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ORCL Oracle

Participants
Ken Bond Senior Vice President of Investor Relations
Safra Catz Chief Executive Officer
Lawrence Ellison Chairman and Chief Technology Officer
Raimo Lenschow Barclays Bank PLC
Mark Moerdler Sanford C. Bernstein & Co., LLC
Derrick Wood Cowen and Company, LLC
Kirk Materne Evercore ISI
Michael Turits KeyBanc Capital Markets Inc.
Mark Murphy JPMorgan Chase & Co.
Call transcript
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Operator

Welcome to Oracle's First Quarter 2022 Earnings Conference Call.

Now, I'd like to turn the call over to Ken Bond, Senior Vice President.

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.

this many on purchased be Oracle Investor website of or Cloud available list Relations live went Cloud following a customers Oracle who Services from Additionally, call. recently will

Chairman On the and Safra Catz. Chief Officer, Larry CEO, and call Ellison; Technology are today

are other reminder, today's or discussion, relating present important that a we expectations, will today's forward-looking to our to forward-looking to also business considered being statements factors may These which discussion will may statements As might differ predictions, results be statements subject including these and include actual statements. that estimates affect from uncertainties made information risks Throughout forward-looking. some today. forward-looking potentially cause materially

you affect we placing a recent you price obligating from And most results result, in risks and future these reports undue or information that other including a our forward-looking of light to and discussion of caution for revise market review we ourselves amendments to we may finally, any applicable these XX-K our on our events. As results factors encourage these new XX-Q the forward-looking and future complete or stock. reliance statements statements our and are our or of not

And we'll a questions, Safra. begin the Before taking call to I'd few with prepared with like remarks. that, over turn to

Safra Catz

from the $XXX currency coming and was $X.XX good outperformance and the above million my midpoint was midpoint was parts quarter great guidance, also of constant of business. revenue with EPS Ken, Thanks, constant strong total afternoon, everyone. a of We above guidance. as very my currency our had all

the it we significantly, I quarter. the gave level stayed would throughout we from have strengthened didn't and guidance dollar had when it the same the at gotten strengthened benefit get As

rates, Now from our dollar review I'll results I growth non-GAAP here otherwise. constant say unless using on,

expect of $XX company up application revenue. for the billion $X.X So up currency. USD, with year fiscal quarter an total total revenues USD subscription are we constant now the and XX% XX% X% Total constant annualized X% GAAP $X currency accounted revenues with revenue up accelerating and billion, in license rate in for in services were of XX% were at cloud and an billion, revenues X% in support will the exit cloud that Fusion apps in growth mid-XXs. up

Our saw strategic back-office this ERP, in NetSuite currency, cloud quarter. infrastructure the up up subscription legacy growth and infrastructure services, constant in applications revenues excluding XX%. triple-digit GAAP grew billion, booking $X.X Fusion including services XX% were X%. grew and we XX% And hosting mid-XXs, up ERP,

ramp USD, that's X% were million, X% XX% the I infrastructure in fiscal and currency constant including from database in growth Autonomous was So up up License Database, includes OCI revenue constant revenue, after cloud X% up in was compare support tough will expect year. subscription at up database Cloud last up Customer services, year's revenue and were last down higher consumption from a XX%. QX. Database $XXX quarter. and currency X% through revenues, the which revenues

and XX% was was the in up Non-GAAP our US$X.XX, per and year, $X.X up tax XX%. will was USD in income from operating X% in earnings X% X%. XX%, and profit up up X% gross and currency. and cloud So license full-year base up last tax expenses all-in, Operating XX%, margin of billion, dollars the constant for X% and quarter was The USD, profit gross services were for was services dollars rate The billion, year. rate the below slightly expect in to quarter for support quarter. were XX%, in the total similar gross be currency. X% for non-GAAP margin $X.X growth last license grew share the support revenues up constant this I operating cloud

