ORCL - Oracle Corporation

Operator: Hello. And thank you for standing by. My name is Tiffany, and I will be your conference operator today. At this time, I would like to welcome everyone to the Oracle Corporation Q2 FY 2026 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during that time, simply press star, then the number one on your telephone keypad. I would now like to turn the call over to Ken Bond, Head of Investor Relations. Sir, please go ahead. Ken Bond: Thank you, Tiffany. Afternoon, everyone, and welcome to Oracle's second quarter fiscal year 2026 earnings conference call. On the call today are Chairman and Chief Technology Officer, Lawrence Ellison, Chief Executive Officer, Mike Cecilia, Chief Executive Officer Clay McGork, and Principal Financial Officer, Doug Caring. A copy of the press release and financial tables, which includes a GAAP to non-GAAP reconciliation, other supplemental financial information, and a list of many customers who purchased Oracle Cloud Services or went live on Oracle Cloud recently, will be available from our Investor Relations website. As a reminder, today's discussion will include forward-looking statements, and we will discuss some important factors relating to our business. These forward-looking statements are also subject to risks and uncertainties that may cause actual results to differ materially from statements being made today. 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. And finally, we are not obligating ourselves to revise our results or these financial-looking statements. Before taking questions, we'll begin with a few prepared remarks and I'll turn the call over to Mike. No. It's actually to me, Ken. Appreciate it. This is Doug. As it relates to the numbers we are about to present, the following apply to both the results for Q2 and to our guidance for Q3. First, we'll be discussing our financials using constant currency growth rates as this is how we manage the business. Second, we'll be presenting our numbers on a non-GAAP basis, except where we indicate otherwise. Finally, as it relates to currency, it had a 1% positive impact on revenue, and 3¢ positive impact on earnings in Q2. For Q3, assuming currency exchange rates remain the same as they are now, currency should have a two to 3% positive effect on revenue and have a 6¢ positive effect on EPS depending on rounding. In terms of the result for Q2, we had another excellent quarter of execution. Remaining Performance Obligations, or RPO, ended the quarter at $523.3 billion, up 433% from last year and up $68 billion since August. Driven by contracts signed with Meta, NVIDIA, and others as we continue to diversify our customer backlog. RPO expected to be recognized in the next twelve months grew 40% year over year, compared with 25% last quarter, and 21% last year. Total cloud revenue, which includes both applications and infrastructure, was up 33% at $8 billion. Representing a significant acceleration from the 24% growth rate reported last year. Cloud revenue now accounts for half of Oracle's overall revenue. Cloud infrastructure revenue was $4.1 billion, up 66% with GPU-related revenue growing 177%. Oracle's cloud infrastructure businesses continue to grow much faster than our competitors. Cloud database services revenue was up 30%, with Autonomous Database revenue up 43% and multi-cloud consumption up 817%. Cloud applications revenue was $3.9 billion and up 11%. Our strategic back-office applications revenue was $2.4 billion and up 16%. We finished combining our industry-based cloud apps and our Fusion cloud apps under one selling organization in each region across the world, have been seeing increasing cross-selling synergies that are expected to drive higher cloud applications growth rates in the future. All in, total revenues for the quarter were $16.1 billion, up 13% and higher than the 9% growth reported in Q2 last year. Continuing our trend of accelerating total revenue growth. Operating income grew 8% to $6.7 billion. Non-GAAP EPS was $2.26 up 51% while GAAP EPS was $2.10, up 86%. We recognized a pretax gain of $2.7 billion in the quarter, stemming from the sale of our interest in Ampere. Turning to cash flow. Operating cash flow in Q2 was $2.1 billion, while free cash flow was a negative $10 billion and CapEx was $12 billion reflecting the investments being made to support our accelerating growth. As a reminder, the vast majority of our CapEx investments are for revenue-generating equipment that is going into our data centers. And not for land, buildings, or power that collectively are covered via leases. Oracle does not pay for these leases until the completed data centers and accompanying utilities are delivered to us. Rather, the equipment CapEx is purchased very late in the data center production cycle allowing us to quickly convert cash spent into revenues earned as we provision cloud services to our contracted and committed customers. In terms of funding our growth, there are a variety of sources available to us throughout our debt structure in public bond, bank, and private debt markets. In addition, there are other financing options through customers that may bring their own chips to be installed in our data centers and suppliers who may lease their chips rather than sell them. Both of these options enable Oracle to synchronize our payments with our receipts and borrow substantially less than most people are modeling. As a foundational principle, we expect and are committed to maintaining our investment-grade debt rating. Turning to guidance. Let me start with the impact of the added RPO that occurred in Q2 on our future results. The vast majority of these bookings relate to opportunities where we have near-term capacity available, which means we can convert the added backlog to revenue sooner. The result is we now expect $4 billion of additional revenue in FY 2027. Our full-year FY 2026 revenue expectation of $67 billion remains unchanged. However, given the added RPO this quarter, can be monetized quickly starting next year, we now expect fiscal 2026 CapEx will be about $15 billion higher than we forecasted after Q1. Finally, we are confident that our customer backlog is at a healthy level and that we have the operational and financial strength to execute successfully. While we continue to experience significant and unprecedented demand for our cloud services, we will pursue further business expansion, only when it meets our profitability requirements, and the capital is available on favorable terms. As it relates to specific guidance for Q3, total cloud revenue is expected to grow from 37% to 41% in constant currency, and is expected to grow from 40% to 44% in USD. Total revenues are expected to grow from 16% to 18% in constant currency, and are expected to grow from 19% to 21% in USD. Non-GAAP EPS is expected to grow between 12% to 14%, and be between $1.64 and $1.68 in constant currency, and grow between 16% to 18% and be between $1.70 and $1.74 in USD. And with that, I'll turn it over to Clay. Clay McGork: Thank you, Doug. Our infrastructure business has grown at an accelerating 66% year over year. You are well aware of the strong demand for AI infrastructure. But multiple segments across OCI are also contributing to this accelerating growth rate, including cloud natives, dedicated regions, and multi-cloud. Our diversity of capabilities within infrastructure differentiates us from AI infrastructure neo clouds. Our unique combination of infrastructure and applications differentiates us from other hyperscalers. We have ambitious, achievable goals for capacity delivery worldwide. OCI now operates 147 live customer-facing regions with 64 more regions planned. In the last quarter, we handed over close to 400 megawatts of data center capacity to our customers. We also delivered 50% more GPU capacity this quarter than Q1. Our super cluster in Abilene, Texas is on track with more than 96,000 NVIDIA Grace Blackwell GB 200 delivered. We also began delivering AMD MI 355 capacity to customers this quarter. Our pace of capacity delivery continues to accelerate. We continue to see strong demand for AI infrastructure across training and inferencing. We follow a very rigorous process before accepting customer contracts. This process ensures that we have all the necessary ingredients delivered to customer success at margins that make sense for our business. We analyze, land and power for data center buildings, component supply, including GPUs, network gear, and optics, labor costs for all phases of construction and low voltage work, engineering capacity to design, build, and operate, revenue and profitability, and capital investments required. Only when all these components come together do we accept customer contracts. Having the confidence we can deliver on schedule with the highest quality. As Doug said, this quarter, we contracted for an additional $68 billion of RPO. These contracts will quickly add revenue and margin to our infrastructure business. We continue to carefully evaluate all future infrastructure investments, invested only when we have alignment across all necessary components to ensure profitable delivery for our customers. The holiday season is a peak period for many of our retail and consumer customers. It is our responsibility at OCI to deliver the most secure, highest performance, and highest availability infrastructure to support these customers at the scale they need. Uber has now surpassed 3 million cores on OCI, powering their highest traffic ever this Halloween. TMove scaled to nearly 1 million cores for Black Friday and Cyber Monday. In addition, we also supported thousands of other customers across our retail and other applications through their largest and most successful holiday period yet. OCI is constantly expanding in features and services. We recently launched Acceleron, delivering enhanced networking to all OCI customers, and other services like our AI agent service. However, we cannot deliver everything ourselves. And we rely on our rapidly expanding partner community to provide the best experience on OCI. Added new AI models from Google, OpenAI, and xAI to ensure our customers have the latest and greatest AI capabilities. Our marketplace consumption has grown 89% year over year, powered by partners like Broadcom and Palo Alto. Those same partners drive OCI consumption by building their SaaS businesses on OCI. Palo Alto released their SASE and Prisma Access platform on OCI, and Cyber Reason and New Fold Digital continue to scale their businesses rapidly. These partnerships make our ecosystem richer, which helps our customers, and that growth translates directly to more OCI growth as our partners build their solutions on our infrastructure. Oracle database services see increasing demand across all clouds. Multi-cloud database consumption has increased 817% year over year. We launched 11 multi-cloud regions this quarter, bringing us to 45 regions live across AWS, Azure, and GCP with 27 more planned over the next month. We see increasing customer demand with billions in identified pipeline. We launched two important programs this quarter for multi-cloud. The first is multi-cloud universal credits, which enables customers to commit once to Oracle database services and use it anywhere in any cloud with the same price and flexibility. The second is our multi-cloud channel reseller program, which enables customers to procure Oracle database services through their preferred channel partners. We also launched nine services across the different clouds, such as Oracle Autonomous AI Lakehouse. This combination of the best services, universal availability, consistent and easy pricing and procurement, and partner support is accelerating the adoption of Oracle database services across our entire customer base. OCI is the only full cloud available to individual customers. We launched dedicated region 25, which provides the full capability of OCI in a tiny three-rack footprint. OCI is also the only cloud that enables partners to become cloud providers themselves through our alloy program. And our new footprint is available for all alloy providers. Dedicated region and alloy consumption grew 69% year over year. We launched one dedicated region for Ithka Group in Oman, and both NTT Data and SoftBank launched one alloy region each this quarter. This brings our live dedicated regions to 39 with 25 more planned. In summary, the four segments of our business are growing at incredible rates. This will contribute to a continued acceleration in our infrastructure revenue in the coming quarters. Customers are choosing OCI for its performance-optimized architecture, unrelenting focus on security, consistently low and predictable pricing, and unmatched depth in database and enterprise integrations. Those priorities have been our strategy from the beginning and are the driving force behind this growth. OCI is in a constant state of reinvention, you can see the value that has for our customers. When you combine our commitment to deliver the best in performance, efficiency, and security with the growing customer demand for cloud infrastructure services we are seeing. I couldn't be more excited about what's coming next. And with that, over to Larry. Lawrence Ellison: Thank you very much, Clay. Over the years, Oracle has developed software in three important areas: database applications, and the Oracle Cloud. We used AI to make our database software and our autonomous software eliminates human labor and human error, thus lowering operating costs and making our systems faster, more reliable, and more secure. Now with the development of the Oracle AI database, and the Oracle AI data platform, we're bringing all three layers of our software stack together to solve another very important problem. Enabling the latest and most powerful AI models to do multistep reasoning on all your private enterprise data while keeping that data private and secure. Training AI models on public data is the largest, fastest-growing business in history. AI models reasoning on private data will be an even larger and more valuable business. Oracle databases contain most of the world's high-value private data. Oracle applications also all hold huge amounts of exceptionally valuable private data. The Oracle Cloud includes all the top AI models: OpenAI ChatGPT, xAI Grok, Google Gemini, and MetaLama. Oracle's new database and AI data platform plus the latest versions of Oracle applications, enables all of those AI models to do multistep reasoning on your database and application data while keeping that data private and secure. All our database and application customers want to do this. Because for the first time, they get a unified view of all of their data. AI models can respond to a single inquiry by reasoning across all your databases, all of your applications. By treating all of your data holistically, the combination of AI models both the Oracle AI database and AI data platform, breaks down the walls that isolate and fragment your data. The Oracle AI data platform makes all your data accessible to AI models not just Oracle databases. And Oracle applications. The data in the Oracle databases and Oracle applications but data from other databases. Cloud storage from any cloud, even data from your own custom applications. Are accessible to AI models using the Oracle AI data platform. Using our AI data platform, you can unify all your data and reason on all of your data using the very latest AI models. This is the key to finally unlocking all the value in all your data. Very soon, through the lens of AI, will be able to see everything happening in your business as it happens. Mike, over to you. Mike Cecilia: Thanks, Larry. As Doug shared, the total revenue growth of 13% in constant dollars, I think it's worth noting that that's three consecutive quarters now where total revenue growth has been in double digits. So a solid quarter, and we see even better days ahead of us. So let me break down a few of the numbers a bit further, and I'll do so all in constant currency. Cloud applications revenue was up 11%, and that brings us to about a $6 billion annualized run rate. Within that, Fusion ERP up 17%. Fusion SCM up 18%, Fusion HCM up 14%, NetSuite grew by 13%. Fusion CX is up 12%. In our industry cloud, specifically hospitality, construction, retail, banking, restaurants, local governments, and communications all combined were up 21% in the quarter. So big growth rates on a big base. In our health care business, we now have 274 customers live in production on our clinical AI agent, and that number continues to rise daily. Also in health care, our brand new AI-based ambulatory EHR is generally available and that it's received US regulatory approval. We expect both our bookings and our revenue in Q3 to accelerate materially. So overall, cloud apps were up 11% on a bigger base. This is very meaningful because we see this business as continuing to accelerate going forward. We achieved this growth while we also undertook a major Salesforce reorg in many regions throughout the world. This is something we've been talking about for many years, and that is the synergies between our back-office applications and our industry applications. We're seeing more and more deals where our industry apps are pulling fusion or the fusion apps are pulling the industry apps. And as a result of seeing more and more deals, we're also seeing larger deals with more components. So recently, we combined our industry application sales team and our fusion sales teams into a single selling organization. This enables our sellers to have more strategic One Oracle conversations with our customers to sell higher and to sell more. We think about our very large installed base of on-premise application customers, these strategic conversations are driving upgrades. And you've heard us say before, just moving a customer to the cloud results in a three to five x annual revenue lift compared to support revenue. Now on top of all of that, top of the Salesforce, the one-off of go-to-market, one or four go-to-market motions, the industry suites, think about combining our AI data platform. With this unmatched suite of applications. This creates an incredibly unique opportunity for our customers to gain value very quickly from enterprise-grade AI. The combination allows customers to unite the industry-leading foundational models with company-specific proprietary data, as Larry mentioned, much of which comes from the Oracle applications. And, of course, the AI data platform also ties in non-Oracle applications, competitive data sources like MongoDB or Snowflake, object stores, and even complete bespoke unstructured data. So we think this allows our customers to very easily build enterprise lake houses, AI agents, and applications that leverage built-in, not bolted on, but built-in AI to transform their business. So just to repeat, AI, of course, is a great OCI play. It's also a broader software play for Oracle. It's driving growth in our applications. And our database businesses as well. Let me highlight a few key wins. In communications, the communications industry, Digital Bridge Holdings selected ERP and SCM. Ethihard Salam Telecom SCM. Motorola Solutions, ERP, SCM, and CX. Tim Brazil, who is the country's five-g leader, just signed a new five-year expansion to accelerate AI adoption and to transform customer experience at scale. All built on OCI. This five-year deal was an expansion or extension of a partnership that began with TIM Brasil's full data center migration to OCI back in 2021. So they're now building AI agents that are powering real customer interactions, including the content agent which compares bills for customers across months, and explains variations automatically. Already in the pilot, 18% faster issue resolution with the AI agents built. On OCI. Expecting even further improvements as we roll out. Continues. They've got 24 projects in motion. Seven of them are already in production. It's just a matter of months. Six more launching soon. All enabled by a multi-cloud architecture with Oracle as the key AI infrastructure partner. Already as a result of this initial rollout, customer satisfaction is up 16%, and call center flows are managing end to end with 90% accuracy. Resulting in 30% faster services times for customers, and a 15% fewer network failure interventions all using predictive analytics and, again, AI Copilot's built in OCI. So we are the AI engine for TIM Brasil to enable personalization at national scale. In financial services, CoreCivic selected ERP. SCM, and HCM. PrimeLife Technologies ERP Jewelers Mutual Insurance, ERP. In public sector, city of Costa Mesa, ERP, SCM, HCM. The United States Space Force, ERP, and HCM. The city of Santa Ana, ERP, SCM, and HCM. In the high-tech industry, SolarEdge Technologies, ERP, and SCM. Zscaler, ERP. Dropbox, ERP. And SCM. I could go on and on about these wins, but I think it gives you the flavor of just the sheer amount of multi-pillar wins why it's so important, that we have, you know, so many different options for customers and back office and front office. In terms of go-lives, we had 330 cloud apps customer go-lives this quarter. That's multiple go-lives per day. Virgin Atlantic Airways went live in September on Fusion ERP. And HCM and payroll, Broadridge just recently relaunched their Fusion ERP and EPM. Go live. LifePoint Health just went live on their third wave of Fusion ERP as SCM, and HCM. Saudi Telecom is live on Fusion SCM. With ERP and HCM to follow soon. DocuSign is now live on Fusion Data Intelligence. Again, I could go on about to go live. So with 330 of them in the quarter, gives you a flavor of some of the really important go-lives that we had recently. The cloud application deferred revenue is up 14%. That is higher than the cloud apps revenue growth of 11% just to reinforce my earlier statements, that we expect continued apps growth acceleration. So a solid quarter across the board. We're on the back end of a sales reorg that was focused on unified selling, across our applications portfolio, We're seeing a clear AI halo effect for our cloud applications, which is driving upgrades our AI data platform, combined with our applications is an absolute conversation changer it brings the Oracle database and all of our applications into the center of the modern ejectic enterprise. Looking ahead, we're executing well on a big and growing pipeline and I expect revenue and earnings growth to accelerate off an even larger base. With that, Ken, I'll turn it back to you. Mike, Tiffany, if you could please poll the audience for questions. Operator: At this time, if you would like to ask a question, press star. Then the number one on your telephone keypad. To withdraw your question, simply press star 1 again. Your first question comes from the line of Brad Zelnick with Deutsche Bank. Please go ahead. Brad Zelnick: Thank you. Congratulations and a particular shout out to Mahesh and the team for standing up a massive amount of capacity. In this quarter. My question is for Clay or maybe Doug. Oracle is clearly the destination of choice for the most sophisticated AI customers but this is a far more capital-intensive proposition unlike any business Oracle's ever been in before. Very specifically, how much money does Oracle need to raise to fund its AI growth plans ahead? Thank you. Clay McGork: Thanks for the question, Brett. This is Clay. So look. I'll answer that question in two parts. First, let me give you kind of the reason why it's hard to answer that question exactly. So the thing I think that a lot of people don't understand is that we actually have a lot of different options how we go about delivering this capacity to customers. There's obviously the way that people think about it, which is we buy all the hardware upfront. And as we and I talked about it in my financial analyst meeting, we don't actually incur any expenses for these large data centers until they're actually operational. So then it goes on to, well, how do you pay and what's the kind of cash flows look like the stuff that goes into the data center? Well, we have some other interesting models that we've been working on. One of them is that customers can actually bring their own chips. And in those models, Oracle obviously doesn't have to incur any capital expenditures upfront. For that model. Similarly, we have different models that we're working on with different vendors where some vendors are actually very interested in a model where they rent their capacity rather than selling their capacity. And as you can imagine, that comes with different cash flow impacts that are favorable to reduce the overall borrowing needs and capital required for Oracle. So as you can imagine, as we look at all of these kinds of commitments, we will use a range and a variety of those. That we minimize the overall cost of capital. As well as, you know, in certain cases, we'll be raising our own funds. As part of that, I think it's important that everyone understand that we're committed to maintaining our investment-grade debt rating. So now to give you some more specifics, what I would say is we've been reading a lot of analyst reports, and we've read quite a few that show an expectation of upwards of $100 billion for Oracle to go out and complete these build-out. And based on what we see right now, we expect we will need less if not substantially less, you know, money raised than that amount. To go and fund this build-out. So, hopefully, that helps answer your question, Brad. Brad Zelnick: It does. Thank you. It's very helpful, and thanks for taking the question. Operator: Your next question comes from the line of Ben Reitzis with Melius Research. Please go ahead. Ben Reitzis: Hey, guys. Thanks a lot. Appreciate it. Good to speak with you. In light of the answer to that question, the path for OCI margins seems very important to improving the EBITDA and cash flow. So at the analyst meeting, you said margins for AI workloads for OCI. Would be in the 30 to 40% range over the life of a customer contract. I guess, my question is how long will it take your AI margins across all your OCI data centers to ramp to that level? And what needs to happen to get there? Clay McGork: Yeah. Thanks for the question, Ben. Look. The answer is it really depends. So the good thing is that as I mentioned earlier, we don't actually incur any expenses for the data centers until they're actually built up and running. And then we've highly optimized our process by which we actually put in and then are able to hand that over to customers, which means that the period of time where we're incurring expenses without that kind of revenue and the gross margin profile that we talked about is really on the order of a couple of months. So in that scenario, that time period is not material. So a couple of months is not a long time. What actually matters much more is the overall mix of the data centers that we have online right, and how they're growing compared to the total amount that we're scaling across the world. And so I think as we go through this build-out phase, right now, we're in a phase of very rapid build-out without the majority of the capacity online. Obviously, the aggregate mix is going to be lower. But as we actually get the majority of this capacity online, and that's really our focus, the best way to improve margins quickly, is to actually go out and deliver capacity faster. That ends up very rapidly ensuring that we get to that 30 to 40% gross margin profile for all of the AI data centers. Operator: Your next question comes from the line of Tyler Radke with Citi. Please go ahead. Tyler Radke: Yes. Thank you for taking the question, and this question for Larry or Clay. So Oracle has clearly established itself as a leading provider, for AI infrastructure. To AI labs and, in some cases, enterprise clients. How are you thinking about the opportunity to sell additional services such as database, middleware, other pieces of the portfolio similar to how we saw cloud providers add that on at the early days of the public cloud space, and what might be some of the similarities or differences that you see with the emerging AI platform as a service market versus the traditional cloud platform as a service market. Thank you. Lawrence Ellison: Well, let me start with traditional cloud and traditional cloud. Oracle database. So I think the biggest change we've made there was to make database available in everyone's cloud. So you can buy the Oracle database at Google or Amazon, that it's available at Microsoft Azure. As well as OCI. So that was the most maybe that was the first move we made. We call it multi-cloud, and we embed OCI data centers within the other clouds. So they get the latest, greatest version of the Oracle database. Second thing we did is we actually converted the Oracle database or added capabilities to the Oracle database. To allow you to vectorize all of your data. So it's a vector database. Some people call that an AI database. So it's designed to make data available to models. You can then once you back your data, you can place AI models on top of that. And the AI models can understand what's in the database and reason with the data that's in the database. So we think that combination of making the data available on our database also accessible by AI models dramatically increases the value of the data. We think that's very so far, none of the other large-scale databases have been able to do that. We can do that. Not only we can do that and keep your data secure. That's one of the bigger issues. We have to scale it, keep everything reliable, keep it secure. And we actually have to add all of those capabilities and features to the Oracle database. So that was step two. First multi-cloud, Second, vectorize all the data. And make it accessible, by all of the popular AI models. Third step, well, you know, it's great that we're making the Oracle database data available to these AI models. But companies actually have data that's not stored in an Oracle database. It's not stored in an Oracle application. So we built an AI lake house. We call the AI data platform. That actually points to and vectorizes all of your data whether it's in an object store in different clouds, whether it's a bespoke application, whether it's in another database, it really will take the universe of your data that catalog that data, vectorize it, and allow an AI an LLM to do multi-step reasoning on all of that data. Now the thing that's really remarkable about that is think about asking one query. Asking one question. And the model looks at all of your data. When you ask a question, you have to direct it to this database or this application. You can't say, look. I just like to know whose next customer I should be selling to. I'm a salesperson in territory. I wanna look at all the accounts in my territory, and I want to see who's the best prospect in my territory. Well, that means looking at contractual data, means looking at publicly available data. That means looking at our sales system. At our support system, all of these separate systems. Well, suddenly, all of that data is unified. We take all of your data and unify it. So you can ask a single question and the AI models can find the answer to that question regardless of what data store it's in. That's really a unique proposition, and we think that thing is gonna turbocharge the use of our database and the use of our cloud dramatically. Operator: Your next question comes from the line of Brent Thill with Jefferies and Company. Please go ahead. Brent Thill: Thanks. Question for Larry and Clay on the fungibility of your infrastructure. What would you have to do to convert a data center from one customer to another such as one of the larger customers was unable to pay? Clay McGork: Yeah. Thanks. Thanks, Brent. So I think the first thing to understand is that what we deliver for our AI infrastructure is exactly the same cloud that we deliver for all of our customers. You know, we made specific choices at the beginning of OCI around bare metal virtualization, and the way in which we do things like secure wipe of hardware, etcetera. But the reason I bring that up is that take as an example, you anyone right now with a credit card should show up and sign up for any one of those hundreds of regions that I talked about earlier, and you can spin up a bare metal computer in as quickly as a few minutes. And at the end of that, you can turn it off, and I will recycle that. And I can hand it to their customer in less than an hour. And so when you ask the question of, well, how long does it take to transfer capacity from one customer to another? It's on the order of hours. And what actually I think is kind of a corollary to that question is, well, then how long does it take customers to adopt it? And, thankfully, we have a lot of experience getting more than 700 AI customers on our platform, including the vast majority of the large model providers. Already run on OCI. And when we give them capacity, they typically spend that capacity up in the order of two to three days. And so when I think about how long does it take for me to take capacity handed to the customer, it is not a laborious process. It is not a unique. And something else I would say that I think a lot of people don't realize about our cloud is this is actually happening all the time. So, you know, we have lots of customers that might sign up for a few thousand of one type of GPU, then they'll come back and say, well, actually, you know, I'd like to get even more capacity somewhere else. Will you take this back? And we do that all day every day. We're constantly moving customers around. And, you know, adding aggregate net capacity. So we have the technology. We have a secure base from which to do that, and we also have a customer base of a lot of demand such that whenever we find ourselves with capacity that's not being used, it very quickly gets allocated and provisioned. Operator: Your next question comes from the line of Mark Moerdler with Sanford Bernstein. Please go ahead. Mark Moerdler: Congrats on the quarter. Doug, you gave some color earlier tonight that I'd like to dig in on. Clay presented a slide at the financial analyst meeting where he showed the revenue and expenses for a single data center. Doug and Clay, can you talk about the cash flow for that same data center? Starting with the commitment for the data center and then the hardware and how that flows into becoming cash flow positive, and then how that rolls up across multiple data centers. Any color would be really appreciated. Clay McGork: Sure. Happy to answer, Mark. So as we talked about earlier in this call, it starts with the actual data center and the power capacity along with it. And the way in which we structure that is that we incur no cash expenses until that's fully delivered and provisioned and fit for purpose. So then it really comes down to what does the cash flow look like for the capacity going inside the data center. And as I talked about earlier, that really depends on kind of the business model and the financial model that we've used procuring that. In some cases, customers actually wanna bring their own hardware, in which case, we don't have any capital expense. It's really around the data center itself possibly networking gear, as well as human labor cost. We have other models where vendors want to rent that capacity. In which case, those rent payments start when the is provisioned for the customer. And so customer cash flow comes in, we're then taking that cash flow and pushing that out to all of the different suppliers. And then, obviously, you got the model where Oracle takes its own cash, pays upfront for the hardware, and then puts the capacity in. That's obviously the most cash-intensive upfront. And then there's a depreciation schedule over the next several years. So it really depends on the exact business and financial model used for each of the data centers. And then you ask well, how do they layer together? Well, thankfully, we don't need calculus for this one. Basic arithmetic is enough because they actually just layer on top of each other. So if you have a time schedule for one data center and a time schedule for a second data center, the cash flows add together. And, obviously, if the data center comes in sooner, you'll have the expenses as well as revenue coming in sooner. If data moved out, then the expenses and the revenue also move out. Mark Moerdler: That's very helpful. I appreciate it. Operator: Your final question comes from John DiFucci with Guggenheim Securities. Please go ahead. John DiFucci: Okay. I won't make you kiss my ring. It's actually John DiFucci. Anyway, I'm sorry. Listen, a lot of my questions on infrastructure have already been asked, and they're really important questions because that's a big part of your growth. But I have a question on the applications business. Mike, you said applications are gonna accelerate this year. Why the confidence in this business when all your large SaaS peers are seeing just the opposite where growth is decelerating, especially because you know, we thought that something similar about Oracle's application business last year. We didn't really start to see it until the fourth quarter. We've heard some things in the field around One Oracle, your go-to-market motion where apps and infrastructure are more combined versus separate. And you also talked about combining vertical and horizontal apps teams here. Is that it? Is it mostly go-to-market? Is there something more about the products or something else that we should be thinking about? Thank you. Mike Cecilia: Well, yep. Thanks for the question, Doug. First, I think it's a combination of things. But let me just start with what I think is happening in the industry. All of our competitors are largely in the best of breed business. Because they're not in the applications business in totality. They're not in the back-office business. They're not in the industry business, and they're not in everything in. They're not in the front of the house, the back of the house, and the middle of the house. We are the only applications company in the world that's selling complete application suites. Then you add in baked-in AI, the AI halo, baked-in AI right into our application. So we're over 400 AI features live in Fusion already. I mentioned 274 customers live on our Clinical AI agent. So, you know, the go-lives for these clinical AI agents are a new breed of SaaS applications for us, are measured in a matter of weeks. So you're looking at an industry like health care where it would take months or years to get anything done at that magnitude. Weeks. And by the way, the customers are implementing these things. All by themselves. Right? They don't need us to help them. You just roll them out and they work. So we're in the applications industry suite business. We're building AI into our back-office applications, our front-office applications, and we are building applications that are also AI agents themselves. Are in fact AI agents. That's why you see the growth rates in our industry applications of 21% in the quarter. Our fusion ERP is up 17 SCM up 18%. HCM up 14%. CX up 12%. Again, all on a bigger base. Then I think the next piece of this is you add in the AI data platform. So if you'd like an industry suite, of applications then you'd like to create your own AI agents. You'd like to create and unlock your own enterprise data on top of it all. We are the only all of those ingredients for a customer. And I think as you look at customers' tiring of spend on best of breed because the integration costs are so high, and it's hard to bolt AI onto all that because you're actually not retiring anything in the process. We're in a very unique position. And I think we're starting to see it in the numbers too, John, with the deferred revenue for apps growing at 14% now. You know, faster than the in-quarter revenue growth of 11%. For all those reasons, I'm optimistic on our apps business going forward that it's a continued growth measure. For Oracle. John DiFucci: Thank you, Mike. When I when you as you were talking, I sort of clarified in my mind. When I think of one Oracle, I used to think of I thought of it when I started to hear about it as a go-to-market motion, but it's more than that. It's actually a it's a product thing too. It's everything. So thanks a lot. Mike Cecilia: Thank you. Thank you, John. Ken Bond: A telephonic replay of this conference call will be available twenty-four hours on our Investor Relations website. Thank you for joining us today. And with that, I'll now turn the call back to Tiffany for closing. Operator: Ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect.

Operator: Hello and thank you for standing by. My name is Tiffany, and I will be your conference operator today. At this time, I would like to welcome everyone to the Oracle Corporation Q1 FY2026 conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during that time, simply press star then the number one on your telephone keypad. I would now like to turn the call over to Ken Bond, Head of Investor Relations. Ken, please go ahead. Ken Bond: Thank you, Tiffany. Good afternoon, everyone, and welcome to Oracle's first quarter fiscal year 2026 earnings conference call. A copy of the press release and financial tables, which include 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, Lawrence Ellison, and Chief Executive Officer, Safra Catz. 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. Safra Catz: Thanks, Ken, and good afternoon, everyone. Clearly, we had an amazing start to the year because Oracle has become the go-to place for AI workloads. We have signed significant cloud contracts with the who's who of AI, including OpenAI, xAI, Meta, NVIDIA, AMD, and many others. At the end of Q1, remaining performance obligations or RPO now top $455 billion. This is up 359% from last year and up $317 billion from Q4. Our cloud RPO grew nearly 500% on top of 83% growth last year. Now to the results. Using constant currency growth rates, as you can see, we've made some changes to the face of our income statement to better reflect how we manage the business and so you can understand our cloud business dynamics more directly. So here it goes. Total cloud revenue, that's both apps and infrastructure, was up 27% to $7.2 billion. Cloud infrastructure revenue was $3.3 billion, up 54% on top of the 46% growth reported in Q1 last year. OCI consumption revenue was up 57% and demand continues to dramatically outstrip supply. Cloud database services, which were up 32%, now have annualized revenues of nearly $2.8 billion. Autonomous Database revenue was up 43% on top of the 26% growth reported in Q1 last year. Multi-cloud database revenue, where Oracle regions are embedded in AWS, Azure, and GCP, grew 1529% in Q1. Cloud application revenue was $3.8 billion, up 10%, while our strategic back-office application revenue was $2.4 billion, up 16%. Total software revenue for the quarter was $5.7 billion, down 2%. So all in, total revenues for the quarter were $14.9 billion, up 11% from last year and higher than the 8% growth reported in 17% to $6.2 billion. We have also been on an accelerated journey to adopt AI internally to run more efficiently. I expect our operating income will grow mid-teens this year and higher still in FY2027. Non-GAAP EPS was $1.47 while GAAP EPS was $1.01. The non-GAAP tax rate for the quarter was 20.5%, which was higher than the 19% guidance and caused EPS to be $0.03 lower. For the last four quarters, operating cash flow was up 13% to $21.5 billion and free cash flow was a negative $5.9 billion with $27.4 billion of CapEx. Operating cash flow for Q1 was $8.1 billion while free cash flow was a negative $362 million with CapEx of $8.5 billion. At quarter end, we had $11 billion in cash and marketable securities and short-term deferred revenue balance was $12 billion, up 5%. Over the last ten years, we've reduced the shares outstanding by a third at an average price of $55, which is, at this point, much less than a quarter of our current stock price. This quarter, we repurchased 440,000 shares for a total of $95 million. In addition, we paid out dividends of $5 billion over the last twelve months, and the board of directors again declared a quarterly dividend of $0.50 per share. Given our RPO growth, I now expect fiscal year 2026 CapEx will be around $35 billion. As a reminder, the vast majority of our CapEx investments are for revenue-generating equipment that is going into the data centers and not for land or buildings. As we bring more capacity online, we will convert the large RPO backlog into accelerating revenue and profit growth. Now before I dive into specific Q2 guidance, I'd like to share some of the overarching thoughts on fiscal year 2026 and the coming year. Clearly, it was an excellent quarter, and demand for Oracle Cloud infrastructure continues to build. I expect we will sign additional multibillion-dollar customers and that RPO will likely grow to exceed half a trillion dollars. The enormity of this RPO growth enables us to make a large upward revision to the cloud infrastructure portion of our financial plan. We now expect Oracle Cloud Infrastructure will grow 77% to $18 billion this fiscal year and then increase to $32 billion, $73 billion, $114 billion, and $144 billion over the following four years. Much of this revenue is already booked in our $455 billion RPO number and we are off to a fantastic start this year. Now while much attention is focused on our GPU-related business, our non-GPU infrastructure business continues to grow much faster than our competitors. We are also seeing our industry-specific cloud applications drive customers to our back-office cloud app. And finally, the Oracle database is booming with 34 multi-cloud data centers now live inside of Azure, GCP, and AWS, and we will deliver another 37 data centers for a total of 71. All these trends point to revenue growth going higher. For fiscal year 2026, we remain confident and committed to full-year total revenue growth of 16% in constant currency. Beyond fiscal year 2026, I'm even more confident in our ability to further accelerate our top and bottom line growth rate. As mentioned, we will provide an update on our long-range financial targets at our financial analyst meeting at Oracle AI World in Las Vegas in October. Now let me turn to my guidance for Q2, which I'll review on a non-GAAP basis and assuming currency exchange rates remain the same as they are now. Currency should have a $0.03 positive impact on EPS and a 1% positive effect on revenue depending on rounding. However, the actual currency impact may be different as it was in Q1. Here it goes. Total revenue is expected to grow from 12% to 14% in constant currency and is expected to grow from 14% to percent in US dollars at today's exchange rate. Total cloud revenue is expected to grow from 32% to 36% in constant currency and is expected to grow from 33% to 37% in US dollars. Non-GAAP EPS is expected to grow between 8% to 10% and be between $1.58 and $1.62 in constant currency. Non-GAAP EPS is expected to grow 10% to 12% and be between $1.61 and $1.65 in USD. And lastly, my EPS guidance for Q2 assumes a base tax rate of 19%, however, one-time tax events could cause actual tax rates to vary as they did this quarter. Larry, over to you. Lawrence Ellison: Thank you, Safra. Eventually, AI will change everything. But right now, AI is fundamentally transforming Oracle and the rest of the computer industry. Though not everyone fully grasped the magnitude of the tsunami that is approaching. Look at our quarterly numbers. Some things are undeniably evident. Several world-class AI companies have chosen Oracle to build large-scale GPU-centric data centers to train their AI models. That's because Oracle builds gigawatt-scale data centers that are faster and more cost-efficient at training AI models than anyone else in the world. Training AI models is a gigantic multi-billion dollar market. It's hard to conceive of a technology market as large as that one. But if you look close, you can find one that's even larger. It's the market for AI inferencing. Millions of customers using those AI models to run businesses and governments. In fact, the AI inferencing market will be much, much larger than the AI training market. AI inferencing will be used to run robotic factories, robotic cars, robotic greenhouses, biomolecular simulations for drug design, interpreting medical diagnostic images and laboratory results, automating laboratories, placing bets in financial markets, automating legal processes, automating financial processes, automating sales processes. AI is going to write, that is, generate, the computer programs called AI agents that will automate your sales and marketing processes. Let me repeat that. AI is going to automatically write the computer programs that will then automate your sales processes and your legal processes and everything else and your factories and so on. Think about it. AI inferencing. It's AI inferencing that will change everything. Oracle is aggressively pursuing the AI market. And we're not doing badly in the AI training market, by the way. The difference seems bigger. Oracle is aggressively pursuing the inferencing market as well as the AI training market. We think we are in a pretty good position to be a winner in the inferencing market because Oracle is by far the world's largest custodian of high-value private enterprise data. With the introduction of our new AI database, we added a very important new way for you to store your data in our database. You can vectorize it. And by vectorizing it, by vectorizing all your data, all your data can be understood by AI models. Then we made it very easy for our customers to directly connect all their databases, all their new Oracle AI databases, and cloud storage OCI cloud storage, to the world's most advanced AI reasoning models. ChatGPT, Gemini, Grok, Lama, all of which are uniquely available in the Oracle Cloud. After you vectorize your data and link it to an LLM, the LLM of your choice, you can then ask any question you can think of. For example, how will the latest tariffs impact next quarter's revenue and profit? You ask that question. The large language model will then apply advanced reasoning to the combination of your private enterprise data plus publicly available data. You get answers to important questions without ever compromising the safety and security of your private data. Again, I'd like you to think about this for a moment. A lot of companies are saying we're big into AI because we're writing agents. Well, guess what? We're writing a bunch of agents too. But when they introduced ChatGPT almost three years ago, what you've got to do is have a conversation and ask questions. You weren't automating some process with an agent. You could ask whatever question you wanted to ask and get a well-reasoned answer with all of the latest and best information and high-quality reasoning to go along with it. Who's offering that to customers? We'll be the first. When we deliberate and demonstrate it at AI World next month. That's what our customers have been asking for ever since the introduction of ChatGPT 3.5, almost three years ago. I wanted to ask questions about anything. And, therefore, you need to understand my enterprise data as well as all the publicly available data. Then you can answer the questions that are most important to me. Well, now they can ask those questions. Back to you, Safra. Safra Catz: Thank you, Larry. Tiffany, please poll the audience for questions. Operator: At this time, if you would like to ask a question, press star, then the number one on your telephone keypad. To withdraw your question, simply press star 1 again. Your first question comes from the line of John DiFucci with Guggenheim Securities. Please go ahead. John DiFucci: Thank you for taking my question. Listen. Even I am sort of blown away by what this looks like going forward. And this question, I guess, is sort of purposely open-ended. So Lawrence Ellison and Safra Catz, Oracle's become the de facto standard for AI training workloads, and you make money from it. And you have a lot of faith in that. But, clearly, there's more here than just AI training. I know it's a big part of it. You talked about it. But can you talk about what else, a little more detail about what else is driving these pretty amazing forecasts? Safra Catz: Go ahead, Larry. I mean, that you were discovering this. Lawrence Ellison: Yeah. Well, a lot of people are looking for inferencing capacity. I mean, people are running out of inferencing capacity. I mean, the company that called us, I mentioned it, I think, either last quarter or the quarter before, someone called us, we'll take all the capacity you have that's currently not being used anywhere in the world. We don't care. And I've never gotten a call like that. That's a very unusual call. That was for inferencing, not training. There's a huge amount of demand for inferencing. And if you think about it, in the end, all this money we're spending on training is going to have to be translated into products that are sold, which is all inferencing. And the inferencing market, again, is much larger than the training market. And, yes, we are building like everybody else, we're building agents with our application. But we're doing much more than that. You know, I no one's shown me a ChatGPT 3.5. Again, the three years ago, a little less than three years ago when ChatGPT amazed the world. And you could simply talk to your computer and ask questions and get well-reasoned answers based on the latest and most precise information. As long as you ask those questions about publicly available data. And there's a lot of publicly available data. But if you combine the publicly available data with the enterprise data, which companies really don't want to share, you have to do it in such a way that your private enterprise data stays private yet the large language model can still use it for reasoning so as to answer your question, like, how do the latest tariffs or the latest steel prices or whatever affect my quarterly results? Affect my ability to deliver products, affect my revenue, affect my cost. You know, answer those kinds of questions. To answer those kinds of questions, we have to and we have. We had to change our database, fundamentally change our database so you can vectorize all data. That's the form in which large language models understand information is that after it's been vectorized. And then allowing people to ask any question they want about anything. And that's exactly what we've done. But unless you have a database that is secure and reliable and linked to all of the popular LLMs. And we've done all of that. Unless you have that, and you have you have to tell me who else has that besides Oracle. Unless you have that, this can be very hard for you to deliver a ChatGPT-like experience on top of your data as well as publicly available data. That's a unique value proposition for Oracle. And that's because, again, we're the custodian of all of much more data than any of the application companies. They have their application data. They measure their customers in tens of thousands. We measure our customers in millions of databases. So we think we're better positioned than anybody to take advantage of inferencing. In addition, by the way, aside from just our GPU and all of that, we have become the de facto cloud for many of our customers. Again, they want to put some things in our public cloud or in our competitor public cloud working with the Oracle database. Simultaneously, there are a lot of reasons why they want what's called either a dedicated region or cloud at customer. We give our customers so much choice that they're very unusual for us not to be able to meet a customer's needs in one way or another. And then, of course, we have every piece of the stack. We have the infrastructure, we have the database that you're going to hear a lot about. As really the only reasonable store for data that you want to use AI models again, and then we have all of these applications that are just taking off. So we've we just have a lot of different layers. They're all moving in the same direction, and they all benefit our customers when used together. John DiFucci: Listen. My dad, let me just go ahead. Go ahead, John. I've got don't mean to cut you're gonna compliment us and interrupted you. What a what a I'm so I apologize for being rude. Listen. I was just gonna say my hat's off to both of you. I have been doing this a really long time, and I tell my old team, pay attention to this. Even those that are not working on Oracle. Because this is a career event happening right now, and it looks it's just amazing. And I guess I'm just really happy for you and congrats on this. Amazing. Lawrence Ellison: Thanks. John DiFucci: A lot of work. Keep doing it. Keep doing it. Lawrence Ellison: It's been a lot of work. And well, let me mention two other things. I think that are actually shocking. We have gotten the entire Oracle cloud, the whole thing, every feature, every function of the Oracle cloud, down to something we can put into a handful of racks, three racks. We call it butterfly. It costs $6 million. So we can give you the we can give you a private version of the Oracle Cloud with every feature, every security feature, every function, everything we do. For $6 million. I think the cost for the other hyperscalers is more than five more than a 100 times that. So we can actually give our customers cloud at customer, the full cloud at customer, and we have companies like Vodafone in I I'm not sure which companies I can name or which companies I can't. We have large companies that are buying basically their own Oracle Cloud region. In fact, multiple Oracle Cloud regions. Because they don't want to have any neighbors in their cloud. They don't want other companies in their cloud. But they want the full cloud. They want to pay as they consume. They want all the features, all the function, all the safety, the security. They don't want to have to buy it. They don't want to have to buy and own the software and the hardware. They want us to maintain it, build the network, supply all of that, and they just want to pay for consumption. We can do that at an entry-level price that's 1% of what our competitors can offer. That's one thing. Another thing. Let me give you one more, and I'll stop there. We also have the most advanced application generator of any company. It's interesting. We're an application company and a cloud infrastructure company. And, therefore, we build applications. And as we build applications, we'd like to be more efficient. And the way to be more efficient is to build AI application generators. And we have been doing that. And the latest applications that we are building we're not building them. They're being generated by AI. And we think we're far, far ahead of any of the other application companies in terms of generating the applications. So that's another very significant advantage we have. And, of course, and it's funny. You know, I made the comment that we don't charge separately for our AI and our applications because our applications are AI. They're entirely AI. The new ones, the new ones that we're building, they're nothing other than a bunch of AI agents that we generate that are linked together with workflow. That's all they are. How do you charge separately for that? That's it. That's every application that we have. But the applications are better, and, hopefully, we'll sell more, and that's the way we'll get paid for them. I got thank you, John, for the very nice compliment. Thank you, Larry. Thank you, Safra. Safra Catz: Thank you, John, for all these years following us. So kindly also. Thanks. Great day. Probably time for another question. At this point. Your next question comes from the line of Brad Zelnick with Deutsche Bank. Please go ahead. Brad Zelnick: Great. Thanks very much. And I think we're all kind of in shock in a very, very good way. Larry, there's no better evidence of a seismic shift happening in computing than these results that you just put up. And Oracle has in your fifty-year track record of navigating transitions and coming out on top. But as we think about enterprise applications, investors are fairly pessimistic these days, and I'd love to hear your perspective. Where do you see this all going for the industry? Where does the market share go for the companies that don't have the database, that don't have the advantages that you have all the way down to the silicon? Is this maybe an extinction event, you know, curious to hear what you think. Lawrence Ellison: Well, I think we have substantial advantage because we are an infrastructure company, and we are an application company. There are two things that happen. As an application company, we knew we had to start generating our applications. We just couldn't do it with armies of people anymore. We still need people. Don't get me wrong. But the number of people we need is substantially less. And we can build slash generate much better applications than we can hand build. And we've been working on these AI application generators for some time, and then we're actually using them. But the thing is we're not just building application generators. We're building application generators, and then we're building the applications. Which gives us insights to make the application generator better. It's a huge advantage to be on both sides of that equation. Both being an application builder and a builder of the technology of the application generation technology. The AI, the underlying AI application code generators. That's a huge advantage. Let me give you another advantage, which is often a disadvantage. We're very large. We no longer sell individual discrete applications. We sell suites of applications. We decided to go into the medical business against Epic believing that we could solve much more of the problem. Because we're much bigger than they are. And we're by the way, we're much bigger than Workday. And, or ServiceNow. And we're solving a larger portion of the problem. We're able to do all of ERP then we can add all of CRM. But all the pieces are engineered to fit together. That makes it so much easier for customers to consume. So we think that selling being good at application generation, the underlying technology, makes us better build better applications, enables us to build more applications so we can solve more of the problem. So the customers don't have to do all that system integration across multiple vendors. We can just build a suite where all the pieces are engineered to fit together. I think we have tremendous advantages in the application space. We have tremendous advantages in the AI inferencing space where we can again, what we'll demonstrate at Oracle AI World next month is we've taken all of our customer data, all of it. I want to go into all the details now. But you can ask any question you want to ask. Who's your salesperson? Who's the number one prospect in my territory? What product should I be selling them next? What are the best references for me to use to persuade them to use our product? You can get all of those questions answered for you immediately if you're a salesperson. The engineers can look at which features of Oracle Financials are people making the most errors when they're using those features. What do I have to fix and make easier to use? You just ask the question. Because all of that data is available to AI models. Is there anyone else doing this? Not that I know of. It's a huge advantage for us. Brad Zelnick: We look forward to AI World, Larry. Thank you. It's an amazing day for Oracle. It's a remarkable day for the industry. Thanks again, and congrats. Lawrence Ellison: Thank you. Thank you so much. Operator: Next question comes from the line of Derrick Wood with TD Cowen. Please go ahead. Derrick Wood: Great. Thanks for taking my question. I'll echo my congratulations on this momentous quarter. Safra, the fact that you delivered over $300 billion of new RPO in Q1, just really amazing to see it's going to require a lot of infrastructure build-out. So could you provide a bit more context on how much CapEx and operational cost structure will be needed to fully service these contracts, how we should think about the ramp of these costs relative to the ramp in revenue over the next few years, and generally, how investors should be thinking about the ROI on the spend? Safra Catz: Sure. So first of all, as I mentioned in the prepared remarks and as I've said very clearly beforehand, we do not own the property. We do not own the buildings. What we do own and what we engineer is the equipment, and that's equipment that is optimized for the Oracle Cloud. It has extremely special networking capabilities. It has technical capabilities from Larry and his team that allows us to run these workloads much, much faster. And as a result, it's much cheaper than our competitors. And depending on the workload. Now because of that, what we do is we put in that equipment only when it's time, and, usually, very quickly assuming that our customer accepts it, we're already generating revenue. Right away. The faster they accept the system and that it meets their needs, the faster they start using it. The sooner we have revenue. This is, in some ways, I don't want to call it asset light, from the finance world, but it's assets pretty light. And that is really an advantage for us. I know some of our competitors, they like to own buildings. That's not really our specialty. Our specialty is the unique technology, the unique networking, the storage, the just the whole way we put these systems together. And by the way, they are identical, and very simplified and, again, making it possible for us to be very profitable while still being able to offer our customers an incredibly compelling price. What I have indicated is that CapEx looks like it's going to be about $35 billion for this fiscal year. But because we're monitoring this, we're literally putting it in right when we take possession, and then handing it over to generate revenue right away. So we have a very good line of sight for our capabilities to put this out and to just spend on that CapEx right before it starts generating revenue. But at this point, I'm looking at $35 billion for the year. And I think, I mean, it could be a little higher, but I think and if it is higher, it's good news. Because it means more capacity has been handed to me in terms of floor space. And as you also know, we are embedded in our competitors' clouds, again, all we are responsible for to pay for is in fact our equipment, and that goes right away. And there, we're moving ultimately to 71 data centers embedded in our competitors or flash partners. Derrick Wood: Very encouraging to hear. Lawrence Ellison: Can I let me add a couple of very short things? One is we just turned over a giant data hall to one of our customers. And the acceptance time could have been as long as a couple of months. It was one week. It was one week from the time we, quote, owned officially owned the equipment. And they were testing it to the time they started paying for it. One week. So we have an extraordinary team that's doing an extraordinary job of making sure that we get the equipment working very quickly. And our customer is going to accept it. They want to accept it as fast as possible. Because they want to do the work. They want to train their models. And this one took a huge hall, took one week for acceptance. It was an extraordinary event. The other we are a very large consumer of networking equipment, GPUs, etcetera. Because we are a very large consumer, we are able, I think, to get better financing terms from the vendors than some of their people. So I think we have that going for us as well. I think we're going to do very, very well on the finance side. We have advantages there as well. Derrick Wood: Great. Thank you, Larry. Thank you, Safra. Operator: Of course. Your next question comes from the line of Mark Moerdler with Bernstein Research. Please go ahead. Mark Moerdler: Thank you very much, Larry and Safra, and, frankly, team Oracle. Amazing and congratulations. I'd like to focus on the AI training business you've been winning. Could you please explain to us how Oracle can create enough of a differentiated moat to assure this business does not get commoditized and how do you continue to drive strong earnings and free cash flow from the training business even if training slows. I think people really need to understand that. Lawrence Ellison: Well, I got let me I mean, I could do it in with one sentence. Our networks move data very, very fast. And if we can move data faster than the other people, if we have advantages in our super our GPU super clusters that are performance advantages, if you're paying by the hour, if we're twice as fast, we're half the cost. Safra Catz: Yeah. Well, that's tight. Hard to beat that. Impressive. Mark Moerdler: I agree. Operator: Your final question comes from the line of Alex Zukin with Wolfe Research. Please go ahead. Alex Zukin: Hey, guys. I really appreciate you squeezing me in. I originally was going to ask you if the new Oracle AI database really opens up the general enterprise inferencing market, and based off your script, it sounds like the answer to that question is hell yes. So I guess my follow-up question would be, how do you see that pacing happening over the course of the next few years? How soon after the introduction of the Oracle AI database would you expect your enterprise customers, your sophisticated customers to really be open to interrogating their enterprise data in this fashion? And how does the current supply constraint environment stand in the way of that demand or is it solving as we speak? Safra Catz: I don't know if, Larry, you want to cover it. You covered it in No. We've got it. Lawrence Ellison: Good. Marks. Go ahead. You got it. Go ahead. Okay. I think who wouldn't want that? I mean, I think everyone says they want to use AI. I mean, every I mean, CEOs, they don't want to use AI. Heads of state, heads of government say they want to use AI. We've never had consumers like that. I mean, we nor historically, we don't deal with CEOs. Now we deal with CEOs. Now we deal with heads of government and heads of state. On this because AI is so important. And letting people have you know, use AI on top of their data. That is what they want to do. But they didn't know how to do it securely. They didn't know how to well, they didn't know how to do it, period. And then one of the big risks was, oh my god. I can't share my JPMorgan Chase can't share all of its data. Goldman Sachs can't share all of its data with OpenAI. They won't do it. So or XAI or LAMA or, you know, Meta. They won't it's got to keep it private. So we've got to keep your private data private. We've got to keep your private data secure. But we have to make it available for inferencing by the latest and best reasoning models from OpenAI and XAI and everyone else. And because we have the database, because we can vectorize all the data in the database, because we have very elaborate security models in our database, in the Oracle database, we can do all that. We can deliver all that. And then what we chose to do was to with the AI database was not only make sure we can vectorize all the data so it can be understood by the AI model, we then bundled it with all of the AI models. That's why we did a deal with Google. That's why we did all of these deals where, you know, Gemini you can get Gemini from the Oracle Cloud. You can get from the Oracle Cloud. You can get from the Oracle Cloud. You get Walmart from the Oracle Cloud. I could go on. So we bundled them together. So it's very easy for our customers to use these large language models on a combination. And that's what they want is a combination of all of the publicly available data and all of their enterprise data. Which allows them to ask and get answered any question they can think of, any question that's important to them. Everyone wants it. I think the demand is going to be insatiable. But we can deliver a lot of databases and a lot of AI across our cloud over the next several years. We're in a good position to do that. Safra Catz: And this is going to be one of the reasons that Oracle databases, which are still the bulk of the enterprise market by a lot, are going to finally move into the cloud. Many of them will move in the public cloud using the Oracle AI database, but many and the largest enterprises will want their own either dedicated regions or Oracle Cloud at customer. And, again, they can finally get the benefit of AI for their own data using any LLM that they want because they're all in our cloud too. Alex Zukin: It sounds like very high margin AI revenue, guys. Congratulations. Safra Catz: Thank you. Thank you. Okay. Ken Bond: Thanks, Alex. A telephonic replay of this conference call will be available for twenty-four hours on our Investor Relations website. Thank you for joining us today. With that, I'll turn the call back to Tiffany for closing. Operator: Ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect.

