Oracle Corporation (ORCL) on Q3 2022 Results - Earnings Call Transcript

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 onetime 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, , 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: 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.
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Oracle Corporation's (NYSE:ORCL) New Price Target and AI Sector Wins Drive Optimism

  • Oracle Corporation (NYSE:ORCL) receives a new price target from Guggenheim, suggesting an 11.18% increase.
  • The company's significant contract wins in the AI sector have led to a 37% surge in shares.
  • Oracle's strategic partnerships and a 77% increase in cloud infrastructure sales forecast highlight its strong market positioning.

Oracle Corporation (NYSE:ORCL) is a leading player in the technology sector, known for its database software and cloud infrastructure services. Recently, John DiFucci from Guggenheim set a new price target for Oracle at $375, up from its current price of $337.28. This target suggests an 11.18% increase, reflecting optimism about Oracle's future performance.

Oracle's shares have surged by over 37% following significant contract wins in the AI sector. The company secured billion-dollar deals, underscoring its growing influence in the AI market. This development has boosted investor confidence, as highlighted by the stock's 30% surge in premarket trading after announcing an improved sales outlook for its cloud infrastructure.

The company's strategic positioning is further strengthened by partnerships with tech giants like Amazon, Alphabet, and Microsoft. Oracle anticipates a 77% increase in cloud infrastructure sales, reaching $18 billion this fiscal year. This surpasses its previous forecast of 70% growth, driven by the increasing demand for AI solutions.

Richard Clode from Janus Henderson Investors describes Oracle's performance as a "drop the mic" moment. The company has secured $300 billion in contracts, reflecting unprecedented demand for AI. This growth is supported by sovereign drivers enhancing capital expenditures, expanding Oracle's market presence.

Oracle's stock, currently priced at $337.06, has seen a significant rise of 39.56% over the past year. The stock has fluctuated between $239.94 and $339.69 today, with a market capitalization of approximately $946.74 billion. The trading volume stands at 42.4 million shares, indicating strong investor interest.

Oracle Corporation's (NYSE:ORCL) Growth in the Cloud Computing Sector

  • Guggenheim maintains a "Buy" rating for Oracle, raising its price target from $250 to $375, indicating strong confidence in Oracle's growth, especially in cloud services.
  • Oracle's stock has seen a significant increase, with a price jump of $3.03 or 1.27%, showcasing its strong performance in the tech market compared to competitors like Apple.
  • The company's market capitalization stands at approximately $678.36 billion, reflecting its substantial presence and volatility in the tech industry.

Oracle Corporation (NYSE:ORCL) is a leading technology company known for its software products and services, particularly in database management. The company has been making significant strides in the cloud computing sector, which is a key growth area. Oracle competes with other tech giants like Microsoft and Amazon in the cloud space.

On September 10, 2025, Guggenheim maintained its "Buy" rating for Oracle, with the stock priced at $241.51. Guggenheim also raised Oracle's price target from $250 to $375, as highlighted by TheFly. This reflects confidence in Oracle's growth potential, particularly in its cloud services, which have been a major driver of its stock performance.

Oracle's stock is experiencing significant growth, driven by its impressive cloud outlook that has captivated investors. The stock price has increased by $3.03 or 1.27% from the previous trading session, reaching a high of $243.44 today. This growth contrasts with Apple's stagnating stock performance, highlighting the factors determining winners in the tech market.

Oracle's market capitalization is approximately $678.36 billion, indicating its substantial presence in the tech industry. The stock has traded between a low of $234.56 and a high of $243.44 today, with a trading volume of 22.84 million shares on the NYSE. Over the past year, ORCL has reached a high of $260.87 and a low of $118.86, showcasing its volatility and growth potential.

The financial landscape is also influenced by broader market dynamics, such as the temporary block on former President Trump from dismissing Federal Reserve's Cook and the emerging turf war concerning Fannie Mae and Freddie Mac. These events, while not directly related to Oracle, shape the overall market environment in which the company operates.

Oracle Corporation's Upcoming Earnings Report: A Financial Overview

  • Oracle Corporation (NYSE:ORCL) is anticipated to release its quarterly earnings with an estimated EPS of $1.47 and projected revenue of $15.03 billion.
  • The company's performance in the cloud services sector is a significant contributor to its financial outcomes.
  • Financial metrics such as the P/E ratio of 50.37, debt-to-equity ratio of 5.09, and current ratio of 0.75 offer insights into Oracle's market valuation and financial health.

