'll begin with a few prepared remarks, and then we'll take your questions. However, I want to remind everybody we will not be making any comments regarding TikTok. And with that, I'll turn the call over to Safra. Safra?

Ken Bond:

Safra, are you on mute?

Lawrence Ellison:

Thank you, Safra. We just completed a great quarter, but the quarter would have been even better if we would have had more -- and we would have had more revenue growth if we had not been capacity constrained in OCI during Q2. There was more demand than we had supply. To remedy this capacity shortfall, we are adding OCI capacity and building new OCI datacenters as fast as we can. We are now up to 29 regional data centers around the world, more than AWS. OCI added customers and grew revenue at a rate well in excess of 100% year-over-year in Q2. The Oracle Autonomous Database was up over 50%. We also introduced several new OCI managed services during the quarter. The most interesting of these new OCI managed services is for the popular open source database, MySQL, featuring an all-new, Oracle-developed, massively parallel query accelerator called Heat Wave. MySQL plus Heat Wave processes queries hundreds of times faster, hundreds of times faster than the current version of MySQL by itself and other MySQL-compatible databases, such as Amazon's Aurora. MySQL plus Heat Wave is so much faster, so much easier to use and less expensive than PostgreS, Redshift, Snowflake or any other database available on Amazon AWS. The amazing thing about Heat Wave is that you don't have to move your data out of MySQL and build a separate data warehouse to get the huge performance gains. You simply take any existing MySQL or Aurora database, run that exact same database on the new MySQL version that includes Heat Wave , and immediately, your queries run hundreds of times faster. You don't have to change a single line of code. It can't get any easier to use than that. Now I'd like to change subject and talk about our multibillion-dollar application businesses in the cloud. Fusion EPS -- Fusion ERP grew 33% in Q2 to over 7,500 customers. NetSuite grew 21% to over 24,000 customers. We have the top-rated ERP products on both Gartner and IDC. There is no large-scale enterprise application business in the cloud that's growing as fast as we are. In the coming months, our cloud ERP market leadership will become even more obvious when we announce that several major large-scale SAP ERP customers are leaving SAP and moving to our Fusion ERP cloud. Oracle is the clear market leader in cloud ERP. Finally, I'd like to talk about our all-new, cloud-based national electronic health record system and health management application suite that Oracle built in response to the COVID-19 pandemic. This system has already been used to register more than 0.5 million people for clinical trials run in the United States for COVID-19 vaccines and therapeutics, such as monoclonal antibodies. Last month, in partnership with the Tony Blair Institute, we used this same exact national electronic health record system to manage the distribution of yellow fever vaccine in Africa. 7,000 people in Ghana were vaccinated during the first week of the program. We're very proud of that. We are currently in discussions with dozens of countries around the world to adopt Oracle's new national electronic health record system to modernize their national public health infrastructure, thus enabling efficient COVID-19 vaccine management therapeutic monitoring and diagnostic testing. Normally, at this point, I'd begin to read a list of notable new customers that we acquired during the quarter. But our new more efficient track will be to provide you with a list of those customers attached to our detailed financial quarterly numbers. So immersively, you will be able to read the list for yourself and no longer will you have to endure me reading it to you. So with that, I'll turn it back over to Ken.

Operator:

[Operator Instructions]. Our first question comes from Heather Bellini with Goldman Sachs.

Safra Catz:

So, the pandemic affects us, in some ways, negatively; in some ways, positively, simply because of our size and the breadth of our customer base, it affects them differently. And so obviously, our hospitality customers have had a very difficult time of it in the main. Some of our retail customers have done horribly, some have done very, very well. What has become very clear to our customers is that those that are digitally forward and that can work also under -- with a lot of automation using a digital tool, using our technology, using the cloud, they are faring far, far better. And as a result, we see change occurring, and you can see it in our ERP SaaS numbers, in our HCM numbers, NetSuite numbers, you can just see that those numbers continue to do very, very well. And then, of course, our Gen 2 cloud, whether it's compute where many of our customers are using way more than they expected to, and as Larry said, just blowing out our internal forecast such that we will need a few more weeks to really catch up with our demand while we're also expanding globally simultaneously. So, we actually believe that this remains very consistent. Obviously, there was uncertainty before because of the pandemic. At this point, I think it's very clear that our business is accelerating, our stable businesses remain stable, and our shrinking businesses whether it's nonstrategic hardware or other things, those continue to get smaller. But generally, the overall revenue number will be showing acceleration even in this pandemic, and I almost feel badly saying, maybe it helped ultimately because many of our customers have realized the importance of using technology to deal with their customers, their employees, and their suppliers.

Safra Catz:

Thank you. You too, Heather.