USD, in billion, some As was which is billion. dollars Operating tax four $XX same X% our $XX a revenue due quarters differences marketable billion up customer in X% obligation up in in over items, RPO, and a in and period the also XX% the GAAP constant XX% flow free QX remaining in flow XX% $XX.X $XX.X from billion, was last revenue result was U.S. X% currency. $X.X in deferred capital XX% recognized up the over now discrete and short-term and more Approximately next or is cash currency. have same The expected constant $XX.X to EPS year-ago strong over be to X.X%, revenue of billion, gross is period. US$X.XX, cash but our $X.X was months. XX% XX bookings. up than balance up timing We was USD up constant as securities. rate the of was performance expenditures deferred up the alone CapEx The billion, to due payments, cash with for GAAP for balance in currency, billion, with

As we've prudent acquisitions, to dividend. repurchases, innovation, use before, committed we said are stock value through debt our of to times technical strategic shareholders many the returning and

XX% shares we total that's billion. about of and the quarter, in And million current for This $X we XX reduced shares last over a share the XX outstanding half average have years, price. the repurchased by price,

quarterly and of the XX months, dividends declared of $X.X billion $X.XX of out paid we a the Directors per last addition, dividend In Board over share.

for you that Cloud will in becoming levels. fundamentally revenue what to margins wherein, business a XXXX all revenue. ahead we year company and to accelerate is in for. more we is confident fast-growing constant remain profitable guidance portion XXXX, businesses are better year, compared fiscal same larger look will accelerating. cloud are revenue see of or total highly digits to than Now expect And total on-premise. growth year growth waiting fiscal the currency as mid-single pre-pandemic which the a next be somewhere our the operating one our because I I

guidance QX. for on non-GAAP my And to I basis. this turn review now me will Let a

$X.XX and between and expected now, a to currency the EPS Non-GAAP in than minor climb through of are very QX USD between and $X.XX. both QX then guidance and they support X% is year. QX and revenue to grow revenue and remain in and Assuming more the constant for for constant grow and currency both be USD expected fiscal grow QX EPS higher as X% both base to XX%. license of My second X% in expected EPS currency half to the rate Cloud currency assumes between Total and USD are X% a for have QX. effect should currency. services X% exchange are in positive constant total revenue on for rates same

one-time his cause turn one-time quarter events, any to tax for and I events tax up for it could normalizing average actual However, down, in but rates will rate given around non-GAAP for that, Larry both or over these tax to that I'll so. comments. XX% with our tax expect And vary

Lawrence Ellison

Thank fund huge in live ledgers Oracle XX ERP, separate of Oracle Australia customers. past they very Fusion applications pioneers live you, largest, the quarter, until most went launched infrastructure I is world's is services of America one Oracle of Fusion HSBC, Oracle cloud business, cloud not ERP of Earth. just Fusion and Macquarie, ERP bank, company Safra. NetSuite cloud Oracle year. Cloud into a being applications is company. live York Oracle investment any Oracle used New now, financial major went consolidating application. first Amazon Oracle's global QX, cloud ledger. over companies has QX, ERP QX, Cloud largest JPMorgan This Fusion and provider very building went cloud strong ERP. in NetSuite are name another to NetSuite couldn't the Oracle grown live bank in currently rapidly on ERP with portion years Oracle has X,XXX position global Mellon, the cloud has with complex were Fusion company. Several of plus Also first a $XX largest Bank in on Fusion ERP later, infrastructure in largest global in cloud the Oracle billion Bank kind. the customers. in the leader the countries all Vanguard, market. in in Also on by a over mutual very overwhelming Chase, applications. market the QX. XX,XXX many company

have do in on can our partners to banking BXB a you cloud of you and There cloud working the generation We new things never financing strategic started are and the do develop opportunities are with There could payment systems. on-premise. cloud.

forward. healthcare and Oracle's on-premise with systems, verticals If are ERP with banks. the that Banking and you supplier, aggressively businesses into going been with to are world's we the financing payments those like partners banking would go and two largest be are impossible old are opportunities pursuing center the will there have new money opportunities largest

business, important of Humana innovate cloud healthcare, ERP infrastructure In the of Speaking was in we continue an win several in Fusion part to QX. technical areas. our

way and are of who and Oracle has note cloud the in the great we now long a made into Amazon, business. order. I'll in Microsoft, our Google, case I come infrastructure We was know. are list have on hyperscalers, the global you Oracle you big sorted not four a those don't give They and progress way the that one list.

