Oracle (ORCL) 11 Sep 232024 Q1 Earnings call transcript

Good day, everyone, and welcome to Oracle's First Quarter 2024 Earnings Call. Today's call is being recorded. And now, I would like to turn the conference over to Ken Bond. Please go ahead.

Thank you, Lisa, and good afternoon, everyone, and welcome to Oracle's first quarter fiscal year 2024 earnings conference call. from press non-GAAP financial financial reconciliation be and the a which information of website. viewed to Relations GAAP and downloaded copy release tables, and includes can A Investor our other supplemental

Additionally, a purchased Services our will went or investor recently customers relations on Cloud available Oracle Oracle Cloud live be of list many who from website.

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

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

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

few remarks. with prepared taking questions, we'll a begin Before

I'd to over like Safra. turn that, with call And the to

afternoon, everyone. good Thanks, and Ken,

was at like lost Like nearly when years employees. lost ago Oracle, of the know, XX a we all heroes feels all where about later. remember is day hard exactly we XX speaking to these we souls. our and hope and victims their one As of was of and yesterday And we still when honor a and X,XXX I us. the are blessing it unfolded, each it remember I years that many you memories traumatic for you, it today tragedy the country. Today, so even country

of that I help to going over things be at the couple on I QX it of weeks. about with our go you'll before numbers, thought are hearing would next the that Now some to start Oracle

we week, including Oracle better multi-cloud of progress differentiate throughout of drive showcase Autonomous generative Oracle the use on Oracle of strategy, and industry innovations, our the AI our our OCI, portfolio latest to Database, the have the CloudWorld, will decision-making Next use which AI Fusion, NetSuite Analytics application. and to

share take there our our in current better out than is customers. us Now, marquee prospective customers services to of join where person and their CloudWorld and year event We and time spokespeople experiences. our know existing busy calendars products each for that no their are

anticipate from to products Our teams innovation generation development results our and services. interacting directly customers build the of and next with

next Health, hear customers you Some NVIDIA, and more. many, many, many Uber, Cohere from will Ascension of the many, include week

discussions the You'll the also There Amdocs, the are getting driving will more announcements on work are Oracle see a shortly. partners from ecosystem we remarkable hear it's interest of to includes and from our expanding are this going Microsoft. that Overall, set VMware, ISV Oracle. of lot with and community strategic you

to performance acceleration From this you a up portion with nearly leading a time the for I've statement. remaining XX%. been excluding ecosystem about see financial or billion, of our In obligations indicator RPO, talking standpoint, customer Cerner, $XX now. and our we partner our QX, income as with revenue some climbed

expected gives total me booked is Approximately of moving the next QX, continuing momentum XX% to growth OCI turning We that and forward. the that is customer accelerate we first billion annual confidence build. momentum here several an months. have value. which recognized be greater the XX revenue total billion that QX for deals in point our in now business, is RPO the $X.X additional included numbers. to This week than to of in isn't $X as is In even will over into revenue My continue signed bookings

I remind ready QX was am like on announcing when the which eight we you, and you were because know day to day Now only that. a XX, I of results, I Friday none

was quarter guidance the a total XX%. but we our and guidance quarter per currency cloud saw and this share tailwind, rates. growth always, modest I'll Clearly, with our constant midpoint growth the of financials at $X.XX revenue high-end above So of currency discuss as using great was earnings QX another

SaaS revenue, cloud excluding up IaaS, and was Cerner, XX%. Total $X billion,

was $X.X and revenue up revenue at up also revenue quarter again was $X.X services billion, $X.X IaaS our of XX%, Now XX% billion, and cloud up billion, license XX%. by revenues, up SaaS the billion, billion, cloud Database XX%. applications, our OCI. including driven $X.X Application cloud with XX%, product strategic and total for revenue subscription includes Total support at $X.X GenX our up support, which Autonomous Cerner, and were

of revenue have billion, subscription license XX%. XX%. were they revenue back-office up strategic XX%. now up was includes cloud $X.X applications Infrastructure Infrastructure and which services SaaS billion, Our grew support, revenues, annualized $X.X

hosting revenue of XX% cloud billion. an legacy with services, GenX $X.X annualized Excluding Infrastructure services grew revenue

and database the services, databases was up XX%. SaaS OCI up were these up by as Database were which highlighted to cloud cloud revenue the strategic of services. includes which XX%. migrate was XX%. revenue alongside cloud of Cloud services cloud, importantly, up will consumption and be expect Database GenX leg revenue up was services Exadata OCI X% license we XX% Services Autonomous growth database subscription on-premise Very third support,

which of amazing compare this QX were license year. year XX% following tough revenues Software $X.X XX% billion, a down growth, made it an last