Brad Zelnick:

Great. Congrats on a good quarter and strong guidance. Larry, I've got maybe a bigger question -- a bigger picture question for you. I know you appreciate there are generational aspects to IT where, most often, the winner in the last generation isn't the winner in the next. But under your leadership and vision and Safra's operational discipline, Oracle has been an industry leader for over 4 decades by thinking strategically about the future. And today, we hear amazing feedback on Oracle's latest innovations, the actual underlying technology like OCI and Autonomous. And by that alone, it would seem the future is bright for Oracle, but we've also seen in the past that the best technology doesn't always win. What gives you confidence that Oracle can remain successful and appeal to younger generation, many who think cloud-first and want to move really, really fast?

Operator:

Our next question comes from Mark Moerdler with Bernstein Research.

Lawrence Ellison:

Yes. So again, the interesting thing about Cloud at Customer, the change in our business model. So you've got to remember, when we sign a huge Cloud at Customer deal and we deliver a bunch of Exadata to a customer, we recognized, let's see, how much revenue, nothing, versus selling a bunch of Exadata. So what's happened -- remember, we're going from selling Exadata machine to delivering them for free and then charging, if you will, rental or usage on the machines as we go from selling hardware to selling Exadata Cloud at Customer. So our accounting model, you say, well, wow, Oracle's revenue is flat. Well, flat, maybe not so bad, actually it's growing somewhat. But keep in mind, where we used to get paid for Exadata machines right away, we now deliver them at Cloud at Customer, and we have to wait to get those monthly revenues over a 4-year period. So what you're seeing is this change in model, and Cloud at Customer is already doing pretty well. It's just there's a huge lag. There's histories. From the time -- there's a lag from the time we start selling a bunch of these things until all the revenue starts coming in. So that's what's going on right now where it's already a very successful product. We're selling a lot of them. Our sales are accelerating, but there's this time lag between sales and the revenue, very different than selling a database license or selling an Exadata machine. As we move to the new model, it's a more profitable model long term, but it doesn't have the instantaneous impact. So there's this time lag. And that's what you're seeing.

Michael Turits:

Congrats on the quarter. Larry, you talked a lot about ERP, and that's been a lot of where the messaging has been around Fusion apps. But this has been a really strong year even during COVID, around front office. Can you talk a little bit about your CX business and whether or not you could see acceleration there and particularly how some of your AI capabilities are playing into that, if they are?

Operator:

Our final question comes from Raimo Lenschow with Barclays.

Safra Catz:

Larry, do you want to take it?

Safra Catz:

Well, let me -- you go ahead, Larry. Go ahead.

Safra Catz:

Yes. Let me just add a couple of things. One is we have upped our capital spending plans because the demand is so strong that we've increased it by probably this next quarter, probably be 50% higher than this last one just to keep everything going and growing. I also want to point out that some of our customers do not want to go into a big public data center but for different reasons, regulatory reasons or others, one have Cloud at Customer, and that's very important that we are able to offer that. And in addition, some of them have extremely a large requirement and are basically a private region. Those aren't in the numbers you were mentioning as far as data center build-outs, but that's another area where we are expanding and consumption is increasing at very, very large rate. So we're very busy here just keeping up with demand.

Operator:

Thank you for joining today's Oracle's Second Quarter 2021 Earnings Conference Call. We appreciate your participation. You may now disconnect.

Ken Bond:

Thank you, Erica. Good afternoon, everyone, and welcome to Oracle's first quarter fiscal year 2021 earnings conference call. A copy of the press release and financial tables, which includes a GAAP to non-GAAP reconciliation and other supplemental financial information can be viewed and downloaded from our Investor Relations website. Additionally, a list of customers being mentioned on this conference call, which have purchased Oracle Cloud services or went live on Oracle Cloud this quarter, will also be available from our Investor Relations website. On the call today are Chairman and Chief Technology Officer, Larry Ellison; and CEO, Safra Catz. As a reminder, today's discussion will include forward-looking statements, including predictions, expectations, estimates or other information that might be considered forward-looking. Throughout today's discussion, we will present some important factors relating to our business, which may potentially affect these forward-looking statements. These forward-looking statements are also subject to risks and uncertainties that may cause actual results to differ materially from statements being made today. As a result, we caution you from placing undue reliance on these forward-looking statements and we encourage you to review our most recent reports, including our 10-K and 10-Q and any applicable amendments, for a complete discussion of these factors and other risks that may affect our future results or the market price of our stock. And finally, we are not obligating ourselves to revise our results or publicly release any revision to 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.