Operator: Hello and welcome to the Oracle Corporation Fourth Quarter and Full Year 2025 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. I would now like to turn the conference over to Ken Bond, Head of Investor Relations. Please go ahead. Ken Bond: Thank you, Sarah, and good afternoon, everyone, and welcome to Oracle's fourth quarter and fiscal year 2025 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 purchase 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, Lawrence 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 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-Ks and 10-Qs and any applicable amendments for a complete discussion of these factors and other risks that may affect our future results or 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. Safra Catz: Thanks, Ken, and good afternoon, everyone. As you can see, we had an excellent finish to an amazing year. With Q4 total revenue and EPS both exceeding my guidance. We are reporting our fiscal year-end results just eleven days after the last day of the quarter. Using Oracle Fusion, we continue to announce our quarterly and annual financial results faster than any other company in the S&P 500. Now a few years ago, I told you that we had reached a tipping point in our cloud transition and expected revenue growth to accelerate. And it has. In Q4, we hit double-digit revenue growth and it's only going up from here. Even as the company gets bigger. Our remaining performance obligations now stand at $138 billion, up $8 billion from last quarter and up 41% from last year. And yet, the best is still to come. Our applications business was the area we moved to the cloud more than a decade ago and we are now the leader in enterprise back office with SaaS solutions for ERP, Financials, EPM, HCM, supply chain, and manufacturing. With the addition of over 100 AI agents along with strong bookings and higher renewal rates for our strategic SaaS products, I expect the cloud applications growth rate will accelerate this coming year. Our infrastructure business was the next area to move to the cloud. We made engineering decisions that were much different from the other hyperscalers and that were better suited to the needs of enterprise customers resulting in lower costs to them and giving them deployment flexibility. OCI has seen exceptional demand for infrastructure services and those contracted non-cancelable bookings in RPO give us confidence that OCI revenue will grow over 70% this current year. Included in that is the Oracle Autonomous Database and the AI data platform. Enterprises know that their AI needs demand the most capable database to manage a company's full dataset further with our AI and autonomous features, our customers can bring all their data together, make it available for LLMs, and yet have the best security built in. In addition, our customers have the flexibility to run their Oracle databases in OCI, in private clouds, or in partner clouds with our multi-cloud offering. But what is clear is that more customers will use the Oracle database to leverage AI. So as a result of the strength in our cloud applications and infrastructure including database services, we are raising our revenue guidance for fiscal year 2026 to over $67 billion, up 16% for the year. Now for the results. And as usual, I'll be discussing our financials using constant currency growth rates as it is how we manage the business. Total cloud revenue SaaS plus IaaS was up 27% at $6.7 billion. And total cloud services and license support revenue for the quarter was $11.7 billion, up 14%. IaaS revenue was $3 billion, up 52% on top of the 42% growth reported last year. OCI consumption revenue was up 62% and demand continues to dramatically outstrip supply. Our infrastructure cloud services now have an annualized revenue of nearly $12 billion. Cloud database services which were up 31% now have annualized revenue of $2.6 billion. Autonomous Database consumption revenue was up 47% on top of the 27% growth reported last year. As on-premise databases migrate to the cloud, either on OCI directly or through our database at cloud services with Azure, Google, or AWS, we expect that cloud database revenues collectively will be the driver of revenue growth alongside OCI and strategic SaaS. We are currently live in 23 cloud regions with database at cloud services and have another 47 planned. Database subscription revenues which include database license support were up 7%. Infrastructure subscription revenues in the quarter which includes license support, were $6.7 billion, up 19%. SaaS revenue was $3.7 billion, up 11%. Application subscription revenues, which includes support, were $5 billion, up 8%. Our strategic back office SaaS applications now have annualized revenues of $9.3 billion and they were up 20%. Software license revenues were up 8% to $2 billion. So all in, total revenues for the quarter were $15.9 billion, up 11% from last year. Operating income grew 7%. Non-GAAP EPS was $1.70 in U.S. Dollars while GAAP EPS was $1.19 in U.S. Dollars. The non-GAAP tax rate for the quarter was 19.7% which was higher than my 19% guidance. For the full fiscal year, total company revenue was $57.4 billion, up 9%. Total cloud services and license support revenue which is entirely based and accounts for 77% of total revenue was $44 billion, up 12%. Total application subscription revenue grew 7% and infrastructure subscription revenues grew 17%. Total cloud services were up 24% to $24.5 billion. IaaS or cloud infrastructure revenue was up 51% to $10.2 billion for the quarter with consumption revenue up 59% from last year. SaaS revenue was up 10% to $14.3 billion for the year. Non-GAAP EPS for the full year was $6.00 in USD, up 9% and full year operating income grew 9%. As mentioned, remaining performance obligation at the end of Q4 is now $138 billion, up 41% in USD. Further, our cloud RPO grew 56% on top of the 80% growth last year and now represents nearly 80% of total RPO. And approximately 33% of total RPO is expected to be recognized as revenue over the next twelve months. For the year, operating cash flow was up 12% at $20.8 billion and free cash flow was a negative $400 million with $21.2 billion of CapEx. Operating cash flow for Q4 was $6.2 billion while free cash flow was a negative $2.9 billion with CapEx of $9.1 billion. The vast majority of our CapEx investments are for revenue-generating equipment that is going into data centers and not for land or buildings. I expect that FY 2026 CapEx will be higher at over $25 billion as we work to meet demand from our backlog. As we bring more capacity online, our revenue and profit growth will further accelerate. At quarter end, we had $11.2 billion in cash and marketable securities. The short-term deferred revenue balance was $9.4 billion. We are committed to returning value to our shareholders through technical innovation, strategic acquisitions, stock repurchases, prudent use of debt, and a dividend. This quarter, we repurchased a little over 1 million shares for a total of $150 million, and over the last ten years, we've reduced shares outstanding by more than a third at an average share price of just over $54. In addition, we have paid out dividends of $4.7 billion over the last twelve months and the Board of Directors again declared a quarterly dividend of $0.50 per share. Since it's the beginning of FY 2026, I'd like to comment on the financial acceleration we expect to see in the coming years. Between our $138 billion RPO and even larger pipeline we have a clear line of sight to future revenue growth. So for fiscal year 2026, I expect that total cloud revenue will grow over 40% in constant currency, up from 24% in FY 2025. I expect the cloud infrastructure revenue will grow over 70% up from 51% in FY '25. I expect total revenue will be at least $67 billion, up 16% in constant currency. And up more than $1 billion from our prior guidance. RPO is likely to grow more than 100% in fiscal 2026. And lastly, I expect we will exceed the revenue growth target we previously provided for FY '27. Beyond FY '27, I am even more confident in our ability to meet and likely exceed our previously provided FY '29 target. We will provide a more fulsome update on our long-range financial targets at the financial analyst meeting at Oracle Cloud World in Las Vegas in October. Now let me turn to my guidance for Q1 which I'll review on a non-GAAP basis. Now assuming currency exchange rates remain the same as they are now, currency should have a $0.02 positive effect on EPS and a flat to 1% positive effect on revenues depending on rounding. However, of course, the actual currency impact may be different. Total revenues are expected to grow from 11% to 13% constant currency, are expected to grow from 12% to 14% in U.S. Dollars. Total cloud revenue is expected to grow from 26% to 30% in constant currency and U.S. Dollars. Non-GAAP EPS is expected to grow between 4% to 6% and be between $1.44 and $1.48 in constant currency. Non-GAAP EPS is expected to grow between 5% to 7% and be between $1.46 and $1.50 in USD. Lastly, my EPS guidance assumes a base tax rate of 19%, however, one-time tax events could cause actual tax rates to vary. We had a great year. And this year, the one we're in now, will be better. Oracle is well on its way to being not only the world's largest cloud application company, but also one of the world's largest cloud infrastructure companies. And with that, I'll turn it over to Larry for his comments. Lawrence Ellison: Thank you, Safra. Oracle's future is bright in this new era of cloud computing. Oracle will be the number one cloud database company. Oracle will be the number one cloud applications company. And Oracle will be the number one builder and operator of cloud infrastructure data centers. We will build and operate more cloud infrastructure data than all of our cloud infrastructure competitors combined. Most of the world's most valuable data is stored in an Oracle database. All of those databases are moving to the cloud. Oracle's cloud, Microsoft's Azure cloud, Amazon's cloud, or Google's cloud. Oracle runs everywhere. The latest vector version of the Oracle database Oracle 23AI, is an AI data platform. The only database that can make all of the customers' data immediately available to all of the popular AI large language models. While maintaining complete data privacy for the customer. As use of AI increases, so will Oracle's database market share. Oracle will be the largest and most profitable cloud applications company in the world. Oracle developed suites of integrated AI agent-based applications for ERP, for EPM, supply chain, manufacturing human resources and customer engagement. Plus industry applications for healthcare, banking, utilities, retail, hospitality and many other industries. We use the most modern application generators and AI database technology to build our application suite and then we add AI analytics using OpenAI, XAI, Google, LAMA, and other popular LLMs. On top of that application data. No other company is even attempting to build the depth and breadth of AI-based applications that we have already built. Oracle will build more cloud infrastructure data centers than all of our infrastructure competitors combined. All of our OCI data centers from the smallest low-cost data center to the largest gigawatt AI training data center include all Oracle OCI capabilities. A large percentage of those capabilities are autonomous. So labor costs are minimized and human error is dramatically reduced. Oracle is already prospering in this new era of cloud computing and AI. And it's just the beginning. Back to you, Safra. Safra Catz: Thank you, Larry. Before we go to the Q&A, just to repeat one number. FY 2025 cloud infrastructure revenue was up 51% to $10.2 billion for the year, consumption revenue up 59% from last year. Sarah, if you could please poll the audience for questions. Operator: Thank you. Your question comes from Mark Moerdler with Bernstein. Your line is open. Mark Moerdler: Thank you very much for taking my question, Larry, Safra. And the whole Oracle family, congratulations on the strong quarter. And the strong year. You've been promising and are now starting to deliver extraordinary growth acceleration. Something we've not seen at other very large software companies. Yet there's a lack of understanding across the street of your AI business. Can you give us color or break out any numbers to help investors understand the durability and profitability of the AI business. Thanks. Lawrence Ellison: Okay. Well, the interesting thing is a lot of people are talking about that they have all the data. So these other companies say they have all the data. So they can do AI really well. They can build all these AI agents on top of all of that data. The only problem with that statement is they don't have all the data we do. We have most of the world's valuable data. The vast majority of it is in an Oracle database. The latest version of the Oracle database is an AI-centric piece of technology, a vector database, called Oracle 23AI. So what it does is it allows it it's the key enabler for companies to use AI. Using AI I mean, the current AI models are trained on the Internet. Otherwise known as publicly available data. Do you think JPMorgan Chase makes all of their internal data publicly available? Do you think those AI models train on JPMorgan Chase's data? Companies want to be able to use AI models on top of their own data. That is essential. Oracle applications make all of the data inside the Oracle applications available to AI models like Grok or ChatGPT or all by the way, all the rest of them from Google, from whomever, from Meta, you know, Lama, all of us, We have all of those all of those LLMs are in our cloud. Or in the Oracle Cloud. So this is our value proposition. Our database takes all of your data. Our applications take all of your application data. And make that data available to the, you know, the most popular AI models, like, if you like ChatGPT, you use ChatGPT. If you like Grok, you use Grok. You use that in the Oracle Cloud. We are the key enabler for enterprises to use their own data and models. No one else is doing that. That makes sense. It's a huge this is not a small point. This is why our database business is going to grow dramatically. About it, you have to put all of your data into a database. So that database must be highly secure. It must be scalable. It must be economical. It must be reliable seven days a week, twenty-four hours a day. It has to be fault-tolerant. It can never break. That's how Oracle got popular in the first place. But then it has to hold the data in a way that's by the AI models. In other words, the data has to be vectorized. And searchable, by the AI models. And you use that data to train up those models on your data. Who else is doing that? Let me answer the question. Nobody. Next question please. Operator: Thank you. The next question comes from John DiFucci with Guggenheim. Your line is open. John DiFucci: Thank you. Hi, Larry and Safra. Safra, your quote in that press release that you repeated on this call about next year was pretty amazing and a strong statement as I've seen you make. And I've known you a long time. Putting that in print means a lot to me because I know it means a lot to you. Can you help us unpack that statement a bit? For instance, is Stargate part of the more than 70% growth you expect in IaaS in fiscal 2026? And we don't know the timing of Stargate or even your financial share. Like, we know those big numbers out there, but not how much of it's yours or you're gonna be involved. But is Stargate also in the RPO growth of more than 100% in fiscal 2026? And any other color beyond Stargate to help us get our heads around those massive growth numbers for IaaS would be helpful. Safra Catz: Thanks, John. And, yeah, we have known each other a very long time, longer than I care to admit. So the reality is that Stargate is still in formation. There are a lot of partnerships we are in the middle of right now. That are all part of this enormous growth rate. We are the destination for everyone who wants AI workloads, who want database workloads, and want applications. We are really and all of that together comes into our RPO. We have so much in pipeline right now that, and of course, we have so much in our RPO, meaning those are non-cancelable contracts. And we see the demand. I am still in a position where our supply is not meeting our demands. We actually currently are still waving off customers from, or scheduling them out into the future so that we have enough supply to meet demand. This is a situation we have not seen in our history. And the numbers themselves are so enormous. The reason is because our technology is different. As Larry has said on previous calls, the cloud we built runs faster and has more capabilities than our competitors and is built for enormous amounts of data. And so we are very much the destination of choice. As Stargate forms, that will contribute into all of this. But, some of our partners many of our partners some of them will be in Stargate. Some are outside of Stargate. We really are working with many, many companies right now. Have enormous pipeline as a result. Lawrence Ellison: Let me chime in here also a little bit. Let me surprise you with there are huge contracts that have nothing to do with even AI. We got a gigantic contract from TIMU that would have been unprecedented except for all the other gigantic contracts we're also been getting. But, TIMU is a very large company that's growing extremely rapidly. And they are basically moving their infrastructure to the Oracle Cloud. That was a very big contract. We're seeing huge growth in multi-cloud from the data centers we've already built and the data I mean, if it's revenue, it's obviously data centers we already built. But the future the growth rate in multi-cloud is astonishing. In other words, our database is now moving very rapidly to the cloud I think because a few reasons. Because the database has now all these AI capabilities, but also, quite frankly, now people can get it in whatever cloud they want. If you're dedicated to using Azure, you can get the Oracle database in Microsoft Azure. The fully capable Oracle database in Microsoft Azure with all of our fanciest features, including the new AI features. You can get it at Amazon. You can get it at the Oracle Cloud. It's all the same in every place. And that's given our customers a lot of comfort that Oracle is not only where they store all of their current data, but they wanna keep using the Oracle database and move all of that data to the cloud as quickly as they can they're now able to do it at the place of the cloud of their choosing. The database business is growing rapidly. This next generation of companies like ByteDance, TikTok, which obviously we do business with them, T Moves and other But Uber, I mean, there are just lots of these companies. A bunch of the security companies have moved to the Oracle Cloud. It's growth coming from many, many different directions. Safra Catz: So if I could just so Stargate is just part of it. There's a lot of things happening here. John DiFucci: But it I just wanted just to clarify, it sounds like it's part of RPO but is also part of that 70% in IaaS revenue growth too? Safra Catz: Stargate is not formed yet. But some of our business with OpenAI, which is one of our partners, in Stargate, is part of our future. Very much so. But do you understand? We work with OpenAI. Those are still small numbers. In the scheme of everything else we're doing. But it will ultimately be bigger. John DiFucci: Got it. Thank you very much. Lawrence Ellison: Next question please. Let me add one little thing. If Stargate turns out to be everything is advertised then we've understated our RPO growth. Operator: Correct. The next question comes from Ben Reitzis with Melius Research. Your line is open. Ben Reitzis: Hey, thanks, Safra, Larry. Great to be speaking with you today. Nice presentation. Your CapEx in the quarter was much higher than expected, I mean, $5 billion more than we expected to get to the '21. And now you're thinking about it going to 25. You want a little more color on what it was spent on? How was it helping you yield more revenue? And how do you know 25 is the right number? For this year? And, usually, I have some pretty good color on architecture. When you answer this question. So I'm looking forward to that as well. Safra Catz: Okay. So let me start and let Larry make it perfect. The reality is that as I mentioned on the call, our CapEx is usually about equipment. We're not a we have building partners who charge us rent once they've finished constructing things. And when we all of a sudden have higher CapEx, it means we are filling out data centers, and we are buying components to build our computers, which are different than other people's and we are putting them on the floor. We had an opportunity to buy up and, for deployment and so we did. And we are putting out as much capacity as we possibly can as quickly as we can. I do believe that the $25 billion next year may turn out to be understated. So it is all to meet demand. We don't order. We don't build. Unless we've got orders for our capacity to be built out. And we have so much in orders right now that I actually expect I believe I said on the call over $25 billion this next quarter. And that is, again, to match demand. Lawrence Ellison: We recently got an order that said we'll take all the capacity you have wherever it is. This could be in Europe, could be in Asia, we'll just take everything. I mean, we never got an order like that before. We had to move things around. We did the best we could, to give them the capacity they needed. The demand is astronomical. Now we have to but we have to do this methodically. The reason demand continues to outstrip supply is we can only build these data centers build these computers so fast. And we're also doing a lot of engineering around high-speed networking. You'll see us making we are making large engineering investments to speed up the networking, the reliability of the networking, lower the cost of the networking. So we're doing a bunch of things we are doing a bunch of things to lower our CapEx costs. But even if we do that CapEx is going to go up because the demand right now seems almost insatiable. I mean, I don't know how to describe it. I've never seen anything remotely like this. I mean, people are calling up and asking us, please, can you find us more capacity? We'll take it wherever. Oh, it's in Malaysia. We'll take it there. Fine. We'll take it there. You got some of wherever. Ben Reitzis: Are you having any trouble getting GPUs? Lawrence Ellison: No. No. Not right now. Ben Reitzis: Got it. Thanks so much color, guys. Appreciate it. Next question please. Operator: The next question comes from Siti Panigrahi with Mizuho. Your line is open. Siti Panigrahi: Great. Thanks and congratulations on a strong Q4 and impressive guidance. I wanna go back to the cloud database. Mainly, you have massive data database on-prem. So what are you hearing from customers in terms of migrating to cloud? Now you have multi-cloud strategy. Have dedicated alloy customer. And, Safra, what's your expectation on that cloud database revenue contribution or driving that 70% growth of OCI in our fiscal 2026? Safra Catz: Okay. Let me just start. So first of all, the database business is really healthy. Really growing. In fact, you even see it in the number that I think folks didn't think was possible, which is in license. You should understand that when our customers are buying more licenses, that actually means often that they would wanna use the bring your own license pricing to go to the cloud. So database support is up. Is solid, license is up, all the cloud metrics, autonomous consumption, Oracle Cloud, all of multi-cloud is basically using up all capacity that gets put out there. So the Oracle database is on fire. And it is only the beginning. I wanna remind you what a significant and large business it is. And the bulk of it is still on-premise. As Larry said, now that you can have it in any of the clouds you like as with the at database, you know, at Oracle. In all of the in all the other clouds also beyond just OCI, or you can deploy it at cloud at customer. Another place where the numbers are enormous in growth rates. So consumption going way up, more licensing, more bookings, and a lot of demand. And the database side of the world for all the reasons Larry said, is just a superb business and extremely compelling especially to the extent you want to leverage artificial intelligence. Lawrence Ellison: You asked for a number, an easy number to figure out. So let's say 10% or $10 billion of our support revenue, our database support revenue moves to the cloud. So that becomes at least $50 billion because it includes all the computers. And all the networking and all of that. So the support was just 20% of the license fee. So you move $10 billion of our database to the cloud. It becomes at least $50 billion in cloud revenue. It's almost as big as Oracle is now. Siti Panigrahi: Thanks Larry and Safra. Operator: The next question comes from Raimo Lenschow with Barclays. Your line is open. Raimo Lenschow: Thank you. Congrats from me as well. One subject we haven't really talked about was applications, but all the excitement around OCI, like, I you do get enough credit on applications. Can you talk a little bit about what's going on there? Because I had to go back to my model quite a bit to see 22% growth on Fusion. And the outlook looks really strong as well. And you talked about accelerating growth there. With all the worries about tariffs and stuff like that, I kind of I'm surprised to see kind of these very, very good numbers from you. Can you maybe talk about that a little bit? Thank you. Safra Catz: Sure. Tariffs have no impact really at all to play in this. What it does allow our customers to do is do what I do when I announce on day a year on day 11. Is to be much more really much better run and have a better idea of where their business is and how it's doing and to do more and spend a lot less. What you're seeing now, and it hasn't been obvious in the numbers, because, as you know, we have our strategic SaaS products, and we break that down for you in the release to some extent. Those are going gangbusters. And we've had other things in the numbers that have made you not be able to really see. We have some non-strategic products. And in addition, we've also had an advertising business, which we are now lapping. I stopped even mentioning it because you know, what's the difference? A few hundred million. But the reality is what you're starting to see is our strategic SaaS product, as they roll out in our customer sites and as they ramp up, they're very, very popular. They're obviously compelling because only if you're in the cloud can you use the AI capabilities. See, many customers are still on on-premise ERP products. Those can't really use the advanced Agentyx and AI capabilities. So if you wanna use that, and many do, for automation and to do more spend less, you've gotta move to Fusion or NetSuite. And those are just very, very compelling. And it's just now starting to show. Through the noise. Lawrence Ellison: I would add one thing, which is companies don't really enjoy buying applications from five different vendors and then making all of those applications work together. So some companies, not all, but some companies are saying, Oracle, you build these integrated suites of application and they're all AI agent-based applications. So they're modern applications, they're modern cloud applications. But all of your applications are engineered to work with one another. So our ERP and EPM, supply chain manufacturing, human resources, customer engagement, all those apps are designed as a single suite of application to run an enterprise or government agency. And all those pieces then work together. So there's no cost of integrating those applications. So we're seeing a lot of companies buying basically saying, I'm gonna go all Oracle. I'm gonna buy the complete Oracle suite for ERP, EPM, chain manufacturing. But a lot of people don't have manufacturing. Supply chain human resources and customer engagement. They're picking us. If they pick our back office applications, they'll sometimes pick our front office applications over Salesforce. As a result of that. And our customer engagement applications are getting better and better. We continue to invest in those. And, you know, our intent is to give some of our biggest customers a one-stop shop where they can buy the entire suite to run their enterprise from us. And that gets rid of a lot of headaches. Everything is in the same database. Everything comes with the same AI data platform with it. All the analytics are there. Everything is there. You don't have to do the system integration. You don't have to buy a bunch of pieces and make them work together. That has been our strategy for some time, and that's all coming together. As a bunch of companies are not successfully navigating this difficult, admittedly difficult transition from on-premise to the cloud. There have been a lot of companies that have not done it very well, and they're casualties, and we're picking up a lot of their users. So the application business is very, very promising. And then I add, you know, Oracle Health and Oracle Banking, Oracle Hospitality, those the different industries on top of that. There's no other apps company that is trying to build such a broad-based integrated suite of AI cloud application. Raimo Lenschow: Makes sense. Thank you. Operator: Next question, please. Operator: Your final question comes from Brad Zelnick with Deutsche Bank. Your line is open. Brad Zelnick: Great. Thank you very much, and congrats. Safra, Larry, the things you've been telling us would happen, are clearly happening. And it's amazing. As we go forward, Larry, Oracle has always had the advantage of being the only vendor with enterprise-grade technology from apps all the way down to infrastructure, and since the Sunday is optimized even down to the silicon, why does the full stack nature of what you do remain important as we enter this new era of computing? Lawrence Ellison: Well, such an interesting question because I think to some degree, people thought our biggest weakness is that we were just spread too thin. We're trying to do infrastructure I mean, database initially. Infrastructure and then applications on top of that infrastructure. But you know, what made our database so good? I can argue there you know, we made some good technology decisions? But the other thing that made our database so good is we had we developed apps on top of our own database. In the same company, you have people using the database to develop applications. And the people and the people who are developing that database. And if the applications found features missing from the database, they found capabilities they wish were in the database. That would make their applications better more reliable, more secure, we gain those insights by building those applications. Building applications allowed us to understand how to build database better. Building great databases made it much easier to build the cloud. There are a lot of databases that run the cloud. You know? You become a there's a database of our users. All of our resources are in databases. So the autonomous database the Oracle Autonomous Database is one of the reasons our cloud you know, at some point, we're gonna rechristen our cloud from gen two cloud to the autonomous cloud. You know, right now, that would be too aggressive. We're not fully autonomous, but we're getting there. And because we were able to use a lot of our existing database technologies specifically the autonomous database technology, to make our cloud more scalable, more reliable. And by the way, when you eliminate human labor, when you have an autonomous database, you eliminate human labor, you save money, but you also eliminate human error and human mischief. So it makes your cloud much more secure. One of the reasons our cloud is more secure, one of the reasons our cloud is faster, is because we have an autonomous database that runs it. So having all of these levels of technology allows us to solve a technical problem at the right layer of the technology. Should we solve the problem in the network fabric? Should we solve the problem with our cloud controller? Something we have with other people that we've embedded different hardware to run the run the cloud. We added we have different hardware architecture. To make it more secure and more reliable. So we've done innovation in the network. We've done innovation in our host computing. We have a non-stop Linux operating system that we build, the autonomous database that manages all the data in the cloud and so on. Being able to solve problems at different layers of the technology. Understanding the different layers of the technology. Allows us to build an integrated solution that is faster, cheaper, more reliable than what our competitors can do. Brad Zelnick: Awesome. Thank you. Ken Bond: Thank you, Larry. And Scott and Brad. A telephonic replay of this conference call will be available for twenty-four hours on our Investor Relations website. Thank you for joining us today. With that, I'll turn the call back to Sarah for closing. Operator: Thank you. This concludes today's conference. Thank you for joining. You may now disconnect.

Operator: Ladies and gentlemen, thank you for standing by. My name is Abby I will be your conference operator today. At this time, I would like to welcome everyone to the Oracle Corporation Third Quarter Fiscal Year '25 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks there will be a question-and-answer session. [Operator Instructions] And I would now like to turn the conference over to Ken Bond, Head of Investor Relations. Mr. Bond, you may begin. Ken Bond: Thank you, Abby. Good afternoon, everyone, and welcome to Oracle's third quarter fiscal year 2025 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 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 risk 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 any questions, we will begin with a few prepared remarks. And with that, I'd like to turn the call over to Safra. Safra Catz : Thanks, Ken, and good afternoon, everyone. As you can see, this was our strongest booking quarter ever by a huge margin as we added $48 billion to our backlog. Our RPO balance is now $130 billion up from $97 billion last quarter and up from $80 billion last year. That's a growth of 63% year-over-year and this does not include any contracts with project Stargate. The RPO figure is the leading indicator of demand for our cloud services, while our live data center count and power capacity is the leading indicator of the conversion of RPO to revenue. Speaking of data centers, we marked a milestone this quarter as we crossed into triple digits with our 101st cloud region coming online. It's just a matter of time before we have more cloud regions than all of our competitors combined, reflecting the strategic advantage of our Gen 2 architecture, which offers our customers the most flexibility. From a delivery standpoint, the growth of our power capacity under contract is even higher than the growth in the number of data centers and we expect that our available power capacity will double this calendar year and triple by the end of next fiscal year. As we bring more capacity online, our revenues will clearly accelerate. What we are seeing in the market is that we are the destination of choice for both AI training and inferencing. This is due to the fact that our Gen 2 cloud is faster and therefore, cheaper than our competitors and also do to our ultra high-speed networking engineering that we started decades ago and that is now highly relevant for AI. Taken together we have numerous structural engineering advantages that distinguishes OCI from our competitors. And as Larry will discuss in more detail, Beyond that, because of the momentum OCI is enjoying, customers are looking at us for many more workloads. Now shifting to Q3 results. I'll be discussing our financials using constant currency growth rate, as this is how we manage the business. So here goes. Total cloud revenue at SaaS and IaaS was up 25% at $6.2 billion with SaaS revenue of 3.6% in the quarter, up 10% and IaaS revenue of $2.7 billion, up 51% on top of 49%, which report -- which we reported last year. Now as a reminder, the exit our advertising business last year had the effect of lowering total cloud revenue growth by 2% this quarter. Total cloud services and license support revenue for the quarter was $11 billion, up 12%, driven again by OCI our strategic cloud applications and cloud database services. Infrastructure subscription revenues, which includes license support, were $6.2 billion, up 18%. Record level AI demand drove Oracle Cloud Infrastructure revenue up 51% in Q3 and that's 54% when you exclude our legacy hosting, both a much higher growth rate than any of our hyperscaler competitors. Our Instructure cloud services now have an annualized revenue of $10.6 billion. OCI consumption revenue was up 57%, Demand continues to dramatically outstrip supply. Now we do expect that the component delays that have slowed cloud capacity expansion this year, should ease in Q1 FY '26. So pretty soon. Growth in the AI segment of our infrastructure business was extraordinary GPU consumption revenue is now nearly 3.5 times the size of last year's. Cloud database services, which were up 28%, now have annualized revenue of $2.3 billion, Autonomous Database consumption revenue was up 42% on top of the 32% growth reported last year. So again, we have acceleration, as we get bigger. As on-premise databases migrate to the cloud either on OCI directly through public cloud, cloud to customer or DRCC, or through our database at cloud service with Azure, Google or AWS. We expect the cloud database revenues collectively, will be the third driver of revenue growth alongside OCI and strategic SaaS. We are currently live in 18 cloud regions with database at cloud services with our partners and have another 40 planned with Azure, Google and AWS. Now finally, database subscription revenues, which includes license support, were up 6%. Application subscription revenues, which again, include product support, were $4.8 billion and up 6% [too] (ph). Our strategic back-office SaaS applications now have annualized revenue of $8.6 billion and were up 8%. Software license revenues were down 8% to $1.1 billion. So all in, total revenues for the quarter were $14.1 billion, up 8% from last year. Now shifting to gross profit and operating income, the gross profit dollars of cloud services and license support grew 10% in Q3. We continue to focus on operating expense discipline, which collectively continue to grow slower expense discipline. So expenses continue to grow slower than revenue, a trend that I expect will continue. The Q3 operating income grew 9% and the operating margin was 44%, up slightly from last year. The non-GAAP tax rate for the quarter was 19.9%, which was higher than my 19% guidance and lowered EPS by $0.02. And EPS currency headwind ended up at $0.04 more than I thought would be hurt by currency -- as currency continued to strengthen. The non-GAAP EPS was $1.47, up 4% in USD, up 7% in constant currency. The GAAP EPS was $1.02, up 20% in USD, up 25% in constant currency. At quarter end, we had $17.8 billion in cash and marketable securities. The short-term deferred revenue balance was $9 billion, up 3% and operating cash flow for Q3 was $5.9 billion, slightly more than our $5.9 billion in CapEx, as we front-loaded some purchases into the quarter, given the demand that you see in our RPO growth and the additional demand we see in our pipeline. I expect fiscal year 2025 CapEx will be a little more than double what it was last year at around $16 billion. As always, we remain careful to pace and align our CapEx investments appropriately and in line with booking trends. On a trailing 12-month basis, operating cash flow was up 14% at $20.7 billion, and free cash flow was $5.8 billion. As I mentioned, remaining performance obligations or RPO is now $130 billion, up 63% in constant currency, and it reflects the growing trend of customers wanting larger and longer contracts, as they see firsthand how Oracle Cloud services are benefiting their businesses. Further, our cloud RPO grew over 90% and now represents more than 80% of total RPO and approximately 31% of that total RPO number is expected to be recognized as revenue over the next 12 months. Now we are and remain committed to returning value to our shareholders through technical innovation, acquisitions, repurchases, prudent use of debt and the dividend. This quarter, we repurchased nearly 1 million shares for a total of $150 million and over the last 10 years, we've reduced the shares outstanding by more than one-third at an average price of $54 a share. In addition, we have paid out dividends of $4.4 billion over the last 12 months, and the Board of Directors increased the quarterly dividend 25% from $0.40 to $0.50 per share today. Before I dive into Q4 specific guidance, I'd like to comment on the financial acceleration we expect to see in the coming years. We now have a clear light of sight to our future revenue growth. We remain very confident and committed to total cloud infrastructure revenue for fiscal year 2025 growing faster than the 50% reported last year and it will be even faster for fiscal year 2026, likely a lot faster. Our confidence in meeting our $66 billion revenue target for FY '26 is now stronger revenue than ever and represents around a 15% growth rate. And more importantly, I now expect that our fiscal year '27 growth rate will be around 20%, which is even higher than I previously guided. Let me now turn to my guidance for Q4, which I'll review on a non-GAAP basis and assuming exchange rates remain the same as they are now, currency should have a $0.01 to $0.02 negative effect on EPS and a 1% negative effect on revenue. However, as usual, currency impact may be different. So focus in on constant currency. Total revenues are expected to grow from 9% to 11% in constant currency and are expected to grow from 8% to 10% and in USD at today's exchange rate. Total cloud revenue is expected to grow from 24% to 28% in constant currency is expected to grow from [25 to 27 in USD] (ph). Non-GAAP EPS is expected to grow from 0% to 2% and be between $1.62 and $1.66 in constant currency. Non-GAAP EPS is expected to grow between negative 1, positive 1 and be between $1.61 and $1.65 in USD. I should mention that my Q4 EPS guide is negatively impacted by $0.03 plus due to losses recognized from an investment in another company. Lastly, my EPS guidance for Q4 assumes a base rate of 19%. However, as you saw in this quarter, onetime tax events could cause actual tax rates to vary and usually do. And finally, I'm sure this isn't lost on anyone, but we are reporting earnings just 10 days after the close of the quarter, and that's also because there was a weekend, using fusion we continue to file our quarterly and annual financial statements faster than any other company in the S&P 500. And with that, I'll turn it over to Larry for his comments. Lawrence Ellison: Thank you, Safra. Well, as Safra pointed out, some of our existing businesses, AI training and multi-cloud database are experiencing hyper growth. We are in the process of building a gigantic 64,000 GPU, liquid-cooled NVIDIA GB 200 cluster for AI training. Our multi-cloud business at Amazon, Google and Microsoft grew 200% in the last three months alone. But in addition to these rapidly growing existing businesses, new customers and new businesses are migrating to the Oracle Cloud at an unprecedented rate. In Q3, we signed a multibillion dollar contract with AMD to build a cluster of 30,000 of their latest MI355x GPUs and all four of the leading cloud security companies: CrowdStrike, Cyber Reason, Newfold Digital and Palo Alto, they all decided to move to the Oracle Cloud. But perhaps most importantly, Oracle has developed a new product called the AI data platform that enables our huge installed base of database customers to use the latest AI models from OpenAI xAI and meta to analyze all of the data they have stored in their millions of existing Oracle databases. By using Oracle version 23 AI's vector capabilities, customers can automatically put all of their existing data into the vector format that is understood by AI models. This allows those AI models to learn, understand and analyze every aspect of your company or government agency, instantly unlocking the value in your data while keeping your data private and secure. This AI inferencing will be another great large new business for Oracle. Back to you, Ken. Ken Bond: Thank you, Larry. Abby, please poll the audience for questions. Thank you. Operator: Thank you. We will now begin the question-and-answer session. [Operator Instructions] And your first question comes from the line of Brad Zelnick with Deutsche Bank. Your line is open. Brad Zelnick : Great. Thanks so much for taking the question. And congrats on just remarkable booking strength. Larry, I'm hoping you can expand more on Stargate because this is just a massive scale American first venture with Oracle joined by undisputed AI leaders like OpenAI and NVIDIA and they chose you over several other choices in the market. What is Oracle's unique value add here? What can Oracle do that others can't? Thanks. Lawrence Ellison : Well, I think it's actually very simple. The capability we have is to build these huge AI clusters with technology that actually runs faster and more economically than our competitors. So it really is a technology advantage we have over them. If you run faster and you pay by the hour, you cost less. So that technology advantage translates to an economic advantage, which allows us to win a lot of these huge deals. And it is not just the Stargate deal, which is in our future, by the way. We got to over $130 billion in RPO without any transactions from Stargate. So again, Stargate looks to be the biggest project -- AI training project out there. And we expect that will allow us to grow our RPO even higher in the coming quarters. And we do expect Stargate of our first large Stargate contract fairly soon. Brad Zelnick : Great. Larry, if I could maybe just sneak in a very quick one for Safra. When Stargate does hit as it is a related party. Is there anything that you can share with us as to how we should expect it might flow through the financials? Thanks again. Safra Catz : Well, it won’t flow -- through us in any unique way. They will place contracts with us, and they'll come right through. So I'll be explaining it to you once it's fully laid out, but it's not going to make your work harder. We are going to be very, very clear on as the contracts come through us. It won't be as much of a change as you think it's just going to be even larger numbers. Brad Zelnick : Well, thank you again. Operator: And your next question comes from the line of Derrick Wood with TD Cowen. Your line is open. Derrick Wood : Safra and Larry, congrats on a strong bookings quarter. I wanted to drill into the growth under current around OCI, especially in light of such a huge RPO number that didn't even include Stargate. In some quarters, we hear about particular demand for AI contracts certainly seems to be a lot of favorable developments going on there. But other times, we hear about emerging adoption in multi-cloud and database on hyperscalers and we can hear about strength in dedicated as well with sovereign clouds and alloy. I guess as you look at Q3 bookings and pipeline trends, can you give us a sense as to how demand is unfolding across those three different environments and how you feel about the growth durability and really the infrastructure capacity serviceability of each of these vectors. Safra Catz : Well, I mean the reality is that everything is chugging on all fronts. So multi-cloud, I gave you some of the numbers. These numbers -- I was just looking year-over-year because we only started really having revenue originally a year ago. It's more than 10 times what it was just a year ago and the numbers are exploding. As I told you, we've got 18 lives, but 40 coming online. So that is going unbelievably well. OCI, public cloud going spectacularly, cloud a customer really going well and all the pieces around that and we're starting -- there are whole parts that are only now rolling out which are sovereign clouds disconnected clouds. And so we've laid out quite a lot of capacity, and it's starting to fill up. So bookings are going very, very well, and it's turning into revenue. So pretty much it's -- we're going on all cylinders for us. We are happy when customers come directly to us with their database workloads, but we are also happy when they do -- they come to us through our partners, Azure, AWS and GCP. So for us, we don't care. It is -- they get exactly the same capability at the -- and it's truly ideal. Lawrence Ellison : Now the customers can get our database everywhere. They can install an Oracle cloud region on their premises. They can get Oracle from Azure. They can get Oracle from Google. They can get Oracle from AWS. They obviously get a good Oracle from OCI. And that Oracle database is becoming more and more capable. It does store most of the world's valuable data. It is by far the largest data base installed base in the world, with nothing remotely close. And most of those databases are still on-premise, but now they are beginning to migrate to the cloud. And one of the big drivers of them migrating to the cloud is the autonomous version of the database. And now perhaps just as importantly the AI data platform, which allows you to take all of your existing data, all of your existing data and make it available to any of the leading AI models, say, Grok, ChatGPT, LLaMa, all of them can immediately take advantage of your existing data and your existing database and turn it into insights and actions and agents directly, again, on your private data while keeping that private data private. And that has been the missing link in companies and government agencies taking fully trained on all of the public data that's available on the Internet. Now that's a huge amount of information and makes for brilliant AI -- but the AI is not -- does not have a lot of information about your company or your government agency because that data is not available on the Internet. That is not data that the AI model was trained on -- now with the Oracle Database, 23 AI. The AI model can look at your data train itself on that data and provide you with, again, inside actions on your existing data while keeping it private. You don't have to share it with anybody. Derrick Wood: Fantastic. Thank you. Operator: And your next question comes from the line of Alex Zukin with Wolfe Research. Your line is open. Alex Zukin: Hi, thank you guys. And echoing the congratulations for truly unbelievable bookings number. I guess maybe, Larry could you opine on the current kind of state of the AI training versus inferencing opportunity. You have potentially investors worried about diminishing returns to training. Even some of your hyperscaler peers seemingly walking back on some of their CapEx commitments. What are you seeing out there with respect to training versus inference, both in the incremental bookings that you're adding into the pipeline? And maybe just how Oracle is differentiated on the inferencing side versus both hyperscalers and Neo clubs, particularly with this AI data platform product that you just announced? Lawrence Ellison : Okay. Well, obviously, our training business is getting bigger and bigger and bigger, very rapidly, as evidenced by our RPO. But it wasn't just AI training that drove the RPO up. the AI inferencing, the potential of AI inferencing and think about all of the Oracle databases out there that, that data in those databases are going to train AI models. The AI models are only useful if they're familiar with the data -- your data, the AI models have to understand your products. your customers, your service requests, your financials. So you have to make all that data available to the AI models in those databases. This has not -- this is -- we're right at the beginning of that. And again, on top of those Oracle databases now, we ourselves because [when] (ph) the application business have built lots and lots of agents on top of the Oracle -- on the Oracle databases and made those agents a part of our applications, modernizing and automating our applications. But customers need to do the exact same thing as they build software inside of their government agency where they build software inside, again, AI agents inside of their company. And how are they -- what is -- how do they go about doing that? Well, they go about doing that is training the AI models on their data, on their data that is currently in an Oracle database. And we make that very easy. You push a button -- the new version of the Oracle Database 23 AI with vector capabilities allow you to convert your data into vector format that's understood by the AI models. Nobody else has that. Nobody else has that. So you can easily now train the AI models on your data for inferencing, obviously, and for building of agents, you can do that automatically with the Oracle Database. We are the only one with that capability. So we think inferencing in the end is a much bigger opportunity than AI training. And there are literally millions of Oracle databases all over the world that will and that data, all of those millions of databases, all of that data will be used to train AI models. And on top of that, they'll build agents and applications. We think, again, that -- I mean it's -- we don't have these 1 or 2 or 10 huge contracts for training because there aren't that many people building frontier models, but there are hundreds of thousands of our customers that will be consuming those AI models and training those same AI models on their private data and then running agents and applications on top of all of that. That's a much bigger market than AI training for us. Alex Zukin: Super helpful. And maybe just Safra, how to think about RPO trends and trending over the course of the next few quarters in light of that? Safra Catz : I think there are going to be lumpiness as you can see, but we actually expect some extremely significant numbers coming within the next few months also. So there's just a lot of demand folks there is a lot of demand where people want to lock in and schedule into our cloud. So we're going to see we're going to see increases in RPO. But remember, our remaining performance obligation, we also burned down some of it through the quarter as capacity goes online, but I expect that number to be extremely large. This is enormous, but I expect it actually to continue to be very large amazingly. Alex Zukin: Thank you so much. Operator: And your next question comes from the line of John DiFucci with Guggenheim. Your line is open. John DiFucci: Thank you. You said you were live on 33 cloud regions and another 40 planned with Azure --. Safra Catz : No, 18 Multi cloud. John DiFucci : Sorry, I got it. Yes, I got you way ahead of yourself. I'm sorry, ever. But anyway, I know you said you had another 40 planned with Azure, AWS and Google, this quarter, we saw a big uptick like in discussions between partners and large enterprise regarding Oracle database pick your hyperscaler like the discussions seem to be in like happening in mass, but not the deals yet. And one of the things a limiting factor and talk partners was that some of these global enterprises needed it to be global because the global enterprises. Those 40, I guess, does that get you there for that? And when -- like when do those 40s get deployed? Are they going to be deployed over the next year? Or is it going to be over the next, I don't know, about how long does that take? Safra Catz: Well, of course, we are not in full control of that, but everyone's motivated to get them as quickly as possible because, as you know, the way the revenue flows through, it flows through to our partner or our host and then we -- and then they pay us. So they are very, very motivated to get it as quickly as possible because that is holding up revenue for them until they can deploy it. It's been moving very quickly. They’ve accelerated recently. And as you can imagine, there is some significant competition between those three hyperscalers to grab those workloads before their competitor takes them. So it is moving quickly. And -- but there is enormous demand again, enormous demand, but that capacity is not always within our control. So but they are very, very motivated to get it going because when those customers move, they often bring a lot of additional workload connected to the database into their cloud would often directly into OCI also. And of course, we are the fourth competitor for them at the same time. So I don't have the exact dates of someone in my organization, no doubt it does, but we do expect it in short order to be a lot more deployed very quickly, and demand is extremely high. Lawrence Ellison : Can I help – I think I can help on this. So everyone needs a primary and a backup data center in North America. Everyone needs a primary and a backup data center in Europe, typically Western Europe. And everyone needs a primary -- not everyone and a lot of people need primary and backups in Asia. So that's six data centers. So once we get to a primary and backup in North America and Europe and in Asia for let's us say, Google, we're ready to roll. Most of the impediments are out of the way. So -- but then it's just a matter of building the people that want -- that are Japanese national companies. That's for the multinationals or the multinationals that works. And then there's obviously the Japanese domestic market in the German domestic market and so on and so forth. But I think by the time we get to 40, which is around -- close enough to say, 12 months from now, the -- as Safra said, it's not entirely in our control because AWS has to provide us with the space because we are literally embedding the OCI data centers inside of AWS inside of Google and inside of Azure. But we expect this is growing extraordinarily fast, and we think we'll be able to meet most of the needs of customers that need for primary and back up around the world, certainly in the coming months. And then it's just going to be adding capacity country by country. Operator: And your next question comes from the line of Kirk Materne with Evercore ISI. Your line is open. Kirk Materne: Thanks very much for taking the question. I'll add my congrats on the RPO and booking strength this quarter. Larry, you mentioned some of the agents you've been building out on top of your application platform earlier. I was just wondering, are you now starting to see the demand for those technologies or those functionality that agents are bringing starting to have an impact on your strategic SaaS business? And perhaps the pace of conversions from any legacy on-prem systems that still might be out there? Thanks. Lawrence Ellison : Okay. So I would say, I mean, our biggest differentiator when we're competing in the health care field, our biggest differentiator is the quality of our AI agents that we have a lot of AI agents in health care. One, we listen when a doctor consults with a patient, we listened to that consultation and we record all the prescriptions, all the doctors' orders, all the doctors' notes, we automatically. We provide the doctor a prior meeting with the patient, a summary of the patients, their latest lab tests and vital -- when the doctor is finished a meeting with the patient has given all these orders prescriptions and come to diagnostic conclusions, we automatically update the electronic health records, taking a huge burden of the position. They don't have to type any of this stuff in. We just listened the interface to our system is voice, primarily voice which is all AI and -- but the whole system is made up of AI agents. Let me give you another one, another AI agent that we're in the process of building. It is -- the doctors have to -- the hospitals have to get permission to prescribe an expensive cancer drug or to do a heart transplant or something like that or a knee transplant. They have to get prior authorization from the payer, the insurance company in the United States or the government like the NHS in the U.K. And there's this negotiation. You send your patient's electronic health records to the insurer. Insurer looks at that, analyzes that and says, yes, this person is authorized to use Herceptin or a cancer drug or not. But that's all done manually on the phone. But our AI agents, we read the insurance policies. We read all the electronic health records. We actually make mention whether this is a reimbursable drug or this is a reimbursable surgery. We do that and we automate that entirely make it completely electronic. This saves billions of dollars in the health care field and makes a huge difference and determines whether they're going to buy our system or buy some other -- some alternative systems. So I know people are saying, what's the dollar impact when you're selling the agents? Well, the dollar impact is we sell in country, an entire health system. Based on whether our agents and our health software is better than our competitors and saves them money. So it's not just -- it's not money really attributable to AI agents in health care. It's the fact we're selling more and more health care systems because that we have a lot of AI agents embedded in them, which helps -- which produces better outcomes for patients and saves governments and payers money. Safra Catz: And the name applies to our Fusion applications which have sense of embedded agents, whether it's in supply chain, financials, HCM, we have literally dozens of agents already embedded in our applications, unlike our competitors who are talking about it, we actually have them already built and deployed it. Lawrence Ellison : But I can make one more statement. It's going to be since our applications are going to be primarily AI agents. Again, I say the applications themselves will migrate to be basically a bunch of the connected AI agents. It really -- you're not going to be able to separate how much of this -- how much did you make on the AI agents and how much did you make on the rest of the applications. All of our applications are becoming AI agents. Kirk Materne: Safra, if I could just ask a really quick follow-up. Is this the tipping point for any customer that hasn't moved to the cloud to have to get there now to get this functionality, talking some partners, it feels like anybody that's been holding out is now ready to go because they can't get any of this functionality if they're still on-prem. Safra Catz : Yes. I mean this is the motivator, the ability to have your system do so much of your work. As I was signing off with my finance and audit committee and talking with my Chief Accounting Officer, they have the entire description of the balance sheet issue, all the different balance sheet parts all done because of our products. That is such a time saver and so much incredible productivity and insight that you're disadvantaged if you do not use this. And that's why I know every quarter, I mention again, we're announcing. Of course, it's Monday. I couldn't announce Sunday or a Saturday or of course, Friday, something you do only if you have bad news. I mean, I had to announce the 10th. And imagine so much of the work that my teams do is enabled because of these advanced technologies. And it is your way to get there. Ultimately, everyone is going to come to it and it should be motivating them because it is such a massive not only productivity improvement. And as a result, lower cost, but it also gives you incredible insight into your business. It’s really amazing. Operator: And your final question comes from the line of Mark Moerdler with Bernstein Research. Your line is open. Mark Moerdler: Thank you very much for taking my question. And really, congratulations on how incredibly well this is being executed. We know Oracle spends less on CapEx per dollar of IaaS pass revenue. than your larger hyperscale cloud provider peers. But how should we understand why CapEx is lower? And how should we think about the trajectory of CapEx given the strength of RPO and especially the strength of OCI and OCI AI? Thank you. Lawrence Ellison : Okay. Well, I'll take a crack at that. So we can start our data center smaller than our competitors. And then we grow based on demand. So building these data centers are expensive, and they're really expensive, if you don’t – if they're not at least half full. So we tend to start small and then add capacity as demand arises. And that allows us to have higher utilization. That's one thing. The other thing is we have a high degree of standardization and automation inside of our cloud. So the operating in the cloud also gives us better margins, now that you will not see that on CapEx. That will be on operating profit. But it's really the combination of starting smaller that affects and growing with demand that affects CapEx and then overall margins, the fact that we have a high degree of automation which lowers our labor cost dramatically. By the way, more importantly than -- more important than lowering our labor costs with no labor, there's no human error, there is no human mischief. So we're much more reliable and much more secure because we don't have a lot of human beings in our data centers. Mark Moerdler: Makes, a lot of sense. Thank you. Ken Bond: Thank you, Safra. Thank you, Larry. Thank you, Mark. 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 now turn the call back to Abby for closing. Operator: And ladies and gentlemen, this concludes today's call, and we thank you for your participation. You may now disconnect.