$XX.X total for Cerner. excluding up all, up were revenue X% X% billion, the quarter including in So Cerner,

and gross support cloud we’ve scale services higher our center from Shifting IaaS ensure gross margin build expand margin The profit very we've continued XX%, we new gross with while margins for to as support We also services monitor our grew data cloud percentages point, these of cloud license QX. IaaS gross carefully as fill up. dollars this and capacity, license X% To margins. in to last regions to was expenses our up. margins substantially seen year. And improving go

income was operating XX%, last year. margin up XX% year. up from from The was Non-GAAP billion, XX% operating last $X.X

continue not from we benefit to to Oracle continue economies the standards, to grow also the only operating will profitability and scale income, of we Cerner cloud in grow margin we drive percentage. As will operating but

short-term flow that billion, XX% cash quarter nearly billion was rate result billion dollars, was the in up GAAP year. good flow will X%. currency. for non-GAAP a US for was USD. EPS tax EPS very while constant the cash free USD, non-GAAP had XX% the flow end, The I The revenue was Operating and balance expect rest marketable of in was At in $X.XX The $XX.X the XX% XX.X%, cash billion, and up quarter up up we first in to in X% our in and see $X.XX deferred we quarter $X.X up was for to $X $XX.X free cash securities.

was last free flow Over billion, XX%. the flow was and XX% operating $X.X quarters, cash up $XX.X four cash up billion,

last from we see and flow bookings was QX for Capital clearly billion expenditures CapEx four were needs. cloud continue the stemming our customers’ our as $X.X beginning billion to quarters in $X.X and transformation. benefits growing the build cash are to we capacity over

XXXX have CapEx. this be past we in demand CapEx similar will see year's I fiscal the the Given year and to that pipeline, expect

the regions we remain and with We our line XX and always, careful margins cloud investments regions business. XX have which our is another booking Azure. world with public in cloud interconnect trends, in appropriately being our cloud XX As regions of pace are public gross Microsoft around up built, six why to these cloud with now live

also for And regions XX many, course, nine implementations. more more of each. with live We of we nine EU have planned, demand regions and regions clouded and sovereign live increasing have many dedicated customer XX security

customers. The compelling and optionality continue of to cost in marketplace advantages, make so sizing flexibility the to our regions cloud deployment us

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

total we for repurchased shares X.X quarter $XXX This million. million a of

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

I'd earlier longer-term. I the on Now into of given like of a bookings momentum. line great before business, to what sight dive trajectory share my have the see into QX we the guidance, I Per remarks, some thoughts

We quarter can quickly we building any are in have we extremely may confident there though biggest even than about acceleration possible. small challenge centers for data our the year, be as Because more as demand fluctuations. revenue supply, far is our

I rate license our high you Cerner upfront goals. in which revenue to are total transition Cerner we This maintaining move our accelerating transition to addition, fiscal ratably. an growth as next And excluding customers Again, the for are this year are as of firmly near-term year. meeting financial current subscriptions, analyst to rate remain resulting committed growth purchases, rate our headwinds 'XX at recognized hear as financial in the to which some our is fiscal accelerated committed we as In Cerner, the recognized to remain week, growth well cloud from cloud will cloud.