Oracle Corporation, listed on the NYSE under the symbol ORCL, is a leading provider of integrated cloud applications and secure infrastructure. The company is set to release its quarterly earnings on September 9, 2025, with analysts estimating an earnings per share (EPS) of $1.47 and projected revenue of $15.03 billion. Oracle's performance in the cloud services sector is a key driver of its financial results.

Oracle plans to announce its first-quarter fiscal year 2026 earnings results on September 9, 2025, after the market closes. The company will host a conference call and live webcast at 4:00 p.m. Central Time to discuss the financial results. This event will be accessible on the Oracle Investor Relations website, providing insights into the company's performance and future outlook.

Analysts expect Oracle to report a year-over-year increase in earnings, driven by higher revenues for the quarter ending August 2025. The consensus estimate suggests Oracle will post quarterly earnings of $1.47 per share. The stock's movement will largely depend on whether the actual results meet or exceed these expectations. A positive earnings surprise could lead to a rise in Oracle's stock price, while a miss might result in a decline.

Oracle's financial metrics provide insight into its market valuation. The company has a price-to-earnings (P/E) ratio of approximately 50.37, indicating how much investors are willing to pay for each dollar of earnings. Its price-to-sales ratio is about 10.93, reflecting the market's valuation of its revenue. The enterprise value to sales ratio is around 12.56, showing the company's total valuation in relation to its sales.

Oracle's debt-to-equity ratio is notably high at approximately 5.09, indicating a significant level of debt compared to equity. This could be a concern for investors, as it suggests a reliance on debt financing. Additionally, Oracle's current ratio is around 0.75, suggesting potential liquidity challenges in covering short-term liabilities with its current assets. These financial metrics will be important considerations for investors as they assess Oracle's financial health and future prospects.

BMO Lifts Oracle Price Target to $245, Keeps Outperform Rating Unchanged

BMO Capital raised its price target on Oracle (NYSE:ORCL) to $245 from $235 while maintaining an Outperform rating, as the firm expects the company’s significant capital expenditure requirements to impact free cash flow and potentially necessitate new capital raises in fiscal 2026 or 2027.

The analyst noted that Oracle’s ongoing dividend commitments and anticipated share buybacks, combined with rising capex needs—likely tied to cloud infrastructure and AI investments—could pressure cash flows. While BMO sees any capital raise as manageable, it cautioned that dilution from new financing could weigh modestly on EPS.

Despite this, the firm made only slight adjustments to its estimates and reiterated its bullish stance, arguing that Oracle’s growth prospects in cloud and AI continue to support a favorable risk/reward profile. The raised target reflects confidence in Oracle’s strategy and the durability of its business model even as it navigates near-term financial balancing.

Oracle Surges 13% After Raising 2026 Revenue Forecast on Strong AI Cloud Demand

Shares of Oracle (NYSE:ORCL) jumped more than 13% intra-day today after the company raised its full-year revenue growth outlook and underscored strong demand for its AI-driven cloud offerings. CEO Safra Catz announced during the post-earnings call that Oracle now expects total revenue for fiscal 2026 to reach at least $67 billion, representing a 16.7% increase year-over-year, up from its prior forecast of 15% growth.

For the fiscal fourth quarter, Oracle reported adjusted earnings per share of $1.70 on revenue of $15.9 billion, surpassing analyst expectations of $1.64 in EPS and $15.58 billion in revenue. The standout performance came from Oracle Cloud Infrastructure, which saw revenue surge 62% year-over-year. Additionally, the company's remaining performance obligations—a forward-looking measure of contracted revenue—rose 41% to $138 billion, signaling continued momentum in demand for its services.

Oracle Corporation's Impressive Earnings Report and Future Outlook

  • Oracle Corporation (NYSE:ORCL) reported earnings per share (EPS) of $1.70 and revenue of $15.9 billion, surpassing estimates.
  • The company's stock surged by 8% following the release of its fourth-quarter earnings report, driven by robust cloud revenue and growing demand for artificial intelligence solutions.
  • Oracle's CEO, Safra Catz, projected a significant boost in cloud infrastructure revenue, anticipating an increase of over 70% in the 2026 fiscal year.