Larry Ellison:

Thanks, Safra. Let's say, Oracle occupies a unique position in the Cloud markets. Oracle is the only Cloud vendor that competes in both the enterprise applications market SaaS, and the infrastructure as a service market IS, our competitors in SaaS are people like Salesforce and Workday. Our competitors in IaaS are people like Microsoft and Amazon. They're different markets. We're the only one that spans these two markets. It's a very interesting dynamic. I believe we have the best technology in the market today at both the applications layer and the infrastructure layer of the Cloud. Well, analysts have ranked Oracle Cloud applications number one in both market share and customer satisfaction for some time. We're number one in customer satisfaction in HCM. We're number one in customer satisfaction in ERP, I can go on, but what's interesting is that those same analysts are beginning to take notice of the technical quality and customer satisfaction associated with Oracle's Cloud infrastructure as a service business. I'd like to read an approved statement from IDC about their recently published survey. In the 2020, Industry CloudPath survey that IDC recently released where it surveyed 935 IaaS customers on their satisfaction with top IaaS vendors including Oracle, Amazon Web Services, Microsoft, IBM, and Google. Oracle IaaS, OCI received the highest satisfaction score and the biggest year-over-year score increase of all IaaS vendors. In addition, 86% of those surveyed said, they expect their spend on Oracle IaaS and OCI to increase in the future. I suspect this comes as a big surprise to many of you, and many of our competitors. Just as Zoom picking Oracle Infrastructure surprised a lot of people in the recent past. I know the biggest question for investors has been, can Oracle preserve its huge market leading database franchise into this new Cloud era? Well, interesting question. Obviously an extremely important question to me and everyone here at Oracle, but if Oracle Cloud Infrastructure, OCI is in fact as IDC describes the best IaaS platform in the market, the IaaS platform with the highest customer satisfaction. And that same IaaS, OCI is the foundation for the world's only autonomous database. Where do you think the Oracle Database installed base is going to go? What we're beginning to see is that it's just starting to migrate. And it's migrating to both the Oracle public cloud the only place you could get the autonomous database and Oracle Cloud@Customer, excuse me, the only other place you can get the Oracle Autonomous Database, and Oracle Cloud Infrastructure, all together. Customers are picking Oracle Cloud Infrastructure and the Oracle Autonomous Database for a few very basic and very obvious reason; much better security, much better reliability, much better performance, and dramatically lower cost, much, much lower cost than AWS. And that's why people are and I'll talk about the people like 8x8 are another video conferencing system are moving entirely from AWS onto the Oracle Cloud. In fact, there is not a major video conferencing company that isn't talking to Oracle that moving to the Oracle Cloud. Zoom is a perfect example of why customers are choosing Oracle Cloud Infrastructure. We see the benefits of choosing OCI and Zoom’s results. Zoom’s recent earnings were stunning. Zoom may be the fastest company ever to have their company named become a verb. At Oracle, we love the Zoom, as most of our employees continue to work from home. And we love that Zoom’s usage of Oracle Cloud Infrastructure services delivered triple digit revenue growth in sequential quarters from Q4 last year to Q1 this year. OCI Cloud data centers are opening all over the world at a record pace. We now have 26 OCI regions live around the world, edging out Amazon AWS, which currently has 24 regions, and will be adding at least another 10 regions in the next nine months. We're not slowing down. We're speeding up. Oracle’s Database Cloud@Customer is functionally identical to the Oracle Database in the public cloud. That's why we're seeing the migrations going both places. They're going to Database Cloud@Customer, which is unique Oracle offering and they're going directly into our public cloud. So, the price is the same in both cases. The database is fully serverless and elastic in both cases. You only pay for what you use in both cases, and there are no upfront fees in both cases. We're seeing very rapid adoption of Oracle Database Cloud@Customer among our very largest customers, and this is just the beginning. In 2018, we delivered the world's first autonomous database, and the Oracle Autonomous Database is still the world's only autonomous database. When in 2019, we introduced the world's first autonomous operating system. And today Oracle economists Linux is still the world's only autonomous operating system. Now in 2020, we've introduced Oracle Autonomous Data Guard, which effectively eliminates [site downtime]. If the data center running your application goes down for any reason, Autonomous Data Guard immediately switches and automatically switches that application over to another data center. No human intervention is required to keep your application running without interruption, and no human labor is required to set up and configure an Autonomous Data Guard. To use Autonomous Data Guard, there's nothing to learn and nothing to do, you just have to turn on a single switch. Only Oracle offers this economist reliability feature. Another unique OCI offering is our dedicated region Gen 2 Cloud@Customer. Customers can now put our entire Gen 2 public cloud behind their firewall, in their data center, all of it. It's not just the Oracle Database behind your firewall. It's every service that's in our public cloud, compute storage fusion application, plus the economist database, the Autonomous Linux, Autonomous Data Guard, everything, and we manage it, and maintain it for the customer. You get all the benefits of the cloud, but it's in your data center behind your firewall. No one, not Amazon, not Microsoft, not Google, nobody, but Oracle can give customers a complete public cloud in their data center behind their firewall. Our strategic services are growing rapidly. Autonomous Database revenue grew 64%, an annualized consumption. Our Gen 2 OCI consumption rate was 130%. We're clearly growing faster than the market. And we're taking market share in the process. With that, I'll turn it back over to Ken.