processor And world's remains Our and running long MySQL Oracle open-source up it innovations database, database, Amazon's other our database. of of AWS. is we most the management it MySQL, technology to have course, a performance MySQL the an biggest is system, been and new areas the Amazon have version critical continue now like tools of anyone query really And ultra-high strongest where Database called breakthrough can on called competitive. good it is systems. includes in-memory MySQL, we AutoPilot. Aurora set new getting very and it. an a and took put version again in of plus deliver in and open-source the The now renamed generation, HeatWave, unrivaled

version of pre-HeatWave old slow version Now, open-source MySQL, the processing. is with very the very, query MySQL of

is called you SnowFlake at is to MySQL SnowFlake on RedShift you then SnowFlake data moved your come and a MySQL on AWS because put RedShift, fact, up typically SnowFlake in you years in against and queries competing way In Amazon And has effectively runs a use faster Aurora data runs old MySQL. Recently, the as at into of over way you from quite query Aurora, or and Aurora. the clouds, Amazon. your do system warehouse transaction Aurora out RedShift data like than known multiple a warehouse that processing, thing when processing do your also the Amazon's with

Okay.

has Oracle MySQL Amazon's MySQL, to Aurora So measure simply this be for over and reaction introduces HeatWave. with they new Oracle's for again, over this version the stupendous query customer than that been processing. the faster MySQL reason And new of XXXx generation of

it's MySQL, terrible was Now, this query was query Amazon than Aurora, is proved MySQL, actually be MySQL processing. RedShift not or unexpected. what What for Oracle old old that SnowFlake to which than is, The is for Aurora faster that's unexpected more processing. XXx the

is database, database, to place MySQL run HeatWave. there queries. open-source suddenly, transaction And can – one with the with HeatWave do you on, can do is MySQL So transaction fastest one same database, your processing that you

asked So and what MySQL over it again. with into customers you make going move many just to what This that's thought Public Oracle's Cloud, they to public that's do. the we to want, don't so it asked quarter anymore available do that clouds. if We are other And customers available HeatWave data excited made on SnowFlake Oracle this we RedShift over or need is we they available is would your at query. our but us

public to technical in advantages interestingly, to over to I'll and plan most Oracle we Cloud the perhaps we cost aggressively Public turn on Amazon huge back and it over other where technical Safra. with clouds MySQL Aurora, So HeatWave have available advantages, and Oracle performance addition make RedShift huge Amazon compete SnowFlake.

Safra Catz

I Ken, take questions. Larry. we're think Thanks, to ready

Ken Bond

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

Operator

first Our from Lenschow Barclays. [Operator question comes with Raimo Instructions]

Raimo Lenschow

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

Safra Catz

I'll maybe add then Raimo, can and in. start Larry

out and health HCM or you moving their have delaying of And data, employees advise And pandemic and companies our question companies I transformation moved adapt better and is could have work work closer employees as that also that they slowly or had mobile our and companies a year cloud, that from are it's vendor that safety better and capabilities, digital because better there course, that situations have top no their whether goal quadrant so much even doing think their brand other is obvious is Gartner on close to otherwise, to and ourselves the much applications. a than we customers, been and COVID. of home by digital ranked things become are them changing really that the in that the to monitor your regarding that urgency like example, so the can and relationships that those the new with with right-hand all don't. and third to one we need the you those top one moving has customers, the incredibly business on may I ability number choice think no during to once to discussed, are for implemented, it's capabilities rolled their back-office of this be And is we've if you've where us, ERP one for Fusion suppliers supplied it. in row we with

they with momentum is for can't us, like and with have on-premise historically for So prospects say I commitment they our just and products SAP who continue that where from just have to been there or did. incredible either companies customers and

Lawrence Ellison

add. I'll Yes,

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

against They get five they years system. We're install winning customers them, SAP, they update their we're every taking now. on-premise and of deal cloud and You an will a It's have lot system. it again a it don't probably away. then everyone,