Operator: Thank you for standing by, and welcome to the Oracle Corporation Second Quarter Fiscal Year 2025 Earnings Conference Call. [Operator Instructions] Thank you. I'd now like to turn the call over to Ken Bond, Head of Investor Relations. You may begin. Ken Bond: Thank you, Rob, and good afternoon, everyone, and welcome to Oracle's second quarter fiscal year 2025 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 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 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. Safra Catz: Thanks, Ken, and good afternoon, everyone. Q2 was another excellent quarter with total revenue at the high end of my constant currency guidance, and EPS was actually $0.01 above the high end. These results are being driven by the fact that our largest revenue component, cloud services and license support, now represents 77% of total revenue and is also our fastest-growing line item, which in turn, is driving the acceleration of overall revenue growth. We expect cloud revenue to reach $25 billion this fiscal year. This is happening for several reasons. First, our cloud is faster and is less expensive than other clouds. We remain the preferred cloud for AI workloads as well as for non-GPU cloud infrastructure services. In addition, our ability to deploy our cloud in many sizes gives our customers flexibility, and our multi-cloud agreements with Microsoft, Google, and AWS provide customers more choice in how they can migrate their Oracle databases to the cloud. And our strategic SaaS applications continue to grow rapidly. And we are also seeing more of our industry-based cloud applications come online, which immediately contribute to revenue growth. You can see all of this in the momentum in the acceleration of our cloud growth and the 50% growth of our $97 billion RPO number, remaining performance obligation. And today, we're telling you again that revenue growth will accelerate further in the coming quarters. Turning to Q2, and I want to remind you that our quarter ended on Saturday a week ago, and here we are announcing our results, and that's only possible because we use Oracle Fusion. Now as for the numbers, we saw all segments exceeding our internal forecast. Now as the dollar strengthened in the quarter, the 1% currency benefit for total revenue and the $0.02 to $0.03 benefit for EPS that were present in my August guidance retreated with total revenue and EPS in Q2 essentially unaffected by currency movement. As usual, as I go over things today, I'll be discussing our financials using constant currency growth rate as this is how we manage the business. So here it goes. Total cloud revenue, that's SaaS and IaaS, was up 24% at $5.9 billion with SaaS revenue of $3.5 billion, up 10%, and IaaS revenue of $2.4 billion, up 52%, on top of the 50% growth reported last year. As a reminder, we exited the advertising business last quarter, which had the effect of lowering the total cloud revenue growth by 2% this quarter. Total cloud services and license support for the quarter was $10.8 billion, up 12%, driven again by OCI, our strategic cloud application and autonomous database. Infrastructure subscription revenues, which includes license support were $6 billion, up 17%. Record level AI demand drove Oracle Cloud Infrastructure revenue up 52%. But excluding legacy hosting infrastructure, cloud services revenue was up 55%. Our infrastructure cloud services now have an annualized revenue of $9.7 billion. OCI consumption revenue was up 58% as demand continues to outstrip supply. Growth in the AI segment of our infrastructure business was extraordinary. GPU consumption was up 336% in the quarter. And we delivered the world's largest and fastest AI supercomputer, scaling up to 65,000 NVIDIA H200 GPUs. Cloud database services, which were up 28% and now have an annualized revenue of $2.2 billion. As on-premise databases migrate to the cloud on OCI, either directly or through our database-at-cloud services with Azure, Google, and AWS, we expect the cloud database revenues collectively will be the third leg of revenue growth alongside OCI and strategic SaaS. We are currently live in 17 cloud regions with database-at-cloud services and have another 35 planned with Azure, Google, and AWS. Database subscription services, which includes database license support, were up 5%. Application subscription revenue, which includes product support, were $4.8 billion and up 7%. Our strategic back-office SaaS applications now have annualized revenue of $8.4 billion and were up 18%. Software license revenues were up 3% to $1.2 billion, including Java, which saw excellent growth. So, all in, total revenues for the quarter were $14.1 billion, up 9% from last year. Now shifting to gross profit and operating income. The gross profit dollars of cloud services and license support grew 9% in Q2. As our cloud businesses continue to scale, the gross margins of both cloud applications and cloud infrastructure have each been trending higher. We continue to display expense discipline, which, of course, we're known for, especially with R&D, sales and marketing, and G&A expenses, which collectively continue to grow slower than revenue, a trend that I expect to continue. The Q2 operating income grew 10% and the operating margin was 43%, up 60 basis points from last year. The non-GAAP tax rate for the quarter was actually 20.1%, which is higher than my 19% guidance. Even as higher tax rate lowered EPS by $0.02, we still hit the high-end of my constant currency guidance. Actually we did better. The non-GAAP EPS was $1.47 in U.S. dollars, up 10% in USD and 10% in constant currency. The GAAP EPS was $1.10 in USD, and that's up 24% in USD and 23% in constant currency. At quarter end, we had $11.3 billion in cash and marketable securities. The short-term deferred revenue balance was $9.4 billion, up 8%. With CapEx at $4 billion for the quarter, free cash flow was negative $2.7 billion and operating cash flow was positive $1.3 billion. Given the demand that you see in our RPO numbers and the additional demand we see in our pipeline, I expect fiscal year 2025 CapEx will be double what it was in fiscal year FY '24. As always, we remain careful to pace and align our CapEx investments appropriately and in line with booking trends. On a trailing 12-month basis, operating cash flow was up 19% at $20.3 billion and free cash flow was $9.5 billion. Our remaining performance obligation or RPO, is now at $97.3 billion, up 50% in constant currency and reflects the growing trend of customers wanting larger and longer contracts as they see firsthand how Oracle Cloud Services are benefiting their businesses. Further, our cloud RPO grew nearly 80% and now represent nearly three-fourth of total of total RPO. Approximately 39% of the total RPO is expected to be recognized as revenue over the next 12 months, and we continue to see the growth of current RPO accelerate. We have now about 98 cloud regions live and many, many more to follow. That we have more cloud regions than any of the other hyperscaler reflects the strategic advantage of our Gen 2 architecture. We can start a new cloud region with a handful of racks and then scale up with customer demand. Additionally, our data centers are highly automated and identical in features and function varying only in scale. This size and flexibility and deployment optionality of our cloud regions continue to be a significant advantage for us. As we've said before, we're committed to returning value to our shareholders through technical innovation, acquisitions, stock repurchases, prudent use of debt, and a dividend. This quarter, we repurchased nearly 1 million shares for a total of $150 million. In addition, we paid out dividends of $4.4 billion over the last 12 months. And the Board of Directors again declared a quarterly dividend of $0.40 per share. Before I dive into specific Q3 guidance, I'd like to share some overarching thoughts about the financial benefits I expect we will see over the coming quarters and years. To start, we continue to see excellent demand for our cloud services, which you see in our RPO growth. And while this growth is stellar, our pipeline is actually growing even faster, and our win rates are growing higher with the recent win at Meta being a prime example of why we expect that our RPO balance will climb again in Q3. Meta was not booked in the Q2 quarter, only in Q3. In fiscal year 2024, we signed some big deals and many have begun to generate revenue. We expect that those will continue ramp higher in the second half and be a key contributor to revenue growth acceleration this year and next. For fiscal year 2025, we remain very confident and committed to full year total revenue growth growing double-digit and full year total Cloud Infrastructure growing, faster than the 50% reported last year. Okay. Let me now turn to guidance, which I'll review on a non-GAAP basis. In terms of currency, we've seen a dramatic shift due to significant strengthening of the U.S. dollar. To put this in perspective, Q2, we expected currency to have a $0.03 positive effect on EPS. For Q3, assuming exchange rates remain the same as they are now, currency should have a $0.03 negative effect on EPS and a 2% negative effect on revenue. However, as the dollar strengthened, it may not hold out the whole quarter and may be different. All right, total revenue, are expected to grow from 9% to 11% in constant currency and are expected to grow from 7% to 9% in USD at today's exchange rate. Total cloud revenue is expected to grow from 25% to 27% in constant currency and is expected to grow from 23% to 25% in USD. Non-GAAP EPS is expected to grow between 7% to 9% and be between $1.50 and $1.54 in constant currency. Non-GAAP EPS is expected to grow between 4% to, 6% and be between $1.47 and $1.41 in USD. I should mention, that my Q3 EPS guidance is negatively impacted by $0.05 due to an investment loss in another company that we are a partial owner of. Lastly, my EPS guidance for Q3 assumes base tax rate of 19%. However, like in Q2, onetime tax events and other things can cause actual tax rates to vary. And with that, I'll turn it over to Larry for his comments. Lawrence Ellison: Thank you, Safra. Oracle Cloud Infrastructure trains several of the world's most important generative AI models. Our major AI customers include OpenAI, xAI, Nvidia, Cohere, and most recently, Meta with their large-scale Llama models. Oracle continues to win large AI training workloads because we're faster and less expensive than the other infrastructure clouds. And we just extended our AI performance advantage by delivering the largest and fastest AI supercomputer in the world, scaling up to 65,000 Nvidia H200 GPUs. The Oracle Cloud trains dozens of AI models and embeds hundreds of AI agents in cloud applications. Oracle's AI agents automate drug design, image and genomic analysis for cancer diagnostics, audio updates to electronic health records for patient care, satellite image analysis to predict and improve agricultural output, fraud and money laundering detection, dual-factor biometric computer log-ins, and real-time video weapons detection in schools. Furthermore, the vector capabilities of the new AI version of our database, Oracle 23ai, enables our customers to easily use their existing data in their existing databases to augment and specialize the training of industry standard generative AI models like ChatGPT, Grok and Llama. The Oracle Cloud and the Oracle 23ai vector database makes it easy for our customers to build their own AI agents and use their own data to reap the benefits of the AI revolution. Oracle is training AI models and developing AI agents that will improve the rate of scientific discovery and economic development and corporate growth throughout the world. The scale of this opportunity is unimaginable. As Safra said, this fiscal year, total Oracle Cloud revenue should top $25 billion. And this is just the beginning of the beginning. Back to you. Safra Catz: Thank you, Larry. Rob, if you could please poll the audience for questions. Operator: [Operator Instructions] Your first question today comes from the line of Mark Moerdler with Bernstein. Your line is open. Mark Moerdler: Thank you very much for taking my question and congratulations on the quarter. I'd like to gain better insight into OCI. OCI is designed differently from its larger peers, deliverable in just 10 and shortly 3 racks of servers. Can you explain how the architectural difference impacts how you build and deliver OCI racks and how it will impact how many data center regions you could have compared to your peers? And then how might this affect your CapEx growth over the next five years? Lawrence Ellison: Okay. Well, all the data centers are the same racks. So you can think of it as completely modular. We have a basic rack and to build a region, it takes 6 racks, the smallest region we can build. So our racks started under 50 kilowatts. And our biggest data centers -- excuse me, so our basic small data centers, 50 kilowatts. And our data centers -- the largest data center we're currently building now is 1.6 gigawatts. So that's quite a range, 50 megawatts to 1.6 gigawatts. And when we build them and we put them in inventory, the racks are pretty much the same. So it's very easy for us to manufacture these. It's lower cost to manufacture these. The inventory is less because they're all kind of the same. Furthermore, every cloud region has all of our services. They have all the same services. So it's easy for customers. We don't have to provision like our competitors do. Our competitors have some of their services in some regions and some of their services in other regions. We have all of our services in all of our regions, even though we are both smaller in terms of the -- our smallest region and larger in terms of our largest region than our competitors. When all of our racks are the same and all of our services are the same, they become very easy or, I should say, easier to automate. They're all identical. We have one suite of automation tools that works in all 100 of our current regions. And it makes it possible because of the high degree of automation to run not dozens of regions but hundreds or, even theoretically, thousands of regions as individual customers are dedicating their own region. Individual customers are buying complete Oracle regions and installing them. If you -- what seems like it would be on-premise, though it is a full Oracle Cloud region, just happens to be in a dedicated data center to that customer. We are selling a lot of those as well. So it allows us to address a market that our competitors can't reach. So standardization, automation, and from the smallest to the largest data centers give us a huge advantage in competing in this marketplace. Safra Catz: On the CapEx side, what we can do since our competitors always have to land with extremely large footprints before they can even get started, we can land with smaller footprints, have consumption and expand as customers need it. And this allows us to really match our capital expenditure with ultimately our revenue because it only -- we don't have to spend a long time with empty centers because we literally can start small and just fill them up as our customers are consuming. And I think this is really something that is expressed also in the profitability of our cloud and keeps showing up because of that. Mark Moerdler: It's extremely helpful. I really do appreciate it. Thank you. Operator: Your next question comes from the line of Siti Panigrahi from Mizuho. Your line is open. Siti Panigrahi: Thanks for taking my question. It's impressive to see OCI growth 52% and even database-as-a-service up 28%. So as you execute on your multi-cloud strategy, can you provide some color on the database migration to cloud or even database-as-a-service traction? And what are you hearing from customers as they prepare to migrate on-prem database to cloud? And how should we think about the contribution to revenue going forward? Lawrence Ellison: Well… Safra Catz: You go ahead, Larry and then I'll finish. You go ahead. Lawrence Ellison: All right, let me start. As I mentioned and as you caught in my talking, 28%, it's now annualized revenue, just the cloud database services of $2.2 billion. And imagine most -- that is mostly -- nearly entirely OCI without even the database at AWS and Azure and Google. That also, though, has grown from zero to 100 million-plus run rate, already past 100 million and will be hundreds of millions probably as an exit. So these cloud regions have only started opening. As I mentioned, though, we do now have 17 open and twice as many opening. So I think what you're going to see is the database, as it moves to the cloud, is really only at the beginning. In addition though, I want to remind you that Cloud@Customer and our Alloy partners are also contributing to this. And we have an enormous pipeline of customers who want to bring their databases to the cloud, but one of -- but a number of them want to do it in their own dedicated regions that are just their own for either regulatory reasons or sovereignty reasons, again an offering that only we have, that none of our competitors have. Lawrence Ellison: Yes. Again, Microsoft is the only partner where we -- where the contract is more than a year old. So Google is much more recent and AWS even more recent than Google. So we're at the very beginning of multi-cloud. And as Safra said, it's going to exit well over $100 million in its first year. The first year is starting when we got AWS when we had all three. It will be a multibillion-dollar business. It will be a combination of AWS and Google and Azure, plus all of these Cloud@Customer, dedicated region, Cloud@Customer. We're going to have hundreds of those regions. The demand for -- from individual customers, large banks, telecommunication companies, building half a dozen or so data centers. They want us to build a half a dozen data centers, sometimes more inside their own dedicated facilities. So they'll run the Oracle Cloud in dedicated regions. And again, we'll end up with hundreds of those, and it clearly is going to be a multi -- a very large, rapidly growing multibillion-dollar business for us. Siti Panigrahi: That's great color. Thanks, Larry and Safra. Safra Catz: Ken, I think I misspoke. Could you actually say the line correctly that I was supposed to say about guidance? Ken Bond: Sure, absolutely. Non-GAAP EPS is expected to grow between 4% to 6% and be between $1.47 and $1.51 in U.S. dollar. Thank you. Safra Catz: Sorry, I don't know what I said exactly, but that is correct. Thanks. Operator: Your next question comes from the line of Brad Zelnick from Deutsche Bank. Your line is open. Brad Zelnick: Great. Thank you. And congrats on the continued acceleration at scale. Larry, as Oracle leads with larger and larger GPU clusters, there's healthy industry debate around scaling laws with Elon Musk allegedly pushing the envelope of what's possible. I'm curious to hear your perspective as to whether there's diminishing returns on the amount of compute thrown at model training and Oracle's ongoing leadership in AI infrastructure and GPU superclusters. Lawrence Ellison: Well, there's two elements to speeding up training. One is building larger and larger GPU clusters made up of faster and faster GPUs. So it's a GPU cluster itself. The second element, something Oracle has been very, very focused on is building networks that rapidly move large volumes of data into those GPU clusters. As you make these GPU clusters larger and faster, it's putting more and more demands on the network to be able to move huge amounts of data into those GPU clusters. So, the GPU clusters aren't sitting there waiting for the data. If they're sitting there waiting for the data, it becomes very inefficient. If you're paying by the minute and you -- and half the time, 30 seconds, you don't have the data available, obviously, that's a scaling problem, and that's an economic problem and that's a performance problem. Oracle differentiates itself in its data centers by investing heavily in building networks. And by the way, switch software, all sorts of network software and network hardware to move data more quickly. We think we'll be able -- the demand is really -- as the GPU clusters get bigger and faster, the critical thing is for us to be able to move the data faster. And we are investing heavily in that and we think we're going to maintain our advantage there. And that will -- as we make our networks faster, the AI training will get faster. If we don't -- if no one makes the networking faster, then I think there's a potential bottleneck. But we're trying to avoid that bottleneck by speeding up our networking. Brad Zelnick: Thank you. Operator: Your next question comes from the line of Raimo Lenschow from Barclays. Your line is open. Raimo Lenschow: Perfect. Thank you. Can I shift gear a little bit and go back to the -- or go to the SaaS part of the business? If you look there, if you look at your growth rates, I mean, we're at kind of a late-stage point of the cycle where people usually don't look at back office systems. But you guys putting up like really solid growth numbers there, you're outgrowing your peers. Can you talk a little bit of what's going on there? Thank you. Safra Catz: Actually, I don't agree with you that folks aren't looking at their back office systems. In fact, I think there's enormous amount of pressure to be more efficient for many companies. The competition is fierce in almost -- in basically all industries right now. And as companies, when they look at us, for example, that's why I always point out that it's what is at day nine, and that includes three weekends, three weekend days since our quarter closed. That just shows how efficient you can be in running your operations. And a lot of company executives actually come up to me and say, we need to do that. We need to do more and spend a lot less doing it. And we see enormous -- really enormous pipeline in customers who understand that they can first automate and simplify their own businesses to spend less, so they can invest in the things that differentiate them. But there's also enormous interest in using their data for AI and using those systems, we have, I don't know, dozens and dozens of AI agents that can really help companies spend a lot less and really do a better job serving their customers. So, we find enormous interest in this area. And no one has the capability and the data and the AI capability that Oracle can bring to a customer. So, actually, I think it's been one of the most exciting times in back office and in front office, too. We have -- even our front office systems also taking advantage of so many of our capabilities for our customers. So, this has been a great time. And in fact, our booking trends, which you don't see yet in revenues because we wait until they're implemented, our booking trends have taken a marked step-up. We were going over those just today and they've accelerated from last year quite significantly. Raimo Lenschow: Great. Thank you. Operator: Your next question comes from the line of Kirk Materne from Evercore ISI. Your line is open. Kirk Materne: Yes, thanks very much and congrats on the results. Safra, you talked a little bit about the pipeline strength at the end of your prepared comments. Can you just talk about your line of sight in terms of capacity coming online, so that you all can recognize some of the revenue that's associated with the demand that you're seeing specifically around on the OCI side? Thanks. Safra Catz: Yes. So, the second half of this year is, and especially -- well, the second half, we're in it, is going to see a lot of capacity come online that we've been waiting for and that we've been working on. So, we expect that you're going to see that turning into revenues. This is -- everything is accelerating even more. And in addition, though, we also expect our RPO to start moving up the actual base RPO number, which is, of course, up 50% year-over-year. But the number itself, we expect it to spike in this quarter and for the end of the year. So, we expect both capacity to come online for our customers, which it is. And so it will burn down some of our RPO, but we also simultaneously expect to sign a number of very large contracts to -- that will make our RPO number go up, too. Operator: And your final question comes from the line of John DiFucci from Guggenheim Securities. Your line is open. John DiFucci: Thank you. Safra, you've shown us -- I'm going to switch gears a little bit and go down to the bottom line here versus the top line. You've shown us for years that Oracle is not going to do what I'll call empty business that you don't make good profit on. It's been a while, but you've previously said that OCI gross margins have improved consistently. You just mentioned it again in your prepared remarks. And I think the last time you actually threw out a number was a while ago, but it was in the low 30s for gross margins for OCI. And that was several quarters ago. Can you give us an update on the progress of that, especially given the massive growth you're seeing? Safra Catz: It's really amazing, but we are continuing to benefit from a number of things in OCI, so our gross margin percentage continues to improve. And I know that many of you think that GPU business or OCI base infrastructure business is not as profitable. And yet our margins in that business just continue to improve because of the number of things that Larry mentioned. For example, the way we run our cloud, the way we set up our cloud, everything is automated, everything is run. Because we are a software company to the core, we're always optimizing our software capabilities, which gives us really enormous leverage. Our operating margins in OCI again improved. And it's just going to -- it's been really fantastic. So they improved in OCI, our SaaS margins improved, everything is improving with scale for us even in -- even as we're investing. So we just -- it just continues to improve. John DiFucci: That's great to hear and we continue to watch closely. So thank you. Ken Bond: Thank you, John. A telephonic replay of this conference call will be available for 24 hours on our Investor Relations website. Thank you for joining us on the call today. With that, I'll turn the call back to Rob for closing. Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect.