Operator:

[Operator Instructions] Our first question comes from Mark Moerdler with Bernstein Research.

Safra Catz:

Sure. Thanks for the question. So, it's really following the path that we were on before COVID really hit in March. And so, we were – what is going on is very basically an extrapolation of what's happening in the business. So, the things that are going very well and are growing and are getting larger and larger is everything associated with the Cloud. And that so does have implications on license because options grew not only, database options grew not only double digits, but actually 20% something. And analytics also grew because, as you know, with Oracle licenses, you can bring them to our Cloud. But in addition, Exadata and some of our Oracle specific hardware that's very strategic, you know, continues to do well, but really the [big barn theatres] are, the fact that our SaaS business is large and growing quickly, and now OCI, and our database cloud products and services are growing and they're getting larger and larger. And so because we've got annual consumption revenue growing over a 100% and this kind of – this is now overwhelms the fact that some of our businesses, I'll give you an example, on-premise consulting. This business continues to get smaller, and so it's completely overwhelmed by the businesses that are growing faster. And commitment to our database is incredibly strong. More and more of our customers want to bring their Oracle databases to the Oracle Cloud. And then of course, you have the cases that Larry's talked about, where our just Oracle Cloud Infrastructure, Gen 2 is just so good, and so much cheaper and so performant and secure that more and more applications want to come to that. So that's really what's going on. I'm not seeing into the future. I'm basically looking at what's going on under the cover and it’s a very easy extrapolation, as our installed bases of our cloud businesses continue to grow.

Ken Bond:

Next question please. Thank you, Erica.

Brad Zelnick:

Great, thanks so much for taking the question. And I'll echo my congrats to the company as well. I want to ask about Cloud@Customer, clearly there's a lot of excitement for how it can enable very large customers to adopt autonomous database and have all the benefits of OCI behind the firewall, and I appreciate it's only really become available in the last few months, but maybe for Larry, from a product market fit perspective, can you explain why this is such a big deal? And for Safra, are there any leading indicators you can point to maybe backlog or anything else to help us understand the leading demand for these products, which I assume it supports your confidence in the overall business accelerating? Thanks.

Ken Bond :

Thank you. Next question, please.

Heather Bellini:

Thank you so much to the two of you. I just thought Safra, OCI had a great quarter, and obviously, it had really impressive growth with customers like Zoom that you've highlighted, and can you talk to us a little bit about the pipeline momentum you're seeing with OCI as customers accelerate their migrations to the Cloud? And also, can you share with us what type of workloads and applications are seeing the most traction with it or is it really broad based? Thank you.

Larry Ellison:

Yeah, I’ll add a little bit of color. When Safra says our customers waiting for us, let me add a little more information. A lot of those customers actually tried to run Oracle at AWS. That’s right. It just didn't work very well. So, they’ve decided, maybe they should wait, and so they did. So, they did try. They looked around. They experimented, but the vast, vast, vast majority didn't work very well. We have an Exadata Cloud Service, we have, you know, autonomous database is not available anyplace, but the Oracle Cloud Exadata database service isn't available anyplace to the Oracle Cloud. We're much better – you'd expect us to be much better at running Oracle Applications than anybody else than we are, and a significant percentage of enterprise applications. You know, I don't know 40%, 30%, 40% are Oracle Applications. So, that's just a gigantic installed base that we think it's going to be moving to the Oracle. We're starting to watch it move to the Oracle Cloud. So that's one thing. So they tried, didn't work. So, they're coming to us. Next thing. A lot of our application customers, you know, we got well over 7,000 customers – Fusion application customer, 7,000 Fusion ERP customers. Now those customers are beginning to build data warehouses around their ERP data, everyone does. And they're building those data warehouses using Autonomous Database and Oracle Analytics and the Oracle Cloud using Oracle Infrastructure Services. As I said, the Oracle Analytic Cloud is an Oracle Infrastructure Service, is an OCI service. The Autonomous Database in OCI service. So, our application customers pretty much all of our medium and large application customers will become in the not too distant future, will become infrastructure customers, a lot again, and you've got to add them onto. So, these are people that our SAS customers are going to become infrastructure customers. On premise database customers are going to become infrastructure customers, either in the form of Cloud@Customer or Public Cloud. Then there are surprises like Zoom, you know, and 8x8, but there are more surprises like that. I think Zoom is a great example because it proves that the Oracle Cloud is secure, reliable, high performance, and economical. They pick – because it has nothing to do with the Oracle Database. It has nothing to do with them doing a SaaS customer that was just purely an evaluation of our Cloud versus Microsoft's versus Google's versus Amazon. And another example of that is high performance computing. Car companies simulating crashes. Now, why would anyone go to the Oracle Cloud to do high performance computing when you can go to Google, or you can go to Microsoft or you can go to AWS? Well, because we're much faster, therefore much of it – we’re much, much faster and therefore they get the simulations on faster, but they got to be willing to pay less. Yeah, almost every car company, well, maybe that's too strong. Half the car companies around the world are now either using our high performance computing or evaluating our high performance computing because we benchmarked so well, against the competition. And this is all new business, like the video conferencing business. So, the OCI team did a spectacular job of building, you know, a second generation learning from what Microsoft did? What Google did? What Amazon did? And then building the next generation, and it's so good, we're winning business everywhere. So, and again, and these are very early days. Gen 2 OCI is relatively new. And, Gen 2 Cloud@Customer is even newer. And these are both fabulous products that I think are going to do extremely well over the next few years.