turn same a currency on QX, which are EPS in my basis. to review now and on as I'll positive If me Let guidance they effect remain on QX. for total should rates positive a now, X% the have exchange effect currency $X.XX a non-GAAP revenue

actual currency different. the However, be impact may

expected X% to grow expected to expected in to X% USD. revenues X% to grow X% to revenue including USD are total today's X% in currency X% XX% Here are to from in constant grow constant at we go, grow to rates. expected and Cerner excluding Cerner Total X% to in currency, and from are

grow X% grow for $X.XX is again, numbers, X% XX% currency is between be EPS rate to in excluding XX% Non-GAAP is expected and to expected mainline between see these Non-GAAP and be XX%. $X.XX is and USD. Cerner, X%, give My grow Total to QX to XX% guidance to and you XX% assumes EPS constant revenue EPS the USD. to of constant expected from between to $X.XX in expected $X.XX to in cloud business, currency. tax and a between can I in you grow XX% so

actual However, one-time tax tax vary. to rates events could cause

with over his for And it turn comments. Larry to I'll that,

Thank you, Safra.

is pharmaceutical their people technology Generative the antiviral So, is changing cars, AI Maybe, and is interfaces. the computers. ever? drugs, AI changing user with computer out. about is AI important Self-driving communicate generative voice everything. computer-designed industry, new most are how industry, Generative automobile the to find we

have As cloud. than in contracts twice That's QX. X of today, development we Oracle's to last as end training AI had much AI at the training of the companies as $X capacity more of purchase signed Generation AI billion booked

very less much AI training startups of and AI leading half speed Oracle business X continue the also twice announce do growth largest that to only but at at the with signed clouds models pleased is in The expand in and the to for AI cost contract reason, to than Cloud. Oracle's business the cloud companies to our Gen AI report one simple we Exai I'm Oracle's train superclusters has exciting NVIDIA news technology infrastructure Oracle. the interconnected RDMA other have not their

to cloud and Our is even quite applications well it's get business doing better. about

expect new to Cerner Oracle's quarter value standardizing our of replacing in $X nine their are Health applications. systems, a on with able In we announce Berkshire process all and ERP the current And utility Cloud business by existing total now two contracts Fusion of awarded I’m all the companies billion. owned Hathaway large be to that over

a database later this and few our conclude with me with upcoming Microsoft about our week. announcement business Let words

making in Azure Microsoft the combination the of by substantially in, multi-cloud Microsoft Microsoft XXth. to Satya use will Azure in for expanding discuss cloud and Redmond Microsoft and thank at headquarters with on easier our Please the database services. Oracle tune We be cloud I our with you. will technology it details expanding and partnership customers latest existing buy partnership

Back to Safra. you,

maybe, Thanks, we point. Ken, taking start at questions Larry. And this could

Absolutely.

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

from Instructions] [Operator you. first We'll our take Zelnick with question Brad Thank Deutsche Bank.

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

without can't you amounts of any enormous training Well, AI models of build these data.

train supercluster. generative vast into amount It So these if shown they training is entire to ingesting big specialize, training OpenAI models treat everything, anything, from their and what just of it, need models. you cancer, a amounts you getting much ChatGPT AI issue all electronic let's X.X, that are to is say, Imaging and -- GPU read AI they data image that this you -- to for partners. read about one the you AI of of take your has like health that in problem Wikipedia, doctors specialize X.X records data everything. ingested train sense diagnose they data so something they the and -- specialized want example, data. To huge is ingested read public And the huge to train we ChatGPT data to Internet, help need of and

We records and train to ingesting have of their in enormous models. ingesting getting another ours own AI, partner access work doesn't data. electronic amounts huge our without of of to amounts health AI --

of away of ChatGPT to So elements all because in from ingest change X.X, is deal all data vast AI utterly for ChatGPT and or that recognition. image upon have a at shift training multiple AI, went terms with X.X of amounts you in image building that train gravities the of into dependent Trillions to times data. a data

and treatment and other and and improve still capability cancer training training think we anonymized contain that doctors this our new highly-specialized very for diagnostic specialized Vector health Oracle's can of database private, their is electronic the good their business, So sorts records, while heart database all like will help that diseases. for models and data disease yet data prescriptions keeping

and stronger the and So now important. information we about it's think getting age. a demands we into data are our changed has boon on Nothing the business, of getting The to that. are more deepwater