Operator: Hello, and welcome to the Oracle Corporation Q1 Fiscal Year 2025 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. [Operator Instructions] I would now like to turn the conference over to Ken Bond, Head of Investor Relations. You may begin. Ken Bond: Thank you, Sarah, and good afternoon, everyone, and welcome to Oracle's First Quarter Fiscal Year 2025 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 our 10-Q and any applicable amendments for a complete discussion of these factors and other risks that may affect our future results or the marketplace 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. Safra Catz: Thanks, Ken, and good afternoon, everyone. Before I go to our Q1 numbers, I thought I'd take only a moment to review some of the things that you'll be hearing about over the next couple of days from Oracle. We are at Cloud World in Las Vegas, and Cloud World is where we come together with our customers and partners to share experiences and showcase our latest products and services. Our customers are our best folks people when they share how our technologies transform their enterprises. The innovations from our labs and research centers in combination with feedback from our customers have helped us build superior products and services. You'll hear about new cutting-edge features within OCI, database, analytics, Fusion, NetSuite and our industry applications. We will also be showing new capabilities that we've been working on for a while, including embedded AI agents infusion and those drive productivity and efficiencies for our customers when they're rolled out. And as an Oracle Fusion customer myself, I take great pride once again in my team's ability to have us announce earnings and give guidance nine days after the quarter ended. Many, many of our customers ask us how to replicate our results. And at Cloud World, we will be having a lot of Oracle playbook conversations this week. You've already seen today's announcement of our partnership with Amazon Web Services, which has now joined Microsoft Azure and Google Cloud in making OCI and Oracle available in their respective clouds. Needless to say, we think our multi-cloud strategy will expand the ubiquity and popularity of our differentiated technologies, especially the Oracle Database. Larry will share more details in just a moment. But now to Q1, which was clearly another outstanding quarter, with total revenue at the high end of my guidance and earnings per share of $0.04 above the high end of guidance. Currency was essentially in line with my guidance. And as usual, I'll be discussing our financials using constant currency growth rates as this is how we manage the business. Total cloud revenue, that’s SaaS and IaaS was up 22% at $5.6 billion, with SaaS revenue of $3.5 billion, up 10% and IaaS revenue of $2.2 billion, up 46%, on top of the 64% growth reported last year. As a reminder, we exited the advertising business last quarter, which had the effect of lowering the total cloud applications revenue by 2% this quarter. Total cloud services and license support for the quarter was $10.5 billion, up 11%, driven again by our strategic cloud applications, autonomous database and OCI. Application subscription revenues, which includes product support were $4.8 billion and up 7%. Our strategic back-office SaaS applications now have annualized revenues of $8.2 billion and were up 18%. Infrastructure subscription revenues, which includes license support, were $5.8 billion and up 14%. Infrastructure cloud services revenue was up 46% and up 49% when you are excluding our legacy hosting services. Our infrastructure cloud services now have an annualized revenue of $8.6 billion, OCI consumption revenue was up 56% and demand continued to outstrip supply. Cloud database services, which were up 23% and now have annualized revenues of $2.1 billion. Very importantly, as on-premise databases migrate to the cloud, on OCI directly or through our database at cloud services with Azure, Google and AWS. We expect those cloud database revenues collectively will be the third leg of revenue growth alongside OCI and strategic SaaS. Database subscription revenues, which includes database license support, were up 4%. Software license revenues were up 8% to $870 million, including Java, which saw excellent growth. So all in, total revenue for the quarter were $13.3 billion, up 8% from last year. Shifting to gross profit and operating income. The gross profit dollars of cloud services and license support grew 9% in Q1 as our cloud businesses continue to scale the gross margins of both cloud applications and cloud infrastructure has each been climbing higher. We continue to display operating expense discipline with Q1 operating income growing 14% and the operating margin was 43%. The non-GAAP tax rate for the quarter was 18.9% with non-GAAP EPS at US$1.39, up 17% in USD, up 18% in constant currency. The GAAP EPS was US$1.03, up 20% in USD and up 22% in constant currency. Including in my guidance at the beginning of the quarter was the expected completion of an assessment of the useful lives of our server networking equipment, including an increase of the estimated lives from five years to six years effective at the beginning of this fiscal year. This change in accounting estimate reduced Q1 operating expenses by about $197 million. At quarter end, we had nearly $11 billion of cash and marketable securities, a short-term deferred revenue balance was $11.5 billion, up 2%. Operating cash flow for Q1 was $7.4 billion, while free cash flow was $5.1 billion. On a trailing 12-month basis, operating cash flow was $19.1 billion and free cash flow was $11.3 billion. Our remaining performance obligations or RPO is now $99 billion, up 52% in constant currency. Now while we typically see a seasonal decline of RPO in Q1, we signed several large deals this past quarter, resulting in a sequential increase in RPO compared to the decline that we typically see based on our experience over the previous five years. Further, our cloud RPO grew more than 80% and now represents nearly three-fourth of total RPO. And approximately 38% of total RPO is expected to be recognized as revenue over the next 12 months, which reflects the growing trend of customers wanting the larger and longer contracts as they see firsthand how Oracle Cloud services are benefiting their businesses. We spent $2.3 billion on CapEx this quarter, given the demand that you see in our RPO growth and the additional demand we have and see in our pipeline, I expect the fiscal year 2025 CapEx will be double what it was in fiscal 2024. As always, we remain careful to pace our investments appropriately and in line with booking trends. We now have 85 cloud regions live, another 77 planed with more to follow. We have public cloud regions. We have dedicated cloud customer regions. We have national security regions. We have sovereign regions. We have Oracle alloy regions with our partners, and we have multi-cloud regions with Azure and Google Cloud and now shortly with AWS as well. This sizing flexibility and deployment optionality of our cloud regions continue to be significant advantages for us in the marketplace. As we've said before, we're committed to returning value to our shareholders through technical innovation, strategic acquisitions, stock repurchases, prudent use of debt and the dividend. This quarter, we repurchased 1.1 million shares for a total of $150 million. In addition, we paid out dividends of $4.4 billion over the last 12 months. And the Board of Directors again declared a quarterly dividend of $0.40 per share. Before I dive into specific Q2 guidance, I'd like to share some overarching thoughts and the benefits that I expect they will bring over the coming years. First, the Oracle database is thriving, and the multi-cloud agreements we now have with Microsoft, Google and AWS make it easier for our customers to run their Oracle databases in the cloud. Second, we are rapidly expanding our OCI capacity to meet the demand that you see in our 52% RPO cloud growth. Third, while much attention is focused on our GPU related businesses, our non-GPU infrastructure business continues to grow much faster than our competitors. And finally, our strategic SaaS app continue to grow while we are starting to see more and more of our industry-based cloud apps come online. All these trends point to revenue growth going higher. We will discuss the implications of these positive trends at our financial analyst meeting on Thursday. For fiscal 2025, we remain very confident and committed to full year total revenue growth growing double digits and full year total cloud infrastructure revenue growing faster than last year. Let me now turn to my guidance for Q2, which I'll review on a non-GAAP basis. If currency exchange rates remain the same as they are now, currency should have about a 1% positive effect on total revenue and as much as a $0.03 positive effect on EPS, hard to know for sure. However, the actual currency impact may be different. Total revenues are expected to grow from 7% to 9% in constant currency and are expected to grow between 8% and 10% in USD at today's exchange rate. Total cloud revenue is expected to grow from 23% to 25% in constant currency and 24% to 26% in USD. Non-GAAP EPS is expected to grow between 6% to 10% and be between $1.42 and $1.46 in constant currency, and non-GAAP EPS is expected to grow $0.08 to $0.12 and be between US$1.45 and $US1.49 in USD. My EPS guidance for Q2 assumes a base tax rate of 19%. However, onetime tax events could cause actual tax rates to vary. And with that, sorry, it was so long. And with that, I'll turn it over to Larry for his comments. Lawrence Ellison: Thank you, Safra. Today, Oracle has 162 cloud data centers, live and under construction throughout the world. The largest of these data centers is 800 megawatts, and it will contain acres of NVIDIA GP clusters able to train the world's largest AI models. That's what's required to stay competitive in the race to build one, just one of the most powerful artificial neural networks in the world. The stakes are high and the race goes on. Soon Oracle will begin construction of data centers that are more than a gigawatt. Building giant data centers with ultra-high apartments RDMA networks and huge 32,000 node NVIDIA GPU clusters is something that Oracle has proven to be very good at. It's the reason we're doing so well in the AI training business. It's important to remember that we first developed those high-performance RDMA networks to interconnect our Exadata CPU cluster hardware that powers our Exadata database cloud service. The Oracle Database Cloud service running on Exadata and Exascale RDMA clusters, provide an order of magnitude, better performance, better scalability, better reliability and better security than other databases. And it's still the world's only autonomous, fully self-driving database. Our large and loyal customer base understand and appreciate the many technical advantages of using the Oracle database. And those customers wanted us defined a way to make the very latest and best Oracle technology available on other clouds in addition to OCI. We found a way. With today's AWS announcement, our customers will be able to use Oracle's latest Exadata and Exascale RDMA clusters with the latest versions of our database software, from within the Microsoft Azure cloud, from within the Google Cloud and from within the AWS cloud. This will enable customers to use the Oracle database anywhere and everywhere. That has always worked well for our customers and for our database business. We believe our cloud partnerships with AWS and Microsoft and Google will turbocharge the growth of our database business for years to come. Back to you. Ken Bond: Thank you, Larry. Sarah, if you could please poll the audience for questions. Operator: Thank you. [Operator Instructions] Your first question comes from the line of John DiFucci with Guggenheim Securities. Your line is open. John DiFucci: Thank you. Larry and Safra, I mean there's a lot of good stuff here, but I'd like to ask a question on margins. You keep putting up strong cloud numbers, especially the OCI numbers that look -- when you give the guidance and you look at what you have to do to hit them, they look really difficult to do to say the least. We also assume that upside to RPO and you've pointed out, Safra, the sequential increase. I think the last time there was a sequential increase was because you bought Cerner and they just added RPO because of that. I assume a big part of that's OCI too. You mentioned it's cloud, three quarters of it. So that indicates there's more to come, right? So given the mix of business continuing to lean into that lower margin OCI, and I know you have -- that's changing over time, but it's still lower margin today, how should we think of overall margins versus profit for the entire company going forward? Safra Catz: Okay. Let me start with this and maybe then Larry can add on. So first of all, I want to remind you that, that -- remember that third leg of the stool I mentioned, which is our database and autonomous database, that is also part of OCI. And that is beginning to really expand. And our multi-cloud agreements, again, will help OCI gross margins. So that you know, gross margins even this quarter as a percentage increased, regardless of the fact that we have a lot more OCI. And so our business is really only now starting to get real scale. And we have built OCI in a way and Larry can really expand on it, where it is extremely automated. The management of it is very automated. And our whole rollout as it grows, we make more money. And as much as percentages are great, and again, our operating margin percentages continue to increase. And OCI includes not only base storage and compute and GPUs, but it also includes a lot of other capabilities, including the database, which have excellent margins, too. And of course, as you mentioned, our SaaS business, again, an excellent and at scale business, even that business benefits from our expansion in OCI. And once again, even its high margins continued to improve this past quarter. Larry, I don't know if you want to... Lawrence Ellison: I'd like to. So let's start with SaaS. As we go to autonomous database, we get tremendous efficiencies. We're moving Fusion and NetSuite to Autonomous database as we speak. We've decided everything needs to move to autonomous for two reasons really. First reason, when you have a completely autonomous database, there is no -- the DBA, the database administrator is a robot. There is no human labor associated with managing the Oracle Autonomous Database. Now okay, that's obviously a cost savings. But more importantly, with no human labor, there's no human error. It's a huge security advantage we have over our competitors. We don't -- there's no mistakes to be made. There's no human labor. It's all automated. And the potential -- when you have everything completely automated, and it's also truly elastic. I'm not going to go into exactly what that means. But it means that you've got a job running that certainly needs 500 microprocessors, you get those 500 for the 3 minutes you need it, and then you return them to the pool. So that's very different than how other databases work, which they may call -- the cloud itself may be elastic in places, but their databases are typically not elastic. Autonomous is. So we use a lot less hardware. It's a lot faster. It's a lot more efficient. It's fully automated, no human labor, much more secure. And the margins for the autonomous database business is much higher or much higher than the traditional Oracle business. And I think those margins are -- I mean, they're stunningly high. Around the same margins as SaaS which are also stunningly hard margin because SaaS runs primarily on that autonomous database. So we use hardware very efficiently. We use labor sparingly because labor is a security risk. When people are actually doing things manually, it's a security risk, and it slows down our ability to expand. Every Oracle data center from the largest to the smallest are identical in features and functions, they only vary by scale. That means we have one suite of automation software that automates all of this. Nobody else does this. No one has that level of automation, that level of autonomy. It allows us to get much better margins in our database business, in our SaaS business and the rest of our cloud business. Our clouds are more automated, so we have very low labor costs. Our networks are much more efficient, the RDMA networks run so much faster. If you run twice as fast, our costs go down by half. And our networks are much faster than the other clouds. So we think our potential as we scale, our potential to deliver much better margins they're currently delivering are very real. John DiFucci: So is it safe for me to assume that then the upside you keep putting up and you hopefully will continue to do, will add profit and that profit will actually increase as a percentage of the margins will also increase over time? Lawrence Ellison: I believe so. And I believe, for example -- I mean I think you'd find different points of view from different engineers as we move Fusion to Autonomous Database. I think the cost savings -- our cost -- our cloud cost savings will be around 50%. That's what I believe. Now it might be 40%, it might be 35%, but there will be huge cost savings from where we are now, and that's across the entire base of Fusion customers. So that's just one example of how we're using faster networks, faster databases, more automation to make our products more secure. And I keep emphasizing the security is really the primary goal. But as a second order effect, we also end up spending a lot less money to run those data centers. John DiFucci: Great. Thank you, Larry. Thank you, Safra. Operator: Your next question comes from the line of Mark Murphy with JPMorgan. Your line is open. Mark Murphy: Thank you very much and congrats on the great performance. Larry, how do you envision the market transitioning from the AI training phase to the AI inferencing phase? There's some debate out there on whether we have an imbalance or a bubble on the front end of the curve because training is compute intensive and then perhaps it recalibrates differently somehow for the inferencing stage, which might be less intensive? Or do you see the potential for high growth kind of all the way through both of these phases? Lawrence Ellison: Well, a lot of people think that, Mark, I send a kid to college and then I'm done. They're training ever. I got four years of training, and then I can put the kid to work and they'll be doing inferencing. And that's not true. This race goes on forever, to build a better and better neural network. And the cost of that training gets to be astronomical. When I talk about building gigawatt or multi-gigawatt data centers, I mean these AI models, these frontier models are going to -- the entry price for a real frontier model from someone who wants to compete in that area is about $100 billion. Let me repeat, around $100 billion. That's over the next four, five years for anyone who wants to play in that game. That's a lot of money. And it doesn't get easier. So there are not going to be a lot of those. I mean we -- this is not the place the list who can actually build one of these frontier models. But in addition to that, there are going to be a lot of very, very specialized models. I can tell you things that I'm personally involved in, which are using computers to look at biopsies of slides or CAT scans to discover cancer. Also, there are also blood tests for discovering cancer. Those tend to be very specialized models. Those tend not necessarily use the foundational the Groks and the ChatGPTs, the Llamas and the Geminis, they tend to be highly specialized models. Trained on image recognition on certain data, I mean, literally millions of biopsy slides, for example, and not much other training data is helpful. So that goes on, and we'll see more and more applications like that. So I wouldn't -- if your horizon is over the next five years, maybe even the next 10 years, I wouldn't worry about, hey, we've now trained all the models we need and all we need to do is inferencing. I think this is an ongoing battle for technical supremacy that will be fought by a handful of companies and maybe one nation state over the next five years at least, but probably more like 10. So this business is just growing larger and larger and larger. There's no slowdown or shift coming. Mark Murphy: Thank you very much. Lawrence Ellison: Let me say something that's going to sound really bizarre. Well, I probably -- you'd probably say, well, he says bizarre things all the time. So why is he announcing this one? It must be really bizarre. So we're in the middle of designing a data center that's north of the gigawatt that has -- but we found the location and the power place. We look at it, they've already got building permits for three nuclear reactors. These are the small modular nuclear reactors to power the data center. This is how crazy it's getting. This is what's going on. Operator: Your next question comes from the line of Raimo Lenschow with Barclays. Your line is open. Raimo Lenschow: Just a question more on the database side on the agreements that you just announced today or that you have in place and now added with AWS. So now that we have all the hyperscaler agreements in place, how do you think about that migration movements from database workloads that are at the moment running on-premise or on cloud customer to the public cloud? I mean how should we think about that momentum? Thank you. Safra Catz: We think it going to accelerate -- no, you go ahead, Larry. Lawrence Ellison: No, no, no. I think you're right. Well, there's two things. Public cloud is very interesting and it's very important. I mean Oracle became very successful in the database business a long time ago because one of our watch words was portability. We ran on IBM main frames. We ran on Microsoft PCs. We ran on Hewlett Packard machines. And if you remember them, digital equipment machines and all sorts of computers, we ran everywhere. And that was very important so our customers could run the Oracle database in any environment. And it's obviously -- and we had to find a way to actually make the best versions of our database, the Exadata, Exascale versions of our database available in other people's clouds. And what we're able to do is basically get OCI small enough that we could embed an OCI data center within Microsoft Azure or an OCI data center within Google or AWS or wherever we had to put it where it could be fully autonomous, where we could use Exadata and Exascale clusters. We actually were able to do that. It was not technically easy, but we did it. In doing that and miniaturizing our Oracle data centers, I mentioned earlier that all of our data centers are the same except in scale. The biggest one is 800 gigawatts right now, bordering -- getting close to 800 megawatts, excuse me, we're getting close to 1 gigawatt. The smallest are about 150 kilowatts, and we're going to get down to 50 kilowatts. What that means is, we'll have a lot of companies, medium large-sized companies that will decide to have an Oracle private cloud. I mean it's still -- there's no difference between our private cloud and the public cloud. They are identical. They're absolutely identical. And a bunch of people have Oracle -- have a private cloud, a bunch of industrial companies, Vodafone has six Oracle private clouds, for example, to run their workloads. But they're becoming so inexpensive that anyone can decide, okay, I want to move to the cloud. I want all the advantages of the cloud, but I want to make sure that I'm the only one in the cloud. I don't want any neighbors or I want only approved neighbors. I don't want someone with a credit card moving in. I'm just paranoid about security where I've got government regulations I have to adhere to. So we think that obviously, moving with Oracle database available in AWS, Microsoft and Google is incredibly important. And Safra said it right, I mean it will absolutely accelerate database growth in the public cloud. But we expect that private clouds will greatly outnumber public clouds as companies decide they want the Oracle Cloud behind their firewall in their data center with no neighbors. And we -- because we've gotten our data center -- our data centers are so automated and they're scalable, and they're all identical in terms of function, we're organized. So we can -- actually, we have 162 data centers now. I expect we will have 1,000 or 2,000 or more data centers -- Oracle data centers around the world, and a lot of them will be dedicated to individual banks or telecommunications companies or technology companies or what have you or nation states, sovereign clouds, all of this other stuff. So we think -- it's hard for me to predict whether the private clouds or the public cloud which is going to be bigger? I don't know. The good news is we win either way. Raimo Lenschow: Okay. Interesting. Very interesting. Lawrence Ellison: Next question, Shara. Operator: Thank you. Your next question comes from the line of Mark Moerdler with Bernstein. Your line is open. Mark Moerdler: Thank you so much and congratulations on the quarter. Very impressive both the quarter and the guide. We've seen a lot of focus on the model training side, but less on applications and inferencing in the rest. You guys have a lot of expertise in the market and in the industry. You already have traditional AI sprinkled throughout all the Oracle products and capabilities. But where do you see the monetizable value of GenAI on the app side? How long do you think it's going to take for GenAI to be a meaningful revenue, not just for Oracle, but software in general, on the app side, not on the training side? Thank you. Lawrence Ellison: Well, let me -- I'm sorry, I'm monopolizing these answers. I apologize. But let me start with health care everything from us helping doctors diagnose different diseases. When someone goes in to get a sonogram, and I've seen the nurses and the technicians and the doctors actually measure the baby skull and measure the baby's spinal cord to see how -- it's utterly ridiculous. The computer should do all of that. And if there's an umbilical wrapped around the fetus the computers should discover all of that, and now it should all be recorded. The doctor could get assistance from a computer doing all of this stuff. Looking at the plaque and coronary arteries, all should be done that way. Already, we've delivered when a doctor visits a -- gets ready to visit a patient, we prepare a summary for the doctor. We use AI to look at the electronic health records, the latest labs that might've been just a few hours ago. And let the doctor know whether there's stability or disease progression or whatever the doctor needs to know prior to the consultation with the patient. That summary is created by AI, human readable summary. Then AI listens to the consultations between the doctor and the patient. This is already delivered. This is already out there. They'll deliver -- they'll listen to the consultation of doctors with the patient. If the doctor orders a prescription, the AI checks to make sure the prescription is accurate and enters the prescription. The AI updates the electronic health records. The AI transcribes and distributes the doctors' orders, all from listening to the conversation. The doctor then gets a draft at the end of the conversation that the doctor can quickly review and approve. And then the prescriptions are filled and the orders are executed and the electronic health records are updated. We're already doing all of that. But I can go on. In health care, we need so many things from reading of X-rays to just the user interface. Our user interface is so different than Epic's. I was at Stanford with my son at one time and it took three people, three different positions to actually be able to find his X-rays. This is how you find the X-rays for Larry Ellison. You say, Oracle, please show me Larry Ellison's latest X-ray. It's a voice interface. You just ask for them. How do you log on? Well, you look at the computer and it recognizes your face. It recognizes your voice, that knows you're the doctor and you're authorized to look at that, all the authorization is done with AI. When are we going to start monetizing it? Well, all of Cerner is the monetization. The fact that we can dramatically expand our health business is because it's based on AI. It is -- AI is just -- I don't know how to describe it. I mean the best way to describe it. It's not something you sell separately. It's the diagnostic system. It's the electronic health record system. It is -- the pharmacy system, this prescription system, the user authentication, the log-in system, it's all AI. And I know people think it's a separate thing that, "Oh my God." And I hear a bunch of applications come say, "Oh, we've now got AI agents we'll charge for separately. I mean -- it's -- our applications are going to be primarily AI applications, everything. How do you charge separately for everything I really don't -- I find it bewildering when I listen to them talk. I don't understand what they're saying. We wonder -- and I'll stop there. Mark Moerdler: Larry, I think you are the first person to explain it that way. Thank you. It makes a lot of sense. Operator: Thank you. Your next question comes from the line of Derrick Wood with TD Cowen. Your line is open. Derrick Wood: Great. Thanks. And I will echo my Congratulations. Safra, Larry, you guys have had this big inflection in RPO growth over the last few quarters. Could you update us on how you're feeling about supply availability and your ability to stand up data center infrastructure in a time-efficient manner in order to move from contract signing to consumption and convert backlog into revenue? And I guess, are you doing anything different today than, say, a year ago to try and help accelerate these time lines? Safra Catz: Okay. I'm going to start and Larry can finish. So we have enormous demand that is absolutely true. And I will say that demand is still outstripping supply. But I can live with that because we are laying out a lot of supply. As you can see, in the revenues and you're going to -- and you can see that in the guidance and my commitment for this next year, and we'll be talking about beyond on Thursday, Financial Analyst Day. We have made a number of changes, including what Larry mentioned earlier, which is the automation of the setting up and laying down our data centers. However, there are -- because demand is so large, we do have to get in different places. As I told you I don't know, a couple of quarters to grow. We made the decision instead of picking up small pieces to actually wait in some cases, to pick up larger locations. And that is really playing out very, very well for us. But we are really moving and growing in so many places because it's not only public cloud rollouts, but it is also private clouds, which are in immense demand, national security regions, immense demand. And really, we are moving as fast as we can, and automation is the thing that has helped us lay this out. And the fact that it is -- we have an everything everywhere means, nothing is unique. Everything is the same, and that cannot be set by our competitors, and that helps us in our rollout. Lawrence Ellison: I just want to emphasize what Safra just said. Our private clouds are identical to our public clouds, except for the fact they might only have one tenant, and it might be in a building that you own. Besides that, they're identical. We own the hardware. We manage the hardware for you. It just happens to be in a building you own, and you're the only one that can get in. So that's a very different situation than all of our competitors, and it's fully automated. So we're prepared to manage thousands of data centers. By the way, I would compare that to Elon Musk, Starlink, where he's got, I think, close to 7,000 satellites in the sky now, 6,800. How do you manage -- these satellites constantly maneuver. They don't -- they're not geosynchronous satellites. Their low earth orbiting satellites. So they're constantly flying around and changing location. How do you manage 7,000 spacecraft flying around? Well, let me tell you, computers, it's got to be fully automated or it's not going to work. You can't have thousands even hundreds, I would say, data centers you can't have, but you certainly can have thousands of data centers unless they're fully automated. And the only way you could automate something is to make them all the same. You can't automate 25 different things. So that's one thing. The other thing I'll point out, and I think it's interesting about Oracle, that some of the most senior people in our management team are experts in building buildings, building electric power plants and electric transmission systems. Because building these data centers is just that. You can't just build a data center. You also have to account for the energy and the transmission of the energy from where it's generated to the data center. And of course, the most efficient way to do this is actually build the generation -- the power generation plant right next to the data center. So you transmit over the short -- over the shortest distance. And we actually have very senior people who are very -- actually come from the utilities industry, as strange as that sounds, that are expert in doing this and helping us build these gigantic projects. Again, I'll harken to Elon Musk. One of the hardest jobs he had in building Tesla was when he built the Austin plant, he had to build the largest building ever been built by human kind anywhere at any time. And you want to know the largest building ever built? It certainly is not the Pentagon. It's not the NASA building for the space shuttle. Largest building is the Tesla plant. And so you have to be the contractor of that plant. You have to be able to build those things and then fill it with robots that then build your cars. So you got to build the building, get the power, build all the automation systems, which is the hardest part about building the cloud or building automation system, build all the automation systems, so it works efficiently and reliably and cost effectively. That is -- and we have some really interesting people here with a very different experience base than we had even five years ago. Q – Derrick Wood: Thank you very much. Operator: Your final question comes from the line of Brad Zelnick of Deutsche Bank. Your line is open. Brad Zelnick: Great. Thanks so much for fitting me in. And I'll just start by saying I can't remember a Q1 ever being this exciting. Larry, we've talked about a lot of the reasons why you win in cloud infrastructure, especially by addressing areas of the market where your competitors can't even reach. But in light of many high-profile cyber incidents lately, can you talk about how being more secure, not just in being so highly automated as you've already discussed, but how is being more secure helping to win some of these very large OCI deals especially in the U.S. and other governments around the world? Thank you. Lawrence Ellison: Well, I couldn't thank you more for the question because I have two things I'm talking about a Cloud World on Tuesday. One is multi-cloud and the other is security. And let me announce right here, we're done with passwords. The idea is utterly ridiculous. They're easily hacked. The more difficult they are to remember, the more likely you are to write them down, the more likely they are to be stolen. Everything done to make passwords better has made them worse. It's a terrible idea. So we're getting rid of passwords entirely. This is the way log on is going to work. I'm going to type in larry.ellisonoracle.com, the computer is going to look at me and say, okay, hi, Larry, we're done. Why would I type in? Safra can recognize me. My kids can recognize me. You're telling me a computer can't recognize me and log me in. This is ridiculous. So we're not -- no more passwords. Those have got to go. There are other things we can do to secure network communications and we have this new technology actually goes live in our cloud this week called Zipper, it's called Zero Trust Packet Routing, that I'll be talking about. And it guarantees the -- while biometric authentication will guarantee that you are who you say you are when you log in. So we'll know, so users -- fraudulent users will find it very difficult to infiltrate our systems with biometric authentication. And by the way, there are keys on the keyboard that will look at your fingerprint. It depends on how -- if you want face recognition plus fingerprints, all voluntary. You don't have to do it if you don't want to. But I certainly -- a whole bunch of people prefer biometric authentication. That's why Google Pay is popular and Apple Pay is popular. So it's from my convenience. I don't want to remember passwords. Look at me and recognize me and log me in. Don't ask me to type in some stupid 17 letter password that someone can steal. There is that. The Zero Trust packet routing actually authenticates you from the user all the way to the data. And we've greatly simplified network security by separating it from network configuration. That's another thing I'm going to talk about. But by the way, let me go back to automation. Automation is more of a security issue than it is an efficiency issue. Automated cars, self-driving cars will kill a lot fewer people every year than human drivers. They don't get drunk. They don't go 135 miles an hour. Automation is a safety issue and a security issue. All -- almost all cyberattacks begin the same way with human error. If there is no Oracle database administrator as there isn't with the autonomous database, the data -- the DBA cannot make a configuration mistake that exposes your data. You can't have a human being involved if you want to make your data secure. Autonomy is a huge portion of it. And the fourth piece of security that I'll talk about is code generation. When you generate a computer program rather than hand write it in Java, hey, we're the owners of Java or I don't know. Maybe this supreme court said, we're not the owners of Java. I'm not sure. I'm not sure what it even means. I'm not a lawyer. But if the computer generates the program rather than a human being writing it, the computer will not generate security vulnerabilities. They will not generate something called state which means your application can't fail over automatically in case your data center loses power or burns down or something like that. Code generation is a huge portion of next-generation security. Zero Trust packet routing is another important one, biometric authentication and automation are the four key attributes to winning the cyber war. It's going to be our defensive robots against their robots, and we have to have better technology on the defensive side than they currently have on the offensive side because they are winning. I mean every year, there are more -- there's more successful cyberattacks. And you know what the FBI says when you're attacked? Pay the ransom, there's something we can do about it. Well, that's not very encouraging. I have an idea. Let's keep the ransom money, but implement next-generation technology that makes it much harder for cyber criminals. And by the way -- and it's not so bad with cyber criminals now compared to what state actors have the ability to do. So we have to harden our computer systems. We have to make them more secure. The good news is there is a whole new generation of AI-based security systems like biometric authentication, like zero-trust packet routing that we can use to stop these attacks, but we have to actually deploy the technology. Brad Zelnick: Amazing, Larry. Look forward to learning more this week in Vegas. Ken Bond: Thank you, Brad. Thank you, Larry. 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 Sarah for closing. Operator: Thank you. This concludes today's conference call. We thank you for joining. You may now disconnect your lines.

Operator: Thank you. Good day, everyone, and welcome to Oracle's Fourth 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. 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. Safra Catz : Thanks, Ken, and good afternoon, everyone. Clearly, we had an absolutely incredible quarter. As you know, Oracle's Q4 is known for customers purchasing large software license contracts to power their businesses. But because of the pivot to the cloud, this Q4 was powered by the enormous demand for our cloud services. And they showed up in RPO or Remaining Performance Obligations. In Q4, Oracle signed the largest sales contract in our history, led by huge demand for training large language models, as well as record levels of sales for OCI, autonomous, fusion, and net suite. RPO was $98 billion, up $18 billion from Q3, and up 44% year-over-year from $68 billion last year. And we are trading one-time non-recurring license revenue in return for much bigger strategic customer commitments for multi-year cloud revenue, from which we expect to further accelerate our revenue growth rates. This is exactly what we've been targeting, and it bolsters my confidence that our overall revenue, earnings, and cash flow performance, as well as our growth rates, will only get stronger and accelerate. In short, this Q4 marks the full emergence of our high growth cloud businesses. Now, I started talking about this tipping [0.4] (ph) years ago, and you've seen it continue to play out in our results since then. As a reminder, we accelerated our US dollar revenue growth rate from negative one in fiscal year [2020] (ph) to plus eight this past year if you exclude Cerner. In addition, EPS has grown at a 10% compounded annual growth rate over that same period. And both operating cash flow and free cash flow, which of course we report on a trailing 12 month basis, were each declining 10% four years ago. This year, they grew 9% and 39% respectively. Now customer conversations are now absolutely fully focused on our cloud services as the results clearly show. So let me give you just a couple of examples -- a few examples. First, as you saw, OpenAI selected Oracle to run deep learning and AI workloads on Oracle Cloud infrastructure. Like many others, OpenAI chose OCI because it is the world's fastest and most cost effective AI infrastructure. In total, we signed over 30 AI contracts for over $12 billion this quarter, and nearly $17 billion this year. Second, we continue to expand our work helping companies use our cloud applications portfolio to reinvent their businesses. As an example, a very large enterprise tech company signed a contract in Q4 for over $600 million where we will be helping them transform their operations with Fusion to enable them to become more agile, faster growing, and more profitable. May I say in the process, we will replace out many of our competitors product. These cross-pillar cloud deals or suite deals, focus on business process reengineering that incorporate multiple cloud applications that no one else can offer. And I want to point out, by the way that today is day 11 of our new fiscal year and we are once again, announcing our results not only for the quarter but the year and giving guidance, making us faster than any other public company by a launch. We are able to do this because of Fusion applications and that is why companies are choosing Fusion and our wonderful teams are showing them the way. And third, I'm pleased to announce that we've signed another multi-cloud partnership this time with Google. OCI and Google Cloud Network interconnect is available immediately in 10 regions, and we will be live with Oracle database at Google Cloud in September, where customers can get direct access to Oracle Database Services running on OCI, deployed in Google Cloud data centers. So what's driving this? Well, it is all about our comprehensive, highly differentiated and secure cloud offering. Customers have progressed from their initial curiosity about Oracle Cloud into full-blown rollout. We have the most secure, complete and cost-effective set of enterprise applications and infrastructure cloud technologies of any vendor. Not only are our cloud technologies vertically integrated to work together, but we offer flexible deployment models like public cloud, multi-cloud, sovereign clubs, dedicated cloud or any other way our customers ask us to deliver. And we also offer Oracle Alloy, where Oracle partners become cloud providers offering customized cloud services alongside the Oracle Cloud. Now I'm now going to dive into the details of Q4 and finish my prepared remarks with how this strength and momentum will impact fiscal year 2025 and beyond. Okay. So let's start. In Q4, the dollar strengthened from the time of my Q4 guidance, so we saw a 1% currency headwind to total revenue and a $0.01 currency headwind to EPS. As usual, I'll be discussing our financials using constant currency growth rate because this is how we manage the business. Total cloud revenue that is SaaS plus IaaS, excluding Cerner, was $4.7 billion up 23%, including Cerner, total cloud revenue was up 20% at $5.3 billion. And SaaS revenue of $3.3 billion, up 10% and IaaS revenue of $2 billion, up 42% on top of last year's 77% growth. Total cloud services and license support for the quarter was $10.2 billion, up 10%, driven again by our strategic Cloud Applications, Autonomous Database and OCI. Application subscription revenues which includes product support were $4.6 billion and up 6%. Our strategic back-office SaaS applications now have annualized revenue of $7.7 billion and were up 16%. Infrastructure subscription revenues, which includes license support were $5.6 billion up 13%. Infrastructure cloud services revenue was up 42%. Excluding legacy hosting, OCI Gen2 infrastructure cloud services grew 44%, with an annualized revenue of $7.4 billion. OCI consumption revenue was up 53% were it not for continuing supply constraints, consumption growth would have been even higher. Database subscriptions, which includes database license support, were up 6% and highlighted by cloud database services, which were up 26% and now have an annualized revenue of $2 billion. Very importantly, as on-premise databases migrate to the cloud, either to OCI directly or using database at Azure or database at Google Cloud. We expect these cloud database services will be that third leg of revenue growth alongside OCI and strategic [SaaS] (ph). Consistent with our strategic direction and reflecting customer preference for cloud services, software license revenues were down 14% and to $1.8 billion. So all in, total revenues for the quarter were $14.3 billion. That's up 4% if you include Cerner, up 5% excluding Cerner. Shifting to margins. The gross margin for cloud services and license support was 77%. This is a result of the mix between support and cloud, in which cloud is growing much faster than support. The gross margin percentages for software support and SaaS are consistent with last year, while IaaS gross margins improved substantially. Gross margins will go higher as more of our cloud regions fill up. We monitor our expenses carefully to ensure gross margin percentages expand as we scale. To that point, though the gross profit dollars of cloud services and license support grew 8% in Q4. Non-GAAP operating income was $6.7 billion, up 9% from last year. The operating margin was 47%, up from 44% last year, as we continue to drive more efficiencies in our business. Looking forward, as we continue to benefit from economies of scale in the cloud, we will not only continue to grow operating income, but we will also expand the operating margin percentages. The non-GAAP tax rate came out over 1% higher than my guidance at 20.1% and non-GAAP EPS was $1.63 and GAAP EPS was $1.11 in USD. As a reminder, the non-GAAP tax rate last year was 9.2%, and this had an adverse effect on this quarter's EPS growth. Non-GAAP pretax income grew 14% in constant currency. So you can figure out that had we had the same tax rate last year as this year, net income would have grown 14% and EPS would have been up 12% in CD, 11% in USD. For the full fiscal year, total company revenue was $53 billion up 6%. Total cloud services and license support revenue, which is entirely subscription-based and accounts for nearly [3/4] (ph) of total revenue was $39.4 billion, up 11%. Total application subscription revenues grew 9% and infrastructure subscription revenue grew 13%. Total cloud services, excluding Cerner, were up 26% to [$17.2 billion] (ph). SaaS revenue, excluding Cerner was up 13% to $10.4 billion for the year. IaaS and cloud infrastructure revenue was up 50% to $6.8 billion for the year, with consumption revenue up 66% from last year. Non-GAAP EPS for the full year was $5.56 in USD, up 9% in USD and the full year operating margin percentage was 44%, up from 42% last year. At quarter end, we had nearly $10.7 billion in cash and marketable securities, the short-term deferred revenue balance was $9.3 billion, up 4%. Over the last four quarters, operating cash flow was $18.7 billion, up 9% and free cash flow was $11.8 billion, up 39%. Capital expenditures were $6.9 billion. As I mentioned our remaining performance obligations, or RPO is now $98 billion, up 44% in constant currency and the portion excluding Cerner, if you're curious was up 60%. We signed several large deals in this quarter, and we have many more -- many, many more in the pipeline. Approximately 39% of total RPO is expected to be recognized as revenue over the next 12 months. And this reflects the growing trend of customers wanting larger contracts as they see firsthand how Oracle Cloud services are benefiting their businesses. Now while we spent $3.5 billion on CapEx this quarter, the $2.8 billion shown in the cash flow statement is lower simply, as a result of timing of payments. We are working as quickly as we can to get cloud capacity built out given the enormity of our backlog and pipeline. At this moment, we have 76 customer-facing cloud regions live with 47 public cloud regions around the world and another 19 being built. We have 11 database at Azure sites live and more locations with Microsoft coming online soon. We will have 12 Oracle database at Google Cloud sites live this year. We also have 13 dedicated regions live and 15 more planned. We have several national security regions and EU sovereign regions live with increasing demand for more of each. And finally, we already have two alloy cloud regions live with 11 more plant. Of course, we also have many, many, many cloud customer installations as I mentioned earlier, the sizing and flexibility and -- the size and flexibility and deployment optionality of our cloud regions continues to be incredibly advantageous for us in the marketplace. This quarter, we purchased 1.25 million shares for a total of $150 million. In addition, we paid out dividends of $4.4 billion over the last 12 months, and the Board of Directors today declared a dividend of $0.40 per share. Before I discuss my guidance for Q1 and fiscal 2025, I do just want you to have a couple of notes. The first is that in Q4, we decided to exit the advertising business, which had declined to about $300 million in revenue in fiscal year 2024. Also, I will no longer breaking out the Cerner business in my results. And even though it will begin to grow modestly throughout the year in both revenue and operating margin, it's not necessary to break it out anymore and because it is now operating in a growth mode. Now to guidance. Throughout fiscal year 2025, I expect continued strong cloud demand to push Oracle sales and RPO even higher and result in double-digit revenue growth this fiscal year. I also expect that each successive quarter should grow faster than the previous quarter as OCI capacity increases to meet demand. We believe our momentum, our current momentum will continue as our pipeline is growing even faster than bookings and our win rates are going higher as well. I expect fiscal year 2025 cloud infrastructure services to grow faster than the 50% we reported this year. CapEx In fiscal year 2025 will probably be double what it is in fiscal year 2024 -- what it was in fiscal year 2024. Okay. Beyond this fiscal year, I remain firmly committed to our fiscal year 2026 financial goals for revenue, operating margins and EPS growth. However, given our strong bookings results, I believe some of these goals might prove to be too conservative given our momentum. We are going to provide you a more fulsome update on all of this at the Financial Analyst Meeting at Oracle Cloud World in Las Vegas in September. Okay. Let me now turn to my guidance for Q1, which I'll review on a non-GAAP basis. Now if currency exchange rates remain the same as they are now, currency should have a negative 1% effect on my revenue and either $0.01 or $0.02 negative on EPS in Q1. However, as you all know, actual currency impact may be more or less, I just can't get that now. Total revenue for Q1 are expected to grow from 6% to 8% in constant currency and using the currency situation as it is now, they're expected to grow from 5% to 7% in USD. Total cloud revenue is expected to grow from 21% to 23% in constant currency and 20% to 22% in USD. Non-GAAP EPS is expected to grow between 11% to 15% and be between $1.33 and $1.37 in constant currency. Non-GAAP EPS is expected to grow between 10% to 14% and be between $1.31 and $1.35, but this time in USD. My EPS guidance for Q1 assumes a base tax rate of 20%. And as always, one-time tax events could cause the actual tax rates to vary from my guidance. Okay. I know that was long. But with that, let me turn it to Larry for his comments. 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: NVIDIA, Microsoft, Google, X AI, Open AI, coherent dozens more. In other words, the world's largest cloud companies and the world's most successful and accomplished AI companies choose to use Oracle cloud services and data centers. So can -- so why are they working with Oracle, because Oracle's Gen 2 cloud infrastructure is different. OCI's area network moves data much faster. And when you charge by the minute, faster also means less expensive. OCI trains large language models several times faster and at a fraction of the cost of other clouds. OCI’s Critical cloud software, the operating system and the database are fully Autonomous. At OCI, human beings do not run the operating system or the database, Autonomous software robots do. No one else has this level of autonomy in the cloud. Eliminating human labor eliminate human error. Almost all cloud security breaches begin with human error, eliminating the possibility of human error is the only way to make certain your cloud data is not stolen. That's it. The most important technology companies in the world are using OCI because it's faster, less expensive and more secure. Easy to say, not easy to do. Back to you, Ken. Ken Bond: Thank you, Larry. Chris, if you could please poll the audience for questions, we'll begin the Q&A portion of the call. Operator: Thank you. Our first question comes from Raimo Lenschow with Barclays. Please go ahead. Raimo Lenschow: Perfect, thank you. Congrats from me. These are very impressive numbers. Safra, can you try to help us bridge the strong RPO number and how we need to think about feeding that into revenue? Is that just the capacity function? Or is there anything on the customer side that you need to deliver on the technology side you need to deliver. Just help us to bridge the gap on those. Thank you. 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. Raimo Lenschow: So it's just a mechanical problem in a way. 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. Raimo Lenschow: Great. Very impressive. Thank you. Operator: Your next question comes from Brad Zelnick with Deutsche Bank. Please go ahead. Brad Zelnick: Great. Thank you very much and congrats from me as well. Larry, it's great to see the amazing momentum in OCI, especially given it's a competitive market and the leading names in AI are coming to you, wanting to partner with Oracle. Can you talk about the innovation road map for OCI and your AI services in particular? And why we should expect Oracle to keep on winning not just today, but over the next several years to come in this market? 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. Brad Zelnick: Amazing, thank you so much Larry. Operator: Next question comes from Siti Panigrahi with Mizuho. Please go ahead. Siti Panigrahi: Thank you. Larry and Safra, it's impressive to see how fast you ramped OCI as you're now available in 11 data centers. And then now with this Google partners, we'll have Oracle database at Google Cloud. So I have two questions: one is, as you embark on offering this multi-cloud flexibility to customer, when can we see a similar partnership with AWS? And second is, how should we think about these partners is helping your customers migrate their on-prem Oracle workloads to cloud? Safra Catz: I don't know, Larry you wanted – started with that. Larry Ellison: I guess I can start. Well, we believe in giving customers choice. And customers want choice. Customers are using multiple clouds, not only infrastructure cloud, but they might have sales force applications or Workday applications – or they use multiple cloud in their business right now. So it's very important, we think that these -- that all the clouds become interconnected. So we're thrilled to have the connection with Microsoft and be building OCI data centers inside of it -- right inside of Azure. So the computers are next to each other to minimize network costs and network latency, which is all good things. We're doing the same thing with Google. We would love to do the same thing with AWS. We think we should be interconnected to everybody. And that's what we're attempting to do in our multi-cloud strategy. I think, that's what customers want. So I'm optimistic that's the way the world will settle out. We'll get rid of these fees for moving data from cloud-to-cloud and all the clouds will be interconnected, and customers can pick their favorite service from their favorite cloud and mix and match whatever they want to use and do it easily and seamlessly. Siti Panigrahi: Thank you. Operator: Your next question comes from the line of Alex Zukin with Wolfe Research. Please go ahead. 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. Larry Ellison: I'm going to take a swing at this one. We can -- every medium-sized on-premise customer that Oracle has could have a private -- full Oracle cloud where they have no neighbors. They are the only user of that Oracle Cloud, and we can install that in their existing data centers. Nobody else can do that. You have to move to the public cloud. Now we have public cloud, we have a lot of public cloud regions. We love the public cloud. But if you're very conservative and you want to absolutely maximize security and that's important to you. We can put in a cloud, a full Oracle Cloud, and we run it. We pay for the heart -- again, it's an Oracle region. We put in Oracle cloud region and let me just make up a name. Samsung, we could build a cloud region for Samsung. In fact, two cloud regions is for Samsung. We could do two cloud regions making up names, General Motors, Ford, any company. Those are pretty big companies, but much smaller companies as well. So we're the only ones that give you an option to have the full capability of a public cloud run by Oracle, all of our services, every single 1 of our services, you don't pay for the hardware, you just pay for what you use, put that model directly on your premises. And you can use it and no one else is in that cloud. We can do that. No one else can do it. We can put them on ships and on submarines, no one else can do it because we can start very, very small. All Oracle clouds are identical, except for scale. All Oracle clouds have all Oracle services. All Oracle clouds are fully automated because they're identical. They're fully automated. So one of the reasons we took a little bit longer to get our cloud out was because we built something quite different than what our competitors have. And that allows us to go from very small to very large, using the same automation software. I think some of our competitors, they're large data centers, some are quite different than other data centers. They might have different -- some services might be available on some data centers and not in others. They're not -- they did a very different approach to what we did. We had the advantage of seeing what all the other guys did and we took a different road. It took us a bit longer, but we think we're better off in terms of security. We're better off in terms of scalability. By the way, that means the ability to go down in size and up in size. It allows us to get to every corner of the globe, and provide a level of privacy for your data that other cloud providers cannot provide. 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. Alex Zukin: It also sounds like you guys have a better price in most cases. So thanks, again to [indiscernible] tough quarter. 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. Larry Ellison: One last comment -- maybe one last comment. The other thing is our cloud was designed not for hundreds of regions, but for thousands or possibly even tens of thousands of data centers and regions. That's why we had to put in a high degree of automation. There is no way we could run these data centers manually. There are too many of them, and we're building them to do fast. We couldn't hire people fast enough and train people fast enough. And the risk of them making a mistake, an error is the risk -- well, they start exposing our customers' data. So they are highly automated. It's a little bit like I apply to myself, and comparing it to the satellites that Elon Musk puts in the sky. StarLink has -- they're more -- he has more satellites than everyone else in the world combined because, again it is a very different – it is a satellite system, Starlink, that's designed for a very large number of satellites that are highly automated. And same model lots and lots of them, 100% or nearly 100% automation to run these clouds. Operator: Your next question comes from Kirk Materne with Evercore ISI. Please go ahead. Kirk Materne: Yeah. Thanks very much. I'll echo the congrats on the cloud momentum. Larry, Safra, I was wondering if you could just expand a bit on the OpenAI announcement this afternoon. Just what that entails in terms of how you'll be working with them or Microsoft? Are there certain workloads they'll be working on with you directly. Can you just give us whatever additional color you can on that deal, obviously very excited. Thanks. Safra Catz: Well. Go ahead. No, you can. Go ahead. Larry Ellison: Okay. All right. Well, we are building a very, very large data center, very big about half of a huge data center. We're building for them lots of NVIDIA chips, the new NVIDIA chips, the new NVIDIA interconnect, liquid cooled and they are primarily for training. I mean not inference things. It's we're doing masses and masses of training. And I don't know, that's what we're doing and the training goes beyond languages because now these systems are -- even the call -- even though they are called large language models, they really -- part of the proper name is probably neural networks, they're neural networks, and they're trained not just with language, but masses of images as well. For example, Oracle is very involved with taking biopsy slides and using microscopes to read biopsy slides, recording those images and then using AI to diagnose cancer from these biopsies. It is one of the projects we're working on the medical side of our business. And these large language models, strangely enough, are also looking at biopsies. They're not just reading things language. They are also looking at images and interpreting images. So that is actually a bigger and more complicated problem than understanding language. That's what's so exciting about -- again second time I mentioned Elon and Elon company. Tesla is very close to getting full service driving authorized in China. I'm not speaking at it at school. I think the Chinese government is moving along the full self-driving, self-driving in China. In order to train a car to do full self-driving, you trained on vast amounts of images because the car has to look at these images and then decide what it's going to do next. That's what it does. It doesn't speak, it responds to what it sees. That's a very different problem than answering a question posed in any language. So everyone is going to be training their models on imaging. That's a huge amount of additional data. It is a huge amount of additional training, and we are right in the middle of it. Kirk Materne: Thank you. Operator: Your final question today comes from John DiFucci with Guggenheim Securities. Please go ahead. 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. Safra Catz: Okay. I would tell you that both of them, both whether it's database at Azure or even the AI workloads as they come on board, they are all incremental to anything you saw so far in our revenues, okay? The database at Azure, those centers are just going live now. So even though we are selling quite a bit of ARR there, these are small and growing very, very fast. So the revenue in Q4 of, let's say, Azure was very small. Q1 will be 10 times as much. Q2 will be potentially 30 times as much. So it is extremely incremental to our current run rate. By the way, that is also true to -- we've already -- we have revenue -- AI revenue so far. Yes, we do, and we've been announcing those. These contracts that we are signing -- that we've signed at the end of Q3 and that are signed at the end of Q4 are so much larger in size that they will be incremental to everything you saw this past year, literally incremental added by quite a bit. So it is going to be -- this is a very exciting time, obviously. And everything is incremental to what you've seen so far because it dwarfed it in many ways. 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. Ken Bond : Thank you, John. 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 Krista for closing. Operator: Ladies and gentlemen this does conclude today's conference call. Thank you for your participation and you may now disconnect.

Operator: Good afternoon. My name is Krista, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Oracle Corporation Third Quarter Fiscal Year 2024 Earnings Conference Call. [Operator Instructions] Thank you. I would now like to turn the conference over to Ken Bond, Senior Vice President, Investor Relations. Mr. Bond, you may begin your conference. 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. Safra Catz: Thanks, Ken, and good afternoon, everyone. We had another excellent quarter with third-quarter revenue coming in as expected and EPS $0.02 above the high end of my guidance range. Now, before I get into the results of the quarter I wanted to touch on the strength of our infrastructure cloud business. OCI has emerged as the largest driver of our overall revenue acceleration growing much, much faster than our cloud competitors. Customers have figured out that by moving to OCI they can really get more while paying less, but it's not just the cost that matters to our customers. Beyond the superior price performance of OCI customers are choosing Oracle and Oracle services for multiple reasons. First, we know better than anyone what it takes to run the full stack of technology that goes into mission-critical workloads. I'm talking about running at enterprise scale with comprehensive security and unparalleled support and that's from decades of experience running the world's most important workloads and optimizing clustering technology, which is critical to artificial intelligence, workloads, and database services. Secondly, our AI capabilities are unique as they're built-in to help customers drive business outcomes. This is more than integrating generative AI across our Fusion and Industry Cloud applications and autonomous database, which we have done. It's also about enabling and refining these AI models with the customer's own data to better understand and serve their operations without them losing control of their own data. Third, we provide deployment flexibility for customers based on how they want to run in the cloud. In addition to offering public cloud services, we remain the only vendor which also offers a dedicated and complete cloud of customer, dedicated regions, sovereign clouds, and Alloy, our partner cloud so customers don't have to compromise the services they receive while meeting their deployment needs. And finally, we provide multi-cloud offerings so customers can consume our cloud services in the public cloud of their choice. We offer Oracle database at Azure with Microsoft as well as MySQL HeatWave through multiple clouds and you can expect more multi-cloud services to come. Now to Q3 results, which I'd like to point out I had the actual results on day five and signed off with my auditors days ago. So I'm just bragging a little bit but I couldn't help it, I know a lot of CFOs are pretty jealous. As I mentioned earlier, total revenue came in at the midpoint of my constant-currency guidance and EPS was above the high-end of guidance. As was the case when I gave guidance last quarter, currency had little effects in Q3. But I'll still discuss our results using constant currency growth rates in the few areas that the rates are slightly different. So here we go. Cloud revenue that's SaaS and IaaS excluding Cerner was $4.4 billion, up 26%. Including Cerner, total cloud revenue was up 24% at $5.1 billion with IaaS revenue of $1.8 billion, up 49%, and SaaS revenue of $3.3 billion, up 14%. This quarter marks the first time our total cloud revenue is more than our total license support revenue. So we have crossed over total cloud services and license support revenue for the quarter with $10 billion, up 11% driven again by our Strategic Cloud Applications, Autonomous Database, and OCI. Application subscription revenues, which includes product support were $4.6 billion and up 10%. Our strategic back-office SaaS applications now have an annualized revenue of $7.4 billion and were up 18%. Infrastructure revenues which includes license support were $5.4 billion and up 13%. Infrastructure cloud services revenue was up 49%. Excluding Legacy Hosting Services, OCI Gen2 infrastructure cloud services revenue grew 52% with an annualized revenue of $6.7 billion. OCI consumption revenue was up 63%. Where if not for some continuing supply constraints, consumption growth would have been even higher. Database subscription revenues, which include database license support were up 5%. And highlighted by cloud database services, which were up 34% and now has annualized revenue of $1.9 billion. Very importantly, has on-premise databases migrate to the cloud, we expect these cloud database services will be the third leg of revenue growth alongside strategic SaaS and OCI. Software license revenues were $1.3 billion, down 3%. So all in, total revenues for the quarter was $13.3 billion, up 7% including Cerner and up 9% excluding Cerner. Now to margins, the gross margins for Cloud Services and License Support was 77%. This is as before a result of the mix between support and cloud in which cloud is growing much faster than support. Support and SaaS gross margin percentages are consistent with last year while IaaS gross margins improved substantially year-over-year. While we continue to build data center capacity, overall gross margins will go higher as more of our cloud regions fill up. We monitor these expenses carefully to ensure gross margin percentages expand as we scale. And to that point, gross profit dollars of Cloud Services and License Support grew 8% in Q3. Non-GAAP operating income was $5.8 billion, up 12% from last year. Operating margin was 44%, up from 42% last year as we continue to drive more efficiencies in our operating expenses, which continue to trend down as a percentage of revenue. Looking forward, as we continue to benefit from economies of scale in the cloud and drive Cerner profitability to Oracle standards, we will not only continue to grow operating income but we will also expand the operating margin percentages. The non-GAAP tax rate for the quarter was very close to my guidance at 18.9%, and non-GAAP EPS was $1.41 in USD, up 16% in both USD and constant currency. GAAP EPS was $0.85. At quarter-end, we had nearly $9.9 billion in cash and marketable securities. And short term deferred revenue balance was $8.9 billion, up 4%. Over the last four quarters, operating cash flow was $18.2 billion, up 18% and free cash flow was $12.3 billion, up 68%. Capital expenditures were $6 billion over the same time period as we continue to see cash-flow benefits from our cloud transformation. Our remaining performance obligation or RPO is now over $8 billion with the portion excluding Cerner up 41% in constant currency. We signed several large deals this quarter and we have many more in the pipeline. Approximately 43% of our total RPO is expected to be recognized as revenue over the next 12 months. And this reflects the growing trend of customers wanting larger contracts as they see first-hand how Oracle Cloud Services are benefiting their businesses. And we expect to have some very nice joint announcements with NVIDIA next week. Now while we spent $2.1 billion on CapEx this quarter, the $1.7 billion in the cash-flow statements is slightly lower just due to the timing of payments. So the $2.1 billion is actually what we spent and will pay for. We are working as quickly as we can to get the cloud capacity built out given the enormity of our backlog and pipeline. I expect the CapEx will be somewhere around $7 billion to $7.5 billion this fiscal year, meaning our Q4 CapEx should be considerably higher. To that point, we now have 68 customer-facing cloud regions live with 47 public cloud regions around the world and another eight being built. 12 of these public-cloud regions interconnect with Azure and more locations with Microsoft are coming online soon. We also have 11 dedicated region slots and 13 more planned. Several national security regions in EU sovereign regions live with increasing demand for more of each. And finally, we already have two Alloy cloud regions live with five more planned where Oracle Partners become cloud providers offering customized cloud services alongside Oracle Cloud. And of course, we have also many, many, many clouded customer installations. As I mentioned earlier the sizing, flexibility, and deployment optionality of our cloud regions continues to be incredible advantage for us in the marketplace. And as we've said before, we're committed to returning value to our shareholders through technical innovation, acquisitions, stock repurchases, prudent use of debt, and a dividend. And this quarter, we repurchased 4 million shares for a total of $450 million. In addition, we paid out dividends of $4.4 billion over the last 12 months. And the Board of Directors declared a quarterly dividend of $0.40 per share today. Now, before I dive into Q4 guidance, I'd like to share some thoughts on what I see for the next 12 months or so. As demand for our Cloud Services continues getting stronger, our pipeline is growing even faster and our win rates are going higher as well. As our supply constraints ease revenue growth rates will accelerate higher as our capacity expands and we get into fiscal year '25. I should also say that we continue to expect the FY '24 of which we are now in the fourth quarter, total revenue excluding Cerner will accelerate from last year as it has for the past three years and will likely be significantly higher in FY '25. In addition, Cerner, which is a significant headwind this year, we expect to return to growth next year. And final - and I remain firmly committed to our FY '26 financial goals for revenue, operating margin, and EPS growth. However, some of these goals might prove to be too conservative given our momentum. Let me now turn to my guidance for Q4, which I'll review on a non-GAAP basis as always. And if currency exchange rates remain the same as they are now, currency should have little effect on total revenue and EPS. However, of course, actual currency impact may be different. So, at least right now, all the numbers are the same for constant currency and USD. Total revenues including Cerner are expected to grow from 4% to 6%. Total revenue excluding Cerner are expected to grow 6% to 8%. The total cloud revenue excluding Cerner is expected to grow from 22% to 24% as more capacity comes online in Q4. The EPS growth rate will be affected by the compare as our Q4 tax rate last year was 9.2%, which I believe most of you have already accounted for in your models. And my EPS guidance for Q4 assumes a base tax rate of 19%. As always, one-time tax events could cause actual tax rates to vary from my guidance as stated last year. So with that, non-GAAP EPS is expected to be down 2% or to flat and be between a $1.62 and $1.66. And with that, I'll turn it over to Larry for his comments. 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. Safra Catz: We don't hear you, Ken. 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. Operator: [Operator Instructions] Your first question comes from the line of John DiFucci from Guggenheim Securities. Please go ahead. 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? Safra Catz: Honestly, John, that is still to come. So, this is just pretty much our regular way business. That's what you're seeing. We have enormous amounts of demand. I tried to make that clear last quarter, and we have more capacity coming online. But we have tried to - we're trying to focus on much larger chunks of data center capacities and electricity and all of that and that's just - that all to come. This is really our regular way business and our customers just growing and a whole bunch of new customers, by the way. I think there are many, many customers who have come on and that haven't gotten capacity yet. We've got at least 40 new AI bookings that are over $1 billion that hasn't come online yet. 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. John DiFucci: Well, thank you, Larry, and Safra. Listen, what you put up this quarter in Infrastructure as a Service, it just looks pretty impressive. But it sounds like there's a lot more to come. Thank you for taking my question. 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. John DiFucci: Well, there were lot of questions on that last quarter, and I guess there won't be any on this one. Thank you. Ken Bond: Thank you, John. Next question, please. Operator: Your next question comes from the line of Raimo Lenschow from Barclays. Please go ahead. 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. Larry Ellison: Well, two things. One is we save a huge amount of money moving them into our standard data center. Our OCI costs are much lower than the cost of the Cerner dedicated data center in Kansas City. Also, the big thing that we're excited about is OCI is highly secure, it's got a highly secure perimeter and therefore those applications are much less vulnerable to ransomware or other kinds of attacks than if they were in a different kind of data center. So we're very happy that these are now secured. The third thing is now that they're in our cloud, we're able to update those applications on our regular three months cadence. So, we're able to modernize those customers that are in the cloud on a regular basis and start delivering our brand new applications that completely rewritten Cerner application. First for ambulatory clinics and then eventually for acute-care hospitals. But ambulatory clinics system is coming out this quarter and we're able to automatically deliver that system to existing customers. It's not a reimplementation. It is literally an update to what they've already got running on the Oracle Cloud. Even though it's an all-new application, I'm not going to see much technical detail, but it uses the same underlying data schema. So, we literally can bring up the new application without the customer having to go through any implementation process. We can do it just as an update, like when we ship a new version of Fusion to an existing Fusion customer. We can now ship a new version of - an all-new version of the Cerner application to a Cerner customer in OCI. So it allows us to modernize their infrastructure very, very rapidly, deliver the Voice - Clinical Digital Assistant, make the system easier to use, save doctor's time, deliver a lot more value put it in the diagnostic imaging systems that help data intelligence system, deliver all of that automatically on a regular three-months cadence. So, it allows us to modernize the Cerner base very, very quickly while keeping them safe from ransomware. Raimo Lenschow: Perfect. Thank you. Operator: Your next question comes from the line of Ben Reitzes from Melius Research. Please go ahead. 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. Safra Catz: So, for fiscal year '25, looking at about $10 billion in CapEx because it's also involves not only some big centers, but it also involves expansions of existing centers. So we've already got some areas that we will be filling out. So at least preliminarily, we're looking at $10 billion for next year. And then it's not too complicated to figure out the math here when I'm looking at somewhere between $7 billion and $7.5 billion for the full year and you've got all the numbers for one, two, and three at this point. And I would include for Q3 the one we just are announcing. I would add in the amount we haven't paid yet as the CapEx number for this quarter. Okay? And then I guess that would be and then Larry gets the second question. But anyway, so $2.1 billion for this quarter and you've got Q1 and Q2 and I'm going to be somewhere between $7 billion and $7.5 billion for the full year, which is actually a little bit lower than I thought. But we were able to do pretty well. You know-how we spend very carefully. 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? Safra Catz: Can I take at least part of this? Ben Reitzes: Oh, yes, sure. Safra Catz: The GPU we are good. We are actually very good in our GPU access and capability. So, building the computers and that it's much more making sure we've got the power on that. Larry Ellison: Yes. Ben Reitzes: Thank you. 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. Ben Reitzes: Thanks, Larry. Appreciate it. Congrats something OCI growth. Larry Ellison: Thank you. Operator: Your next question comes from the line of Derrick Wood from TD Cowen. Please go ahead. 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? Larry Ellison: Well, I think it is the key to unlocking a stronger adoption cycle for a - moving Oracle in general to the cloud in general and specifically the migration to Autonomous Database. Oracle, we expect the multicloud initiatives to continue to expand. We're seeing it expand in Japan, but we expected to expand amongst other hyperscalers to adopt a similar multi-cloud approach where we built and we built OCI regions inside of the coexisting with their existing cloud infrastructure. We think the world - the era of walled gardens is coming to an end where it used to be okay, I'm going to move all my stuff to AWS, trying to move all my stuff to Azure. What customers really want is the ability to use multiple clouds and for those multiple clouds to talk to one another. And I think - I mean in the era of the Internet and now cloud computing, it's really called Cloud Computing. It's not called a bunch of separate clouds. So we expect that multi-cloud to become the norm and Oracle to be available everywhere. And we - and that's what you said, we think that will preserve our franchise and database where we've been the number-one database in the IT ecosystem for a very long-time. We think that's going to preserve that franchise and expand it because the Autonomous Database is a unique piece of technology and there is nothing like it in the world, and maybe the most interesting thing, no one else is working on anything like that. No one else even trying to duplicate the Autonomous Database. So, we think it will be - it will become a very successful product in every cloud. Derrick Wood: Thanks, Larry. Operator: Your next question comes from the line of Kirk Materne from Evercore ISI. Please go ahead. 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. Larry Ellison: Well, I think Japan is maybe the most interesting market where we had early success with NRI. They run the Tokyo Stock Exchange. No - what NRI has is just is an Oracle - a couple of Oracle Cloud regions which they resell in the financial services community inside of Japan. And one of their applications is a major stock exchange, the Tokyo Stock Exchange. So, think about how many clouds run stock exchanges, that would be ours. It's got to be highly secure, it can never go down, it's going to have extremely high transaction rates, we can do that. And the success of NRI is caused other - the other computer companies in Japan to become very, very interested and also reselling our cloud with - and we also have the ability that they can add on some of their own technology to our cloud so, our cloud is open so you can plug-in other things to the cloud. So, imagine a big computer company in Japan adopting the Oracle Cloud, reselling Autonomous Database, reselling all of our technologies because all we --we only make one kind of cloud, they're all the same and they have all of the services. But then that company can add their own services to there for their customers. We think all of the cloud companies in Japan are going to adopt OCI. Plus a lot of big companies, the big car companies in Japan. We want around their own, the phone companies in Japan will want their own, the technology companies in Japan will want their own Oracle regions. And because they are sovereign because they are highly secure and because they are highly cost-effective, so we think this allows us to enter a variety of new markets. Pretty much every government is going to want a sovereign cloud and a dedicated region for that government for not only to - so we see a number of countries. It's funny, we talked about winning business with companies. For the first time, we're beginning to win business country - per countries for sovereign cloud where the national government and the state governments are moving to that Oracle OCI region. And of course, it's got to be at least two of them for redundancy and disaster recovery. So, we have a number of countries where we're negotiating sovereign regions with the national government. We see that time and time again, major companies, governments, computer suppliers reselling our Alloy Cloud. The demand for our cloud regions is extraordinarily high. I believe we will end up - well, this is a funny prediction, but okay, we'll end up with more data centers and cloud regions than all the other hyperscalers combined. Safra Catz: Yes. I think that's the story. Larry Ellison: That's what I believe. 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. Larry Ellison: Yes. And let me just add one last thing. Microsoft does not compete for this business. AWS does not compete for this business. Google does not compete for this business. We're the only ones in this business. Kirk Materne: Thank you, all. Operator: Our final question today comes from Brad Zelnick from Deutsche Bank. Please go ahead. 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? Larry Ellison: All right. It is really, really - it is very interesting. And we've gone into the National Government and State Government applications in a very, very big way to give you an idea a little glimpse of what we're doing. Yes, because we can't deliver these cloud regions to medium-sized countries. So, for example, Serbia is standardizing on - or these Oracle Cloud regions for their National Government. We're automating their healthcare and people know that we're in the healthcare business. What they might not know is in cooperation with Starlink we're able to deliver an Internet service to - for the entire country. The rural part of the country, by the way, we can deliver the Internet and we have delivered the Internet. Let's say Kenya or Rwanda very inexpensively using Starlink and our sovereign cloud regions to backhaul the Internet traffic. So, you can bring every school in Serbia online the Internet connectivity even if they're rural doesn't matter. Every school, every hospital as is true of Rwanda, that's true of Kenya. We can do it very, very cost-effectively and one of the applications we have for agriculture, we actually do a national map of the country where we can show you each of the farms in the country, what they're growing - this farm is growing coffee, this farm is growing maze, this farm - what's part of the fields are getting enough nitrogen, which part of the fields are getting enough water? What corrective actions you need to take to increase your agricultural output? We're doing that again in concert with Elon Musk and SpaceX to do this kind of mapping to provide this AI-assisted and then these maps are AI-assisted help them plan their agricultural output and predict their agricultural output, predict markets, the logistics of the agricultural output during all of those things as next-generation national application. And it is one of the most exciting things we're doing, of course, we do procurement and accounting and human resources and recruiting for the government, we do all of those applications. But in some of the newer applications, regarding food security. Making sure all the schools are online. Rural growth schools are online. That rural hospitals are online. It's automating those rural hospitals. It's automating their vaccination program, their healthcare program across the board. These next-generation applications are very attractive. I'll tell you one other crazy thing that we do. It's another generative AI application. If you want to join the EU, it took Serbia eight years to harmonize their laws to be able to join the EU. Albania is facing the same thing. But with generative AI, we can read the entire corpus of the Albanian laws and actually harmonize their laws with the EU and probably more like 18-months to two years rather than the eight years it took Serbia. So, there are all sorts of interesting new AI applications out there that people you've probably never heard of before or at least I hadn't heard of before, until this last 12 months. Now that we've worked on and we're now in the process of delivering. 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. Safra Catz: Thank you. 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. Operator: Thank you, everyone. This does conclude today's conference call. Thank you for your participation and you may now disconnect.