Ken Bond:

Thank you. Next question please.

Raimo Lenschow:

Hey, congrats from me as well. Originally, I wanted to ask about the Enterprise Edition of TikTok, but you said, I shouldn't ask about TikTok, so different question, though. The – would you maybe discuss, like we talked about the strength in Cloud, but the other thing that stood out this quarter was how much better you did compared to your peers on the license side. You know, you were up where everyone kind of was down quite significantly, and you touched on some of the drivers, but maybe you could double a click on some of that again, because that stands really out as something that we haven't seen in the industry. Thank you.

Safra Catz:

Right. It’s driven. In fact, it's driven by their plan to move to the Cloud. And that is very, very clear because they're buying the specific option, which as I said, the options number, very high percentage growth this quarter, because it's really in preparation for their move to the Cloud. But I will also tell you that is available also in analytics and in some of the other some of the other techniques, you know technology licenses. So, analytics is very strong. The database options is extremely strong, very much pointing in the direction of moving to the cloud. So that's really what is driving it. It's not – it's generally not going to be staying on-premise. Some of course, stays on-premise and some will stay on-premise indefinitely, but many companies will be either hybrid, or will be Cloud@Customer, or of course in the public cloud. And that's really what's going on here. And it's, it's really quite clear.

Safra Catz:

Yeah, thank you.

Derrick Wood:

Right, thanks for taking my question and congrats on a strong quarter. I wanted to ask about the hardware side of the business. This is the first quarter seen without negative growth in a long time and to see you heading 70% gross margin, pretty impressive and far sooner than what we've thought. So, does this tell us you're mostly through bleeding off the commodity pieces, and that the majority of growth is driven by Exadata and Cloud@Customer and how should we generally think about the directional trends from here both in terms of growth and margins?

Operator:

Our final question comes from Phil Winslow with Wells Fargo.

Safra Catz:

Sure. I mean, really, when you think of our application business, you really have to think about Fusion and especially Fusion ERP, HCM, our back office, you have to think about NetSuite those are the fastest growing segments. And you have to take into account that we have some other things in that business that are smaller, and some of them are from acquisitions. And that is the less, you know the less strategic part of our business. And as that gets smaller, sometimes replaced by Fusion, that's why that business is really doing very, very well. Because the ERP – everything is Fusion, but Fusion ERP HCM, this whole area really growing quickly. I mean, what you see is, many of our customers both E-Business Suite, PeopleSoft JD Edwards customers, but we also see a new phenomena, which is historically it would be hard to push a door of an SAP customer, an SAP on-premise customer to – but now we find that many of those doors are not only – can be basically are already open for us. So, as the only provider of ERP and the cloud for large, medium, large companies, the Fusion products are really taking off. And so, we've been replacing not only our own products and other companies, but we've made a significant foothold in SAP customers, simply because they're really very frustrated with the vendors that they have installed on-premise. So, this business for us is an enormous opportunity. And it's really just chugging on all cylinders worldwide, in fact.

Ken Bond :

Thank you Safra, thank you Phil. 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 for any follow up questions in this call. We look forward to speaking with you. Thank you for joining us today. And with that, I'll turn the call back to Erica for closing.