Raimo Lenschow

you. Okay. Thank

Operator

Mark Our question from with next Bernstein. Sanford comes Moerdler

Mark Moerdler

for ranking X IaaS the cloud. in this of congratulations Thank the Gartner Google month. the passed IaaS/PaaS you feature and plus SaaS on very questions, functionality OCI my much taking Gen size and strength GCP

do and that enough and view you fundamentally ask, believe checkbox is me Azure to than AWS, the Thanks. capture different GCP customers why? OCI market or Let functionality

Lawrence Ellison

big or Oracle databases. say, doesn't big the application I like interesting to where cases, separate of willing to security Amazon big have compete. their forced pick to questions. separate issue because think remains if databases Oracle we're answered Microsoft, reliability, We're Google there and good many think cloud Cloud big compete is very the to move those Oracle is open ISV not do think to question performance compete Database? architecture. and the Well, the database Well, But XX and probably think that Amazon an Amazon? Oracle than a the It's against Amazon better Well, question Oracle database. only Oracle big it. risky our business. in reasons about with with was, the migrate remains are advantages and would one can That’s – has It's for or will Oracle I the leader big all other enough databases. they still cheaper. six in the for they have security open the I applications of Amazon – for the been five about really Oracle with cloud. I to Amazon the it's the question much such should we We Cloud We to in have leader talk get it's security, is choose, and and single question data, the the we everything But Database a cost, think Oracle a in that's to And out don't enough good we a performance, it database for

because come so left less. people And Oracle cost Cloud to many was have the Amazon we and

database global. if sequence every Earth sequence of business, large Cloud. to It's a Gartner significant very, Microsoft, the another big big very big I'm but the on a counting not people not mean, runs Oracle those I'm the Oracle and have And to Chinese including It's to Gartner Oracle, I cost is is everyone, a the Cloud, we the Cloud not is they're in the three. migrate we vast Amazon, and that players – four this and Database. moving on the four. four. more important regional part we're the not seeing more big I advantages. step run majority And So proving think things virtually or application the the and If because Oracle Google. have Oracle we're big

just Gartner that move help Now nicely. we will report, we'll this along in – quite

Mark Moerdler

I appreciate you. it. Thank

Lawrence Ellison

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

Ken Bond

Erica, question please. Thank you, Larry. next

Operator

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

Derrick Wood

the Great. nice being job guys. at operating you you're how operating XXXX geo more growing product still adding be or on had maybe to income thinking or year go-to-market fiscal want about Last with investment topline an for while to year Thanks my remind operating more growth, for a balancing investments income and QX. versus you perspective you just Can growth for taking to margins recurring question. accelerating the in touch of standpoint? where accelerating from a either Safra, growth fiscal revenue quarter, growth you help alluded us

Safra Catz

and like they Well, have don't they okay. of increasing lose a for more not invest, money. focus profitability, you long other many Oracle know time they we money you make or about investing, we that following talk when We're still when your that these been companies colleagues and on

while more before. and money year, make we investing than will accelerating We this did

never pick. have have that don't are to So expectation high differentiated because very believed is we to that's pick our have We've value. we products we

will it's Board, Database the X, pretty just Cloud Fusion great Customer, our on across much careful so Gen things we're our really even We run don't for worldwide OCI at but we're spend our We whether very know have Services, now more. it that, product that right we we demand going products, though our money. lines that more, such cloud the how and to a it's about You returns, much our time bring waste company. invest we make

the more to we time an going money. so one or just don't this And It's we're other. to us invest, just – of but matter for have you important pick a make to think is

Lawrence Ellison

a with the where growing it considered Yes, when that should faster is thought I'd this example a was second than in bought company to recent an it like independently we NetSuite, strategic. history be part of we just as that past, NetSuite Oracle. We even

number we've but in – growth their And growth a so bigger NetSuite invested, investments and increased made obviously, we're has seen and we and made of more rate NetSuite, gotten faster has in money their but we've growing NetSuite. we've

to be be at larger So any model the would why that's Oracle different it business see don't And We a well likes Safra I it NetSuite. in think working to Cloud. seems pretty that like the Public implement.

Derrick Wood

color. the for Thanks Understood.

Ken Bond

Next question please.