Operator: Good afternoon. My name is Emma, and I will be your conference operator today. At this time, I would like to welcome everyone to the Oracle Corporation's Second Quarter 2024 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. [Operator Instructions]. Ken Bond, you may begin your conference. 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. Safra Catz: Thanks, Ken, and good afternoon, everyone. We had another great quarter. When you look at the top of our financial results table, a few things are very clear. The largest number, cloud services and license support, is now 74% of the revenue, and it's recurring revenue, and it's the one growing by $1 billion this quarter. The smaller numbers, which are not recurring, now account for only 26%. This is exactly what we told you would happen, and it's happening. And as this continues, total revenue growth will accelerate every year. To that point, OCI is now one of the clear drivers of our acceleration. Imagine just three years ago, OCI was rarely, if ever, mentioned as a viable hyperscale alternative. Of course, we knew what we had built and we kept talking about it and we knew it was only a matter of time. And now, more industry analysts are catching on to what customers are choosing. For example, just last week, we were recognized as a leader in the 2023 Gartner Magic Quadrant for Strategic Cloud Platform Services. Our financial results reflect that customers have figured out that by moving to OCI, they really can get more while paying less. On top of that, we are now the default choice for AI workloads given our unique differentiation and price performance capabilities. Why specifically are they coming to Oracle Cloud Infrastructure? Well, it's a combination of several things. Creating the second generation cloud enabled us to build a much better, more scalable, and more efficient cloud. We understood the limitations of the first generation and engineered very differently. Second, we know what it takes to run at enterprise scale, performance and security better than, I say, anyone else. Our 45-year history as the leading enterprise software company gives us unique knowledge of what exactly is required to run mission critical systems. Third, we recognize that customers need deployment flexibility rather than just offer public cloud services like our competitors, we are the only vendor which also offers dedicated cloud to customer, dedicated region, sovereign clouds, and Alloy, our partner clouds. And then finally, our belief in the importance of multi-cloud offerings will be industry changing as these collaborations roll out. With all this success and exploding demand, we are working as quickly as we can to get the cloud capacity built out. Now, to the Q2 results. With total revenue at the midpoint of my constant currency guidance and the EPS at the high end of guidance. Now, as a reminder, currency was 1 point less helpful than when we gave guidance three months ago. Total cloud revenue, that's SaaS plus IaaS, excluding Cerner, was $4.1 billion, up 25%. Including Cerner, total cloud revenue was up 24% at $4.8 billion, with IaaS revenue at $1.6 billion, up 50%, and SaaS revenue of $3.2 billion, up 14%. Total cloud services and license support revenue for the quarter was $9.6 billion, up 11%, driven again by our strategic cloud applications, autonomous database, and our Gen 2 OCI. Application subscription revenues, which includes support, were $4.5 billion, up 9%. Our strategic back office SaaS applications now have an annualized revenue of $7.1 billion and we're up 19%. Infrastructure subscription revenues, which includes license support, were $5.2 billion, up 12%. Infrastructure cloud services revenue was up 50%. Excluding legacy hosting services, Gen 2 infrastructure cloud services revenue grew 55%, with an annualized revenue of $6 billion. OCI consumption revenue was up 71%. Database subscription revenues, which includes database license support, were up 4%, highlighted by Exadata database cloud services revenue, which was up 40%, and autonomous database up 26%. Very importantly, as on-premise databases migrate to the cloud, we expect these cloud database services will be the third leg of revenue growth alongside strategic SaaS and Gen 2 OCI. Software license revenues were $1.2 billion, down 19% in a tough comparison to last year where it was up 23%. So all in, total revenues for the quarter were $12.9 billion, up 4% including Cerner, actually up 6% excluding Cerner. Now shifting to margins, the gross margin for cloud services and license support was 78%. This is because of the mix between support and cloud in which cloud is growing much faster than support. Support and SaaS margins are consistent with last year, while IaaS gross margins improved substantially. While we continue to build data center capacity, gross margins go higher as these new cloud regions fill up. We monitor these expenses carefully to ensure gross margin percentages expand as we scale. To this point, the gross profit dollars of cloud services and license support grew 10% in Q2. Non-GAAP operating income was $5.5 billion, up 7% from last year. The operating margin was 43%, up from 41% last year. As we continue to benefit from economies of scale in the cloud and drive Cerner profitability to Oracle standards, we will not only continue to grow operating income, but we will also expand the operating margin. The non-GAAP tax rate for the quarter was 19% and non-GAAP EPS was $1.34 in USD, up 11% in USD, and up 9% in constant currency. GAAP EPS was $0.89 in USD. At quarter-end, we had nearly $8.7 billion in cash and marketable securities and the short-term deferred revenue balance was $8.9 billion, up 1%. Over the last four quarters, operating cash flow was $17 billion, up 13%. And free cash flow was $10.1 billion, up 20%. Capital expenditures were $6.9 billion over the same period as we continue to seek cash flow benefit from our cloud transformation. Our remaining performance obligation, or RPO, is now over $65 billion, with the portion excluding Cerner up 11% in constant currency. We continue to sign large deals with many in the pipeline. Approximately 48% of total RPO is expected to be recognized as revenue over the next 12 months. CapEx was $1.1 billion in Q2 as we continue to build capacity for bookings and our customers' growing needs. Given the enormity of our pipeline and backlog, I expect CapEx will be somewhere around $8 billion this fiscal year, meaning our second half CapEx will be considerably higher as we bring online more capacity. To that point, we now have 66 customer facing cloud regions live, with 45 public cloud regions around the world and another six being built. 12 of these public cloud regions interconnect with Azure and starting next year, customers will be able to run Oracle Database at Azure on OCI inside Azure. We also have 10 dedicated regions live and 13 more planned, nine national security regions, and two EU sovereign regions live with increasing demand for more of each. And finally, we have seven Alloy cloud regions planned where Oracle partners become cloud providers offering customized cloud services alongside the Oracle Cloud. And of course, we also have so many, many, many clouded customer installations. The sizing flexibility and deployment optionality of our cloud regions continues to be advantages for us in the marketplace. Finally, as we've said before, we're committed to returning value to our shareholders through technical innovation, strategic acquisition, stock repurchases, prudent use of debt, and a dividend. This quarter, we repurchased 4 million shares for a total of $450 million. And in addition, we paid out dividends of $4.1 billion over the last 12 months. And the Board of Directors declared a quarterly dividend of $0.40 per share. Now let me turn to my guidance for Q3, which I will review, as always, on a non-GAAP basis. If currency exchange rates remain the same as they are now, currency should have little effect on total revenue and EPS. However, the actual currency impact may be different. So because of that, all the numbers I give you are the same for constant currency and USD. Total revenues, including Cerner, are expected to grow from 6% to 8%. Total revenues excluding Cerner are expected to grow from 8% to 10%. Total cloud revenue excluding Cerner is expected to grow from 26% to 28%. Non-GAAP EPS growth is expected to grow between 10% and 14% and be between $1.35 and $1.39. My EPS guidance for Q3 assumes a base tax rate of 19%. However, one-time tax events could cause actual tax rates to vary. Finally, I remain firmly committed to our fiscal ‘26 financial goals for revenue, operating margins, and EPS growth. And with that, let me turn it over to Larry for his comments. 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. Ken Bond: Thank you, Larry. Emma, if we could please poll the audience for questions. Operator: Thank you. [Operator Instructions] Your first question today comes from the line of Ben Reitzes with Melius Research. Your line is open. Ben Reitzes: Hey, thanks a lot. It's great to be speaking with you this afternoon. Do you mind going through your thoughts on the OCI trajectory from here and how you feel backlog will play out into revenue? And perhaps you can comment also, is the acceleration potential that you guided for due to getting more GPUs and more AI backlog moving into revenue? Thanks a lot. Safra Catz: Larry, you want me to take it or you? Larry Ellison: No, either one, Safra, you tell me. 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? Larry Ellison: Yeah, well again, in the next few weeks, I mentioned we're going to sign two additional contracts right around $1 billion each. I mean the backlog is growing astronomically. I think it's the word Safra used and that's accurate. There's no reason why -- OCI grew 50% this quarter. I think OCI is going to get much bigger and actually the growth rate will be above 50%, I believe, as these data centers come online. We think we can build a lot of these data centers very quickly. By the way, again, I emphasize it's not just GenAI demand. There is huge pent-up cloud database demand. There is huge demand overseas for sovereign clouds, where people -- governments haven't been able to move their workloads. A lot of those are government Oracle workloads. They haven't been able to move their workloads to the cloud. I mean, there are literally, I don't know, five, six, seven large companies in Japan that will be building at least two data centers, Oracle data centers each. So again, the demand is extraordinary. We can build the data centers relatively fast. And I expect the OCI growth rate to be over 50% for a few years. Safra Catz: Yes, we're not demand limited in any way right now. Ben Reitzes: Thanks a lot, Safra and Larry. Appreciate it. Operator: Your next question comes from the line of John DiFucci with Guggenheim. Your line is open. John DiFucci: Thank you. Thanks for the question. Thanks Larry for the -- and Safra, for those comments on the future OCI growth. So since Ben asked about the growth, and maybe I'll take a step back on the other part of all this, and that's the profit side. Per Larry's comments, you're building out a lot of capacity and Safra's comments agree with that, with the CapEx growth. But Clay's also spoken about the time it takes to build out those AI super clusters and I know that's not the only AI workloads you're doing, but that sounds like some pretty exciting stuff. And it takes time before you get revenue. I realize you're also seeing ramp up of those what I'll call core OCI deals like Uber, and you actually get revenue from them over time. But how should we think about cloud gross margins over time in this context with both those things? There's a lot happening here. 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? Larry Ellison: Yeah I do. I think one thing is very important. We're much more highly automated than the older data centers. So to give you an idea, Oracle Cloud -- to run Oracle Cloud we have to keep track of all of our customers, how much they're using. We have to have a variety of databases and applications that run the cloud. Those databases are all the autonomous database. We have no labor associated with those databases. It's all completely automated. Our installations, when we bring up a new cloud, you plug it in and the process of bringing it up is largely automated. There aren't lots and lots of people in the data center to bring it up, and there certainly aren't lots and lots of people in the data center to run it every day. We focus on autonomous services. Our Linux, our operating system is fully autonomous. There's no labor associated with running it. There's certainly labor associated with building the software, but not running the software, it doesn't cost us more to run 100 data centers than it costs us to run 10 in terms of DBAs or people running Oracle Autonomous Linux. So we have a very different model than our old data centers or our competitors' data centers. We can run these things, we can bring them up relatively quickly and we can run them very inexpensively and efficiently. One last thing about being autonomous, the fact that it's automated, there are far fewer errors and there are far fewer security vulnerabilities because the system is completely self-driving. 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? Safra Catz: Yes. John DiFucci: Okay, and then, and then, and then… Larry Ellison: Grown a lot. 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. Safra Catz: Yeah, it is really still to come. It is -- we're talking about tens of billions of dollars when it comes over. So it's starting to come, but we haven't been in the place to receive it all en masse, and customers have to get comfortable with it. And also, multi-cloud has to really roll out, and that's going to be another piece of it. So customers are going to have so many excellent choices. They can go in the public cloud, they can go in OCI, they can go in their cloud to customer. They can go in OCI at Azure is one possibility. So there's just -- it is the absolute beginning. Because remember, the Oracle database is not a toy. It's a mission critical system. If it just disappeared at companies, the whole planet would come to a standstill. And so this is coming and it's just the beginning. So you see what's going on with OCI, no one believed us this was possible, now here we're at, and then right behind it is going to come the database, and that's going to be something. 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? Safra Catz: Yes, absolutely. Database… 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. John DiFucci: Thank you very much. Sorry for the several part question, but thank you. Safra Catz: Our pleasure. Operator: Your next question comes from the line of Mark Moerdler with Bernstein. Your line is open. 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. Larry Ellison: That's not correct. So Cerner has several pieces. Mark Moerdler: Okay. Larry Ellison: And I believe about half the customers will be moved, half of the Millennium customers. You can think that Cerner is just automating hospitals like Epic. And that's a product called Millennium. And about half of those customers will move to OCI by February. Half of all existing customers will be in Oracle OCI. But we've also developed something that began at Cerner. And we have finished now, completely rewritten it. Well, we're in the process. We will finish next calendar year. But it is largely rewritten and available right now, something called our Health and Data Intelligence platform and it was known as Cerner HealtheIntent. And that's for public health. That's for population scale, public health management. Again, it's sold to US states. It's sold to Australian states. It's sold to European countries. It's for managing population health. Remember during COVID when we didn't know, New York thought they were living out of hospital rooms, but they really weren't, but no one knew, because no one kept track of our inventory of hospital rooms. There was no national view. No one knew how many people contracted COVID yesterday. We didn't have that national view. We have that national view. It is fully staffed and it is available right now. So some of the pieces, some of the Cerner pieces are coming online, other Cerner pieces are moving more gradually, but they're all going into OCI. And they're all very quickly moving from a license basis to a subscription basis. 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? Larry Ellison: So it will be fully an OCI and SaaS, but it will not be the new, we are rewriting, we are replacing Millennium a piece at a time, not a big lift and shift, but we are upgrading and modernizing Millennium a piece at a time, and different pieces will be available starting next year. And so, Cerner customers will be getting new features and capabilities as a part of Millennium as Millennium moves to OCI. And again, half the customers will be in OCI by February. So we're making a lot of progress. At the same time, we're adding a lot of new products to Millennium, like the public health products. But we're also adding much of new products for pharmaceutical companies. We're adding additional products for hospitals to keep track of their inventory, for hospitals to manage their workforce, really what we think of is our health division in Oracle has products for the entire healthcare ecosystems. Payers, including governments, including insurance companies, providers, including ambulatory clinics and hospitals, pharmaceutical companies, research companies, and public health departments in national governments and state governments. So we have products for the entire healthcare ecosystem, which is a much larger footprint than Cerner ever had. So we are going after a much larger market than Cerner was. So we expect Cerner to be a growth story. I guess that's what I'm getting at. Mark Moerdler: Right, that's where I'm going with the question. Safra Catz: Yeah, so let me just tell you, I think for the year, for the full fiscal year, Cerner will be sort of negative 1 to 2 points. But that will be it. It'll end this fiscal year. And from then on, it will be a growth story. So it will no longer be a drag on Oracle growth. Okay? Mark Moerdler: Perfect. Thank you so much. I really appreciate it. It was very helpful. Safra Catz: Great. Operator: Your next question comes from the line of Siti Panigrahi with Mizuho. Your line is open. Siti Panigrahi: Thanks for taking my question, Larry and Safra. Many mission critical workloads still run on Oracle database, and you have a sticky [Indiscernible] team. And we expect Oracle will start migrating those database workloads to OCI, which will bring 3x revenue uplift, which you call even the third leg of cloud growth. You also have now OCI inside Azure data center. So my question is, how does this being multi-cloud change your outlook for Oracle database? And what are you hearing from your database customer in terms of their comfort and preparedness to move their Oracle database to the cloud, either OCI or Azure? Safra Catz: Larry, why don't you start with this? Larry Ellison: Safra, can you go first? Safra Catz: No, yes, I do. You go. Larry Ellison: Okay, thanks. Our customers are very happy with the idea. Remember Oracle started as one of the first databases that ran everywhere. We ran on IBM mainframes. We ran on personal computers. We ran on digital equipment, if you remember them, mini computers, [broadly] (ph) and HP mini computers. We ran on every operating system on every computer. Now, in cloud, they're very happy to see that they can not only get the Oracle database at OCI, they can also get the identical capability from Microsoft. Microsoft, we are building data centers for Microsoft inside Azure. And Microsoft, it wasn't us that decided 2000 was the right number of Exadata machines to install in those 20 data centers. That was Microsoft. The demand is enormous. They want the same flex -- our customers want the same flexibility they've always had with Oracle. They want to use Oracle. They want to transition. But if they're using the Microsoft Cloud, they want to run the best and latest and greatest version of Oracle in the Microsoft Cloud. They'd want to do that in other clouds as well. Some of them, it's very important to have it in Japan, for example. It's very important for some of that data remaining in Japan. One of the things the Oracle database does is it runs the Tokyo Stock Exchange. And it does that in a dedicated data center run by Nomura Research, who supplies financial services and Oracle Cloud, Oracle Gen2 Cloud services to the Japanese market. There are a number of other partners in Japan that are going that same direction. So they used to -- in Japan, they used to buy the Oracle database from Nomura or they used to buy it from Fujitsu, or they bought it from Hitachi, or they bought it from NEC. They wanted that Oracle database. It is quite natural for all of those companies to build their own, have their own dedicated regions of OCI and sell to their and support their customers out of those regions. That's the flexibility we allow that's something that nobody else can do. We can build these regions for our partners. We can build these regions for sovereign states. We can build these regions for large companies that want to have -- that don't want their data commingled with anyone else's data. They want a public cloud, they want a full OCI, they want every part of OCI. But they don't want anyone else in their region. They want it to be theirs and theirs alone. We can do that. Nobody else can. Ken Bond: Next question, please. Siti Panigrahi: Thank you, Larry. Operator: Your next question comes from the line… Larry Ellison: Let me summarize. That means literally any way you want to get Oracle, any way you want to get Oracle, you'll be able to get it. It'll be a little bit back to the future. And we think the impact on demand -- on database demand, we're seeing it already. Let me close with 2,000 Exadata racks. That's a stunning number in terms of how many customers you can put on that. That's tens of thousands of customers you can put on that much hardware. Siti Panigrahi: Thanks, Larry, for the color. Larry Ellison: And that's Microsoft alone, okay. Operator: Your next question comes from the line of Alex Zukin with Wolfe Research. Your line is open. Alex Zukin: Hey, guys. Thanks for taking the question. I wanted to ask around some of the GenAI functionality inside of the applications portfolio, specifically Fusion and NetSuite. Any update or uptick that you're seeing or can share around some of your partnerships around Cohere? Maybe any early feedback from the field that informs incremental value capture, whether or not it's starting to resonate either in the form of increased migration activity, increased market share gains, or increased monetization opportunities around the application portfolio? 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. Alex Zukin: Got it. And then from a monetization standpoint, do you -- is this monetizing in a copilot way similar to Microsoft, or how do you envision ultimately seeing some of the incremental value capture inside of the model? 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. Alex Zukin: Okay. Thank you very much. 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… Larry Ellison: Safra is making a very good point in that we have our own applications in healthcare, but we have partners and other companies that come to us to use our AI to enrich their applications. And we keep their data private and allow them to enrich their applications. That company I mentioned earlier, Imaging, that's not our application that does the cancer diagnosis. That's an Israeli company that's doing that, but they're using our AI to develop their healthcare application. So, we monetize through imaging, enabling them to build their AI application. And we also build a lot of our own. So of course, Safra is right. It's a combination of the two. Safra Catz: Okay. Alex Zukin: Perfect. Thank you, guys. Safra Catz: Thank you. Operator: Your last question today comes from the line of Brad Zelnick with Deutsche Bank. Your line is open. 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. Larry Ellison: Well, okay, how about Microsoft puts an order -- in an order for 20 cloud data centers? That's what we're saying. When one company, as you say, we have 60, by the way, that's a little bit misplaced. That's not quite right. I mean, we have 66 cloud regions and we sometimes use those synonymously. They're not always -- they don't, data center and regions don't necessarily translate one to one. But the -- when someone comes along and orders 20, then that creates a lot of opportunity for us to build more data centers and get more OCI customers because we're building OCI data centers inside of the Azure cloud. So those are the kinds of things we're seeing. We're building our own public regions based on direct customer demand and then we're building partner regions like the 20 data centers from Microsoft. The combination of the two adds up to 100. 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. Larry Ellison: Let me give you one example of that, what Safra is describing, is we got enough Nvidia GPUs for Elon Musk's company xAI to bring up the first version, the first available version of their large language model called Grok. They got that up and running. But boy did they want a lot more. Boy did they want a lot more GPUs than we gave them. We gave them quite a few, but they wanted more and we are in the process of getting them more. So, the demand, we got that up pretty quickly. They were able to use it, but they want dramatically more. There's this gold rush towards building the world's greatest large language model. And we are doing our best to give our customers what we can this quarter, and then dramatically increase our ability to give them more and more capacity each succeeding quarter. Brad Zelnick: Thanks very much. 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 on the call today. And with that, I'll turn the call back to Emma for closing. Operator: This concludes today's conference call. Thank you for attending. You may now disconnect.

Operator: 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. 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. Safra Catz: Thanks, Ken, and good afternoon, everyone. As you know, 22 years ago today was a traumatic day for our country. Like many of you, it feels like yesterday when the country lost nearly 3,000 souls. And we at Oracle, we lost 11 employees. I remember exactly where I was when the tragedy unfolded, and it is still so hard speaking about it even all these years later. Today, we honor and remember each one of the victims and heroes and we hope that their memories are a blessing to all of us. Now before I go to our Q1 numbers, I thought it would help to start with some of the things that are going on at Oracle that you'll be hearing about over the next couple of weeks. Next week, we have Oracle CloudWorld, which will showcase the latest innovations, including AI on OCI, the progress of Oracle Autonomous Database, our multi-cloud strategy, the use of Oracle Analytics throughout our portfolio to drive better decision-making and the use of generative AI to differentiate Fusion, NetSuite and our industry application. Now, CloudWorld is our marquee event each year where current and prospective customers take time out of their busy calendars to join us in person and share their experiences. We know that there are no better spokespeople for our products and services than our existing customers. Our innovation results directly from our development teams interacting with customers to anticipate and build the next generation of products and services. Some of the customers you will hear from next week include NVIDIA, Uber, Ascension Health, Cohere and many, many, many, many more. You'll also hear from our expanding set of strategic partners that are driving the Oracle ecosystem and this includes Amdocs, VMware, Microsoft. Overall, it's remarkable the interest we are getting from the ISV community to work with Oracle. There are a lot of discussions going on and you will see more announcements shortly. From a financial standpoint, we see this customer and partner ecosystem as a leading indicator of our income statement. I've been talking with you about our revenue acceleration for some time now. In Q1, our remaining performance obligations or RPO, climbed to nearly $65 billion, with the portion excluding Cerner, up 11%. We have now signed several deals for OCI greater than $1 billion in total value. In the first week of Q2, we booked an additional $1.5 billion in business, which isn't even included in the Q1 numbers. Approximately 49% of total RPO is expected to be recognized as revenue over the next 12 months. My point here is that customer momentum is continuing to build. This momentum is turning into bookings and that gives me the confidence that our annual revenue growth will continue to accelerate moving forward. Now to the Q1 results, which I remind you, I am announcing on day 11, only because day eight when we were ready was a Friday and I know none of you like that. So this quarter we saw a modest currency tailwind, but as always, I'll discuss our financials using constant currency growth rates. Clearly, Q1 was another great quarter with total revenue at the midpoint of guidance and earnings per share $0.02 above the high-end of guidance and our cloud growth was 29%. Total cloud revenue, SaaS and IaaS, excluding Cerner, was $4 billion, up 29%. Now including Cerner, total cloud revenue was up 29% also at $4.6 billion, and with our IaaS revenue at $1.5 billion, up 64%, and SaaS revenue of $3.1 billion, up 17%. Total cloud services and license support revenue for the quarter was $9.5 billion, up 12%, driven again by our strategic cloud applications, Autonomous Database and our Gen2 OCI. Application subscription revenues, which includes product support, were $4.5 billion, up 11%. Our strategic back-office SaaS applications now have annualized revenue of $6.9 billion, and they grew 20%. Infrastructure subscription revenues, which includes license support, were $5.1 billion, up 14%. Infrastructure cloud services revenue was up 64%. Excluding legacy hosting services, Gen2 Infrastructure cloud services revenue grew 72% with an annualized revenue of $5.6 billion. OCI consumption revenue was up 91%. Exadata Cloud Services revenue was up 46% and Autonomous Database was up 42%. Database subscription services, which includes license support, were up 6% highlighted by cloud database services which were up 44%. Very importantly, as on-premise databases migrate to the cloud, we expect these cloud of database services will be the third leg of revenue growth alongside strategic SaaS and Gen2 OCI cloud services. Software license revenues were $0.8 billion, down 11% following an amazing Q1 last year of 19% growth, which made it a tough compare this year. So in all, total revenue for the quarter were $12.4 billion, up 8% including Cerner, up 9% excluding Cerner. Shifting to margins. The gross margin for cloud services and license support was 78%, with IaaS gross margins improving substantially from last year. And while we’ve continued to build data center capacity, we've also seen our IaaS margins go higher as these new cloud regions fill up. We monitor our expenses very carefully to ensure our gross margin percentages expand as we scale up. To this point, gross profit dollars of cloud services and license support grew 9% in Q1. Non-GAAP operating income was $5.1 billion, up 12% from last year. The operating margin was 41%, up from 39% last year. As we continue to benefit from economies of scale in the cloud and drive Cerner profitability to Oracle standards, we will not only continue to grow operating income, but we will also grow the operating margin percentage. The non-GAAP tax rate for the quarter was 18.8%, and non-GAAP EPS was $1.19 in US dollars, up 16% in USD, up 14% in constant currency. The GAAP EPS was $0.86 in USD. At quarter end, we had nearly $12.1 billion in cash and marketable securities. The short-term deferred revenue balance was $11.1 billion, up 5%. Operating cash flow for the first quarter was up 9% to $7 billion, while free cash flow was up 21% to $5.7 billion and I expect that we will see a very good result in our free cash flow for the rest of the year. Over the last four quarters, operating cash flow was $17.7 billion, up 68% and free cash flow was $9.5 billion, up 76%. Capital expenditures were $8.3 billion over the last four quarters and we are clearly beginning to see the cash flow benefits stemming from our cloud transformation. CapEx was $1.3 billion in Q1 as we continue to build capacity for bookings and our customers’ growing needs. Given the demand we have and see in the pipeline, I expect that fiscal year 2024 CapEx will be similar to this past year's CapEx. As always, we remain careful to pace our investments appropriately and in line with booking trends, which is why our gross margins are up in our cloud business. We now have 64 cloud regions live with 44 public cloud regions around the world and another six being built, 12 of these public cloud regions interconnect with Microsoft Azure. We also have nine dedicated regions live and 11 more planned, nine security regions and 12 EU sovereign regions live with increasing demand for more of each. And of course, we have many, many clouded customer implementations. The cost advantages, sizing flexibility and deployment optionality of our cloud regions continue to make us so compelling in the marketplace to customers. As we've said many, many times before, we are committed to returning value to our shareholders through technical innovation, strategic acquisitions, stock repurchases, prudent use of debt and the dividends. This quarter we repurchased 1.3 million shares for a total of $150 million. In addition, we paid out dividends of $3.9 billion over the last 12 months and the Board of Directors declared a quarterly dividend of $0.40 per share. Now before I dive into Q2 guidance, I'd like to share some thoughts on what I see longer-term. Per my earlier remarks, we have a great line of sight into the trajectory of the business, given the bookings momentum. We are extremely confident about our revenue acceleration for the year, even though in any quarter there may be small fluctuations. Because we have far more demand than we can supply, our biggest challenge is building data centers as quickly as possible. In addition, we are in an accelerated transition of Cerner to the cloud. This transition is resulting in some near-term headwinds to the Cerner growth rate as customers move from license purchases, which are recognized upfront to cloud subscriptions, which are recognized ratably. Again, excluding Cerner, I remain committed to accelerating our total revenue growth rate this fiscal year as well as maintaining our current high cloud growth rate for the year. And as you will hear at our financial analyst meeting next week, we remain firmly committed to our fiscal '26 financial goals. Let me now turn to my guidance for Q2, which I'll review on a non-GAAP basis. If currency exchange rates remain the same as they are now, currency should have a 2% positive effect on total revenue and a $0.03 positive effect on EPS in Q2. However, the actual currency impact may be different. Here we go, total revenues including Cerner are expected to grow from 3% to 5% in constant currency, and are expected to grow 5% to 7% in USD at today's rates. Total revenue excluding Cerner are expected to grow from 6% to 8% in constant currency and expected to grow 8% to 10% in USD. Total cloud revenue excluding Cerner, again, I give you these numbers, so you can see the mainline business, is expected to grow from 27% to 29% in constant currency and is expected to grow 29% to 31% in USD. Non-GAAP EPS is expected to grow between 5% to 9%, and be between $1.27 and $1.31 in constant currency. Non-GAAP EPS is expected to grow between 7% to 11% and be between $1.30 and $1.34 in USD. My EPS guidance for Q2 assumes a tax rate of 19%. However, one-time tax events could cause actual tax rates to vary. And with that, I'll turn it over to Larry for his comments. 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. Safra Catz: Thanks, Larry. And maybe, Ken, we could start taking questions at this point. 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. Operator: Thank you. [Operator Instructions] We'll take our first question from Brad Zelnick with Deutsche Bank. 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? Larry Ellison: Well, you can't build any of these AI models without enormous amounts of training data. So if anything, what AI -- generative AI has shown that the big issue about training one of these models is just getting that -- this vast amount of data ingested into your GPU supercluster. It is a huge data problem in the sense you need so much data. To train -- OpenAI to train ChatGPT 3.5, they read the entire public Internet, they read all of Wikipedia, they read everything, they ingested everything. And to specialize, and you take something like ChatGPT 4.0 and you want to specialize it, you need specialized training data from electronic health records to help doctors diagnose and treat cancer, let's say, and we are partners. Imaging for example, that is ingesting huge amounts of image data to train their AI models. We have our own -- another partner of ours in AI, ingesting huge amounts of electronic health records to train their models. AI doesn't work without getting access to and ingesting enormous amounts of data. So in terms of a shift away from data or a change in gravities at AI, AI is utterly dependent upon vast amounts of training data. Trillions of elements went into building ChatGPT 3.5, multiple times that for ChatGPT 4.0 because you have to deal with all the image data and ingest all of that to train image recognition. So we think this is very good for our database business, and Oracle's new Vector database will contain highly-specialized training data like electronic health records, while keeping that data anonymized and private, yet still training the specialized models that can help doctors improve their diagnostic capability and their treatment prescriptions for cancer and heart disease and all sorts of other diseases. So we think it's a boon to our business, and we are now getting into the deepwater of the information age. Nothing has changed about that. The demands on data are getting stronger and more important. Brad Zelnick: Thank you so much for your perspective, Larry. Operator: We'll take our next question from Mark Murphy with JPMorgan. 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? Larry Ellison: Well, again, our -- we have -- we are on our second generation of data center, and our second generation of cloud. Now a lot of people notice that we were a little bit late to the party, but that's because we moved from a generation which we were not very happy with to a second generation, which we think solved a lot of problems the other cloud companies have not yet solved. So the non-blocking ultrafast RDMA network is not only useful for AI -- training AI models, it's useful for almost everything. It's certainly useful for building a much faster database. It's useful for, in terms of the automation level we have in our data centers, our data centers are 100% automated. They configure themselves. They run themselves. We don't have a lot of labor. Now that saves us a huge amount of money, a lot of labor cost is saved. But the biggest advantage is, if you don't have human beings involved, you don't have human labor, you don't have human errors. You don't have mistakes. You can ensure security. Most security problems are caused by people that make mistakes or people that engage in mischief. We don't have that in our data center. That's another huge advantage. Our data centers are -- because they're all identical, the only way we could automate them was to make them all the same and they vary only by scale. There are big ones and small ones, but they are identical, they all have the same hardware pieces and the same software pieces. They all have the same automation and that automation allows us to put these data centers in very small countries. We expect to have many, many more data centers than any other cloud provider. But we also put those data centers at customers. Nomura Research, NRI, which resells Oracle Cloud capacity in Japan has two dedicated regions and are building two more. They run the Tokyo Stock Exchange. I don't know of any clouds that are running stock exchanges other than ours. And, again, it's because of the extreme reliability and security that we get with all of the automation that's included with our data center. So we have cost advantages, we have performance advantages, we have security advantages. And that's why we are growing much faster than any of the other hyperscalers. Mark Murphy: Thank you very much. Operator: We'll take our next question from Raimo Lenschow with Barclays Capital. 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. Larry Ellison: Yeah, well the back-office in the cloud is very different than the back-office on-premise. And we have a big advantage that we are by far and away the biggest. I don't know, 95% of the cloud ERP market in terms of actual live customers using it. And we have an important partnership with JPMorgan Chase and we'll be announcing some more partnerships in the financial community at the upcoming CloudWorld, where we automate a lot of e-commerce, B2B e-commerce right in the cloud. So what is B2B big e-commerce between two Oracle Cloud customers, two Oracle ERP cloud customers? It's one Oracle procurement system talking to another Oracle order management system and financing the transaction through their bank. We automate that entirely in the cloud. If your bank is JPMorgan Chase, they originate the loan right along with your purchase. It’s e-commerce for B2B, with banking and shipping and insurance, all included and rolled together. No one -- we've done a great job as an industry, automating e-commerce for B2C. I mean, Amazon, Walmart, others have done a brilliant job in that. We've been doing that for a long time. We have not got the equivalent in B2B commerce because B2B transactions are much more complex. In the cloud, you can get all the parties together, the shippers, the insurance company, the manufacturers, the purchasers and we can automate that entirely within the Oracle Cloud. One ERP system talking to another, talking to their bank, talking to their insurance, doing a loan origination, getting it shipped and insured. So we make doing business much easier for our customers when they move to a modern cloud ERP system versus the on-premise ERP system that came before. Raimo Lenschow: Okay. Thank you. Operator: We will take our next question from Mark Moerdler with Bernstein. 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. Larry Ellison: Well, if you're -- you're constantly training these models. Keep in mind, you have to bring in new data if you're in -- obviously in the healthcare field, in the legal field, new cases are being judged, new researches being published all the time and for your AI models to be relevant they have to be up-to-date. So it's not that you train and then do nothing but inferencing thereafter. So you're training and your inferencing sit right next to each other. As long as we can do this stuff twice as fast as everybody else that's on the -- not just on the training side, that's also on the inferencing side, then we are going to be half the cost or better. So we think we are going to be very, very competitive across the board whether it's training or an inferencing. So we don't -- so we are pretty confident that we've got a cost-performance advantages. Again, if you run twice as fast in the cloud, you cost half as much because you pay by the hour. So the performance advantage is really an enormous cost advantage for us. We don't see that going away anytime soon, and it applies to inferencing as well as well as training. Now as far as GPUs, are GPUs a low-margin business? Not for a 100% automated cloud with very, very low cost. We think, in some cases, our prices for GPU training, which are very profitable by the way, for us, but are often lower -- our prices are lower than the cost of other hyperscalers doing the training. Mark Moerdler: Thank you. That's very helpful. Operator: We'll take our next question from Keith Weiss with Morgan Stanley. 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? Larry Ellison: Okay. I'll talk about the progress on taking the existing Millennium’s Cerner software and moving it to new Millennium. We basically rewriting that software piece at a time by the way. It's not going to be a big rip and replace it all. There's a two-phase process with Cerner. The first thing is to get the lift and shift and get the existing system hardened, which we've done and moving the customers to the cloud, which we are in the process of moving everybody to the cloud. That will give them better performance, better security and new features will then start showing up with the system. And so there's a two-phase shift to the cloud, we are well on our way. The next is replace feature after feature after feature of the older Cerner system with a new Cerner system, new Millennium, which we are not coding in Java, like we usually do. The new Cerner system is being generated, as you know, generative AI generates code. We have an application generator called APEX. And we are not writing code for the new Cerner. We are generating that code in APEX, and it's going extremely well. Again, one of the great things about code generators is they don't make mistakes. Well, either they make the same mistake over and over again or once you fix the mistake, you fix it everywhere. So the code gen -- we are using a code generator, and to write the new features in Cerner and it's coming along very, very nicely. Also on the business side of things, we -- again, we think that Cerner business is going to get stronger and stronger again, Safra made the point. The old Cerner business you'd sell licenses. You sell a big contract and you get a big chunk of revenue in that quarter. Our new business model, as you know is cloud, so we get a big Cerner award and we get that money now over time rather than all upfront. So that's, if you will, a bit of a revenue headwind, but the Cerner business is doing extraordinarily well. 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. Larry Ellison: Let me let me just reinforce what Safra just said. We love to save money. One of the things we did with our data centers is we automated them. We -- what we saved labor costs and we saved -- we have better security and better reliability because we eliminated human error. With Cerner, the rewrite of Cerner, it's not armies of programmers that are going be rewriting this. We are generating the new Millennium software using APEX. And that's also going to save us a lot of human labor and generate higher quality code and higher quality user interfaces and better security all at once. Keith Weiss: Helpful. Thank you, guys. Operator: We will take our last question from John DiFucci with Guggenheim. 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? Safra Catz: Yes, okay. Let me start with yes. And as I want to remind you of course, I want to remind you 29% of bigger numbers is more. Okay. So, you know, last year we were smaller, and this year we continue to plan on doing the 29% may be better, all of it is dependent on us getting our data centers filled up and built out as fast as possible. The level of demand we have is stunning. Stunning is the only word I can use, and I don't want to get over overly exuberant simply because we do have to continue to build out our systems, et cetera. And so yes, a very strong momentum to the cloud, and again with the focus we told you. We are bringing our customers to the cloud and that's going to have us focusing on growing that and stronger momentum there. John DiFucci: Okay, great. Very clear. Yes and yes. Got it. Thanks. Ken Bond: All right. Thank you, John, and thank you, Lisa. 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 Lisa for closing. Operator: And that does conclude today's presentation. Thank you for your participation and you may now disconnect.