Ken Bond:

Thank you, Holly. Good afternoon, everyone, and welcome to Oracle's fourth quarter and fiscal year 2020 earnings conference call. A copy of the press release and financial tables, which includes a GAAP to non-GAAP reconciliation and other supplemental financial information can be viewed and downloaded from our Investor Relations website. On the call today are our Chairman and Chief Technology Officer, Larry Ellison; and CEO, Safra Catz. As a reminder, today's discussion will include forward-looking statements, including predictions, expectations, estimates or other information that might be considered forward-looking. Throughout today's discussion, we will present some important factors relating to our business, which may potentially affect these forward-looking statements. These forward-looking statements are also subject to risks and uncertainties that may cause actual results to differ materially from statements being made today. As a result, we caution you from placing undue reliance on these forward-looking statements and we encourage you to review our most recent reports, including our 10-K and 10-Q and any applicable amendments, for a complete discussion of these factors and other risks that may affect our future results or the market price of our stock. And finally, we are not obligating ourselves to revise our results or publicly release any revision to 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.

Larry Ellison:

Thank you, Safra. Look, this quarter, we announced new customer relationships with Zoom and 8x8. They were great wins but there were many others. And before I start listing the additional wins, I want to explain why we're winning. Oracle Cloud Infrastructure is the world's only second-generation autonomous cloud. Autonomous software technology, the Oracle Autonomous Database, Oracle Autonomous Linux, autonomy is the defining technology that separates our Gen2 cloud from Amazon's, Microsoft's and Google's generation-one cloud. Autonomous self-driving computer systems eliminate human labor and eliminate human error. There is nothing for humans to learn and nothing for humans to do. Eliminating human labor dramatically lowers the cost of running an autonomous system. Eliminating human error dramatically increases data security and system reliability. All of the big data losses at Amazon were caused by human error. There is no opportunity for any human error if your data is stored in an Oracle autonomous system. This is a very big deal. The Oracle Autonomous Database provisions itself, configures itself, encrypts the data itself, patches itself and updates itself, automatically scales itself up and down and continuously tunes itself as the database grows and user access patterns change, and it does all of those things while the system is running. There's no downtime required to patch. There's no downtime required to installing new version. There's no downtime required to double the number of processors that you're currently using or reduce the number of processors to have. It all happens while the system is running. Oracle Autonomous Linux is the world's only autonomous operating system, which provides 99.95% [ph] availability while maintaining itself with continuous security and monitoring, continuous patching and remediation while the system is running. Furthermore, soon all the popular OCI services, compute, storage, et cetera, will be truly serverless and elastic. The other guys don't have this. The Oracle OCI will have elastic compute, elastic storage, all the popular – all about popular things would be serverless and elastic, scaling itself up and down automatically while you are running. So we keep the promise of the cloud where customers only pay for what you use. Quite often in other clouds, you have to reserve compute capacity, and even if you don't use it, you have to pay for it. That's not the case. That's less and less the case in the Oracle Autonomous Cloud. Okay. The Oracle public cloud now has 24 OCI Gen2 regions live. Soon, we will have more regions live than AWS, which is currently at a count of 25. We will, this fiscal year, add another 14 Gen2 OCI regions, allowing more customers to run in a public cloud without compromising data locality or data sovereignty requirements. For customers who are wanting or needing to run their applications in their own data center behind their own firewall, we uniquely offer Oracle Cloud@Customer, either for just the Oracle database or for all of our OCI cloud services, including our SaaS applications. None of the other cloud vendors have this kind of cloud customer offering. To summarize, Oracle's Gen2 autonomous, serverless, elastic cloud infrastructure delivers better performance, higher security at a much lower cost than AWS, Azure or the Google Cloud. And that's why we won Zoom. And that's the other – and some of the other deals I'm about to tell you about. Okay. Let's start with Zoom. Demand for Zoom's services has increased almost 20 times since January. Zoom needed additional cloud capacity immediately. Within hours of the first Oracle deployment, OCI supported hundreds of thousands of simultaneous meeting participants. Usage has continued to ramp, where Oracle now supports millions of simultaneous meeting participants. Zoom selected OCI because of our advantages in price, performance, scalability, reliability and cloud security. Every day, our Zoom -- our Zoom conferences move more than 8 petabytes, through the OCI network. That's an extraordinary amount of data. We've been able to scale and help Zoom scale as demand grew. Okay. Another win, in addition to Zoom 8x8, a great example of our sales process, the customer began by moving some services to OCI for performance enhancements. 