Thank you so much for Larry. your perspective,

our next Murphy Mark from take We'll JPMorgan. question with

much. so you Thank

further there of the are very out wondering, Larry, than it's you network that anything think through possible starting different else has So in understand architecture design. of actually fundamentally ahead other low-latency market if to initiatives. OCI a non-blocking, I'm the some your companies because pull to

Having greater like is the going isolation, For instance, you're the Azure lead? Interconnect, running you think regions, it a sounds if just providing stronger that. a to wondering database, expand more extending there possibility of

on data again, -- generation our are second our generation and Well, -- cloud. have of center, we we second our of

generation, yet from of generation we notice we lot little were the other think a party, have not with because were we a solved happy companies not that's a Now very lot late the bit but that to problems moved we solved. a people second which to of which cloud a

for of It's useful models, for building almost -- So much useful it's database. network the we useful data useful a It's They AI our have configure for don't everything. our faster not level non-blocking of centers, the labor. a have AI themselves. ultrafast are automation only RDMA is They centers training certainly data XXX% for, in lot automated. themselves. run in terms We

have Now cost that advantage have human is involved, human of a amount saved. don't have you if saves don't biggest you is, labor the beings money, But errors. us a of human don't you huge lot labor,

mistakes. have You don't

security. can ensure You

mischief. security huge or that Most that don't another by make problems people center. engage mistakes That's our that in data people are caused We have in advantage.

ones way small pieces. only and the There all to they're vary they automate because was same by have -- identical, in same countries. hardware could to they same centers the but scale. and all are centers have same put pieces us them ones, they are and allows and the only make we software identical, the data are They big all automation them all very Our the automation that small data these

Stock security our any in than other because two with Nomura stock of run Exchange. more. building again, the don't They at Tokyo And, more many those and capacity resells of centers data customers. regions the dedicated also two ours. provider. extreme running have Japan which we to has Oracle Research, are centers NRI, But reliability are that data automation get many, we expect than We put that's cloud it's know any that other and all data with exchanges of clouds the I included center. Cloud

of we So we other we that's much And have why any advantages, security faster are advantages. than we cost advantages, have performance hyperscalers. have the growing

Thank much. you very

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

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

the and an right announcing e-commerce ERP Yeah, e-commerce, automate it. well on-premise. is we we by at the where partnership a live financial upcoming some XX% Chase know, a have cloud advantage CloudWorld, community that JPMorgan biggest. have important different the actual I of BXB very with of we in don't away and of And the big partnerships in we'll customers using the cloud in far back-office the lot be market we terms the in than back-office the And are cloud. more

system the management cloud. that and Cloud their big is automate entirely We what ERP one Oracle to bank. in customers? system through procurement It's e-commerce customers, transaction financing two two Oracle between Oracle order Oracle cloud BXB another So talking the

along for with Chase, bank shipping rolled It’s they If is right and with banking insurance, BXB, purchase. and loan your e-commerce your all included originate and JPMorgan together. the

an others brilliant No done that mean, -- Walmart, great job a a job for time. BXC. e-commerce one in we've have been automating We've done I industry, doing as Amazon, a for long that.

not the a insured. shipped that bank, ERP to because the cloud, manufacturers, In the in doing insurance, are you One we system automate BXB Oracle within another, talking We the complex. the commerce purchasers BXB the the have their the and company, get transactions talking equivalent entirely it together, to much shippers, getting their insurance talking origination, more got to all can can loan Cloud. parties and

for make ERP customers modern the they when versus a doing business easier system move much ERP So our came to on-premise we cloud system before. that

Okay. Thank you.

take will question with from next our Moerdler Bernstein. Mark We

Thank general you impact in X. getting I'm question. the as so it were related be will much on top-of-mind for to of taking as question. and Gen OCI parts related Two are to my The you'd Oracle, expect AI AI to what questions specifically relates the

enough revenue model to The supercomputers Oracle a is that. this as workloads grounding, you. margins strong pocket air if revenue low-calorie, maintain and first to me, compute its tell you is so create that could AI the you profitability try grows? some the the from have business it's it don't AI ecosystem, and training of clients second and strong ecosystem] empty-calorie (ph) or about the is inferencing transition or part [is whether enough can Thank And