Operator: Good day everyone and welcome to the Oracle Fourth Quarter and Fiscal Year 2023 Earnings Call. Today’s call is being recorded. I would now like to turn the conference over to Ken Bond. Please go ahead. 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. Safra Catz: Thanks, Ken, and good afternoon, everyone. As you can see, Q4 was another fantastic quarter and the end of a great year. But before I get to the numbers, I'd like to go over our journey to get here. Three years ago, I shared with you that our own business transformation had reached a crossover point as our fast growing businesses had eclipsed the size of our declining businesses. And as a result, this would inevitably drive revenue growth acceleration going forward. Now, I don't blame you for not believing me at the time. Fiscal year 2020 growth was zero. Well, as you can see, this has played out with organic revenue growth accelerating significantly. And that's despite the closure of our nearly half a billion dollar Russia business. Since fiscal year 2020, our strategic back office SaaS business has more than doubled in size. And consumption of our Gen 2 cloud infrastructure service is now seven times larger. And while competitors have seen their growth rates drop precipitously over the last year, our cloud infrastructure growth rate has essentially doubled from last year to 77% this quarter and with Gen 2 OCI growth even higher. And we're far from done. In fact, I just told my team, I think we're at about the middle of the beginning. Looking ahead, I see even more growth opportunities that should help power future growth acceleration in the future. We remain committed to the fiscal year 2026 targets that we shared with you last fall at our financial analyst meeting. And our exploding AI demand leaves us significant upside. Our momentum has been driven by two fundamental differences from our competition. One, highly differentiated technology. And two, a much better customer experience. Firstly, our cloud applications are very popular with a growing base of customers in part because we are the most modern, comprehensive, and innovative set of apps across back office, CX, and industry applications. We implemented AI machine learning capabilities years before anyone was talking about it. And it helps our customers run their businesses every day. To complete the picture, we can serve customers of any size around the world from small businesses on NetSuite to global enterprise on Fusion in all industries. Having the best cloud application technology has helped us grow the business to $11 billion in SaaS revenue while expanding gross margins. On the infrastructure side, we're seeing more and more media articles reporting on the unique capabilities of OCI and our database technologies. Larry will explain our unique differentiation in a moment. But the result is that customers are choosing to run on Oracle infrastructure for all their requirements, be they new services like AI training or services we're known for, like database and Java. To complement the technology, we've changed our culture such that we are totally focused on our customers' success. That partnership spirit starts with engineering as we work hand-in-hand with companies as they try out our technology and continues all the way through their success with us. There's no question that this close partnership with our customers has led to our success. As part of that, we've also created an organization called Customer Success Services, or CSS. This group ensures that customers get the most value from their Oracle purchases, from planning to activation to implementation to support to anything else they need to succeed. We think this unique approach, which customers already tell us they love, ultimately drives overall customer satisfaction, and that results in higher renewal rates, expansion rates, and referencing. Now, I'll turn to Q4. As always, I'll discuss financials using constant currency growth rates, and also provide a full picture. I'm going to share with you results, including and some excluding Cerner, so that you have it all. Total cloud revenues, SaaS plus IaaS, was $4.4 billion, up 55%, with IaaS revenue of $1.4 billion, up 77%, and SaaS revenue of $3 billion, up 47%. Excluding Cerner, total cloud revenue, SaaS plus IaaS, was up more than 33%, at $3.8 billion. Total cloud services and license support revenue for the quarter was $9.4 billion, up 25%, driven again by our strategic cloud applications, autonomous database, and our Gen 2 OCI. Application subscription revenues, which include product support, were $4.4 billion, up 37%. Application-specific revenues, including support, but excluding Cerner, were $3.4 billion, up 11%. SaaS cloud revenue, again, excluding Cerner, was $2.4 billion, was up 17%. Our strategic back office SaaS applications now have an annualized revenue of $6.6 billion, and grew 24%, including Fusion ERP, up 28%, and NetSuite ERP, up 24%. Together, our strategic back office businesses are now larger and have grown faster than our local competitor for four straight years. Infrastructure subscription revenues, which also include support, were $5 billion, up 15%. As mentioned already, infrastructure cloud services revenue was up 77%, excluding legacy hosting services. Infrastructure cloud services revenue grew 89%, with an annualized revenue of $5.2 billion, including OCI consumption revenue, which was up 112%. Cloud at customer consumption revenue was up 60%, and autonomous database was up 47%. Database subscription revenues, which include database support, were up 6%, highlighted by cloud database services, which were up 41%. As on-premise databases migrate to the cloud and cloud at customer, we expect these cloud database services will be a third leg of revenue growth and revenue growth acceleration, alongside back office SaaS and Gen2 OCI cloud services. Software license revenues were $2.2 billion, down 14%, following the 25% growth we saw a year ago in Q4. So, all-in total revenues for the quarter, including Cerner's revenue contribution of $1.5 billion, were $13.8 billion, up 18%. Shifting to margins, the gross margin percentage for cloud services and license support was 78%, as a result of the mix between support and cloud. Last year, Oracle license support revenues, with its mid-90s gross margins, represented about 62% of cloud services and license support revenue, and now it's down to 53%. But this is happening because our cloud services are growing much, much faster than license support, even as license support continues to grow. Most importantly, gross profit dollars of cloud services and license support grew 19% with Cerner, 10% excluding Cerner in Q4. Additionally, I would note that IaaS gross margins improved substantially from last year, and I expect IaaS gross margins will continue to improve. While we have continued to build data center capacity, we've also seen our margins go higher as these new cloud regions fill up. Non-GAAP operating income was $6.2 billion, up 12% from last year. The operating margin was 44% as we continued to integrate Cerner. As we drive Cerner profitability to Oracle standards and continue to benefit from economies of scale in the cloud, we will not only continue to grow operating income, but we will also grow the operating margin percentages. The non-GAAP tax rate for the quarter was 9.2%, and the non-GAAP EPS was $1.47 in U.S. dollars, up 8% in USD, 10% in constant currency. The GAAP EPS was $1.19. For the full fiscal year, total company revenue was $50 billion, up 22%. And excluding revenue, total revenue grew 7%. Total application subscriptions were 35%, and 10%, excluding Cerner, compared to 8% last year. And total infrastructure grew 10%, compared with 5% growth last year. Clearly, our revenue growth continued to accelerate again this year as investments into our cloud businesses are paying off. Total cloud services and license support revenue was $35.3 billion, up 21%. Total cloud services by itself were up 50%, to $15.9 billion. And excluding Cerner, total cloud services were up 29%, to $13.6 billion. And with revenue growth acceleration in both strategic back office cloud applications, which were up 27% for the year, and cloud infrastructure services, which were up 63% for the year. Non-GAAP EPS was $5.12 in USD, up 4% in USD, and up 10% in constant currency. The full year operating margin percentage was 42%. At quarter end, we had nearly $10.2 billion in cash and marketable securities. And the short-term deferred revenue balance was $9 billion, up 9%. Operating cash flow for the quarter was up 42%, at $5.6 billion. While free cash flow was up 46%, at $3.7 billion. Now over the last four quarters, operating cash flow was $17.2 billion, up 80% from last year, as we're now seeing cash flow benefits from our cloud transformation. With capital expenditures of $8.7 billion this year, free cash flow was $8.5 billion, up from $5 billion last year. And I expect that we will see very good results in our fiscal 24 free cash flow. The remaining performance obligation, or RPO balance, is $67.9 billion, up 47% in constant currency, due to strong cloud bookings as well as Cerner. I would also note that organic RPO was 15% in constant currency, as a result of our customers burning through their commitments at a heightened rate. I expect that you'll see this number run up as customers reload and new customers sign up. Approximately 49% of total RPO is expected to be recognized as revenue over the next 12 months. CapEx was $1.9 billion in Q4 and $8.7 billion for fiscal year 2023, as we continue to build capacity for existing bookings and our customers' growing needs. Our investment strategy for adding capacity remains to build many, many identical cloud regions. Our starting point is smaller, which allows us to go where competitors cannot. And this continues to be an advantage for us. Given the demand we have and see in our pipeline, I've increased our CapEx projection and I now expect the fiscal 2024 will be similar to this year's CapEx. I also expect our Gen 2 OCI business will have another excellent year of revenue growth as existing centers fill up and new centers come online. As always, we remain careful to pace our investments appropriately and in line with booking trends, which is why our gross margins are up in our cloud. We now have 42 public cloud regions around the world with another 7 being built. 12 of these public regions interconnect with Microsoft Azure, giving customers true multi-cloud capabilities. We have many, many clouded customer implementations, 10 dedicated regions, and 9 more planned. And lastly, we have 9 national security regions live with immense demand for more. As we've said before, we're committed to returning value to our shareholders through technical innovations, strategic acquisitions, stock repurchases, prudent use of debt, and a dividend. This year, this fiscal year, we repurchased 17 million shares for a total of $1.3 billion. In addition, we paid out dividends of $3.7 billion over the last 12 months as the Board of Directors declared a quarterly dividend of $0.40 per share. Now to guidance. And as I've said before, our fundamental principle is to grow EPS while substantially increasing cloud revenue growth. Let me turn to my guidance for Q1, which I'll review on a non-GAAP basis like everything else. If currency exchange rates remain as they are now, currency should have a 0 to 1% positive effect on total revenue and a $0.01 positive effect on EPS in Q1. However, actual currency impact may be different. Total revenues for Q1, including Cerner, are expected to grow from 7% to 9% in constant currency and are expected to grow from 8% to 10% in USD at today's exchange rate. Additional upside depends on how fast we can put out even more capacity to our customers. Total cloud revenue, again, excluding Cerner, is expected to grow from 28% to 30% in constant currency and 29% to 31% in USD. Non-GAAP EPS is expected to grow between 8% to 12% and be between $1.11 and $1.15 in constant currency. Non-GAAP EPS is expected to grow between 9% to 13% and be between $1.12 and $1.16 in USD. My EPS guidance assumes a base tax rate of 19.5. However, as you see nearly every quarter, one-time tax events could cause actual tax rates to vary. Now, before I finish, let me also give you some initial thoughts on fiscal year 2024. As I described, and Larry will elaborate in depth, we are seeing unprecedented demand for our cloud services and especially our AI services. As a result, I expect cloud revenue, excluding Cerner, will continue growing at at least similar rates to what we experienced in fiscal 2023, even though our base is much bigger and may be higher. As our high-growth cloud revenues are becoming a larger, larger portion of total revenue, we are seeing an acceleration of our total revenue growth. I expect this trend will continue in fiscal 2024. And of course, we also expect to deliver a higher non-GAAP operating margin percentage this coming year as well. Okay. Before I hand off to Larry, I want to take a moment to thank our customers for making fiscal year 2023 such an enormous success. You've been wonderful partners, and we thank you for your trust in us. And I want to thank our employees for being focused on advancing our customers' missions so spectacularly. Some of you are new, and many of you have been with us for years, in fact, even decades. And I think you all see that our best days are, in fact, ahead of us. Thank you for your loyalty and for your incredibly hard work. And thank you, Larry, our CTO, our Chairman, and our founder for leading with brilliance, determination, and vision, and allowing us to all be part of this incredible journey, which is just getting started. So thanks, Larry. And with that, I'll turn it over to you for your comments. 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. Safra Catz: I think we're going to take some questions. Ken? Ken Bond: Yes, thank you, Safra. Thank you, Larry. Lisa, if we could please prepare the audience for Q&A. Operator: Thank you. [Operator Instructions] We'll take our first question from John DiFucci with Guggenheim. 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? Safra Catz: Let me take a start at it. And Larry, you add in here. First of all, the fact that OCI is just growing and accelerating is because customers want to spend less. And they also need to do more. They need to stay competitive. They need to stay agile. And so our technology, whether it's our applications, which allow them to spend a lot less and make better decisions running their business, so that's very, very natural. So our Fusion, and there's just so many things about Fusion that are so compelling. It costs less, it just helps them run their business. But then you go to OCI, where some of these customers are coming from our competitors. And as Larry said, imagine, Larry talked about the workload being twice as fast on OCI. But imagine it's 10 times as fast, or 100 times faster, or as is common in some cases, 1,000 times faster. So imagine what that bill looks like. So we have compelling technology at a much lower price. And that's without a doubt causing our customers to move to us more quickly. I don't know, Larry, if you want to add into that. 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. John DiFucci: Okay. Well, thank you, and really nice job. Thanks. Larry Ellison: Thank you. Operator: We'll take our next question from Brad Zelnick with Deutsche Bank. 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. Larry Ellison: Yes, absolutely. It's very hard to answer that question. A long time ago, I said the biggest difference between - the biggest strategic difference between Oracle's cloud and everyone else's cloud is actually not the RDMA network. That's a technical difference. The biggest strategic difference is that we do both that we use our infrastructure and build applications with it. So we learn a lot about how we can improve our infrastructure by building lots of applications, enterprise-scale applications, on top of our infrastructure. So we have this continuous feedback loop. We're building applications, obtaining insights, making improvements in our productivity. We have a new programming language. We have Java, and we love Java. We use it a lot for building applications. But we have this other low-code application development tool called APEX. And we're now building a lot of our applications in APEX. And our productivity gains are, again, a factor of 10. And we build the applications in one tenth the time, or one tenth the amount of people, or at one tenth the cost. But these are not typical low-code applications. These are applications that can scale to millions of users and all over the world. So most low-code applications are for small projects. We use them for applications we've rolled out globally. And we've made our underlying infrastructure, the APEX development environment, the underlying APEX database, which is the Oracle Autonomous Database, has made our application developers dramatically more productive. It's one of the reasons why we bought into the idea that we could rewrite a whole suite of medical applications in a very, very short period of time, that we could redo Cerner very, very quickly because of these underlying tools. Let me close with one last thing. Again, we use AI technology to make our database better. And it's an autonomous database. You don't need DBAs. It recovers itself. It updates itself. It adds more space. It really is a self-driving database. We've used AI technology to do that. We've used AI technology throughout our cloud, where our cloud is self-healing. We repair bugs while the cloud is running. We have an autonomous Linux operating system that's different than all of the other Linuxes. You can patch it online. It patches itself online. It repairs itself online. So again, by being in those two businesses, applications and underlying infrastructure, we again, use our infrastructure and make it better to make our applications better and we gain insights as what we need to do with our, what we need to add to our infrastructure to make the applications better. So, infrastructures make the applications better, applications make the infrastructure better. We're the only company with that continuous feedback loop and I think it gives us a huge competitive advantage in technology. It's why we have technologies that other people don't have. Brad Zelnick: Very helpful, color. Thank you, Larry. Operator: We'll take our next question from Siti Panigrahi with Mizuho. 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? Safra Catz: Okay. Well, I will tell you that there's no question. Our secret weapon is the fact that we have vertical applications also. Many of our customers end up wanting to buy a vertical application and Fusion together and it's industry by industry. We will be posting online probably some of our wins for the quarter, but what you'll see is when we have existing customers in a segment and a vertical application in that, we truly are, without a doubt, the most popular. Whether it's healthcare with all of our existing customers, whether they be Cerner customers, the fact that we have ERP and HCM, SCM, all of our horizontal applications, CX, as well as the vertical applications, it makes us very tough to beat. New healthcare wins are going to be listed many, many, many go-lives, the same in financial services, retail, hospitality, these whole segments end up wanting to buy their entire solution from us. And that really makes us also very sensitive to their needs and we can fill them much better. So, that's been a big winner for us. And I will tell you that our customers also, when they move from on-premise, they realize that they're moving into the 21st century with a much better system, but also a much lower cost system that also is kept current every 90 days. New capabilities become available. They'll never have to do that big implementation every five years like some of the older companies who say they're cloud, but aren't actually cloud. They're just hosted. So, our products are just so differentiated all around that we're just building momentum around the world. Go ahead. 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. Siti Panigrahi: That's a perfect example, Larry. Thank you both for the color. Operator: We'll take our next question from Raimo Lenschow with Barclays. Raimo Lenschow: Hey, thank you. Could I switch gear a little bit? A question for Safra. Safra, we now have Cerner in as part of Oracle. Where are we on the cost, on the synergy capture and cost takeout? And so are we, do you see we are done there or are we kind of still at the beginning of a journey? Thank you. And congrats for me as well. 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. Raimo Lenschow: Okay, perfect. Thank you. Safra Catz: Thank you. Operator: We'll take our next question from Mark Moerdler with Bernstein Research. 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. Safra Catz: I don't know, Larry, if you want to take a stab at it. The reality is that our customers run from very small to very large. As a general matter, we're a small percentage of their IT costs when they get started and sometimes a small percentage of their cloud spending. As they try us out, they move larger percentages of their business off of other clouds or from on-premise. We're at the very beginning of this movement, especially on the database side as more and more of our customers, our big customers often have cloud a customer or dedicated regions is sort of their ultimate goal for their most critical database workloads. We're at the absolute beginning of that with most of our customers. It's basically what we find is if you give us a chance, it is so much better, so much more cost effective, of course, so much more secure that customers very quickly realize how advantageous it is to move. It's all industries. As some of you know, auto companies are doing their simulations with us. It's really across industries, across sizes. It's very, very diversified. Larry, I don't know if you have additional comments. 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. Mark Moerdler: That's very helpful. I really appreciate it. Operator: And we'll take the last question from Kirk Materne of Evercore ISI. Kirk Materne: Hi, thanks very much. Just a quick one for Safra, if I could. Safra, obviously, a very strong free cash flow quarter. We've gotten some questions from investors wondering about the CapEx this quarter, where you saw some efficiencies, how you're able to keep CapEx flat going into next year, given the fact that you're going to seeing this great demand for OCI. So could you double click on that a little bit for us? Thanks. 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. Kirk Materne: Great, thanks and congrats on the order. Safra Catz: Thank you. Ken Bond: Thank you, Safra. Thank you, Kirk. A telephonic replay of this conference call will be available for 24 hours on our Investor Relations website. Thank you for joining us on the call today and with that, I'll turn the call back to Lisa for closing. Operator: Thank you. And that does conclude today's presentation. Thank you for your participation and you may now disconnect.

Operator: Good afternoon. My name is Emma, and I will be your conference operator today. At this time, I would like to welcome everyone to the Oracle Corporation's Third Quarter 2023 Earnings Call. [Operator Instructions] Ken Bond, Senior VP of Investor Relations, you may begin your conference. 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. Safra Catz : Thanks, Ken, and good afternoon, everyone. Q3 represented another great quarter with continued momentum on the top and bottom line. But before I get to the numbers, I want to share with you a few thoughts that explain what's behind our continued financial success. First, our cloud offerings drive operational efficiency. In fact, one of our competitors recently coined the term, the Oracle playbook, which I absolutely love, because the Oracle playbook is all about doing more while spending less. As you all know, we started this ourselves over 20 years ago and have kept it up over all these years, resulting in the highest margins in the software business for decades. Using our own products and services enables us to increase our investments for growth, while also growing profitability, including through acquisitions as well as during our move to the cloud. We are constantly talking with our customers about leveraging Oracle technology to accelerate their speed to market and reduce cost, all the while improving the experience they deliver to their customers. The combination of Oracle's infrastructure and apps, which is unique in the cloud market, increases the intensity of business transformation. Cloud is no longer about just renting commodity white boxes. It's about velocity and value. We have become the enterprise technology vendor of choice because we have products and services that help our customers drive cost efficiencies and modernize their businesses. Second, while AI has been dominating the recent news cycle, the truth is that our Fusion and Infrastructure customers have been using AI as an integral part of their business for some time. Oracle Fusion, with embedded AI, enables customers to close their books in days, not weeks. Oracle AI provides more relevant sales leads. Oracle AI increases infrastructure performance and security with no human intervention. And customers using OCI get AI as a service to help drive their own business transformation. Given our scale and our information advantage across industries and technologies, we are constantly training our applications to do more for our customers, whether it's further what our customers get when they use our platform. And on our Gen 2 OCI platform, the architecture and unique network capability has fast become the platform of choice for many AI companies because OCI runs workloads faster. And time is money in the cloud. So coming to us saves our customers money. Third, customers are putting Oracle's comprehensive and powerful ways to accelerate their businesses. The Uber win was notable because we have yet another example of an industry-transforming company concluding that Oracle's cloud, performance and security exceeds that of our competitors and at a price point that represents a sustainable long-term partnership. Uber will use more of our technology to drive value in their own business. And you're going to see a rising list of these types of strategic wins pile up in the quarters to come. Finally, before I move to the numbers, and hopefully, no one missed this fact, that we're announcing our earnings nine days after the close of the quarter, and we expect to file the Q right away. We continue to set the standard in operating efficiency which helps customers see what's possible when they are working with us. Okay. Now to the Q3 results. As always, I'll discuss them using constant currency growth rate to provide a full picture both organically and otherwise, I'm going to go over the revenue results, including Cerner, and then some revenue results excluding Cerner. Total cloud revenue, that's SaaS plus IaaS, including Cerner, was $4.1 billion, up 48% in constant currency, with IaaS revenue of $1.2 billion, up 57% and SaaS revenue of $2.9 billion, up 44%. Now excluding Cerner, total cloud revenue was up 28% in constant currency at $3.5 billion. Total cloud services and license support revenue for the quarter, including Cerner, was $8.9 billion, up 20% in constant currency, driven again by our strategic cloud applications, autonomous database and our Gen 2 OCI. Application subscription revenues, which includes support, were $4.2 billion and up 33% in constant currency. Infrastructure subscription revenues, also including support, were $4.8 billion, up 10% in constant currency. Application subscription revenues, including support but excluding Cerner, were $3.4 billion, up 8% in constant currency. SaaS cloud revenue, again, excluding Cerner, was $2.3 billion and was up 16%. Our strategic back-office SaaS applications now have an annualized revenue of $6.2 billion and grew 25% in constant currency, including Fusion ERP, up against 28% and NetSuite ERP, up 26% this quarter. As mentioned already, infrastructure cloud services revenue was up 57% in constant currency. And when you exclude our legacy hosting services, infrastructure cloud services revenue grew 65%, with an annualized revenue of $4.4 billion, including OCI consumption revenue, which was up 86%, cloud customer consumption revenue, up 73%, and autonomous database, up 50%. Database subscription revenues, which include database support, were up 3% in constant currency, highlighted by cloud database services, which were up 40%. Database's subscription revenue is largely made up of on-premise database support. But as these databases migrate from on-premise to the cloud and cloud customer, we expect these cloud database services will be the third leg of revenue growth alongside back-office SaaS and Gen 2 OCI cloud services. Software license revenue, including Cerner, were $1.3 billion, up 4% in constant currency. So all in, total revenues for the quarter were $12.4 billion, up 21% in constant currency. Excluding Cerner's contribution of $1.5 billion, organic revenue was up 7% in constant currency. As a reminder, we no longer operate in Russia, causing organic revenue growth to be negatively affected by 1% of growth over last year. Shifting to margins. The gross margin for cloud services and license support was 79% as a result of the mix between support and cloud. Last year, Oracle license support revenue with its mid-90s gross margins represented about 63% of cloud services and license support revenue. Now because our cloud services are growing so fast, it's down to 55%. Additionally, I would note that IaaS gross margins improved substantially from last year, and I expect IaaS gross margins will continue to improve. While we have continued to build data center capacity, we've also seen our margins go higher as these new cloud regions fill up. Most importantly, gross profit dollars of cloud services and license support grew 13% with Cerner and 6% excluding Cerner. Non-GAAP operating income was $5.2 billion, up 11% from last year. The operating margin, including Cerner, was 42% as we continue to integrate Cerner in the quarter As we drive Cerner profitability to Oracle standards and continue to benefit from economies of scale in the cloud, we will not only continue to grow operating income, but we will also grow the operating margin percentages. For example, while we have only owned Cerner for three quarters, we have already improved its operating margin by over 5 percentage points compared to before the acquisition. And by the way, I actually expect this year, FY 2023, the one we are closing out in one more quarter, will be the trough year for operating margins and percentages as our margin improvement initiatives play out. The non-GAAP tax rate for the quarter was 18.4% and non-GAAP EPS was $1.22 in U.S. dollars, up 8% in USD, up 13% in constant currency. GAAP EPS was $0.68 in U.S. dollars. At quarter end, we had nearly $8.8 billion in cash and marketable securities. The short-term deferred revenue balance was $8.6 billion, up 14% in constant currency. Over the last four quarters, operating cash flow was $15.5 billion, and free cash flow was $7.3 billion with capital expenditures of $8.2 billion. Operating cash flow for the quarter was up 11% at $4.3 billion. The remaining performance obligation or RPO balance is $62.3 billion, up 66% in constant currency due to strong cloud bookings as well as Cerner, which Larry will discuss in a moment. I will also note that the organic RPO growth rate was 26% in constant currency. Approximately 48% of total RPO is expected to be recognized as revenue over the next 12 months. CapEx this quarter was $2.6 billion as we continue to build capacity for existing bookings and our customers' growing needs. Given the demand you see reflected in the RPO as well as what we see in our pipeline, I expect that our CapEx investments will be about where it is right now for the foreseeable future. As always, we remain careful to pace our investments appropriately and in line with booking trends. We now have 41 public cloud regions around the world with another 8 being built. In addition, 12 of these public cloud regions interconnect with Azure, giving customers true multi-cloud capabilities. We have many cloud customer implementations, 10 dedicated regions and another 9 national security regions with increasing demand for more. As we've said before, we are committed to returning value to our shareholders through technical innovation, strategic acquisitions, stock repurchases, prudent use of debt and a dividend. This quarter, we repurchased 1.8 million shares for a total of $150 million. In addition, we paid out dividends of $863 million in the quarter. And the Board of Directors increased the quarterly dividend 25% from $0.32 to $0.40 per share. Our financial strategy remains focused on growing non-GAAP operating and pre-tax income while substantially increasing cloud revenue growth. And given increasing customer interest in our cloud technologies, we will continue to prudently invest to meet this demand. As a reminder, because now we're going to talk about Q4, last Q4, we had a spectacular double-digit revenue growth rate, highlighted by 25% constant currency growth in software license. With our continued migration to the cloud, we expect that we will continue to win big deals that are more subscription driven than license driven. These big subscription wins add to the backlog and are recognized over time rather than upfront. That is exactly what we want to see as our cloud business continues to see excellent growth. So now let me turn to my guidance for Q4, which I'll provide on a non-GAAP basis. Now assuming the currency exchange rates remain the same as they are now, currency would have a 2% negative effect on total revenue and at least 3% plus negative effect on EPS in Q4. But as I say every quarter, the actual currency impact may be very different by quarter end. Okay. Here we go. Total revenues for Q4, including Cerner, are expected to grow from 17% to 19% in constant currency, and thus are expected to grow 15 to 17 in USD. Total cloud growth, including Cerner, is expected to grow from 51% to 53% in constant currency, 49 to 51 in USD. I expect total cloud growth for Q4, excluding Cerner, will be above 30% in constant currency. I expect growth in operating profit to be double digits. As you all know, my non-GAAP tax rate guidance is typically 20.5. However, our tax rates over the last two years and Q4 have averaged around 11%, and I anticipate that in Q4, the most likely outcome is a non-GAAP tax rate of around 14.5%. And we've used this rate in determining our EPS guidance for Q4. Now mind you, that's comparing it to 11 or 10.5, I think, last year. Regardless, like past quarters, the actual tax rate for Q4 could be higher or lower and affect our actual EPS. With that, non-GAAP EPS is expected to grow between 3% and 5% and between $1.59 and $1.63 in constant currency. Non-GAAP EPS is expected to grow between 1% and 3% and be between $1.56 and $1.60 in USD. What have I got here? Anyway, as I've said before, Cerner will be accretive to earnings this year, including Q4. And with that, I'll turn it over to Larry for his comments. 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. Ken Bond: Thank you, Larry. Emma, if you could please poll the audience for questions? Operator: [Operator Instructions] Your first question today comes from the line of Mark Moerdler with Bernstein. Mark Moerdler: With the slowdown we're seeing across so many IaaS PaaS vendors over the last couple of quarters and especially this quarter, why has OCI Gen 2 held up so well? You have born in the cloud customers, which you're seeing weakness elsewhere, you have enterprises. Is it simply low price? Is it performance? Is it you're at the right time in the economic cycle to be capturing new customers? Is there some dynamics around expiry credits that you're -- that are driving this? The difference is too stark. I think it's really important. So the more color you can give, the better. 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. Operator: Your next question comes from the line of Mark Murphy with JPMorgan. 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. Larry Ellison : The answer is absolutely yes. There's actually more demand for AI processing than there is available capacity. So -- and we're the only ones, again, that can dynamically -- and by the way -- and we're short. We are expanding as fast as we can. It's really -- it's an exciting opportunity, but it's challenging when there's more demand than supply. But the great -- the difference with us is our standard network allows us to group together these GPUs and have them attack these problems. Whether it's a medical diagnostic problem or it's a generative language problem, a la ChatGPT. So we have a lot of ISVs seeking us out because we have the -- not only do we have the most cost-effective solution, we can make the solution available to them very quickly because it runs on our standard network. So they can -- we can create a cluster for them, they run their workload. And the moment their workload is through running, we can reallocate that cluster or break that cluster up and allocate it to other users. The other guys can't do that, they can't do it dynamically. Operator: Your next question comes from the line of Derrick Wood with TD Cowen. Derrick Wood : Thanks for taking my question and I'll echo my congratulations, especially on sustaining very high OCI growth. Larry, one area we've been doing more work on is how cloud vendors can help transform the telco market, including migrating their IT infrastructure and their network operations to the public cloud, which should lead to greater efficiencies and also give them a more effective platform to roll out new 5G and edge application services. I know you guys touched on this a bit at last year's Analyst Day, but I was just hoping to get an update on how you're thinking about that telco opportunity with the Oracle Stack, especially with OCI? Who's some of the telco operators you're partnering with? And how you see this playing out over the next couple of years? Yes. This is an exciting business for us. I mean, we're actually creating dedicated data centers for Vodafone. I'm not sure how many we've already built as yet. But if you will, Vodafone is moving a substantial part of their business into the Oracle Cloud. And again, we have this ability to build data centers for customers. And those data centers are OCI data centers that we run for them, but they are dedicated to workloads at a particular customer. Nomura, the first of them we built a few years ago in Japan for Nomura. And they have a primary and now they have a backup, they run the Tokyo Stock Exchange on that, and they sell it into financial services in Japan. But that's an OCI data center that we built for Nomura, where they're reselling the capabilities. Vodafone is again another example of someone who were building dedicated data -- these are OCI data centers that we run there. In our constellation of data centers, they look like all the other OCI data centers. They're automated like all the other OCI data centers. So we take advantage of those economies of scale and that skilled labor that runs them. And a lot -- again, a lot of it is AI, but a lot of it we still have human beings. We've done that for Vodafone. Same thing with DISH Network's entry into telephony is enabled by similar architectural approach using OCI. I can go on and on. But we have -- but it's one of our industries of emphasis. And I think you'll see us -- and that's going to be a huge area of growth for us. As telcos, we've always been very strong in telcos. And now they're beginning to move to the cloud. And we're seeing some major commitments from some of our largest customers around the world. We're also seeing financial services companies take a slightly different point of view, but where they want to keep things, if you will, "on-premise." But since we can build an OCI region and dedicate it to a bank, there we're doing more, if you will, call it, clouded customer where we built a dedicated region for a financial service. Nomura was an example, Nomura in Japan, but there are other examples. We build these clouds for banks. So I mean, huge industries moving to the cloud in a slightly different way than other industries, not moving to public cloud, but rather preferring to have these dedicated regions. So it's just their application, just their applications in this cloud. We have the ability to do that. Again, the Amazon does not, and Microsoft does not, and Google does not. Operator: Your next question comes from the line of John DiFucci with Guggenheim. John DiFucci : I think this question is for Safra. We've heard a lot about your committed cloud mega deals, but you sometimes have talked about pure consumption or pay-as-you-go deals. Other vendors that employ the pay-as-you-go model, such as Mongo and even Snowflake, to some extent, who had been getting a ton of traction in the market, have either seen or they anticipate dramatic slowdowns. We haven't seen anything like that in your results at all and certainly not in your guidance. But can you talk about your exposure to such deals and how they're progressing? 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. John DiFucci : So the commitment is these -- a lot of these, it sounds like these people are committed to ramping up to the full capacity of their data center and not until they do that, do they shut down for the most part their -- the data centers they're replacing? Safra Catz : Yes. John DiFucci : Okay. Safra Catz: Yes. Just so that we're clear here. Pay-as-you-go at Oracle is less than 5% of our business. Okay? John DiFucci : Okay. Safra Catz : Okay. Is that helpful? John DiFucci : That's very clear. Thank you very much, Safra. Operator: Your last question today comes from the line of Brad Zelnick with Deutsche Bank. Brad Zelnick : Larry, as I think about the strong momentum in Cerner, expanding the contract base by $5 billion and your expectations for the business to accelerate, can you parse through the drivers in terms of new logo win rates versus the expansion in cross-sell you're doing with Fusion, for example? And then also, Larry, you touched on the idea of a single medical record. People have been talking about this for decades. When does it become clear that Oracle is helping improve the quality of care and saving lives? And I've got a quick follow-up for Safra if Ken will allow. 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. Brad Zelnick : The mission is so important. If I could just sneak in a quick one for Safra to follow up. Safra, 30% organic cloud growth for the year implies significant acceleration in Q4. What supports your confidence in delivering that? 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. Ken Bond : Thank you, Brad and Safra. 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 Emma for closing. Operator: Thank you. This concludes today's conference call. Thank you for attending. You may now disconnect.

Operator: Good afternoon, ladies and gentlemen. Welcome to the Oracle Q2 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. And please be advised that this call is being recorded. After the speakers’ prepared remarks, there will be a question-and-answer session. [Operator Instructions] And at this time, I’d like to turn the call over to Mr. Ken Bond, Head of Investor Relations at Oracle. Please go ahead. 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. Safra Catz: Thanks, Ken, and good afternoon, everyone. Well, simply put, we had an outstanding quarter. Total revenue for the quarter was more than $200 million above the high end of our guidance range and grew 25% in constant currency. Even excluding Cerner, total revenue grew 9% in constant currency that’s higher than Q1 and on top of a revenue beat this time last year. The strength of the quarter is even more amazing, given that the currency headwind was higher than what it was when I gave guidance with 6% for revenue and a $0.095 headwind for earnings per share. And yet, we still exceeded the high end of my USD guidance for both, total revenue and earnings per share. And as you can see from the numbers, we continue to experience clear company-specific and product-specific momentum. The reasons are many, but it boils down to a few key points of differentiation. First, more and more customers are recognizing our second-generation infrastructure cloud as being fundamentally better architected for higher performance, better security and unmatched reliability versus the older first-generation hyperscale cloud providers. Second, customers appreciate the flexibility of our service and business model that enables them to deploy our technologies where it serves them best, whether that be in the public cloud, in dedicated regions around the world or in a true clouded customer implementation. And third, customers recognize the value of an end-to-end integrated stack of applications, both horizontal, like ERP and HCM and supply chain, and industry-specific applications that focus on their industries. And all of it is on our Gen 2 infrastructure, which is designed perfectly for them as they move through. As customers increasingly look to better value out of their technology investments, many discover that Oracle is much better compared to other alternatives. Gartner formerly recognized OCI by moving us to Visionary status in its cloud infrastructure and platform services report for the first time. In addition, last week, we were awarded a JWCC award at the U.S. Department of Defense as they also recognized our capabilities. As all of these differentiators come together and our business continues to accelerate, we expect organic growth for our fiscal year 2023 cloud revenues will be over 30% in constant currency. Now to the numbers. As always, I’ll discuss our results using constant currency growth rate. To provide a full picture, both organically and otherwise, I’m going to go over the revenue results, including Cerner, and then some of the revenue results excluding Cerner, so you can see what’s going on. Total cloud revenue, now that’s SaaS and IaaS, including Cerner, was $3.8 billion, up 48% in constant currency with IaaS revenue, $1.1 billion, up 59% and SaaS revenue of $2.8 billion, up 45%. Now, excluding Cerner, total cloud revenue, SaaS plus IaaS was up 27% in constant currency at $3.3 billion. Total cloud services and license support revenue for the quarter, including Cerner, was $8.6 billion, up 20% in constant currency, driven again by our strategic cloud applications, autonomous database and, of course, our Generation 2 OCI. Application subscription revenues, which include support, were $4.1 billion, up 35% in constant currency. Infrastructure subscription revenues, which also include support, were $4.5 billion, up 9% in constant currency. Application subscription revenues, including support but excluding Cerner, were $3.3 billion, up 9% in constant currency. SaaS cloud revenue, again, excluding Cerner, was $2.2 billion and was up 16%. Now, our strategic back-office SaaS applications now have an annualized revenue of $5.9 billion and grew 26% in constant currency, including Fusion ERP, up 28% and NetSuite ERP, up 29%. As mentioned already, infrastructure cloud services revenue was up 59% in constant currency. Now excluding legacy hosting services, infrastructure cloud services revenue grew 69% with an annualized revenue of $3.8 billion, including OCI consumption revenue, which was up 88% and cloud and customer consumption revenue, up 83% and autonomous database up 50%. Software license revenues, including Cerner, were $1.4 billion, up 23% in constant currency and up 9% without Cerner. What is increasingly resonating with customers is that in an environment where IT investments need to have a fast and tangible return on investment, only Oracle offers customers the flexibility to manage their technology estate, so they can deploy incremental investments where it brings them the most immediate value. It also helps that the purchase of technology licenses from Oracle enables them to move to the cloud as they are ready, effectively providing an on-ramp to Oracle Cloud services. So, all in, total revenues for the quarter were $12.3 billion, up 25% in constant currency. Excluding Cerner’s revenue contribution of $1.5 billion, organic revenue was up over 9% in constant currency. As a reminder, we no longer operate in Russia, causing total revenue growth to be negatively affected by over 1% of growth over last year. Shifting to margins. The gross margin for cloud services and license support was 79% as a result of the mix between support and cloud. Last year, Oracle license support revenue with its mid-90s gross margins represented about 65% of the total number of cloud services and license support revenue. Now, it’s down to 53%, and this is happening because our cloud services are growing much, much faster than license support. By the way, license support grew 4% this year. Additionally, I would note that IaaS gross margins improved again this quarter, and I expect IaaS gross margins will continue to improve in response to accelerating demand we have continued to build data center capacity. We have seen that as those centers fill up, margins go up like they did this quarter. Most importantly, gross profit dollars of cloud services and license support grew 13% with Cerner and 6%, excluding Cerner in Q2. Non-GAAP operating income was $5.1 billion, up 12% from last year. Operating margin, including Cerner, was 41% as we continue to integrate Cerner in the quarter. As we drive Cerner profitability to Oracle levels and continue to benefit from economies of scale in the cloud, we will not only continue to grow operating income, but we will also grow the operating margin percentage. Further, I expect that this year, will be the trough year for operating margin percentages. The non-GAAP tax rate for the quarter was 20.4. I think I guided to 20.5. So basically, it worked out where we thought. And non-GAAP EPS was $1.21 in U.S. dollars, down 1% in USD, up 7% in constant currency. The GAAP EPS was $0.63. At quarter end, we had nearly $7.4 billion in cash and marketable securities. The short-term deferred revenue balance was $8.7 billion, up 14% in constant currency. Over the last four quarters, operating cash flow was $15.1 billion and free cash flow was $8.4 billion with capital expenditures of $6.7 billion. In addition, we now have 40 public cloud regions around the world with another 9 being built. In addition, 12 of these public regions interconnect with Azure, giving customers true multi-cloud capabilities. We also have many cloud customer implementations, dedicated regions in another 9 national security regions with increasing demand for more as customers want to have their data protected in their country. We are careful to pace our investments appropriately, but need to continue to build to meet our accelerating demand. CapEx this quarter was $2.4 billion as we continued to invest in our cloud to meet this accelerating demand. With triple-digit IaaS bookings growth the last couple of quarters we now expect to spend about this amount per quarter for the next few quarters as we build capacity for our customers’ needs. This level of spend though will not negatively impact our operating margins as we scale. When I talk about accelerating demand, that demand is reflected in the remaining performance obligation or RPO balance, which is now at $61.2 billion, up 68% in constant currency due to strong cloud bookings as well as to Cerner. I will also note that the organic RPO growth rate in constant currency accelerated to 28% in Q2, up from 22% last quarter and approximately 48% of the total RPO is to be recognized as revenue over the next 12 months. Now, as we’ve said before, I know you’re tired of me saying it, but I will, we are continuing -- we’re committed to returning value to our shareholders through technical innovation, strategic acquisitions, stock repurchases, prudent use of debt and a dividend. This quarter, we repurchased 6.1 million shares for a total of $448 million. In addition, we paid out dividends of $863 million in the quarter, and the Board of Directors declared a quarterly dividend of $0.32 per share. Our fundamental principle is to grow non-GAAP EPS while substantially increasing cloud revenue growth. And given our increasing confidence, we will continue to prudently invest as there is strong demand for our cloud services. So now, let me turn to my guidance for Q3, which I’ll provide on a non-GAAP basis. Using currency exchange rates as they are right now, currency should have a 4% negative effect on total revenue and at least a $0.06 negative effect on EPS in Q3. As I say every quarter, the actual currency impact may be different by quarter end, but we’ve got to use a number, so we’re using the number right now. Total revenues for Q3, including Cerner, are expected to grow from 21% to 23% in constant currency and are expected to grow from 17% to 19% in USD. Total cloud growth, including Cerner, is expected to grow from 46% to 50% in constant currency and 43% to 47% in USD. I expect the total cloud growth for the fiscal year, excluding Cerner will be above 30% in constant currency. Non-GAAP EPS is expected to grow between 9% and 13% and be between $1.23 and $1.27 in constant currency. Again, due to currency headwinds, non-GAAP EPS is expected to grow between 4% and 8% and be between $1.17 and $1.21 in USD. And as I’ve said before, Cerner will be accretive to earnings this year, including in Q3. My EPS guidance for Q3 assumes our base tax rate of 20.5%, which is up from 19% last year. However, onetime tax events could cause actual tax rates for any given quarter to vary. And with that, I’ll turn it over to Larry for his comments. 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. Ken Bond: Thank you, Larry. Bo, if you could prepare the audience for Q&A. Appreciate it. Operator: [Operator Instructions] We’ll take our first question today from Brad Zelnick of Deutsche Bank. Brad Zelnick: Great. Thanks very much for taking my question. And congrats on the solid results. Larry, Oracle has a rich history of being a price performance leader in just about everything it does. But technically speaking, why exactly does OCI have an inherent cost advantage? And how sustainable is that advantage? Thanks. 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. Operator: We’ll take that question now from Phil Winslow of Credit Suisse. 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? Safra Catz: I don’t know, Larry, if you want to take it or I take it 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. Safra Catz: Well, it’s really across the board, to be fair. We’ve got high-performance computing. We’ve got most of the auto companies doing their simulations on us. And then, we have Oracle workloads, autonomous database and other workloads. We have extremely broad, just extremely broad moves. I think I told you in previous quarters that, of course, our growth rates are higher because we’re smaller, but yet as we grow, we’re actually accelerating because of exactly the features that Larry covered in the last question, customers are coming to us, often not expecting the phenomenal results. And remember, time is money on the cloud. So, if you’re more performant, it is much less expensive, whether it’s Oracle workloads or straight compute or storage or other workloads. The other thing is you have to understand that our cloud of customers, our national security regions, all of those are being contracted, and we are clearly the choice for governments to maintain their sovereignty over their data. We can land a center very quickly, and they have -- and they fill up very quickly. So, we really have it coming from all areas. And then, of course, our applications business, Larry basically said it. I mean, we’re in it. And we’re winning consistently deal after deal, both as our e-business suite and PeopleSoft and JD Edwards customers moved to us but also SAP installations choosing us over what they had before. So, it’s just on all fronts, frankly. 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. Operator: We go next now to John DeFucci of Guggenheim. 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? Safra Catz: So contrary to, I think, the fears the people always have, the Oracle database is still the biggest part of license by far. So most important part, the database remains strong because customers understand that they can BYOL, bring your own license, and they can have coverage whether they’re on-premise in the cloud or moving in between the two, so again, really always the big number. But we’ve got growth rates that are very strong in analytics. We have growth rates that are super strong in Java, we have growth rates that are strong in the industry’s areas, some of our industry’s applications. And then -- so I want to make sure I gave you the numbers both ways. With Cerner, we have a growth rate of 23% because, of course, you add the Cerner license. Without Cerner, it’s 9% growth. So, even without Cerner, we have license growth after a very strong growth rate a full year ago in license. So, again, big dog is, of course, technology. That’s the bulk of it. But we’ve got a few industry apps and a little bit of Cerner. And it just remains just super strong. John DiFucci: Okay. That makes sense. It sounds like a lot of things are working together here. Thank you. Thank you very much. Safra Catz: Absolutely. Operator: And we’ll go next now to Mark Moerdler at Sanford Bernstein. Mark Moerdler: Thank you very much for taking question. I really appreciate the ability to ask the question, and congratulations on the quarter. Two related questions on Cerner. Safra, where are we on the Cerna integration process as well as taking out the cost? And where do you think you can drive those long-term costs over time. And Larry, we heard a lot of great features at Oracle World about Cerner and what you going to do in healthcare. It’d be interesting to hear what progress you’ve made recently. Thanks. 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. Larry Ellison: Yes. Well, actually, on the technical side, of course, what we’re trying to do is build -- not just provider systems. In other words, what Cerner did primarily in competition with EPIC is the automated hospitals. And yes, we want to automate hospitals and clinics and doctors’ offices and do that. We certainly want to automate providers. But we’re layering on top of that is we want to do national public health. We are doing national public health systems. I mentioned Oxford Nanopore that’s an early warning system to detect the next pathogen that could lead to a pandemic. These global public health systems need to be built. And we are in discussions. We are in discussions with not companies, but countries about building and deploying a global early warning system so we can detect the next pathogen that threatens to turn into a pandemic, we can catch it early enough that we can prevent it from being a pandemic. God forbid, if there is another pandemic that we have up to the minute, up to the second data about how that country’s infrastructure is managing the hospitalization rates and vaccination rates and all of those things, so we can better deploy and manage our resources during a pandemic. So, we don’t have a repeat of the things that went on during COVID-19. So, I expect -- Safra just gone back from visiting some prospective customers that are countries that we will be signing contracts with a number of countries to build these national systems. And these contracts are enormous, I mean, absolutely enormous. And there will be several of them. So, as I said in my note in the press release, the scale of this healthcare opportunity is unprecedented but so are the responsibilities that go along with it. We have to -- we, as humanity has to do a better job of delivering healthcare to people than we have done historically. And we can never have a repeat of the COVID-19 pandemic. And I think there is this worldwide sense of urgency and national consciousness about getting a new generation of systems out there that help us at first prevent and then manage our healthcare -- prevent a pandemic and better manager healthcare systems. As far as I know, Oracle is the only company in the world that’s trying to address this issue. And we’re about to sign up a number of countries that will work with us on doing just that. Operator: And we’ll take our final question this afternoon from Raimo Lenschow at Barclays. Raimo Lenschow: Hey. Thanks for squeezing me in. One quick question. If you think about the global environment, usually, it’s not the time to look at or in the olden days, I remember when I was at PwC, it wasn’t the time to kind of look at your back office systems, but you’re kind of growing really nicely. NetSuite is actually kind of outgoing now Fusion a little bit. Can you talk a little bit about the drivers and what you’re seeing out there? Thank you. 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. Ken Bond: Thank you, Safra. 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 Bo to close the call. 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.