8x8 was very surprised by the extent of their performance gains by moving out of AWS, moving part of their system out of AWS and into OCI. They were so surprised by the performance gains they achieved and the cost savings they achieved, that they decided to move all of their services out of AWS and into Oracle. Once OCI demonstrated much better performance at a much better price, that sealed the deal, for 8x8, and its growing base of 20 million monthly active users. Another win, the Omani Information Technology and Communications Group, a three-year contract, they built a dedicated OCI Gen2 Cloud@Customer data center, in Oman, offering OCI services, OCI public cloud services to all the different government agencies within Oman. This means they'll be able to have the full benefits of the public cloud, OCI Gen2 public cloud, again without compromising their data locality or their data sovereignty requirements. Another win, Jefferies, the world's largest ninth-- world's ninth largest investment firm plan to move over 500 workloads to Oracle's Gen2 public cloud. Jefferies picked Oracle over both AWS and Azure. They are also using OCI to extend their Fusion HCM applications. Another win, General Authority of Civil Aviation in Saudi Arabia, Cloud@Customer, in the customer's own words, 'The key factors that were considered when we chose Exadata Cloud@Customer was cost reduction by approximately 50%, while being in compliance with government requirements for data sovereignty. Additionally, with Autonomous Database on Exadata Cloud@Customer, our team could save time and effort. And focus on business innovation by leveraging its self-driving, self-securing, self-repairing characteristics of the Oracle Autonomous Database.' Quest Diagnostics, Quest is the world leader in diagnostic testing. And they continue to invest in the Oracle cloud to support the ongoing battle against the coronavirus pandemic. Quest expanded its current Exadata Cloud@Customer environment, so that the company could migrate, MyQuest portal an anticipation of dramatically increased COVID-19 antibody testing. Quest also upgraded its existing Exadata on-premises environment to new -- the new Gen2 Exadata Cloud@Customer to support both corporate and line-of-business, business functions. Another win, Santander Bank, Santander is consolidating their databases on Oracle's Exadata Cloud@Customer and adopting our Autonomous Database to support the bank's digital transformation. Another OCI win, TD Bank Group in Canada. TD Bank made a multiyear commitment to use Oracle's public cloud, including Oracle's Gen2 Cloud Infrastructure, along with Oracle SaaS, data integration and Autonomous Data warehouse to move their financial reporting systems from an on-premise configuration to a public cloud deployment. Verizon Business Group, a four-year contract. Verizon has already moved over 25 mission and business critical workloads to the OCI Gen2 public cloud, serving its customers around the globe. These workloads process more than 200,000-plus IOPs, I/Os per second with 120 terabytes of data. Verizon uses the Oracle Cloud Infrastructure with Exadata Cloud Services, including RAC and Data Guard, and Verizon plans to dramatically increase its commitment to the Oracle Public Cloud and move more and more workloads over to Oracle. Another win, Cybereason, a four-year contract. Using the OCI Public Cloud to run its own SaaS platform to provide their customers with endpoint protection, response and analytics as a service. Cybereason will be using Oracle's bare metal service plus the Autonomous Database to run their analytics. Another OCI win, a very large European auto manufacturer. This customer is looking for a highly elastic, high performance compute environment in the cloud to reduce their capital cost and introduce deployment flexibility. They will run computational fluid dynamics to simulate car crashes in the OCI Public Cloud to support their car development and scale up -- and they expect to scale up using many thousands of cores by the end of this year. Another win, SGS, formerly Societe Generale, a three-year contract. Moving multiple workloads to OCI Gen2 Public Cloud, including a 34,000 user e-business suite application with the goal of lowering costs, while improving security, reliability and performance. This wins open doors to the next phase of SGS's transition to the Public Cloud, focused on peering Microsoft Azure with Oracle's OCI Gen2 Public Cloud. Another win, Synacor, three-year contract. They are migrating some of their production SaaS businesses to OCI, which enables them to shutdown a number of their data centers. In May, they expanded their initial contract as they continued migrating existing and new SaaS environments to Oracle's Cloud Infrastructure. Sky.One, three-year contract. Sky.One is a Brazilian ISVs that again has their own SaaS applications. After running on both AWS and the Oracle Cloud, they found that Oracle's cloud gave their customers much better performance at a much lower cost. As a result, they are moving all of their workloads to the Oracle cloud. Another one, another win for infrastructure. Manappuram Finance in India, a five-year contract. They decided to move entirely to the Oracle Public Cloud in our Mumbai Gen2 data center. With our newly launched, Hybrid Gen2 -- Hyderabad Gen2 data center as their disaster recovery site. And I'll stop with -- and the last infrastructure win, I'll talk about is Altair, a three-year contract, five times the size of their initial contract, and they're migrating more of their high-performance compute and commercial workloads to OCI. There are a lot more