new to the in to field, you're Well, Keep are your the data you legal up-to-date. the -- being have if they time all have field, and new these to being in researches published mind, new bring models. models constantly be -- healthcare in if in be you're you're relevant obviously AI judged, for in training cases

then thereafter. train but you So inferencing and it's not do that nothing

sit to and your right other. you're training next So inferencing each

the else better. not can that's do are on that's as be fast on the also we the going we the side, then this twice long stuff training everybody half just as or side, on inferencing -- to As as cost

whether we are going very, an be across to So think we or the board training very competitive inferencing. it's

we've a pretty so don't cost-performance advantages. got that we we So -- are confident

in by pay because twice fast run you cloud, as hour. as half the you you if Again, the cost much

going as So really don't anytime well We cost soon, as advantage and well away applies is training. an it for enormous to see as inferencing the that performance advantage us.

far a very Not prices cases, other often are a cloud doing think, cost. the with our in for We cost GPUs, for training, the as than GPU way, our as which of automated lower Now business? low-margin profitable are are are very some us, hyperscalers prices by GPUs for XXX% the lower but very, -- training. low

very That's you. helpful. Thank

We'll next from take Morgan Stanley. our question with Weiss Keith

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

software by all. not about the and going it process to Millennium’s a Okay. I'll existing time basically a There's Cerner way. big Cerner. and it two-phase rewriting moving that rip software the Millennium. It's at replace be to new on piece with talk taking the We a progress

customers first is moving cloud, the to the shift The and in will performance, and them get cloud. get lift we've to the hardened, new better the process everybody and the with and thing security the the system. then of give are which showing done That start features existing will moving which better up we system to

The know, AI with cloud, which well Cerner older generative new replace of The in as being system coding generates feature not Millennium, a feature is usually new after our like way. generated, next to system, Cerner after shift are we on new feature two-phase you Java, is the And Cerner system do. so there's we code. a we are the

writing we called application code an And have We APEX. new the not for are Cerner. generator

make and it's you extremely that APEX, don't either over are things they same fix again once generating fix they the code over great about We Again, is one everywhere. of the or the generators and Well, mistake mistakes. it going well. you mistake, code in make

the -- So features the business using it's stronger generator, and we -- of Also very, Cerner a in business code business new and write along very licenses. coming gen are we Cerner you'd made we code to old going again, on and think Cerner Safra to is again, things, stronger get the nicely. side that the point. The sell

sell and a that big contract you get You big chunk revenue quarter. in a of

new know you all big than Our time get that get now and award cloud, is as business we model, rather upfront. over money so a we Cerner

So that's, extraordinarily doing bit is the a Cerner headwind, well. but revenue a if of you will, business

I expense statement clearly. quarter the out still And we we've income side, made, through more play a to ways they become go, think it as more obvious on but the have the will to you next changes

save better non-deal have can, to for modern Cerner into And its know still comparison, to we so as be much us, always But while look QX, full you as to QX system looking you will a really quarter to a transforming we you'll little in and a as which spend entirety. are at.

money. to me just reinforce just said. what me Let love save let We Safra

Cerner, have security rewrite better that because our them. eliminated the with better this. the labor reliability we data and error. saved -- we we of With automated Cerner, costs rewriting it's is what not We going we of -- human did and are be we centers things programmers armies of we saved One

APEX. higher are once. human and We interfaces generate better Millennium all of the lot to generating software code and at also And quality higher labor that's security save quality using new us and going a user

Thank you, guys. Helpful.

We our will with DiFucci Guggenheim. take question John from last

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

okay. Yes,

with I remind remind start me more. Let of yes. is XX% bigger as to course, And I you want want to you of numbers

Okay.

to simply we is is and continue we overly I of have out level use, filled we as dependent our word So, year the The Stunning our to I et were year over smaller, is we possible. because out built don't up fast only of stunning. it want centers to you exuberant demand systems, on doing have us getting this cetera. plan and know, data last may and get continue on build the XX% to as can do be better, all

strong the a focus with cloud, told so we And yes, very and the again momentum you. to

the We are bringing there. and have our customers cloud growing on that's stronger momentum to going us and that to focusing

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

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

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