Oracle Corporation (ORCL) on Q1 2023 Results - Earnings Call Transcript

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 the call today are Chairman and Chief Technology Officer, Larry Ellison; and CEO, Safra Catz. As a reminder, today's discussion will include forward-looking statements, including predictions, expectations, estimates or other information that might be considered forward-looking. Throughout today's discussion, we will present some important factors relating to our business, which may potentially affect these forward-looking statements. These forward-looking statements are also subject to risks and uncertainties that may cause actual results to differ materially from statements being made today. As a result, we caution you from placing undue reliance on these forward-looking statements, and we encourage you to review our most recent reports, including our 10-K and 10-Q and any applicable amendments for a complete discussion of these factors and other risks that may affect our future results or the market price of our stock. And finally, we are not obligating ourselves to revise our results or these forward-looking statements in light of new information or future events. Before taking questions, we will begin with a few prepared remarks. And with that, I'd like to turn the call over to Safra. 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 and 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 forecasts 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 includes 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@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 would 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 $1.03, unchanged in USD and up 8% in constant currency. GAAP EPS was $0.56, down 34% and down 26% in constant currency, that's our GAAP EPS. Over the last four 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. In the short-term, deferred revenue balance was $10.5 billion, up 11% in constant currency. The remaining performance obligation or RPO balance is $16.7 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 their 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 the 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, one-time 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 headwinds, 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. Larry Ellison: Thank you, Safra. Last quarter, Microsoft and Oracle announced that we had built a high speed interconnect between Microsoft Azure Cloud and the Oracle Cloud. The purpose of this Multi-cloud interconnect is to enable Azure customers to directly use the very latest Oracle Database technology, even if their application is running in Azure. In other words, customers can now use any combination of Microsoft and Oracle Cloud services together as if they were in one cloud. That was last quarter. This quarter, Oracle is making the latest version of our mice MySQL HeatWave database available in Amazon's AWS cloud. Multiple published customer benchmarks have shown that MySQL HeatWave delivers 7x better performance than Amazon Redshift. 10x better performance than Snowflake and up to 10x higher throughput than Amazon's own MySQL database called Aurora. The Multi-cloud era has begun. Customers are already buying applications and cloud infrastructure from several different providers, including Microsoft, Amazon, Salesforce, Oracle and others. Our job is to give our customers the ability to choose application and infrastructure technology from multiple clouds and then have those different clouds coexist and interoperate gracefully. Multi-cloud interoperability is an important step in the evolution of cloud computing. Multi-cloud interoperability is one of the reasons our infrastructure business is booming, growing over 50% in U.S dollars, and almost 60% in constant dollars. We expect Oracle's total cloud business to exceed a $20 billion annual run rate next year. Now I'll highlight some of our big new infrastructure wins in Q1. Overall, we added about 1,000 new paying customers for infrastructure in Q1. Let's start off with NVIDIA. NVIDIA chose OCI to build their SaaS products for data scientists for machine learning and inferencing along with moving their entire health care platform called Clara to OCI. Mosaic has developed a state-of-the-art neural network on OCI, and they picked OCI because OCI outperformed all of the other clouds when running machine learning and AI. The Avis car rental company is moving their entire Oracle estate, along with their Oracle applications to OCI. The Chicago public schools are closing data centers and migrating their Oracle estate to the Oracle Cloud. Tanium, a leader in cybersecurity chose Oracle Cloud Infrastructure to help safeguard their customers with industry-leading security. OCI deployment will be a part of its multi-cloud strategy and delivering its SaaS platform Tanium as a service. Cigna, a health care company is migrating their existing Exadata on-premise to the Oracle Cloud. Additionally, their SaaS ERP system is being integrated with Oracle Cloud Digital Assistant. Tennessee and Oklahoma are both new government cloud customers. This was the first group of customers were all from North America. I just finished my list beginning with NVIDIA and North America and Tennessee and Oklahoma in North America. I'm now going to move to wins in LAD. AT&T in Mexico is the first case of any telco to move their entire Amdocs stack to a cloud and they're moving it their Amdocs stack to OCI's New Mexico cloud region. Avianca, one of the largest airlines in Latin America will move all of their workloads to OCI. Entel, another telecom, in fact, the largest telecom in Chile is now moving all of their critical workloads from AWS to OCI. Banco Digimais, a fintech bank in Brazil is moving their entire on-premises VMware estate to run in OCI 100%. Serasa Experian, a financial services company is moving AI training for OCR biometrics and facial recognition to OCI. Bionexo, another infotech company -- in the health care business, serving 1,500 -- 15,000 hospitals and clinics is migrating their data lake and their data warehouses from Amazon Web Services to OCI. Santander, a large bank is moving all of their databases from mainframes and Oracle databases all to the Oracle Exadata Cloud Service. Unimed, also a health care, a company health