Operator: Good afternoon. Thank you for standing by. Welcome to Oracle's First Quarter 2023 Conference Call. It's now my pleasure to hand today's conference over to Oracle's Senior Vice President, Ken Bond. 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 our 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. Safra Catz: Thanks, Ken, and good afternoon, everyone. We had an excellent quarter with total revenue growing 23% in constant currency and beating the high end of our guidance. We also had a great organic quarter with total revenue growing 8% in constant currency. This was on top of a fantastic Q4 last quarter. And as you can see from the numbers, we continue to get excellent returns on the investments we've been making over the last few years in products, infrastructure and our sales organization. We are seeing company-specific and product-specific momentum. We continue to expect organic revenue growth in our cloud business will accelerate substantially in FY '23. The currency headwind this quarter was much higher than the 3% headwind that was present when we gave guidance. It was actually 6 points, even though due to rounding, it may look like 5%, and that's a currency headwind to total revenue. It was, in fact, 6 points. And yet, we still exceeded our forecast on a reported basis, and we beat our constant currency revenue forecast by $200 million. We saw similar currency headwinds in EPS, which had an $0.08 negative effect, much worse than the $0.05 headwind present at the time of guidance in June. It's because of the significant and volatile swings in currencies that I always discuss our results using constant currency growth rate and so that you have a clear view of the business as we manage it. Now to the numbers and there's a lot here. I'm going to go over the revenue results including Cerner, and then some of the results excluding Cerner, which many of you are focused on. I hope you're pleased with our expanded disclosure this year. So total cloud revenue, that's SaaS and IaaS, including Cerner, was $3.6 billion, up 45% in USD and up 50% in constant currency, with IaaS revenue a smidge under $900 million and SaaS revenue at $2.7 billion. Total cloud services and license support revenue for the quarter was $8.4 billion, up 20% in constant currency, driven again by Fusion, Autonomous Database and our Gen2 OCI. Application subscription revenues, which include support, were $4 billion, up 37% in constant currency. Again, Q1 cloud application revenue, that's SaaS, was $2.7 billion, up 43% in USD, up 48% in constant currency. Infrastructure subscription revenues including support were $4.4 billion, up 7% in constant currency. And to be clear, that's actually 7% organic growth with no contribution from Cerner. Q1 Cloud Infrastructure or IaaS revenue was $0.9 billion, up 52% in USD, up 58% in constant currency, again with no contribution from Cerner. Now the revenue results excluding Cerner. Total cloud revenue, that's IaaS plus SaaS, excluding Cerner, was up 29% in constant currency at $3.1 billion. Organic revenue growth for both IaaS and SaaS was significantly higher than last quarter. Application subscription revenues, excluding Cerner, were up 12% in constant currency. Our strategic back-office cloud applications now have annualized revenue of $5.8 billion and grew 33% in constant currency, including Fusion ERP, which was up 38%, NetSuite ERP up 30% and Fusion HCM up 26%. That means that SaaS revenues, excluding Cerner, were $2.2 billion, up 20%. Infrastructure cloud service revenue was up 58% in constant currency. Excluding legacy hosting services, infrastructure cloud services grew 70% with an annualized revenue of $3.2 billion, including OCI consumption revenue, which was up 103%; Cloud at Customer consumption revenue, which was up 92%; and Autonomous Database, which was up 56%. And it's not only that our growth rates are higher than our hyperscale competitors. Maybe you'd expect that because we're the newest and thus, the smallest, but our growth rates are increasing as we get bigger. Our second-generation cloud launched after our competitors' first-generation cloud, and so we've been able to architect it more performantly, more securely and more sustainably. As a result, as more companies test our cloud, they discover how much better it is on price, security, performance and sustainability. In addition, we now have cloud regions in more countries and cities than AWS and Azure, giving our customers more choices for their sovereign data. And finally, many of our customers appreciate how flexible our service and business model is. All of this is amazing, our customers, and I can't wait to share the stage with some of them at Oracle CloudWorld in October. Now to license revenues, including Cerner, were $904 million, up 19% in constant currency, led by database options and Java. Total database revenues were up 3% in constant currency. So all in, total revenues for the quarter were $11.4 billion, up 23% in constant currency. Excluding Cerner revenue of $1.4 billion, organic revenue was up 8% in constant currency. In addition, I want to point out that since we no longer operate in Russia, this negatively affected revenue by over 1 point of growth. Had we still -- had we not left, actually, our growth rate will be over 9% this quarter. Operating expenses were up 34%, mainly due to adding in Cerner's expenses and the mix of our business. The gross margin for cloud services and license support was 81%, and the associated gross profit dollars grew 15% with Cerner and 7% excluding Cerner. In fact, the gross margin percentage on IaaS increased dramatically in the quarter. Non-GAAP operating income was $4.5 billion, up 10% from last year, and I expect that we'll see strong operating income growth again in Q2. The operating margin, including Cerner, was 39%, which is lower than in the past since we only just began to integrate Cerner in the quarter. As we drive Cerner and its profitability to Oracle standards and continue to benefit from economies of scale in the cloud, we will not only continue to grow margin dollars but also grow margin percentages significantly. The non-GAAP tax rate for the quarter was 19.4%, slightly above the guidance rate, and non-GAAP EPS was USD 1.03, unchanged in USD, and up 8% in constant currency. GAAP EPS was USD 0.56, down 34% and down 26% in constant currency. That's our GAAP EPS. Over the last 4 quarters, operating cash flow was $10.5 billion and free cash flow was $5.4 billion with capital expenditures of $5.2 billion. For the quarter, operating cash flow was $6.4 billion and free cash flow was $4.7 billion with capital expenditures of $1.7 billion. At quarter end, we had $11.2 billion in cash and marketable securities, and the short-term deferred revenue balance was $10.5 billion, up 11% in constant currency. The remaining performance obligation, or RPO balance, is $60.7 billion, up 62% in constant currency due to strong bookings as well as the addition of Cerner. However, I would note for you all that the organic RPO growth accelerated to 22% in Q1 from 17% in Q4. Approximately 49% of total RPO is expected to be recognized as revenue over the next 12 months. As we've said before, we're committed to returning value to our shareholders through technical innovation, strategic acquisitions, stock repurchases and prudent use of debt and our dividend. This quarter, we repurchased 7.5 million shares for a total of $559 million. In addition, we paid out dividends of $3.4 billion over the last 12 months, and the Board of Directors today declared a quarterly dividend of $0.32 per share. Our fundamental principle is to grow non-GAAP EPS while substantially increasing cloud revenue. And given our increasing confidence, we will continue to prudently invest as there's strong demand for our cloud services. Now let me turn to my guidance for Q2, which I will provide on a non-GAAP basis. Now we are assuming that currency exchange rates remain the same as they are now. That's not a prediction. That's just giving it to you as a translation as it currently is. In that case, currency should have a 5% to 6% negative effect on total revenue and at least a $0.07 negative effect on EPS in Q2. As I say every quarter, the actual currency impact may be different by quarter end. My EPS guidance for Q2 assumes a tax rate of 20.5%, which is up from 19.2% last year. However, onetime tax events could cause actual tax rates for any given quarter to vary. So now to guidance. Total revenues for Q2, including Cerner, are expected to grow from 21% to 23% in constant currency and are expected to grow from 15% to 17% in USD. Total cloud growth, again, including Cerner, is expected to grow from 46% to 50% in constant currency, 42% to 46% in USD. I expect that total cloud growth for the fiscal year, excluding Cerner, will be above 30% in constant currency. Non-GAAP EPS growth is expected to grow between 1% to 5% and be between $1.23 and $1.27 in constant currency. Again, due to currency headwind, non-GAAP EPS is expected to decline 1% to 5% and be between $1.16 and $1.20 in USD. As I've said before, Cerner will be accretive to earnings this year, including in Q2. And with that, I turn it over to Larry for his comments. Lawrence Ellison: Thank you, Safra. Last quarter, Microsoft and Oracle announced that we had built a high-speed interconnect between Microsoft's 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 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 in 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's 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 in North America in 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 Digi+, 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 -- excuse me, 15,000 hospitals and clinics is migrating their data lakes 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 company -- a health care insurance company, is beginning the migration of all of their applications and database to OCI. Sky Mexico, the largest satellite pay-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. 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 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. AdTiming, technology and infotech company, is a new customer in Asia Pacific. Daiichi Sankyo, a big -- is the first big pharma in Japan that is moving their database -- their Oracle database workloads to the cloud. Pacific International Lines, a big transportation company, is a new customer in Asia Pac. Li & Fung, a trading company, another new customer, we had -- again, eventually, we had 1,000 new customers this quarter in OCI. [indiscernible], another fintech company, 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 a new customer in Asia Pac. [indiscernible] 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 shows 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 -- or 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, 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 ], a big telephone company, moving over 300 Oracle databases to the Oracle Exadata Cloud. Norsk Tipping, government agency, migrating all databases off their IBM mainframes and unit 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'll turn it back over to Safra. Ken Bond: Thank you, Larry. Josh, if you could go ahead and queue up the audience for questions? Operator: [Operator Instructions] Your first question comes from John DiFucci with Guggenheim. John DiFucci: Safra and Larry, a little surprised to see your strong results here when most software companies, other than some of the pure security names, really faltered some against the macro backdrop. And frankly, you just didn't hear. But I want to focus the question on one area that we've gotten the most questions on since we launched coverage, and that's on organic constant currency cloud services growth. It looks like you came in above the high end of your guidance for the quarter, and you reiterated, Safra, that you expect greater than 30% growth for the year, which doesn't seem like a stretch like it did when you gave that first. We understand the way a subscription model works but we obviously don't see everything that you see. Can you give us some more color around what's driving the results this quarter and what gave you the confidence in this outlook for cloud services? Was it previously contracted revenue that's just starting to ramp up? Was it expected increase in consumption or something else or all of the above? 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 costs or expand growth, we help them do that in an incredibly flexible way and super, super cost competitively for them. Lawrence Ellison: Yes, let me just add one sentence to that. We are the only infrastructure company that builds enterprise-scale applications. As a result of building these enterprise-scale applications, we have made our infrastructure much, much better. So we not only provide infrastructure and sell infrastructure, we consume the infrastructure ourselves. I think that gives us certain insights as to what we need to build at the infrastructure layer to make our application secure, reliable and so on and easy to use and make people productive. That's why -- I think that's what a lot of customers are discovering when they come to our cloud, that they are more productive, that the system runs faster, it's more secure, it's easier to use, all of that. And that's what gives us confidence that we can build the next generation of health care application because we do both. We do both applications, enterprise applications and infrastructure, and we're the only one. 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. Operator: Your next question comes from the line of Phil Winslow with Credit Suisse. Philip Winslow: Congrats on another strong quarter of organic growth. Now obviously, Oracle has been delivering accelerating growth in its infrastructure and database businesses for multiple quarters now. Safra, can you give us some more color on just what the drivers are behind this? And how sustainable they are, be it BYOL, database add-ons, Autonomous Database, et cetera? And then a question for Larry. Obviously, the expanded partnership with Azure announced in July has received pretty universal positive feedback. And you just announced today that Oracle's MySQL HeatWave will be available on AWS. How do you think about these multi-cloud partnerships impacting the already positive existing momentum in your database business going forward? Safra Catz: Larry, why don't you go first and then I'll fill in if you've missed any? Yes. Lawrence Ellison: Okay, boss, I'll do that. Well, again, I think one of the issues. I know a lot of people for years have been concerned about, can Oracle sustain its leading market share in the database business? And I think what is clear is if our databases are available in multiple clouds, I think then the answer is clearly yes. If our database is not available in multiple clouds, then it's an interesting question, whether we can maintain it just in our own cloud. We've decided to make our best and greatest technology available in multiple clouds. And that gives customers choice. They can use it in OCI. They can use MySQL HeatWave at AWS. They have choices but they will be able to choose between, let's say, Amazon's Aurora or Oracle's MySQL HeatWave. They will be able to choose between Snowflake or the Oracle Autonomous Database. And I think as long as we're available in multiple clouds, we're going to be very strong and very, very competitive against these other companies and these other technologies. Safra Catz: And 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 continue 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 at Customer, dedicated regions or our public cloud. Operator: Your next question comes from the line of Mark Moerdler with Bernstein Research. Mark Moerdler: Congratulations on a strong quarter. Larry, Safra, historically, in increasingly difficult economic conditions, organizations focused on what drove revenue growth or immediate savings, and thus, products like Salesforce Automation or similars received funding while back-office projects were delayed. What is different this time, both from a ERP point of view and an HCM point of view? What's going to drive the sustained growth and strength that you're expecting in Oracle's strategic back office? Safra Catz: Sure. So let me start by -- since I'm also the Principal Financial Officer if I was at 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 -- 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 is the 12th 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 until Monday. Now no other companies report on the ninth or the eighth day. In fact, most companies were reporting their July quarter 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. Lawrence Ellison: Let me just add one -- I'm sorry, let me add one thing, which is Safra addressed the issue of modernizing back office to save money. Let me tell you another way you can save money. We -- I personally have been talking to some of Amazon's most famous brands that are running at AWS. And the AWS build is getting very large, and they can save a huge amount of money by moving to OCI. And we, I expect next quarter, will be announcing some brands, some companies moving off of Amazon to OCI that will shock you. I'll stop there. Mark Moerdler: Amazing. Operator: Your next question comes from Derrick Wood with Cowen and Company. James Wood: Great. And I'll add my congratulations, and Larry, thanks for all the color on the OCI wins. I was hoping to get an update on your go-to-market strategy for OCI. I mean, it's clearly becoming a more critical growth driver for you guys. Is there a dedicated sales force? Are you doing more bundling of OCI with other offerings? Just hoping to get an update on how you're going to market and what kind of resources you're putting around OCI because with 58% growth, it certainly seems like you're now gaining share in the cloud infrastructure market and it's a big market to go after. So any color on that would be helpful. Safra Catz: Let me start, Larry. Go ahead. Lawrence Ellison: No, no, no. No, no. I'll do -- that's what I'm told. Safra Catz: Okay. So one of the enormous changes we made in the past year or so, year or 2 is that we have invested in a lot more engineering talent in the field to help our customers bring over workloads. And once we've shown them how to do it and the enormous benefit they get by doing it, this is the ultimate sales accelerator because there's nothing like a customer who realizes that our solution is just so much better and so much less expensive for them. And you have to do that often by, let's say, priming the pump by sending engineers, field engineers who can help the customers move those workloads. And that's really propelled what's been going on in our OCI cloud. Larry, you go ahead. Lawrence Ellison: Yes. I think exactly what Safra said, and I'll add what -- I'd 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 save a lot of money. It depends which cloud you moved to. And Oracle is much less expensive than the competition, partially because we're faster, which time is money 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. Operator: Your next question comes from Brad Zelnick with Deutsche Bank. Brad Zelnick: Excellent. 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 in 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? Lawrence Ellison: Okay, I'll go first. I'll let Safra -- by the way, the $1.7 billion CapEx is there's just so much demand. Safra mentioned we have more data centers in more countries and in more cities than either Amazon or AWS. And we're expanding because the demand is there. We expect to be growing in the 50% range for cloud services. And that means we're going to have to be adding a lot of data center capacity and opening a lot of new data centers, and we're doing that. The fact that we're running or -- an Oracle cloud data center is running half of Tokyo Stock Exchange. Ask the other cloud vendors how many stock exchanges they run. The -- our stuff is very secure. It's very reliable. It's very performant. It's very, very cost effective. And therefore -- and we have huge opportunity. Therefore, we're spending the money to expand. We have a huge opportunity for growth and we're not going to miss it. But we're still going to be -- as you know, Safra is very cautious. We're always very cautious. We pay a lot of attention to profitability. But we also have to pay attention to the top line as well as the bottom line and take advantage of this growth opportunity. And I think there was a second part to the question that maybe I didn't answer. Safra Catz: Cerner. He asked you all about Cerner. Lawrence Ellison: Cerner, a big other part. 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 within our infrastructure. The tools we use for building applications, our latest generation of tools are the Autonomous Database, very different 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 [indiscernible] doesn't want to hire a lot of DBAs. It's to lower cost. Also, he doesn't want to have any errors of omission. 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, which is a low-code tool. So our newest applications, our very newest applications that we are building, we're building in the Autonomous Database with APEX, which allows us to do stuff that would have taken 3 or 4 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. Let me -- one of the things about the low-code tool is you don't have to do security audits because security is built into the tool. You can't build an insecure application using APEX. Fault tolerance is built into the tool. If the application should fail, it's a stateless application so it'll immediately fail over 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 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. Operator: This does conclude today's conference call. Thank you very much for joining. You may now disconnect.

Operator: Good afternoon. Thank you for standing by. Welcome to Oracle's Fourth Quarter 2022 Conference Call. It's now my pleasure to hand today's conference over to Oracle's Senior Vice President, Ken Bond. 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. Safra Catz: Thanks, Ken, and good afternoon, everyone. As you can see, we had an excellent quarter across the board with total revenue growing 10% in constant currency, the highest organic growth we've seen since 2011, and $240 million above the high end of my constant currency guidance. Earnings were equally strong as the EPS was $0.20 above the high end of guidance. What Q4 demonstrates is that our business is accelerating. A growing list of customers, many new to Oracle are choosing us for more products and services as they understand the benefits of Oracle technology. Our technology helps make our customers modern, efficient and more productive. And they got to see that during the pandemic, and now it's very clear. Those customers are then becoming larger Oracle customers. Fusion customers are buying OCI. OCI customers are buying Fusion and NetSuite. Database customers are moving to autonomous on OCI. Industry vertical customers are going all in on Fusion. We have real momentum all around. Going forward and despite the macro environment, we continue to expect the revenue growth in our cloud business will accelerate substantially in fiscal year '23. We are also excited about completing the Cerner acquisition. Larry spoke at our Oracle Health Strategy session last week, and he'll give you more details today, and I'll fill in with some numbers. As you can see in the financial statements, the currency headwind this past quarter was 5%, which was considerably higher than the 2% to 3%, it was during our last earnings call. Following my regular custom, I'll be reviewing our non-GAAP USD results using constant currency growth rates so you have a clear view of the business as we manage it. Now for Q4, total cloud services and license support revenue for the quarter was $7.6 billion, up 7% in constant currency again, driven by Fusion, NetSuite, autonomous database and, of course, Gen 2 OCI. Total cloud revenues, that's IaaS plus SaaS was USD 2.5 billion, up 22% in constant currency. Application subscription revenues were $3.2 billion, up 9% in constant currency. Our strategic back-office cloud applications now have an annualized revenue of $5.4 billion and grew 24% in constant currency this quarter, including Fusion ERP up 23% and NetSuite ERP up 30%. Infrastructure subscription revenues were $4.4 billion, up 5% in constant currency. Infrastructure, cloud services now have an annualized revenue of more than $3.2 billion, and excluding our legacy hosting services, infrastructure cloud services grew 49%, including OCI consumption revenue, which was up 83%. Cloud@Customer consumption revenue, which was up 108% and autonomous database, which was up 29%. License revenues were $2.5 billion, up 25% in constant currency led by database sales for use in the cloud by major application cloud SaaS companies. As a result our database business had an exceptional quarter with total database revenue up double digits. So all in, total revenue for the quarter were $11.8 billion, up 10% in constant currency. Operating expenses were up 11% as we continue to invest to meet growing demand for our cloud services. For the quarter, the gross margin for cloud services and license support was 82% and the gross profit dollars grew 4%. The full year growth of this gross profit was 4% higher than the 2% we saw last year, and I expect it will be significantly higher in FY '23. Though we will continue to invest in growth, we should benefit from economies of scale of running our cloud business as it gets larger. You should keep in mind that our fundamental principle going forward is to grow non-GAAP EPS while accelerating cloud revenue growth. Non-GAAP operating income was $5.6 billion, up 8% from last year, and the operating margin was 47%, once again higher than all of our competitors. And even while we've been investing aggressively for growth, we've maintained our financial discipline. The non-GAAP tax rate for the quarter was 10.1 and below our base tax rate of 19% as we received a benefit from the resolution of some tax matters in Q4. EPS was $1.54 in U.S. dollars, up 7% in constant currency, unchanged in USD. GAAP EPS was $1.16, down 8% in constant currency, down 15% in USD. Now for the -- let me go through the full fiscal year, though I've given you some full year numbers so far every once in a while. For the full fiscal year, total company revenues were $42.4 billion, up 7% in constant currency and our highest annual growth rate in more than 10 years. Total applications revenue grew 8% compared to 5% last year, and total infrastructure revenue grew 7% compared to 2% growth last year. Clearly, our revenue growth accelerated this year as investments into our cloud businesses are paying off. Total cloud services and license support revenue for the year was $30.2 billion, up 6%. Total cloud services were up 22% to $10.8 billion. Non-GAAP EPS was 4.9 -- was USD 4.90, up 5% in USD, up 8% in constant currency. The full year operating margin percentage was 46%, up 2% from pre-pandemic levels and down a little bit -- down 1% from last year. Operating cash flow over the last 4 quarters was $9.5 billion, and free cash flow was $5 billion with capital expenditures of $4.5 billion during the year. For the quarter, operating cash flow was $4 billion and free cash flow was $2.6 billion. At quarter end, we had nearly $22 billion in cash and marketable securities, but that's lower now that Cerner has closed. The short-term deferred revenue balance was $8.4 billion, up slightly in constant currency. The remaining performance obligation or RPO balance is $46.6 billion, up 17% in constant currency due to strong bookings. Approximately 57% is expected to be recognized as revenue over the next 12 months. As we've said before, we're committed to returning value to our shareholders through technical innovation, strategic acquisitions, stock repurchases, prudent use of debt and a dividend. This quarter, we repurchased 8 million shares for a total of $600 million. In addition, we paid out dividends of $3.5 billion over the last 12 months, and the Board of Directors declared a quarterly dividend of $0.32 per share. With the completion of the Cerner acquisition, which happened after the end of Q4, actually, this last week, we've added about $15.8 billion of debt. And we anticipate retaining our investment-grade credit rating, meaning that for the time being, we're going to focus on reducing our debt balance while continuing our share repurchases at current levels. In addition, I don't believe the dividend will be impacted at all. Once the debt level has declined, we'll reexamine share repurchase levels. Now to the guidance. We feel very optimistic about our business momentum. And we also recognize that there is increasing macro uncertainty right now. In addition, since we ceased operations in Russia in March and made other adjustments in the region, we have factored out around $100 million per quarter from guidance that we used to receive from these customers. Taking all that into account, I do expect our cloud business, which grew 22% this year, will organically grow more than 30% in constant currency in FY '23. Cloud service and license support will also see growth acceleration and could well see double-digit organic growth. As I said earlier, our fundamental principle is to grow EPS while accelerating cloud revenue growth. Given our increasing confidence in organic revenue growth, we will continue to prudently invest back in the business and you can already see the returns in our performance. Revenue growth accelerated from 2% in FY '21 to 7% this year. Clearly, there's strong demand for our cloud services, and we intend to capitalize it -- to capitalize on it. As such, I expect our CapEx spend will be higher in FY '23 to meet the demand. We expect to add another 6 regions in fiscal 2023 in addition to the 38 cloud regions across 20 countries that we have already serving our customers. I also want to share how we will be running Cerner since it will impact their contribution to Oracle going forward. We are already working actively to build and implement world-class health care cloud capabilities. Larry will go over that. This means that we are reviewing their entire product portfolio to identify areas where we can include Oracle technology rather than third-party products as well as moving them to OCI. These efforts will deliver a more stable, secure and innovative product portfolio for customers while using less third-party products. We remain confident in our ability to grow Cerner's top line and bottom line faster than they were able to do so on their own as these changes are implemented. Now let me turn to my guidance. I'll review Q1 on a non-GAAP basis and if currency exchange rates remain the same as they are now, currency should have a 3% to 4% negative impact on total revenue and maybe $0.05 to $0.06 negative effect on EPS in Q1. However, actual currency impact may be different. Total revenues for Q1, including Cerner, are expected to grow from 20% to 22% in constant currency, and are expected to grow 17% to 19% in USD at today's exchange rate. As with past acquisitions, have added conservatism for the Cerner revenue contribution to account for the transition. For Q1, cloud -- total cloud excluding Cerner is expected to grow from 25% to 28% in constant currency and is expected to grow from 22% to 25% in USD. As I mentioned above, for fiscal year 2023, total cloud excluding Cerner is expected to grow over 30% in constant currency. Total cloud growth in Q1, including Cerner is expected to grow from 47% to 50% in constant currency, 44% to 47% in USD. Non-GAAP EPS is expected to grow between 6% to 10% and be between $1.09 and $1.13 in constant currency. Non-GAAP EPS is expected to grow between 1% to 5% and be between $1.04 and $1.08 in USD. And as I've said before, Cerner will be accretive to earnings this year, including Q1. My EPS guidance for Q1 assumes a base tax rate of 19%. However, onetime tax events could cause actual tax rates for any given quarter to vary. And with that, I'll turn it over to Larry for his comments. 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: health care and financial services. In health care, we’re in the process of building a complete suite of applications for the entire health care ecosystem, starting with health care providers like hospitals and clinics. We’re modernizing Cerner’s clinical systems by adding capabilities like a voice user interface and applications like disease-specific AI models for cancer and other diseases. We’re including an IoT device network to improve patient diagnostics and monitoring. We’re adding administrative systems, including managing the incredibly complex contract workforce that hospitals have as doctors are not bolt-on employees nor are nurses. We are going to help recruiting, scheduling and paying those contract workers according to their contracts. Inventory at hospitals is enormously complicated. Inventories aren’t in a central location. You find inventory in nurse’s stations outside operating rooms, outside the intensive care unit. There’s inventory everywhere. Managing that inventory is very complicated. We’re adding RFID tags and maps on handheld phones to help people find what they’re looking for quickly. For payers, including insurance companies and governments, we’re automating payment authorization and billing systems. For pharmaceutical companies, we’re integrating our clinical trial system directly into the hospital clinical system, making clinical trials easier to start and faster to complete. We can do all of this and more because we’re building these health care applications using the latest most productive technologies in the cloud, namely, the Oracle Autonomous Database and the APEX low code programming language. Using these tools, security and reliability are built into the technology platform, not the application. In our financial services vertical, we’re working with major money center banks and leading logistics companies to automate B2B commerce from directly within the Oracle ERP Cloud. For example, when a hospital wants to buy an X-ray machine, that hospital simply enters a purchase request for the X-ray machine into their Oracle ERP procurement system. That procurement system then sends that order directly to the selling company’s Oracle ERP order management system and automatically originates a corresponding loan request from that hospital’s preferred bank. The company selling the X-ray machine uses their Oracle ERP order management system to check product availability and submit a shipping request to their preferred logistics provider to automatically quote a delivery date to the buyer. The entire B2B commerce process is automated within the Oracle Cloud. Purchasing, selling, loan origination, shipping, billing and payments. Automating B2B commerce is yet another huge opportunity for Oracle. We already have over 30,000 Cloud ERP customers, including many of the world’s most important banks and leading logistics companies. Let’s take a moment to look at the progress we continue to make in our Oracle ERP Cloud, starting with health care. We’ve got a very strong position in health care with the providers, including Kaiser, Mayo Clinic, Cleveland Clinic, Mount Sinai, Northwell Health, Tenet, HCM Health, Highmark Health, Humana, Cigna and many others. In Q4, we closed United Healthcare, a win over SAP. We won the NHS, the UK’s second major move to the Cloud. We won New South Wales Ministry of Health in Australia for ERP and SCM. We won WellSpan, a regional provider in Pennsylvania with eight hospitals. We won Abcam, a UK life sciences company, increasing their footprint in ERP and SCM. Going live in Q4 were the Cleveland Clinic with ERP and SCM, UC Health for ERP and SCM, Pfizer on enterprise performance management, UK Health went live, Atrium Health went live, all in Q4. In financial services, our other really big vertical, we had, as I said earlier, we have a very strong position with the money center banks with ERP. Bank of America uses Fusion applications. JPMorgan Chase uses Fusion applications. So does Santander, Bank of New York Mellon, HSBC, Lloyds, Macquarie, Credit Suisse, UBS, Credit Agricole, SMFB, TD Bank, Societe Generale, Vanguard, State Street. I can go on and on, but let me go to the results in Q4. In Q4, we won at Citibank a big ERP win against SAP. We won at Chubb. We won at PNC, the sixth largest bank in the United States. We won at SMBC, the largest Japanese-owned bank in the United States. We won Oversea China Banking Corp. We won Mizuho, the third largest bank in Japan. TIAA, Desjardins, Mitsui Sumitomo also in Japan. GMP, one of Mexico’s largest financial services company. We have a very, very strong position in financial services. That’s one of the key groups of partners that we’re working to automate B2B commerce, along with the logistics companies. In retail, we won, well, we already had Kohl’s, Office Depot, Macy’s, Kroger’s, Albertson’s, Petco, McDonald’s, Chipotle, Tiffany, Sachs, Williams-Sonoma, Walmart, CVS, but in Q4, we added to that list. We added Lowe’s and Albertson’s and Sherwin-Williams and Abercrombie & Fitch. We had major go-lives at Macy’s, Next Doors, and the Co-op Stores, all in retail. In communications, where we’re already present at AT&T, Orange, MTN, Bharti Airtel, Rogers, Wind Tre, Telecom Italia, KPN and SEC, we won Virgin Media. We had a major expansion at AT&T, an ERP SCM expansion. We won a major expansion ERP and EPM at Verizon. Very, very strong quarter in telecommunications with a huge go-live at KPN, the Dutch telecom company, in ERP and SCM. Service wins, we already have PwC, KPMG, Booz Allen, True Blue, Securitas, Waste Management, Skanska, McDermott-Jacobs. We won in Q4 BDO, Verisk Analytics and the Mudafalo Group. Go-lives in Q4 in services included Pricewaterhouse, Manpower Group, TriNet and Republic Services. In the public sector, we had a major win at the State of Missouri, wall-to-wall at the State of Missouri, ERP, SCM, HCM. That was a win over Workday, SAP and everybody else. We won at the Scottish Government. We won at the UK Home Office. We won a State of Switzerland, Vaud. We won General Organization for Social Insurance in Saudi Arabia. We won a deal with the police department in the State of Victoria in Australia. We had major go-lives in public sector in the City of St. Louis and Norfolk County, UK. In hospitality, where we already have Marriott, Hilton, Caesar’s, MGM, Lowes, Royal Caribbean and Park Hotels, we added Airbnb for ERP expansion, a win over Workday, and Intercontinental Hotels and Resorts. Logistics, again, this is our other big group of partners in our major effort to automate B2B commerce from within the Oracle ERP Cloud. We have a very strong position globally in logistics. Our customers include UPS, FedEx, DHL, Swift, Schneider, Union Pacific, Yellow. We added An Post, the postal service of Ireland. The go-lives included DHL, UPS and Deutsche Post. In higher ed, where we’re already installed at Princeton, Cambridge, Julliard, Vanderbilt, UCLA, University of Chicago, Edenborough, Rutgers, Baylor, UCSD and lots and lots of others, we added the University of Maine, East Tennessee State, Villanova and the State University of New York at Stony Brook. Other notable wins in the quarter, on high-tech, we won Teradata. We won a big win at Toyota Motor, an ERP win. At Denso, again, let’s see, what else we got. Berry Global, let’s see, AP Team was another ERP win in energies. Okay. So it was a very, very strong quarter. We’re very excited about our momentum in ERP and how we can expand ERP from what it was when it was an on-premise system to what it can be in terms of B2B commerce automation now that it’s a cloud system. With that, I’m going to turn it back to Safra. Ken Bond: Thank you, Larry. David, if you please poll the audience for questions, we'll go to the Q&A portion of the call. Operator: [Operator Instructions] We'll take our first question from Mark Murphy with JP Morgan. Mark Murphy: Thank you very much and congratulations on the double-digit growth in the quarter. So Larry, your vision of a national health record database is very compelling. It would be a profound benefit to society. Just considering that several trillion dollars are spent on healthcare, what do you see as the size of the opportunity for Oracle and Cerner if you solve that particular problem? 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. Operator: Next, we'll go to Keith Weiss with Morgan Stanley. 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? Safra Catz : Okay. Well, first of all, you have to understand, we're a very big company. We have thousands -- hundreds of thousands of existing customers. Our products also are so compelling that often customers save money by moving to OCI. They -- also many of our customers realized during the pandemic that they absolutely had to have modern systems. Those companies that didn't have modern systems fairly survived through the pandemic. They have to have a digital connection with their customers, with their employees, with their suppliers. Those are the kinds of products we have. And when customers move, let's say, from Amazon to us, the moment they try us, they realize, whoa, this is better and more economical. And of course, for Oracle workloads, you can't get anywhere close to what we can do. So we have a lot of things working in our favor. Our products, of course, our Fusion products are superb. I mean we have so many customers. This call is not long enough to reach them. And of course, NetSuite is, again, industry-leading like Fusion for a different part of the market, incredible momentum. And now we -- by the way, as I mentioned, there's about $100 million a quarter that is just the Russia, Ukraine region, that we stopped charging our customers in Ukraine when they were invaded even though we continue to help them. And of course, we suspended everything in Russia. So we just are just trying to meet our customers' needs. The biggest issue is having enough to meet demand. And I'm actually very happy with the way we manage the supply chain this past quarter, and I'm hoping that it will be -- it will continue to get better because that will give us more capacity and more capability to deliver to our customers. So I mean, we just have so much momentum. We have so many happy customers. And they're just -- new customers are just buying more. You get into the cycle that's very virtuous and people really build confidence in our capability to execute and also the overall economic message and offering that we're giving, We've always tried to give a compelling financial offering. And I think that's really resonating in these times. Operator: Next, we'll go to Brad Zelnick with Deutsche Bank. Brad Zelnick : Thanks very much for taking my questions and congrats on the great results. Larry, we picked up a meaningful uptick in the number of large enterprise agreements or ULAs that customers are doing with Oracle. And in particular, to satisfy their database needs, both on-premise and also in the cloud. Do you have any telemetry or other insights into customer behavior to see where they're deploying these licenses? And can you talk about why BYOL is so important to your strategy and the longevity of Oracle database? And maybe just for Safra as well, that license number was so strong. And in your prepared remarks, you mentioned license growth was led by database use in the cloud by major app cloud SaaS companies. Just wondering if there's any more color you can provide there. 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. Operator: Next, we'll go to Mark Moerdler with Bernstein Research. 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? Lawrence Ellison : Well, I'm not sure I call it -- I'm sorry, Safra, Pease go ahead. Safra Catz : No. You go ahead, Larry. You go ahead. Lawrence Ellison : Yes. Okay. I'm not sure I'd call it countercyclical, but the cloud systems cost a lot less than the on-premise systems to run. So -- and they give you much better information. They allow you to control expenses better. They don't cost that much to implement because you pay for them over time. So we -- what we're seeing is a -- let's take a look at NetSuite, which is the low end of the market, and you think those would be the companies to be most affected by the recession. It's not JPMorgan Chase. They'll keep building -- they'll keep putting in new systems. But some smaller entrepreneur-led companies, you think that the recession we got them. They had -- we got the most revenue we ever got from NetSuite this past quarter. and the highest growth rate that we've ever gotten from NetSuite this past quarter. They are accelerating into the recession because we think the benefits are enormous and it equips the companies to compete more effectively. And again, we don't see that business slowing down. Quite the contrary, we see our ERP business both Fusion and NetSuite accelerating. This in spite of the macroeconomic situation. Safra? 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. Operator: Next, we'll go to Phil Winslow with Credit Suisse. 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? Safra Catz : So it's a little of both. You see, first of all, large enterprises understand that having an unlimited agreement for some period of time, an unlimited agreement gives them unbelievable flexibility. Any large customer, large database user that does not have an unlimited agreement with us is really not optimizing for their spend because it gives them incredible flexibility. They can use on-premise for as long as they need it. They can move to the cloud and get a much lower price in the cloud with BYOL, and they can move back and forth. And it just gives us the kind of flexibility. Those agreements are the ultimate sort of the foundation of so much of what goes on. In addition, of course, in technology, we also have our leading Java business, which on-premise is an extensive use and in the cloud is at no charge. So customers can be motivated to bring their Java to the Oracle Cloud and to use it at no charge, their Java program and to use it at no charge. So we have a lot of things that incent bringing your Oracle databases to our cloud and, of course, all your Java work to our cloud. So both of those are absolutely critical for our license numbers to be as strong as they are. And the Oracle database, I've been following Oracle for, well, since the '80s. And I always -- we always hear about some new product that's about to overtake Oracle. And the reality is that the Oracle database is beyond the gold standard. If you really need work done and if you want to protect your most critical data and you want to use large amounts of it, it is going to be the Oracle database that is head and shoulders above every other product. And invariably, some folks try other things when they get bigger, they always come back to the Oracle database It is irreplaceable because of its technical capabilities that are so far superior. And that becomes very, very, very clear to customers and more and more of them license -- continue their license and extend those unlimited agreements, whether for on-premise and in the cloud. It's not either or it's both, and that is the best use of it. 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. Operator: And our final question comes from Kirk Materne with Evercore ISI. 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? Safra Catz : Yes. So let me hit the buyback first because I know I gave you quite a word sandwich there at the end. I was losing steam. We bought back $600 million this past quarter. I think we bought back about $600 million the previous quarter. I expect to do about the same this quarter. Usually, I don't give you the number in advance. But since previous quarter, to those 2, we did $7 billion and a couple of $8 billion. We're not going to be at that level. We'll be at the $600 million for a few quarters until I see where our debt levels are. And so $600 million a quarter is probably what I'm targeting. It could be a little bit more potentially but that's kind of where I'm at. And then on CapEx, okay. So you noticed how I mentioned how many regions we have, we have just put out -- put up so many regions over the past 1.5 years or 2. I think we now have more than Amazon or we're in -- I think we do already have more than Amazon already. We are going to build another 6, and we're going to expand the ones that we have because they are being used so extensively. In many cases, they are spoken for. And so I expect CapEx, which was where it was this year. I think it will be a little bit more than what it was this year, next year. I'll be giving a little bit more detailed guidance as I see it playing out over the year. But we have so much -- I mean we have so much cloud demand that I am going to continue to spend in capital expenditure. But I do believe that as a percentage of our revenue growth. I think I'll start really feeling those economies of scale and increasing my gross margins and my operating margin significantly. 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. Operator: This concludes today's conference call. You may now disconnect.

Operator: Good afternoon. Thank you for standing by. Welcome to Oracle's Third Quarter 2022 Conference Call. It's now my pleasure to hand today's conference over to Oracle Senior Vice President, Ken Bond. 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. Safra Catz: Thanks, Ken, and good afternoon, everyone. I'd like to start by acknowledging the tragic events unfolding in Eastern Europe as a result of the Russian invasion of Ukraine. We are working incredibly hard to help our Ukrainian employees and support our customers and partners. We have suspended all Oracle operations in Russia, and we did so well over a week ago. I'll now turn to Oracle's third quarter results. I'll review our non-GAAP results using constant dollar growth rates unless I say otherwise. And clearly, we had an excellent quarter with total revenue growing over 7%. Not only was total revenue above the midpoint of my guidance, but it was also the highest organic growth rate since we began our transition to the cloud. We saw broad-based outperformance in all segments. And for the first time in more than 10 years, all segments of our business saw growth. Total cloud revenues, when annualized, are now $11.2 billion, and they grew 26%. I expect the cloud revenue will exit the fiscal year growing in the mid-20s. Total cloud services and license support revenues for the quarter were $7.6 billion, up 8% and accounted for 73% of total company revenue. GAAP application subscription revenues saw record level organic growth of 10% and were $3.2 billion. Fusion apps were up 29%, with strategic back-office applications now having annualized revenue of $5.1 billion and growing 30%, including Fusion ERP, up 35%, and Fusion HCM, up 22%, and NetSuite ERP, up 29%. GAAP infrastructure subscription revenues were $4.5 billion, up 7% and higher than last quarter. And excluding legacy hosting services, infrastructure cloud services grew more than 60%. And I expect the infrastructure revenue growth rate will trend higher over time. OCI consumption, which includes autonomous database, was up 93%, also higher than last quarter. And total Cloud at Customer revenue was up 43%, with the backlog for Cloud at Customer machines growing to triple digits. Database subscription revenues, including database support and database cloud services, were up 4%, and again, higher than last quarter. License revenues were $1.3 billion, up 4%, with strong performance in our tech business. So all in, total revenues for the quarter were $10.5 billion, up over 7%, and as I mentioned earlier, our highest organic growth rate in over 10 years. Operating expenses were up 10% this quarter as we invest to meet growing demand for our cloud services. The gross margins for cloud services and license support was 84%, and the gross profit dollars grew 5%. I expect the full year growth in gross profit dollars for cloud services and license support will be higher than last year. Our plan is to continue to grow profits while we push our top line growth into double digits next year. Non-GAAP operating income was $4.8 billion, up 4% from last year. And the operating margin was 46%, higher than all of our competitors. Earnings per share was adversely affected by around $0.05 per share, primarily due to share price declines of equity investments impacted by the widespread downturn in equity markets last quarter. The non-GAAP tax rate for the quarter was 19%, in line with our base tax rate. And earnings per share was $1.13 in U.S. dollars, up 1% in constant currency and down 3% in U.S. dollars. The GAAP tax rate was 18.4%, slightly below our base rate and the GAAP earnings per share was $0.84 in U.S. dollars. Operating cash flow for the last 4 quarters was $10.4 billion, and our free cash flow over the same period was $6.6 billion. Both results were negatively affected by a one-time litigation charge in Q2. Capital expenditures for the last 4 quarters were $3.8 billion, and CapEx for Q3 was $1.1 billion. And we're on track to invest $4 billion in CapEx this year. We now have more than $23 billion in cash and marketable securities. The short-term deferred revenue balance is $7.9 billion, up 1%, with gross deferred revenue growing 6%. The remaining performance obligation, or RPO, balance is $38.5 billion, up 13% in constant currency due to very strong bookings. Approximately 59% is expected to be recognized as revenue over the next 12 months. As we've said many times before, we're committed to returning value to our shareholders through technical innovation, strategic acquisitions, stock repurchases and prudent use of debt and the dividend. This quarter, we repurchased 7 million shares for a total of 600 million as we reduced the buybacks in advance of the purchase of Cerner. We've paid out dividends of $3.5 billion over the last 12 months, and the Board of Directors again declared a quarterly dividend of $0.32 per share. Our business is strong as our fast-growing cloud business continues to become a larger proportion of the overall business. A few points. First, my guidance assumes that Cerner does not close in Q4, though it very well may close in the quarter. And again, Cerner should be accretive in the first year. Secondly, cloud is fundamentally a more profitable business to on-premise. And I expect that our full year non-GAAP operating margins for fiscal year 2022, which we're finishing now, will be 1% to 2% higher than pre-pandemic levels of 44%. Let me now turn to my guidance for Q4, which I'll provide on a non-GAAP basis. Now the U.S. dollar strengthened dramatically in November. And as you all know, it was a lot of fluctuations this quarter. But assuming currency exchange rates remain the same as they are right now, I expect we will see a currency headwind of 2% to 3% on revenue and $0.05 negative for EPS in Q4. Of course, the dollar could easily strengthen from here. Total revenue for Q4 is expected to grow between 6% to 8% in constant currency and grow between 3% to 5% in USD. Cloud service and license support revenue for Q4 is expected to grow between 6% to 8% in constant currency and grow between 4% to 6% in USD. Non-GAAP EPS for Q4 is expected to be between 1.40 and 1.44 in constant currency. GAAP EPS is expected to be between 1.35 and 1.39 in USD. Now both non-GAAP and GAAP EPS are expected to decline year-over-year due to some large investment gains we saw last year as well as a very low tax rate last year. It was 10.7%. Both of these masked the strong earnings growth and momentum we continue to see out of our core cloud business. My EPS guidance for Q4 assumes a base tax rate of 19%. As I always say, however, onetime tax events could cause actual rates for any given quarter to be higher or lower, but I expect that in normalizing for these onetime tax events, our non-GAAP tax rates will average around 19% or so. And with that, I'll turn it over to Larry for his comments. 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. Ken Bond: Thank you, Larry. Holly, if you could please prepare the audience for Q&A portion of the call. Operator: [Operator Instructions] And our first question for the day will come from the line of Brad Zelnick with Deutsche Bank. Brad Zelnick: Congrats on the continued momentum and especially all those great customer wins, Larry. I have one quick one for Safra and then a follow-up for you. Safra, just looking at my model, it looks like you had your strongest organic revenue growth in 10 years this quarter. And I just want to make sure I've got that right, and I'm not missing anything. 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. Brad Zelnick: And Larry, you now have an increasing number of ISPs that are now supporting and embedding OCI as well as targeted programs where you have some of the largest global SIs in the world really leaning in. Can you talk to us about how you're winning the ecosystem with OCI? And as well, if you can update us on the mix of traditional versus nontraditional Oracle workloads. Just help us get a sense of how the use cases are evolving and where you see that mix going. 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. Operator: And our next question will come from the line of Raimo Lenschow with Barclays Capital. 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? Safra Catz: The one thing I can tell you is we have an excellent relationship with the folks at TikTok. 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. Operator: And our next question will come from the line of Phil Winslow with Credit Suisse. 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? Safra Catz: Okay. So as you've seen, we've made a lot of investments. We basically -- our CapEx this year is double last year, and that's because we've been putting out a lot of capability around the world. Simultaneously, our revenues have been increasing. But over the past few years, we've had parts of the business that were significant parts of the business that were shrinking. And now, as you see in this quarter, for example, all lines of businesses are increasing. We have -- different lines of business have bookings growth, some of which are as high as well over 100%. And so what's happened is the -- most of the business is now growing. And so they're much less of the negatives. And the things that we're getting smaller like application license, for example, is a very small number now. And then, of course, our technology license is going very, very well, including, just this quarter, technology was up 9%. So the cloud business is on an absolute role. You can see it in the numbers already and ERP, HCM, but also, of course, OCI straight and autonomous database. And just all those parts of the business are now growing, and they're large. And the shrinking parts of the business -- first of all, there's a lot less shrinking. We grew and to the extent that we have some supply chain loosening where we are able to deliver all of our bookings, we just expect growth sort of all over the place. And so we're very upbeat about this next year. Operator: Our next question is going to come from the line of Keith Weiss with Morgan Stanley. Keith Weiss: Congratulations on a great quarter. It's great to see the momentum really showing through to the results now. Last quarter, you guys talked a lot about an increasing focus on verticals, particularly banking and health care. This quarter, you're talking about rolling up some of those verticals. Can you talk to us a little bit more about the approach on how you build up and create that roll up in the vertical? How much of that effort is building like vertical-specific products? How much of it is a new go-to-market strategy, if you will, or aligning the go-to-market strategy for those verticals? And how much work is left to be done on those 2 sides? 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. Keith Weiss: Yes. It sounds like a massive value unlock if it gets all pulled together. 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. Safra Catz: Okay. Let me just say one other thing. So we have a number of vertical industries in which we have products, and our competitors don't have products. And this has been a core part of how we work. We work with retailers. We work in financial services. We work in utilities. We work in construction engineering. We don't just modify ERP systems slightly and say we're in the industry. We're actually in operational systems in the industry, and it brings incredible value to our customers to be able to use these products. Operator: Our last question for the day will come from the line of Kirk Materne with Evercore ISI. Kirk Materne: Safra, I was hoping you could expand a bit on the strength in Cloud at Customer. And just really 2 things about that. How should we think about Cloud at Customer being somewhat of a leading indicator for adoption of autonomous database? And then are any of the supply constraints starting to loosen up a bit on that front in terms of maybe helping to accelerate rev rec in that area over the next couple of quarters? 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. Operator: And that will conclude the Q&A portion of today's call. I'll turn it over to management for their closing comments. 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. Operator: Once again, we'd like to thank you for participating in today's Oracle Third Quarter 2022 Conference Call. You may now disconnect.