Operator

Kirk Materne Our with Evercore next from ISI. question comes

Kirk Materne

me was of versus with expansion, workloads services? terms share click other very can some and you taking customers OCI new and on for or within sense some thanks public with like letting might OCI net of for those the guess in you're question. as Thanks. much, a do And to Thanks your of others? net ask curious act you us Just wallet of I feel you of double those infrastructure specifically, what give early a how meaning proxy the on vendors? in customers, you're those terms customers sort Larry, seeing growing are I how either

Lawrence Ellison

Absolutely.

the doing have move of but companies from bunch to other example, run that customers. their their number expense companies are ISVs of a about thing while the a famous Oracle, are then ISV corporate is close They've – the And expanding. I for are there of I'll they have been a of interesting system. operations. primary when Amazon their I reliability Amazon the the ISVs, business. you economics us a whole at cloud with the cloud running are because is a business. Oracle. Zoom in a this examples, those mean what We moved of examples bunch give from look They that really take mean, the mean, to of they most is, that's Maybe I they're

our as So They seeing well. wait. very That customers works, we're But they or That’s two They three in it really workload. move in a workloads. continuing. is more now move that corporate encouraging.

direction So pattern? Gartner in But workload seen more Yes. understand, Once a accelerate and smoothly in as to again, move more workload. it a and have more we even they corporate of third our right step workload experiencing. just rate. terms second and encouraging that's think we the the customers report to one We is move workloads a works the for we are a move what on a advantageous. economics basis They workloads continuous and are customer, move

Kirk Materne

Thank you.

Ken Bond

Okay.

Next question please.

Operator

Our Michael next Turits KeyBanc. question with from is

Michael Turits

and Hey, about at Larry Safra. I to Cloud Customer. ask wanted

mentioned, I think you it's growing Safra, XX%.

any if Cloud you this that So And the tailwinds sustainable driving acceleration and to able is at what that there is are quarter? acceleration saw beyond database headwinds Customer seeing. this start now

Safra Catz

I Cloud is XXX%. at one things up consumption Customer mean, of at didn't I Yes, was mention over the that

size is. And and but to a quickly, their it so complicated. it's it's So The momentum. and do it as a at bit Customer, their workloads realize a in accelerating database to then all while so up once I security us. effectively some we land builds that very, actually what more set it's set The workloads just just runs little you cost now takes for a they incredible then it up, it's that, brings said, very customer Cloud good take get need getting and follow land-and-expand special set they once a to thing it in up how a workloads, they other understand while to is, model We runs be that model. because then gotten start and it it and really

it's customers we're Oracle – a workloads it and their workloads be the what And need just profitable And very amazingly, and particular those have run us. in perfect at. important to it's them, and need. so a also that's their be where really perfect. have secure, And It to match most product. but it have It up, is for always is are be completely fits to global differentiated, remember to be our a for have they often really of really they those because really, be performing, they economical – for to they they have and that's is

Michael Turits

Safra. Thanks, Great.

Ken Bond

Okay.

please. question Next

Operator

Murphy Our from comes Mark final question with JPMorgan.

Mark Murphy

Thank you very much. Yes.

buffer your all to CapEx carrying buffer, curious for could you just or to it capacity such purchases have Safra, pivoted CapEx OCI be a quarter pipeline there of demand that good perhaps these for bit a a that a you OCI So do a two a see you last or approach you does can and a news seem revenue while from then, rise deploy a longer, of so bit take wins. have this future I'm might enough just-in-time which growth?

Safra Catz

to Well, That's be I short. don't like cut sure. for

And sure I so we want to enough, make demand frankly. do enormous but have I have

high-class it on a getting make on in the to bit time. the need up is we where it. we used it quickly sure we and carefully. And able to more we need, very take is have that it that what we what we demand, the demand to this inventory, focused try a that stay all need So quite I always but make very, manage call to such got have to but but we to it very problem, it stay I thought was we accelerating we've sure very being customers, deliver very, quantities our worth vigilant

Mark Murphy

Thank you very much.

Safra Catz

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

Ken Bond

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

Operator

appreciate call. first your Oracle joining earnings We participation. conference quarter today's XXXX Thank for you

now disconnect. may You