care insurance company is beginning the migration of all of their applications and database to OCI. Sky Mexico, the largest satellite paid TV producer in Mexico will move all of their data lakes and all of their data warehouses to OCI in the New Mexico region. That's Latin America. In JPAC, and maybe this is the most interesting customer I'll talk about, NRI, Nomura Research, is continuously expanding their dedicated cloud region. In Japan, they've just added a second data center NRI has. The Oracle Cloud in Japan, the NRI Oracle Cloud in Japan already runs 50% of all transactions on the Tokyo Stock Exchange. That's a mission critical application. ICI 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. timing technology, an infotech company is the new customer in Asia Pacific. Daiichi Sankyo is the first big pharma in Japan that is moving their database -- their Oracle Database workloads to the cloud. Pacific International Lines, the big transportation company is the new customer in Asia Pac. Li & Fung, a trading company, another new customer, we had -- again, eventually, we had a 1,000 new customers this quarter in OCI. another fintech company is again another big new customer for us in Asia Pacific. H2O Retailing is moving their entire VMware on-premise VMware estate to OCI. They're one of the largest retailers in Japan. Again, Asian Development Bank is the new customer in Asia Pac. Vision is an infotech company new customer. We have, again, a bunch of new customers in OCI all over the world. That's JPAC. Now let me move to EMEA. Dojo, a financial services company chose Oracle Cloud Infrastructure for their payment platform because their benchmark showed that the Oracle Cloud OCI is more secure and has better availability than the competition. Al Rajhi Bank, the world's largest Islamic Bank is in the process of moving all of its applications and databases to the Oracle Cloud. Unilever is integrating a few -- their Oracle Fusion Applications with the autonomous database to build a next generation super secure, super agile platform for Unilever. Atlantic Financial Group, an infotech company, hosts core banking functions on the Oracle Cloud Infrastructure, which to many of their banking customers. Centrico , 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 , big telephone company moving over 300 Oracle Databases to the Oracle Exadata cloud. , the government agency migrating all databases off their IBM mainframes and UNIX systems to the Oracle Database and to the Oracle Cloud. And I'll close with the U.K Home Office, the department is moving to the Oracle Gen2 Cloud Infrastructure with a focus on dramatically improving both security and reliability. With that, I will turn it back over to Safra. Ken Bond: Thank you, Larry. Josh, if you could go ahead and queue up the audience for questions. Operator: Your first question comes from John DiFucci with Guggenheim. Your line is open. John DiFucci: Thank you. Hi, 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 with an expected increase in consumption or something else or all 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 cost or expand growth, we help them do that in an incredibly flexible way and super, super cost competitively for them. Larry 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 why what customers are discovering when they come to our cloud, that they're more productive, 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 applications, 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. Thank you. Ken Bond: Thank you, John. Next question, please. Operator: Your next question comes from the line of Phil Winslow with Credit Suisse. Your line is open. Philip Winslow: Hey, thanks for taking my question. 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 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. Larry Ellison: Okay, boss, I will do that. Again, multi-cloud -- 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 and 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, very, very -- and very, very competitive against these other companies and these other technologies. Safra Catz: And the answering for you on how is the Oracle database doing? Well, you saw we had an amazing Q4. And in Q1, again, the Oracle database is what people choose if they have real work to do. It's very secure. It's very performant and they know it has so many capabilities that you don't have to have 16 different databases to get a complicated job done. You can do everything with it in different ways. And the database options are continued to be acquired. Many more customers still want enterprise agreements, so they can BYOL, bring your own license to the Oracle Cloud. Our technology remains unbelievably strong with Java. And so the business overall, our tech business remains incredibly strong, even though it's enormous. And for many, many of the reasons I think there was a period a few years back, where folks were thinking they would try lots of other things and things that were maybe more " fashionable". I think they've realized that actually getting your job done securely, performantly, sustainably, and also really least expensive is to actually use our products to do that. And so they've been doubling down and committing and bringing those workloads to the Oracle Cloud again, propelling just incredible momentum, whether it's Cloud@Customer, dedicated regions or our public cloud. Ken Bond: Thanks, Phil. Next question, please. Operator: Your next question comes from the line of Mark Moerdler with Bernstein Research. Your line is open. Mark Moerdler: Thank you very much for taking the question and congratulations on the 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, with similarities 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 strategic back office? Thank you. Safra Catz: Sure. So let me start by since I'm also the Principal Financial Officer, if I would say that in another company, I'd be the one making the decision to buy fusion ERP, and Fusion HCM. And what is absolutely clear, is that saving money in the back office is basically automatic when you use our products, when you move from, from especially from our competitors products, which are so expensive to maintain and run. When you move to fusion, you can save so much in your back office, that you can use that money to invest