Operator: Welcome to Oracle's Second 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 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. Safra Catz: Thanks, Ken, and good afternoon, everyone. I'm pleased to report another quarter of increasing revenue growth as the fastest-growing parts of the business continue to become a larger percentage of our business. We had a fantastic quarter as total revenue grew 6% in constant currency, above the high-end of my guidance, with broad-based outperformance across the company. Q3 revenue growth looks like it will continue even higher, but let me save that for the guidance discussion. Earnings were also strong, with non-GAAP EPS $0.09 above the high-end of my constant currency guidance. We achieved this outperformance despite the U.S. dollar strengthening since I gave guidance, as we saw a currency headwind of nearly $100 million to revenue and $0.01 to EPS, so the USD results, which are excellent and above guidance are even stronger than they appear. Before I go through the numbers, though, I wanted to comment on what we are seeing in the market that is driving our accelerating revenue growth. As I've mentioned on previous calls, we have a highly differentiated strategy from our competitors where we are the only company able to offer the combination of applications and infrastructure in the cloud. We have best-of-breed capabilities in both infrastructure and apps like HR and ERP, but also a highly differentiated set of industry-specific cloud SaaS applications and of course, our second-generation cloud with Autonomous Database are unique in their performance, security and dependability. And because we have decades of experience in mission-critical systems, our customers can depend on us being up and available when they need us. Our unique capabilities are attracting customers, especially as they consider how to conduct their own digital transformation in the complex industries in which they compete. They want us to know as much about their business as they do, whether it's telco, financial services, utilities, retail and many others and to partner with them to modernize. Once a company thinks beyond simple dev test and other rudimentary cloud workloads and move their technology focus to mission-critical projects, they invariably turn to Oracle. Our focus on customer success is driving more references and new opportunities with both existing customers and with entirely new accounts. And of course, we ourselves are an Oracle Fusion full suite user, and I'm sure it is not lost on any of you and it's not lost on our prospects and customers that we are announcing our results nine days after the quarter closed because of our systems and their embedded processes. Okay. Back to the numbers. And from here on, I'll review our non-GAAP results using constant dollar growth rates, unless I say otherwise. So total cloud services and license support revenues for the quarter were $7.6 billion, up 6% in constant currency and accounted for 73% of total company revenue. Total cloud revenues, when annualized are now $10.7 billion and grew 22%, with cloud bookings growing faster than our cloud revenue growth rate. And as a result, we expect cloud revenue will accelerate further and exit the fiscal year in the mid-20s, potentially higher. GAAP application subscription revenues were $3.1 billion, up 8% organically in constant currency and our highest growth rate in four years. Fusion apps were up 30% with strategic back-office applications now having annualized revenue of $4.9 billion and growing 30%, including Fusion ERP up 35%, Fusion HCM up 25%, and NetSuite ERP up 28%. GAAP infrastructure subscription revenues were $4.4 billion, up 5% and excluding legacy hosting services, infrastructure cloud services grew more than 50%. I expect the infrastructure revenue growth rate will continue to ramp higher through the fiscal year. OCI consumption revenue, which includes Autonomous Database, was up 86% in constant currency and total Cloud at Customer revenue was up 45%. Database subscription revenues, including database support and database cloud services were up 3% in constant currency. License revenues were $1.2 billion, up 16% amongst our very best quarters over the last 10 years and license growth was not dependent on any mega deals. We saw excellent performance in technology, our vertical businesses as well as North America and Latin American regions. So all in, total revenues for the quarter were $10.4 billion, up 6% in constant currency. Operating expenses were up 6% this quarter. The gross margin for cloud services and license support was 84%, and gross profit dollars grew 5% in constant currency. I expect the full-year growth in gross profit dollars for cloud services and license support will be similar to or better than last year. Non-GAAP operating income was $4.9 billion, up 7% from last year and the operating margin was 47%. The non-GAAP tax rate for the quarter was 19.2%, slightly higher than our base rate of 19% and earnings per share was $1.21 in U.S. dollars, up 14% in U.S. dollars, up 15% in constant currency. During the quarter, we recognized GAAP acquisition-related and other expenses totaling $4.7 billion, which substantially consisted of litigation-related charges that will not recur. They relate to a dispute that arose when we hired my former co-CEO in 2010. As a result of this one-time charge, GAAP net income was a negative $1.2 billion. The GAAP tax rate was 16.6% due to some discrete items and the GAAP loss was $0.46 per share. Operating cash flow for the last four quarters was $10.3 billion, and our free cash flow over the same period was $7.1 billion. Both results were negatively affected by the litigation charges I mentioned. Capital expenditures for the last four quarters were $3.1 billion, and CapEx for Q2 alone was $925 million and we are on track to invest $4 billion in CapEx this year. We now have nearly $23 billion in cash and marketable securities. The short-term deferred revenue balance is nearly $8 billion, up slightly in constant currency from a year ago due to timing differences in customer payments with gross deferred revenue growing 5% in constant currency. The remaining performance obligation or RPO balance is $37.2 billion, up 11% in constant currency due to strong bookings. Approximately 59% is expected to be recognized as revenue over the next 12 months. As we've said so many times before, we are committed to returning value to our shareholders through technical innovation, strategic acquisitions, stock repurchases, prudent use of debt and a dividend. This quarter, we repurchased 77 million shares for a total of $7 billion. And over the last 10 years, we've reduced the shares outstanding by 47% at an average price that's about half the current share price. The Board of Directors increased the authorization for share repurchases by an additional $10 billion. We've paid out dividends of $3.4 billion over the last 12 months, and the Board of Directors again declared a quarterly dividend of $0.32 per share. Now the guidance. I'm going to start by reiterating our expectation that full-year 2022 revenue growth will accelerate from 2021 for all the reasons we've already seen so far this year. Given the strong performance in the first half, I now expect that we will see full-year total revenue finish solidly in the mid-single digits, led by cloud revenue growth exiting the year in the mid-20s. Cloud is fundamentally a more profitable business compared to on-premise, and I expect that our operating margins this year will be the same or better than pre-pandemic levels of 44%. Let me now turn to my guidance for Q3, which I'll provide on a non-GAAP basis. The U.S. dollar strengthened dramatically in November. I know you all saw that. And assuming currency exchange rates remain the same as they are now, which we have no idea if they will or not, I expect we will see a currency headwind of 3% for revenue and $0.05 for EPS in Q3. Total revenue for Q3 is expected to grow between 6% to 8% in constant currency and grow between 3% to 5% in USD. Clearly, the midpoint of the range is 7%, and that is higher than the 6% we just reported in Q2 and higher than the 2% we reported in Q1. So everything is trending in the right direction. Cloud service and license support revenue for Q3 is expected to grow between 6% to 8% in constant currency and grow between 3% to 5% in USD. Non-GAAP EPS for Q3 is expected to grow between 2% and 6% in constant currency and be between $1.19 and $1.23 in constant currency. Non-GAAP EPS for the quarter is expected to grow between negative 2 and positive 2 in USD and be between $1.14 and $1.18 in USD. My EPS guidance for Q3 assumes a base tax rate of 19%. However, one-time tax events could cause actual tax rates for any given quarter to be higher or lower. But I expect that in normalizing for these one-time events, our non-GAAP tax rates will average around 19% or so. With that, I'll turn it over to Larry for his comments. 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: Mayo Clinic, the number one ranked hospital in the United States, [Tay Markel], Syneos Health and PPD. Again, I can go on and on, but again, we print those out for you, and you can read them at your leisure. Let me talk about one other industry before I give my closing remarks. That's logistics customers. We've become very, very strong with logistics customers. FedEx was a key win from us, takeaway from SAP. UPS, we have UPS, DHL, FedEx, DP World, SS, TTS. I can go on and on. We have most of the big logistics companies around the world. And FedEx, which is – a lot of our companies aren't through rolling out Oracle Fusion ERP. But FedEx, for example, is now live in 98 countries. We are winning in lots of other industries as well, but I wanted to highlight these three industries because they are essential to our plan to add major new capabilities to our cloud ERP system. Before I describe these capabilities, I have a confession to make. We are not – I don't believe it anyway. We are not on our way to building a $20 billion cloud ERP business in five years. I think it's going to be a lot bigger than that. Let me explain why. As more and more companies adopt and run Oracle Cloud ERP, I ask the question, what does a B2B procurement transaction look like? In other words, how does it work when one Oracle Cloud ERP system is talking to another Oracle Cloud ERP system and placing an order? We are working in concert with our banking and logistics partners to originate purchase financing, products shipped, delivery tracking, invoicing and payments right inside the two transacting Oracle Cloud ERP procurement systems. Oracle Cloud ERP will soon bring an entirely new level of automation to B2B commerce, one that very much resembles the ease of doing business and efficiency of B2C e-commerce. This new ERP automation system, all these new capabilities will dramatically simplify our customers' procurement and supply chain processes. And as such, it represents a huge new opportunity for Oracle to grow its cloud ERP ecosystems. Thank you. Back to Safra. Safra Catz: Thanks, Larry. I think Ken is going to take questions. So... Ken Bond: Yes. Erica, if you could queue the audience, please? Operator: [Operator Instructions] Our first question comes from the line of Brad Zelnick with Deutsche Bank. 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. Lawrence Ellison: Well again, we have a bunch of things the other guys don't have. We have applications. So – but I know you want to talk about this. Yes, you want to talk about infrastructure. We think of those as two separate businesses, but of course, they're not. I mean everyone who is running Oracle ERP is building data warehouses on top of their ERP data. They're mashing it up maybe with Salesforce data. They're doing all of these things. They're doing a combination of big application customers. Bank of America, for example, is doing a combination of running our apps and building bespoke apps around those. So this is a huge opportunity for us that are other infrastructure customers, other infrastructure providers don't have. We've often had the discussion, do we want to support 10 databases, or do we want to support 30 databases? And do we want to have every single service that let's say an Amazon has? And I think our view is we want to have some really good choices, but not every single choice on the menu. We want to have all of the popular databases, but not some of the obscure databases. So we are not going to try to feature match every single thing they do. We will, however, have development environments they don't have at all. So if you're building data warehouses on top of Fusion ERP or on top of Fusion HCM or on top of NetSuite, we have a whole set of tools that makes that easy for you over on the infrastructure side of our business. So we have some – we do – we have all the popular stuff around. I mean obviously, you have Kubernetes and the like. And we have Postgres and the popular databases. We have MySQL, but our version of MySQL is much better than Amazon's version of MySQL. It's much faster. I mean more than 10x faster because of HeatWave. We have this Query Optimizer, they don't have at all. So our idea is to look at the most popular products to have recommended development environments and recommended systems, and be able to do things they can't do at all. I think one other – let me mention one of these fundamental differences in our strategy versus their strategy. They are building a small number of very, very large data centers. Our strategy is to build a large number of smaller, less expensive data centers. We think that improves reliability dramatically. We don't have this giant data center going down. It reduces the blast radius of what happens when things go down. Less goes down. It allows us to go into sovereign nations in some smaller countries that they can't – never afford to put a data center in. And we could not put one, but two, a primary and a backup data center in sovereign countries that care about data sovereignty. We can put a complete cloud. I don't mean just database cloud. I mean a complete cloud at a customer like NRI in Japan. And we did that with that – we put in a primary and a backup. So we can – if people want to run a cloud, if a large financial institution wants to run our cloud inside their firewall, inside their data center, we can do that. And how will that cloud differ from the cloud that we run in the public? It won't differ at all. We can make that small enough, that we can fit it into their data center. Nobody else can do this. So we think – and then let me close with a note that I'm going to paraphrase from a very large telecommunications company who uses our cloud and all the other three North American clouds, Google, Amazon and Microsoft. And the note basically said, the one thing we've noticed about Oracle, Oracle’s Cloud is that it never ever goes down. We can't say that about any of the other clouds. We think this is a critical differentiator availability. Another critical differentiator is security, where we have – where the only way you can achieve security, I promise you this is true, is through autonomy. If you have human beings deploying and tinkering with your systems, they can make mistakes that expose your data. The only way we've been able to solve that problem is to get human beings out of the equation. No human beings, no human error, no human malice. So we think we have a bunch of differentiators. And we'll be able to compete very, very effectively with security, reliability, combination of apps and infrastructure autonomy and a bunch of other things the other guys just will not be able to do. Brad Zelnick: Larry, that's super helpful. Thank you, again and congrats. Lawrence Ellison: I will not have an answer that long again, ever. 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. Brad Zelnick: Thank you so much. Operator: Our next question comes from Raimo Lenschow with Barclays Capital. Raimo Lenschow: Hey. Thanks for taking my question, and congrats from me as well. I wanted to go back to ERP, and I apologize for that. But I remember when I used to work in the industry, Larry, the changing an ERP system was like volunteering for root canal treatment. Kind of, you kind of try to avoid it as much as possible. But if I look at the numbers now, NetSuite had the strongest role I've seen for forever, I think. Fusion ERP is accelerating. So what's going on in the industry in terms of kind of like the pressure or the willingness to do it now? Thanks for that, and congrats again. 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. Raimo Lenschow: Perfect. Thank you. Ken Bond: Next question, please. Operator: Our next question comes from Keith Weiss with Morgan Stanley. 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? Safra Catz: I guess I'll take that. I'll get started with that. Well, first of all, the public database data centers are the ones that we announced that are up and running. Of course, we have many in the offing. We also have, as Larry talked about, a private region for certain customers. But in addition, we've made very significant investment in government, especially United States government-focused data centers. And I'm sure you've seen that we've been invited to submit for the JWCC. We also have data centers at different levels of security for different government requirements in other countries. And those, we don't generally announce, so you don't see those. What you do see is the fact that we have invested ahead of revenue and we invest when we see revenue potential. We have been rolling out on track. So we feel very good about it. We have just continued to make sure we have capacity for customers. And some customers start in one data center, and when we open in their countries, they move to those. And that's working out for us. We have a lot of demand worldwide where you're going to see us make these investments, as I've guided for the whole year. Keith Weiss: Okay. Super helpful. Thank you. Operator: Our next question comes from Mark Moerdler with Sanford Bernstein. 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. Lawrence Ellison: Yes, I'll take a crack at that one. Well, everyone says we’re late to the party. So we saw what everyone else built. In fact, we built two versions of our cloud, right? We built Version 1, which we weren't very happy with and then we built our Gen 2 cloud. And one of the things that we decided, as we had a chance to re-architect it, we were sensitive to – we needed special super high security zones for government. We need to build a lot of data centers. And the magic to building a lot of data centers is twofold. One is compressing the software to a smallish number of servers. But that's really not it. It's really the art of being able to operate a lot of smaller data centers without people or with very few people. Think about what Elon Musk did with his satellite system. Why was he able to build a low earth orbiting satellite system, and nobody else? And a lot of other people have tried, but no one else could. Because he figured it out – he built the software to manage thousands of satellites. No one else could do it. NASA couldn't do it. Other people couldn't do it. That's why they kind of failed in the past. Our automation software for rolling out and managing a large number of data centers is very different software that you would build for managing a small number of super large data center where you had a lot of people. So we've relied much more heavily on automation to do this. And Safra knows all about it because it wasn't easy. It took us a while. And we were worried a bit and we've made a bunch of commitments. And the only way we can meet all those commitments was to have fully automated lights-out data center, cloud data centers. And we – the team did a fantastic job prioritizing that automation. And that automation software is what allows us to have a large number of data centers rather than a small number of large data centers. It's just a different – it's a different suite of software to do it, to manage it. Mark Moerdler: That makes a lot of sense. Safra Catz: Larry, I want to comment also on the private data centers that are truly a full cloud, but at customers. So that's just... 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. Mark Moerdler: That makes a lot of sense. I really do appreciate it and congratulations on the strong quarter. Lawrence Ellison: Thank you. Operator: Our final question comes from Phil Winslow with Credit Suisse. 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… Lawrence Ellison: By the way, I'm really glad you said that. That's what it is. I mean think about it. I mean Marc Benioff over at Salesforce.com, they run their business, their cloud business entirely on Oracle. Now people say, well, that's not cloud revenue. You just license that revenue. Well, it's the Oracle database running all of Salesforce's cloud. And we don't count – and you're right, we don't count that as cloud revenue. We count that as license revenue. But is that a modern cloud application? I think so. But again, the license stuff is being driven by the use of our database in some very large clouds. 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? Safra Catz: Larry, it's either you or me. We're going to talk about data. I mean listen, this is not new news in that what is going on is getting insights from data, being able to capture large amounts of data, and analyzing it. And of course, that's coming and so much of it is in Oracle. We're the ones who can handle high performance, high reliability requirements. And the Oracle database continues to grow. But in addition, we have the other technologies that are also doing very well. Java continues to be incredibly strong, and it's leading application development environment. But remember, when people buy the Oracle database licenses, they can bring those to our cloud, and that's a very economical way to operate. And really, what's going on is huge amounts of data growing exponentially. And when it's important data, especially data you want to use for analysis, for data warehousing, for transactions, you're going to pick Oracle in nine times out of 10. And so this is great for us. And of course, as more businesses just digitize, this just draws more of our technology. 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. Philip Winslow: Great. Thank you, Larry. 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. Operator: Thank you for joining today's Oracle's second quarter 2022 earnings conference call. We appreciate your participation. You may now disconnect.

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. 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. Safra Catz: Thanks, Ken, and good afternoon, everyone. We had a great quarter as total revenue was $100 million above the midpoint of my constant currency guidance, with outperformance coming from all parts of our business. EPS was also very strong and was $0.08 above the midpoint of my constant currency guidance. As the dollar strengthened from when I gave guidance and it strengthened significantly, we didn't get the benefit we would have gotten had it stayed at the same level throughout the quarter. Now from here on, I'll review our non-GAAP results using constant dollar growth rates, unless I say otherwise. So total cloud services and license support revenues for the quarter were $7.4 billion, up 6% in USD, up 5% in constant currency and accounted for 76% of total company revenue. Total cloud revenues are now at an annualized revenue of $10 billion with an accelerating growth rate that we expect will exit the fiscal year in the mid-20s. GAAP application subscription revenues were $3 billion, up 7% with Fusion apps up 26% in USD and 24% in constant currency. Our strategic back-office applications grew 25% in constant currency, including Fusion ERP, up 30% and NetSuite ERP, up 26%. GAAP infrastructure subscription revenues were $4.3 billion, up 3%. And excluding legacy hosting services, infrastructure cloud services grew in the mid-30s, and we saw triple-digit booking growth this quarter. So I expect the infrastructure revenue growth will ramp higher through the fiscal year. OCI consumption revenue, which includes Autonomous Database, was up 80% in constant currency and Cloud at Customer revenue was up 44%. Database subscription revenues, including database support and database cloud services, were up 6% in USD, up 5% in constant currency and that's up from 4% last quarter. License revenues were $813 million, down 8% after a tough compare from last year's Q1. So all-in, total revenues for the quarter were $9.7 billion, up 4% in USD, up 2% in constant currency. Operating expenses were up 3% this quarter. The gross margin for cloud services and license support was 84%, and the gross profit dollars grew 2%. I expect the full-year growth in gross profit dollars for cloud services and license support will be similar to last year. Non-GAAP operating income was $4.3 billion, up 2% from last year, and the operating margin was 45%. The non-GAAP tax rate for the quarter was 18%, slightly below our base tax rate of 19%, and earnings per share was US$1.03, up 11% in USD and up 9% in constant currency. As a result of some discrete items, the GAAP tax rate was 8.4%, and GAAP EPS was US$0.86, which was up 19% in U.S. dollars and up 16% in constant currency. Operating cash flow for the last four quarters was $15.3 billion, up 17% in USD, and our free cash flow over the same period was $12.6 billion, up 9% in USD with capital expenditures of $2.8 billion, also over the same period. CapEx for Q1 alone was $1.1 billion. We now have more than $39 billion in cash and marketable securities. The short-term deferred revenue balance is $10 billion, up 1% from a year-ago due to timing differences in customer payments, but with gross deferred revenue up 5% in constant currency. The remaining performance obligation or RPO, our balance is $38.7 billion, up 10% in constant currency, due to strong bookings. Approximately 60% is expected to be recognized as revenue over the next 12 months. As we've said many times before, we are committed to returning value to our shareholders through technical innovation, strategic acquisitions, stock repurchases, prudent use of debt and the dividend. This quarter, we repurchased 94 million shares for a total of $8 billion. And over the last 10 years, we have reduced the shares outstanding by 46% and in average price, that's about half the current share price. In addition, we paid out dividends of $3.2 billion over the last 12 months, and the Board of Directors declared a quarterly dividend of $0.32 per share. Now to guidance what you are all waiting for. I remain highly confident that fiscal year 2022 revenue growth will accelerate because our fast-growing cloud businesses are becoming a larger portion of our total revenue. I see total revenue growth for fiscal year 2022, which is the one we’re in, somewhere in the mid-single digits in constant currency and accelerating. Cloud is fundamentally a more profitable business compared to on-premise. And as we look ahead to next year, we expect company operating margins will be the same or better than pre-pandemic levels. Let me now turn to my guidance for Q2. And I will review this on a non-GAAP basis. Assuming currency exchange rates remain the same as they are now, currency should have a very minor positive effect on total revenue and EPS in Q2. Total revenue for Q2 are expected to grow between 3% to 5% in both USD and constant currency. Cloud services and license support revenue for Q2 are expected to grow more than 5% in both USD and constant currency and then climb higher through the second half of the fiscal year. Non-GAAP EPS for Q2 is expected to grow between 2% and 6% in both USD and constant currency and be between $1.09 and $1.13. My EPS guidance for Q2 assumes a base rate of 19%. However, one-time tax events could cause actual tax rates for any given quarter to vary both up and down, but I expect that in normalizing for these one-time tax events, our non-GAAP tax rate will average around 19% or so. And with that, I'll turn it over to Larry for his comments. 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. Safra Catz: Thanks, Larry. Ken, I think we're ready to take questions. Ken Bond: Yes, absolutely. Erica, if you could please prepare the audience for questions, please. Operator: [Operator Instructions] Our first question comes from Raimo Lenschow with Barclays. 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. Safra Catz: Raimo, maybe I'll start and then Larry can add in. I think that one of the things has become incredibly obvious during this pandemic is that companies that have closer digital relationships with their customers, their employees and their suppliers are doing much better than those that don't. And the work from home and all the data, that capabilities, whether it's mobile or otherwise, once you have that implemented, your ability to adapt to changing business situations is so much better if you've moved to the cloud, and also capabilities that you may need can be supplied by a vendor like ourselves where, for example, as we've discussed, we rolled out health and safety to our HCM customers, so they could better work with their employees and monitor and advise them regarding COVID. And there is no question that digital transformation is the top goal of companies and those companies that had been delaying or moving slowly have brand-new urgency on it. And of course, because we are ranked and I think it's our third year in a row in the top right-hand quadrant on Gartner really with no one even close to us, we are the number one choice for moving to Fusion ERP and other back-office applications. So for us, I have to say that there is just incredible momentum and commitment from our – from prospects and customers and for companies who have been on-premise either with our products or historically with SAP where they just can't continue like they did. 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. Raimo Lenschow: Okay. Thank you. Operator: Our next question comes from Mark Moerdler with Sanford Bernstein. Mark Moerdler: Thank you very much for taking my questions, and congratulations on the size and strength of the IaaS plus SaaS cloud. OCI Gen 2 passed Google GCP in the Gartner IaaS/PaaS feature functionality ranking this month. Let me ask, is the functionality checkbox enough to capture market or do you believe that customers fundamentally view OCI different than AWS, Azure and GCP and why? Thanks. 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. Mark Moerdler: Thank you. I appreciate it. 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. Ken Bond: Thank you, Larry. Erica, next question please. Operator: Our next question comes from Derrick Wood with Cowen and Company. Derrick Wood: Great. Thanks for taking my question. Safra, nice job at accelerating recurring revenue growth, while still growing operating income in Q1. Last quarter, you had alluded to the fiscal 2022 being more of an investment year for you guys. Can you just remind us how you're thinking about balancing topline growth versus operating income growth or operating margins for the fiscal year and maybe touch on where you want to be adding more investments to help with accelerating growth either from a geo perspective or a product go-to-market standpoint? 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. Lawrence Ellison: Yes, I'd like to just second that with an example in the past, recent history where when we bought NetSuite, we considered NetSuite strategic. We thought this is a company that it should be growing even faster than it was independently as a part of Oracle. And so we made a number of investments in NetSuite, and we've seen their growth – NetSuite has gotten bigger obviously, but their growth rate has increased and we've invested, but we've made more money and we're growing faster in NetSuite. So I think that's the model that Safra likes to implement. And it seems to be working pretty well at NetSuite. We don't see why it would be any different in a larger business like the Oracle Public Cloud. Derrick Wood: Understood. Thanks for the color. Ken Bond: Next question please. Operator: Our next question comes from Kirk Materne with Evercore ISI. Kirk Materne: Thanks very much, and thanks for letting me ask the question. I guess Larry, can you sort of double click on OCI and specifically, I was curious what you're seeing with some of your early OCI customers in terms of net expansion, meaning how are those customers growing with you in terms of either net workloads or new infrastructure services? And within those customers, do you feel like you're taking wallet share versus some of the other public vendors? Just to give us a sense on how those might act as a proxy for others? Thanks. 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. Kirk Materne: Thank you. Ken Bond: Okay. Next question please. Operator: Our next question is from Michael Turits with KeyBanc. 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? Safra Catz: Yes, I mean, one of the things I didn't mention was that consumption at Cloud at Customer is up over 150%. So you need to understand that once Cloud at Customer, they take a while to set up and then once they start getting set up because it's a little bit more complicated. We follow a very, very special security model and what we do is, it's really a land-and-expand model. The customer brings in some workloads and then they realize how incredible it is. And it runs their database workloads, it runs their other workloads so quickly, so cost effectively that it just builds in momentum. The thing that, as I said, it takes a while to actually land and get it all set up, but now it's gotten to be a good size and then it's just accelerating for us. And so that's really where we're at. It is a global product. It is completely differentiated, and it is very profitable for us. And it fits the need of our customers because remember their Oracle workloads in particular really, really run amazingly, but also those are their most important workloads often and those have to be perfect. And that's really – they have to be secure, they have to be performing, they have to be always up, and they have to be economical for them, and it's just a – it's a perfect match for what they need. Michael Turits: Great. Thanks, Safra. Ken Bond: Okay. Next question please. Operator: Our final question comes from Mark Murphy with JPMorgan. Mark Murphy: Yes. Thank you very much. So you seem to have pivoted your CapEx approach a bit from just-in-time purchases to carrying a bit of a capacity buffer, so that you can deploy all these OCI wins. I'm just curious Safra, does it take a quarter or two and then, you have enough of a buffer there or do you see such a pipeline for OCI demand that this CapEx rise perhaps could last a while longer, which might be a good news for future revenue growth? 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. Mark Murphy: Thank you very much. Safra Catz: Thank you. Ken, we can't hear you. Ken Bond: Thank you. 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 the operator for closing. Operator: Thank you for joining today's Oracle first quarter 2022 earnings conference call. We appreciate your participation. You may now disconnect.

Operator: Welcome to Oracle’s Fourth Quarter 2021 Earnings Conference Call. Now, I’d like to turn today’s call over to Ken Bond, Senior Vice President. 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. Safra Catz: Thanks, Ken, and good afternoon, everyone. We are again reporting earnings earlier than last year. And with Fusion ERP, we are now filing our quarterly and annual financial statements faster than any other company in the S&P 500. This is possible because of the highly automated and machine learning-enabled system that helps us complete the accounting of financial transactions much more quickly. As you can see, we had a fantastic quarter with revenue nearly $200 million above my guidance. Q4 is really a story of every product, every region, and every metric exceeding expectations. The credit for the excellent full year results in the quarter goes to our global team of employees who supported our customers without interruption this past year. We were successful by continuing to deliver best-in-class products and services, both infrastructure and applications to help our customers in their digital transformation, many who’ve reinvented themselves in real time because of the pandemic. Now, the growth rates we are reporting today are entirely organic, reflecting true [Technical Difficulty] related growth across our product portfolio. Total cloud services and license support revenue for the quarter was $7.4 billion, up 8% in U.S. dollars, 4% in constant currency driven by Fusion, Autonomous Database, and our Gen2 OCI. Application subscription revenues were $3 billion, up 11% in U.S. dollars and 7% in constant currency. Our strategic back-office cloud applications now have an annualized revenue of $4.4 billion and grew 32% in constant currency for the quarter, including Fusion ERP, which was up 42%. NetSuite ERP, up 22%; and Fusion HCM, up 30%. Our back-office cloud application revenue is not only bigger than our nearest competitor but also growing more than twice as fast. Infrastructure subscription revenues were $4.3 billion, up 6% in USD, up 2% in constant currency. Infrastructure cloud services now have an annualized revenue of more than $2.3 billion. OCI consumption revenue, which was up 103% in constant currency; Autonomous Database, up 56%; and cloud customer revenues, up 50%. Database subscription revenues, including database support and database cloud services, were up 8% in USD, 4% in constant currency. Customers are adopting OCI because of its unique focus on performance and security at the most competitive price. The highly differentiated Autonomous Database, which is available there and the flexibility of deploying Oracle Cloud, both in our own data center, what we call public cloud or behind our customers’ firewall, Cloud@Customer. License revenues were $2.1 billion [ph], up 9% in USD, 5% in constant currency. So, all-in, total revenues for the quarter were $11.2 billion, up 8% in USD, 4% in constant currency. Operating expenses were up 6% in constant currency this quarter, and we made significant investments in our cloud business. And while you can see some of the ROI in FY21’s revenue growth, we expect the most of the return will be realized in FY’22 and beyond. Non-GAAP operating income was $5.4 billion, up 6% in USD; and the operating margin was 49%. The non-GAAP tax rate for the quarter was 10.7% and below our base tax rate of 20% as a result of some discrete items that hit in the quarter. EPS was $1.54, up 29% in USD and up 22% in constant currency. By the way, GAAP EPS was $1.37, up 39% in USD, 31% in constant currency. Now, for the full fiscal year, total cloud services and license support revenue was $28.7 billion, up 5% in USD, up 3% in constant currency. Total Company revenues for the year were $40.5 billion, up in 4%, USD, 2% in constant currency. FY’21 recurring cloud services and license support revenue as a percentage of total revenue now represents 71% of total company revenue, up from 70% last year, and we anticipate this trend to continue as cloud services grow and accelerate. Non-GAAP EPS for the year was $4.67, up 21% in USD, up 18% in constant currency, marking the fourth consecutive year of double-digit earnings growth. The full-year operating margin percentage was 47%, actually our best result in seven years and up 245 basis points from 44% last year. Operating cash flows over the last four quarters was a record $15.9 billion, up 21% in USD. Our free cash flow was also a record, $13.8 billion, up 19% in USD with capital expenditures of $2.1 billion during the year. For the quarter -- back to the quarter, operating cash flow was $4.8 billion, up 34% in USD; and free cash flow was $4.1 billion, up 30% from last year. As in the side, free cash flow would have been about 30 -- $300 million lower as some CapEx targeted for Q4 was actually spent in the last two weeks, so in early June. We now have more than $46 billion in cash and marketable securities. The short-term deferred revenue balance was $8.8 billion, up 10% in USD, 5% in constant currency. The remaining performance obligation, or RPO balance is $41.3 billion, up 8% in constant currency due to strong bookings. Approximately 60% is expected to be recognized as revenue over the next 12 months. As you’ve heard me say many times before, we are committed to returning value to our shareholders through technical innovation, strategic acquisitions, stock repurchases, prudent use of debt and the dividend. This quarter, we repurchased 107 million shares for a total of $8 billion. Over the last 12 months, we repurchased 329 million shares for a total of $21 billion. Over the last 10 years, we have reduced the shares outstanding by more than 44%. In addition, we paid out dividends of $3.1 billion over the last 12 months, and the Board of Directors declared a quarterly dividend of $0.32 per share. Now to the guidance. Let me first start with my confidence in the continuation of our revenue growth acceleration for fiscal-year 2022. As I’ve said many times over the last two years, our overall revenue growth is continuing to accelerate as our fast-growing cloud business becomes a larger portion of our total revenue. I see total revenue for fiscal 2022 growing faster than fiscal ‘21 with constant currency revenue growth somewhere in mid-single digits. Given our increasing confidence in revenue growth and our unique and differentiated position in the market, we are going to invest back in the business at a greater rate, so we can further accelerate the top line. We also see cloud as being fundamentally a more profitable business compared to on-premise. And as everyone knows, our annual non-GAAP margins of 47%, and that’s what we run the business at, are in fact the highest non-GAAP margins of all of our competitors. And we believe that now is the right time to increase our investment to capture market share. As such, we expect to roughly double our cloud CapEx spend in FY 2022 to nearly $4 billion. We are confident that the increased return in the cloud business more than justifies this increased investment and our margins will expand over time. Let me now turn to my guidance for Q1. I’ll review this on a non-GAAP basis and assuming currency exchange rates remain the same as they are now. Currency should be about 2% to 3% positive on total revenue and $0.03 positive on EPS in Q1, however, currency fluctuates and the actual impact could be different. Total revenues for Q1 are expected to grow from 3% to 5% in USD and are expected to grow 1% to 3% in constant currency. Cloud service and license support revenue growth for Q1 will be about the same as Q4 at 4% in constant currency and then climb through the year. As a result of the increased investment in the quarter, non-GAAP EPS in USD is expected to grow between 2% and 6% and be between $0.94 and $0.98 in USD. Non-GAAP EPS growth in constant currency is expected to be anywhere from negative to positive 2 and be between $0.91 and $0.95 in constant currency. Now, my EPS guidance assumes a base tax rate of 19%. However, onetime events could cause actual rates for any given quarter to vary, but I expect that normalizing for these onetime events, our tax rate will average around 19% or so. Finally, we want to thank our employees around the world for working so hard and staying focused on our customers and partners during the pandemic. And we also want to send particular thanks and warmest wishes to our employees in COVID hotspots who’ve been hit particularly hard in [Technical Difficulty] and with whom we have been working very hard to support them, including providing vaccination. We just want to thank all of you and congratulate you all on a successful year and year-end. You’ve all been remarkable. So, thank you. And with that, I’ll turn it over to Larry for his comments. 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. Ken Bond: Thank you, Larry. Erica, if you could please now prepare the audience to poll for questions. Operator: [Operator Instructions] Our first question comes from Mark Moerdler with Bernstein Research. Mark Moerdler: Thank you. And congratulations on to the team on a clean, nice quarter. I’d like to try to get some more color on the drivers of the success of the Oracle Cloud ERP solution. Can you give us some more sense of how much of Oracle Fusion ERP is from new Oracle ERP customers? How much is international versus the U.S.? How much is large enterprise? Where is the sweet spot? Any color you can give to get a sense of what’s really driving the growth, and how much of that is new to versus existing customers would be very helpful. 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. Safra Catz: Yes, and as far as where it’s happening, I have to tell you, it is so broad-based. It is a worldwide phenomenon for us. Our Fusion, NetSuite are just chugging along. It was an incredible, incredible Q4, and Q1 looks enormous. So imagine, bookings are way up, and there’s just a lot of success. We have so many customers that have gone live. So, we have references from some of the largest companies in the world to really small or medium-sized companies that it’s pretty consistent, almost any prospect can find many companies just like it already being incredibly successful. And I think that, frankly, the pandemic taught many of our prospects and customers that moving quickly is really required these days. I think that folks used to think moving quickly is risky. I think, they really saw that they had to move to much more modern, flexible, digital businesses, and that we are the [Technical Difficulty] destination for them for the back-office without a doubt. Larry Ellison: I’d like to add one thing. We almost never lose a competitive ERP deal in the cloud, virtually never. Operator: And our next question is from Keith Weiss with Morgan Stanley. 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? Larry Ellison: Okay. I mean, it’s really easy to remember. About half of it’s database, half of it’s everything else. So, I mean everything else -- I mean, the database, you understand. They’re lifting and shifting existing database workloads and developing new Oracle Database workloads on OCI. The other thing varies from things like Zoom who have moved over, but also in simulations, and we’re very, very good at running simulation software. So, almost -- so a large number of car companies have moved all of their PaaS simulations to the Oracle Cloud because we do it faster and cheaper than any other cloud. So, we have actually a pretty balanced portfolio right now where we have the Oracle database contributing to half of the workloads running on -- running in OCI and the other half is a variety of new customers doing new applications, not database related. 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. Larry Ellison: And I want to emphasize one thing, I said it, but I want to say it again, is there are new Oracle workloads being developed, especially in the area of genomics where there have been a number of new databases moved to Oracle and OCI that track things like the genetic variants of COVID-19. But, there are a number of these things, and you’ll see a whole series of announcements coming out where we’ve moved aggressively into health care, and one of the big new applications for our database is just -- is tracking the genomics of pathogens, and those databases are being developed right on Oracle Autonomous Database from scratch. Operator: Our next question comes from Derrick Wood with Cowen & Company. Derrick Wood: Great. Thanks for taking my questions. And congrats as well on a strong quarter. I’ve got one for Safra and one for Larry. Safra, in the past, you’ve talked about the potential revenue opportunity for the app space, if you were to migrate everybody to SaaS. So, I wanted to ask about the database side and in particular, Exadata. Can you give us a sense of what the revenue potential or uplift could be if you shifted all Exadata customers to Cloud@Customer? And how you feel about the strength of those motions heading into the new fiscal year? And then, for Larry, I mean, as you guys push to drive adoption of Autonomous Database, should we think of Cloud@Customer being the biggest vehicle for adoption, or what routes to market do you see working best? 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? Derrick Wood: It was around Autonomous Database and what’s kind of the route to market to drive adoption, is Cloud@Customer really the biggest vehicle, or are there other routes that are working well too? 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. Operator: Our next question is from Kirk Materne with Evercore ISI. 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. Safra Catz: Sure. So, first of all, I have two new leaders in Europe, Middle East, Africa. I have a very refreshed and new and really successful management team in Europe. And they are pretty much firing on all cylinders. It is extremely broad throughout Europe, Middle East, all of EMEA. [Technical Difficulty] tell you incredible strength worldwide. Latin America doing phenomenally; Japan doing phenomenally; as a result, JPAC doing very, very well; and of course, led by North America. I have to tell you, it’s been an amazing year. It was a phenomenal quarter, but truly an amazing year worldwide. And I’m more than satisfied. I am delighted by the results of the team. And for me, this was my first full year with the field. So, I really applaud the team for doing a spectacular job worldwide. Operator: Our final question comes from Raimo Lenschow with Barclays. Raimo Lenschow: Hey. Thanks for squeezing me in. Safra, the one thing that was interesting that we didn’t really talk that much about is your RPO and RPO growth. Can you talk about it again? Because like the growth there is actually even better than I see on the revenue line. And that, to me, suggests that this wasn’t just Q4. It looks like things are coming together broad-based in the coming quarters as well. Thank you. 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. Raimo Lenschow: Thank you. Okay. Congrats. 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. Operator: Thank you for joining today’s Oracle’s fourth quarter 2021 earnings conference call. We appreciate your participation. You may now disconnect.

Operator: Welcome to Oracle's Third Quarter 2021 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 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? Safra Catz: Thanks, Ken. And good afternoon, everyone. We are again, reporting earnings 10 days after the end of the fiscal quarter, faster than any other company in the S&P 500. Fusion Cloud ERP enables us to understand our business performance sooner and with greater insight, which is an advantage our customers are rapidly beginning to appreciate. As you can see, we had a great quarter and executed well against our growth plan. Revenue was in line with our USD guidance while EPS beat the mid-point of guidance by $0.05. Our total cloud services and license support revenue for the quarter was $7.3 billion, up 5% in U.S. dollars, 2% in constant currency, driven by Fusion, Autonomous Database and our Gen2 OCI cloud. Recurring revenue, as a percentage of total revenue now represents 72% of total company revenue and we anticipate this trend to continue as cloud services grow. Application subscription revenues were $3 billion up 5% in U.S. dollars, 3% in constant currency. Our strategic back-office cloud applications now have annualized revenue of $4 billion and grew 24% this quarter, including Fusion ERP up 27%, NetSuite ERP up 22% and Fusion HCM up 21%. Infrastructure subscription revenues were $4.3 billion, up 4% in U.S. dollars, up 2% in constant currency. Infrastructure cloud services now have an annualized revenue of more than $2 billion, including OCI consumption revenue, which was up 123%; autonomous database was up 55%; cloud customer consumption revenue was up over 200%, but on small numbers. Database subscription revenues, including database support and database cloud services, were up 6% in U.S. dollars and up 3% in constant currency. License revenues were $1.3 billion, up 4% in U.S. dollars and unchanged in constant currency. So all in, total revenues for the quarter were $10.1 billion, up 3% in U.S. dollars, up slightly in constant currency. Operating expenses were down this quarter. And non-GAAP operating income was $4.8 billion, up 6% from last year. Q3 operating margin was 47% in USD, up 300 basis points from 44% last year, and our best Q3 results in more than 10 years. The non-GAAP tax rate for the quarter was 16.7% slightly below our base tax rate, as a result of some discrete items. EPS was a $1.16 in U.S. dollars up 20% in U.S. dollars, up 16% in constant currency. GAAP EPS was a $1.68 in U.S. dollars, up 113% and up 104% in constant currency. In the quarter, the GAAP income statement was impacted by a one-time net tax benefit of approximately $2.3 billion related to the transfer of certain assets between subsidiaries. To facilitate comparison across periods, we have excluded the effect of this event from our non-GAAP calculation. Operating cash flow over the last four quarters was $14.7 billion with capital expenditures of $1.9 billion and free cash flow in excess of $12.8 billion over the same period. For the quarter operating cash flow was $3.7 billion up 23% and free cash flow was $3.3 billion up 26% from last year. We now have nearly $36 billion in cash and marketable security. The short-term deferred revenue balance was down in constant currency at $8.1 billion, while the short-term gross deferred revenue was up 4% in constant currency. As you know, the difference between the two growth rates is due entirely to timing differences in customer payments. The remaining performance obligation or RPO balance is $35.3 billion, up 2% in constant currency versus last year. Approximately 61% is expected to be recognized as revenue over the next 12 months, up from 60% a year ago. As we've said before, we're committed to returning value to our shareholders through technical innovations, strategic acquisitions, stock repurchases, prudent use of debt and a dividend. In this quarter we repurchased more than 64 million shares for a total of 4 billion. In addition, the Board of Directors increased the quarterly dividends, 33% from $0.24 to $0.32 per share. The Board of Directors also authorized an additional $20 billion for the repurchase of Oracle shares. As I mentioned last quarter, we experienced capacity constraints for OCI cloud services as customer workloads expanded dramatically. In addition, we continue to land many new customers, including ISVs, and we have some very large users coming online shortly that will require significant amounts of capacity. As a result, we're investing aggressively this quarter, this Q4, both OpEx and CapEx to prepare for this increase in cloud consumption and associated revenue in FY2022. As such, we are going to target a 49% operating margin for Q4. This will enable us to continue to deliver double digit earnings growth, once again, in FY2022 for the fifth year in a row. Now to the guidance. Again, my guidance today is on a non-GAAP basis and assumes current exchange rates remain the same as they are now, which is a 4% positive effect on total revenue and $0.07 positive effect on EPS in Q4. It may look like a positive effect of $0.08 to EPS due to rounding, but it's $0.07. However, actual currency impacts could be different [so here it goes] [ph]. Total revenues are expected to grow from 5% to 7% in U.S. dollars and are expected to grow 1% to 3% in constant currency. Cloud services and license support will grow faster than in Q3, as well as strategic back-office cloud applications. As a result of the increased investment in the quarter, non-GAAP EPS in USD is expected to grow 7% to 11% and be between a $1.28 and a $1.32 in USD. Non-GAAP EPS in constant currency is expected to be flat to up 4% and be between a $1.20 and a $1.24 in constant currency. CapEx for Q4 is expected to be $1 billion. My EPS guidance for Q4 assumes a base rate of 19%. However, onetime tax events could cause actual tax rates for any given quarter to vary, but I expect that normalizing for these one-time tax events, our tax rate will average around 19% or so. And with that, I'll turn it over to Larry for his comments. 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. Ken Bond: Thank you, Larry. Erica, if you could please pull the audience for questions. Operator: [Operator Instructions] Our first question comes from Michael Turits with KeyBanc Capital. Michael Turits: Larry, thanks for all the color on ERP. I'd like to switch over to your database. You've made meaningful improvements in both cloud customer and OCI too which both one of the two are required for ADB. So, are those improvements enough that we're now starting to see the upgrades to ADB? And are you able to monetize those upgrades to the point where we'll start to see database growth acceleration? 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. Michael Turits: Thanks, Larry. Operator: Our next question comes from Mark Murphy with JPMorgan. Mark Murphy: Yes. Hi Larry. This SAP replacement wave, feels like kind of a historic moment because that kind of activity it's usually so rare and these are the logos are pretty large that you're mentioning. So when we see… 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. Mark Murphy: So Larry, the ones that we see, which aren't too savvy, you mentioned DHL and Honda and Lloyds Bank. Is that a precursor to moving to Oracle core financials eventually. And I'm just wondering which of Oracle strength is really catalyzing that wave of replacements? 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. Mark Murphy: Thank you. Operator: Our next question is from Mark Moerdler with Sanford Bernstein. Mark Moerdler: Thank you. Thank you very much for taking my question and appreciate the additional color that Safra you gave on the call. I'd like to turn to OCI Gen2. We've been hearing about security concerns from consumer internet companies. To what extent has OCI security technology helped you in business with these companies and is consumer internet a big driver for OCI Gen2, also to be clear, this is not about TikTok, it's that all the other consumer internet company opportunities. Thank you. 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. Mark Moerdler: I appreciate it. Thank you for the additional color. Operator: Our next question comes from Phil Winslow with Wells Fargo. Phil Winslow: Hi, thanks for taking my question. Congrats on a strong quarter. I just wanted to focus in on the license line it was up 4% as reported to be a flat constant currency off of what was actually the toughest comp for this fiscal year. Wondering if you can provide some context of sort of what is driving that particularly sort of relative to the strength that you are also seeing in the cloud side? Is this the Oracle database, is this the add-ons to the Oracle database? Any sort of more color there. And then also in particular in sort of in conjunction with the cloud, that'd be great. 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. Phil Winslow: Perfect. Thank you very much for the color. Appreciate it. Operator: Our final question comes from Brad Zelnick with Crédit Suisse. Brad Zelnick: Great. Thank you so much for taking the question. And congrats as well on a great quarter. Larry, it's so great to hear every single one of those SAP wins, especially since investors think of SAP's customer relationships as being so deep. So clearly by displacing them in so many accounts, it speaks volumes to the quality of your product and trust that these companies place with Oracle. So, my question is this, why now, and why from a product perspective, you mentioned Gartner's take, but since Oracle has always competed on having better products, what have you been doing product wise that's enabled you to pull ahead of them like this and what do you need to continue to do product wise to remain ahead? 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. Brad Zelnick: Thank you, Larry. Larry Ellison: It’s amazing. Ken Bond: Thank you, Larry. A telephonic replay of this conference call will be available for the next 24 hours. Dial-in information can be found in the press release issued earlier today. Please call the Investor Relations department with any follow-up questions from this call. And we look forward to speaking with you. Thank you for joining us today. With that, I will turn the call back to Erica for closing. Operator: Thank you for joining today's Oracle's third quarter of 2021 earnings conference call. We appreciate your participation. You may now disconnect.