Oracle Corporation (NYSE:ORCL) is a leading technology company known for its comprehensive suite of software and hardware solutions. The company specializes in database management, cloud services, and enterprise software products. Oracle competes with other tech giants like Microsoft and Amazon in the cloud computing space. On June 11, 2025, Oracle reported earnings per share (EPS) of $1.70, surpassing the estimated $1.64, and revenue of $15.9 billion, exceeding the estimated $15.6 billion.

Following the release of its fourth-quarter earnings report, Oracle's stock surged by 8%, as highlighted by CNBC. This increase reflects the market's positive reaction to the company's strong performance, driven by robust cloud revenue and growing demand for artificial intelligence solutions. The impressive results underscore Oracle's strategic focus on cloud services and AI, positioning the company for continued growth in these high-demand sectors.

Oracle's CEO, Safra Catz, projected a significant boost in cloud infrastructure revenue, anticipating an increase of over 70% in the 2026 fiscal year, compared to a 50% growth in fiscal 2025. This optimistic outlook further contributed to the bullish sentiment surrounding Oracle's stock. The company's revenue increased by 11% year-over-year, reaching $15.9 billion, primarily fueled by rising demand for its cloud infrastructure and software services.

Oracle's financial metrics provide additional insights into its market valuation. The company's price-to-earnings (P/E) ratio is approximately 41.75, indicating the market's valuation of its earnings. Its price-to-sales ratio stands at about 8.87, reflecting the market's valuation relative to its revenue. Oracle's enterprise value to sales ratio is around 10.28, suggesting how the market values the company in relation to its sales, including debt and excluding cash.

The enterprise value to operating cash flow ratio is approximately 27.64, indicating how the market values the company in relation to its cash flow from operations. Oracle's earnings yield is about 2.40%, providing insight into the earnings generated per dollar invested. The debt-to-equity ratio is approximately 5.75, highlighting the company's financial leverage. Lastly, Oracle's current ratio is around 1.02, suggesting its ability to cover short-term liabilities with short-term assets.

Oracle Corporation's Market Outlook and Financial Performance

  • The consensus price target for Oracle Corporation (NYSE:ORCL) has been on a downward trend, indicating a cautious outlook from analysts.
  • Market conditions, including the May Consumer Price Index (CPI) data and U.S.-China trade relations, are significant factors influencing analysts' expectations.
  • Oracle's financial performance, strategic initiatives, and technological advancements are key to its market position and future revenue growth.

Oracle Corporation (NYSE:ORCL) is a prominent player in the enterprise information technology sector, providing a diverse array of products and services. These include cloud software applications, industry-specific solutions, and infrastructure technologies. Founded in 1977 and headquartered in Austin, Texas, Oracle serves a wide range of industries, government agencies, and educational institutions. Its offerings, such as Oracle Fusion cloud applications and Oracle Database, are integral to its market presence.

The consensus price target for Oracle's stock has been on a downward trend over the past year. A year ago, the target was $166.14, which decreased to $158.86 last quarter and further to $155 last month. This trend suggests a cautious outlook from analysts, possibly influenced by broader market conditions and Oracle's financial performance. As highlighted by Yahoo Finance, the market is closely watching Oracle's upcoming earnings report, which could impact future price targets.

Market conditions, such as the anticipated release of the May Consumer Price Index (CPI) data, play a significant role in shaping analysts' expectations. The CPI data is expected to influence market sentiment, as noted by Yahoo Finance. Additionally, updates on U.S.-China trade relations are being monitored, which could further impact Oracle's stock valuation. These factors contribute to the cautious outlook reflected in the consensus price target.

Oracle's financial performance and strategic initiatives are also key factors influencing the target price. The company is set to release its fourth-quarter earnings results, drawing attention from investors. As highlighted by Benzinga, analysts have been revising their forecasts ahead of this earnings call. Goldman Sachs analyst Kash Rangan has set a price target of $120 for Oracle, indicating a positive outlook despite the recent downward trend in the consensus price target.

Technological advancements and the competitive landscape are crucial in determining Oracle's market position. The company's ongoing cloud migration and leadership in AI infrastructure are expected to support continued revenue growth, as noted by Seeking Alpha. However, potential risks associated with projects like Project Stargate and Agentic AI could impact future performance. Despite these challenges, Oracle's core business and growth in remaining performance obligations (RPO) are anticipated to remain robust.