infrastructure deals in the fourth quarter, which was a spectacular quarter for OCI and Infrastructure, but I don't have time to name them all. So, right now, I'm going to move on to cloud application wins. Currently, Oracle is the cloud ERP market and technology leader with over 7,100 Fusion ERP customers and nearly cloud ERP 22,000 NetSuite customers. We have taken a huge lead in the cloud ERP market because our largest competitor, SAP never rewrote their ERP applications for the cloud. Gartner lists Fusion, Oracle Fusion at the very top of their ERP ranking, with SAP in the lower half, listed with the lower half of competitors. This is a dramatic change from a few years ago. Workday has a cloud ERP system, but most of their successes come in HCM. And more and more customers these days are purchasing HCM as a part of an overall ERP purchase, an ERP decision. We've now seen our Fusion HCM growth rates as a result of the fact that HCM purchase decisions are now getting bundled with ERP purchase decisions. We've seen our HCM Fusion growth rates surpass Workday's HCM growth rates. We are already, by far, the biggest cloud ERP player, and it looks like we're going to be able to leverage our advantage in ERP and our scale in ERP to also become the biggest cloud HCM player. Before I go on to the key ERP and HCM wins this quarter, I'd like to highlight a few Fusion customers that went live in Q4 during the pandemic. First was JPMorgan Chase. JPMorgan Chase in this past quarter went live in 100 countries, with over 256,000 employees on Oracle Cloud, HCM and Recruiting. JPMorgan Chase has already moved over two million of their recruiting candidates to the new Oracle Cloud Recruiting system. Maybe the most interesting one, Goldman Sachs. Goldman Sachs initially purchased Workday HCM, but their implementation was not successful. Thereafter, Goldman Sachs acquired Oracle Cloud HCM and they went live a little over a month ago. It's interesting to note that both Gartner and Forrester Research rate Oracle HCM much higher than Workday. Don't believe me, go look at the reports. They're online. Okay. So, where we really distinguished ourselves in addition to capabilities and also other things was in customer satisfaction. Look at the Gartner report, look at the Forrester report. Our customer sat rating is 5.0 right at the top and Workday is right in the middle is right in the middle with 3.0 far behind us. Another company that went live during the pandemic was Mount Sinai Hospital and the Icahn School of Medicine. They went live with Oracle Cloud HCM, amid the COVID-19 pandemic to support more than 26,000 frontline employees with more modern, accessible tools that they could use at home. They replaced a 30-year-old HR payroll system, all right. Those were go-lives that happened during the pandemic, and I think they're very interesting. Okay. We also added a lot of customers in ERP and EPM and supply chain management. First one, KPM Netherlands bought Fusion ERP. They're going to start a complete back-office transformation of nearly 2,000 applications going from multiple vendors' ERP systems to Oracle Fusion ERP, standardizing an Oracle Fusion ERP. A large global networking company is leveraging Oracle's digital supply chain with a single data model to achieve end-to-end view of innovate to commercialize, manufacture to fulfill and design to recycle operations. Another – a large global insurance provider where we beat Workday for an ERP replacement. Workday was the incumbent in HCM, but we were able to win the ERP deal even though they were already there in HCM. The customer chose Oracle because of our accounting hub and our global capabilities. They also bought Fusion Procurement and Fusion Project Management. A large multinational conglomerate in Asia signed a $13 million ARR deal. We'll be rolling out ERP, supply chain management, HCM to their over 200,000 employees and multiple subsidiaries worldwide in a wide ranging program to modernize their corporate system and remove tens of millions of dollars of operating cost. Another win in the quarter, ERP win in the quarter was Westpac New Zealand. They'll be using Oracle Cloud ERP and Oracle Cloud EPM to reduce cost and complexity of their current environment while meeting local banking standards to operate independently from their parent in Australia. Okay. I'm going to stop doing ERP and supply chain wins. I'm going to move to HCM wins. Okay, first, we won Kroger, North America's largest grocery is replacing their SAP system with Fusion HCM. The key enablers that allowed us to win this deal were our capabilities around all of HCM can operate from a smartphone, AI, machine learning integrated into the application, chat box integrated into HCM, and all of our modern SaaS applications and our Oracle Voice Digital Assistant. You can do a lot of things expense reporting, calling up reports using a voice interface on your mobile phone, makes a huge difference between us and our other cloud competitors is our Oracle Voice Digital Assistant. Another HCM win was at Petronas in Malaysia. Once again, there, we're replacing SAP with Fusion HCM. A very large U.S. Managed healthcare company, they acquired Fusion HCM to replace 40 separate systems managing HR activities. These silos of disconnected data result in a loss of visibility of their most valuable resource, their enterprise workforce. Other significant HCM wins in the quarter were the United Nations, Norfolk County Council, the University of Texas, MD Anderson Cancer Center. There were lots more, but I'm going to stop right here and turn it back over to Safra.

Ken Bond:

Thank you, Larry. Holly, if we could move to the Q&A portion of the call now?