in things that help you extend the differentiation of your business. Now, today's the 12 of September. In fact, I signed off with our auditors on Friday, but we don't do our earnings on Friday. So we had to wait all the way till Monday. Now no other companies report on the 9th or the 8th. In fact, most companies were reporting their July quarter on last week. And here we are announcing an August quarter. Well, what does that have to do with costs? Well, I can tell you that when you are in a position to know your results, and to announce them, and to file your earnings with the Securities and Exchange Commission, you've not only saved time, you've saved millions in process dollars, and in the way you run your business. And I just want to point out that we were able to do this after acquiring in the quarter, Cerner by putting their data from their old system into Fusion and consolidating it in fusion. So we actually believe that one of the most important ways to drive business transformation is to move to a much more streamlined cloud product than running old back office systems. Larry Ellison: Let me just add one thing. I’m sorry, let me add one thing, which is Safra addressed the issue of using 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 bill is getting very large, and they can save a huge amount of money by moving to OCI. And we expect next quarter, we'll be announcing some brands and companies moving off of Amazon to OCI that will shock you. Mark Moerdler: I'll stop there. Amazing. Ken Bond: Thank you, Mark. Next question, please. Operator: Your next question comes from Derrick Wood with Cowen and Company. Your line is open. Mark Moerdler: Great. Thanks. And I'll echo 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 when it's clearly becoming a more critical growth driver for you guys. Is there a dedicated Salesforce? 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 us? Larry Ellison: Yes, because with 58% growth, it certainly seems like you're now gaining share in the cloud infrastructure market. It's a big market to go after. So any color on that would be helpful. Safra Catz: Let me start, Larry. Absolutely. Larry Ellison: Okay, so. … Safra Catz: So, one of the enormous changes we made in the past year, year or so euro2 is that we've 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 the 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. Larry Ellison: Yes, I think exactly what Safra said, and I'll add what I just repeat what I said earlier. The amount of money, these huge companies, these very famous companies spend with Amazon is kind of staggering. I mean, everyone assumes, hey, I move to the cloud, and I'd save a lot of money. It depends which cloud you move to. And Oracle is much less expensive than the competition. One, partially because we're faster, which time is money when you're when you're paying by the hour. So again, I'm going to repeat, we're talking to the most famous brands that are running at Amazon, and some of them are going to be moving very soon. Mark Moerdler: Exciting. Thank you. Ken Bond: Thanks, Derrick. Next question, please. Operator: Your next question comes from Brad Zelnick with Deutsche Bank. Your line is open. Brad Zelnick: Excellent. Thank you, and congrats on the solid execution. Larry, we've heard of some very exciting things happening with Cerner pretty quickly after the deal just closed with some hospital networks, we heard from significantly expanding their existing contracts. Can you talk about the unique value you're able to deliver now that Cerner is a part of Oracle and the broader expansion opportunity that you see ahead. And if I could just sneak in one for you as well, Safra $1.7 billion in CapEx and q1 is a pretty big number. And I know very well that you don't spend frivolously What can you tell us about the big step up here? Larry Ellison: Okay, I'll go first, let's have a bug with 1.7 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 be -- we are going to be half to -- half 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 in Oracle Cloud data centers running half of Tokyo Stock Exchange, as the other cloud vendors, how many stock exchanges they run. The -- our stuff is very secure, it's very reliable, it's very performance, it's very, very cost effective. And therefore 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 very, 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 of the question that . Brad Zelnick: Cerner, he asked you all about Cerner. Cerner. a big other part. Yes, one of the things I think that we don't really talk about, but I alluded to the fact that we both build applications, and we run them with on our infrastructure. The tools we use for building applications, our latest generation of tools, are the autonomous database very different than from all the Oracle databases or any other database that came before. There are no DBAs. There is no human labor associated with running the Oracle Database anymore. So there can be no human error. The costs are so much cheaper. Our own internal cloud, our own cloud OCI, uses autonomous database to run all the control systems, because claim doesn't want to hire a lot of DBAs to lower costs. Also, he doesn't want any errors of commission. It's much more reliable than when you have human beings driving the car. We use that for the next generation of Cerner, the Oracle Autonomous database. We pair that with an all new application development tool called Apex , which is a low code tool. So our newest applications, our very newest applications that we were built, we are building, we're building any autonomous database with Apex, which allows us to do stuff that would have taken three or four years in less than a year. So we expect to have our first pretty complete new Cerner health management product out within 12 months, which I think is going to, again, it's something we never could have done with the previous generation of databases or the previous generation of application development tools. But all of that has changed. We have these phenomenal low code tools. I mean, one of the things about the low code tool is you almost -- you don't have to do security audits because security is built into the tool. You can't build an insecure applications using Apex tolerance is built into the tool, if the application should fail, it's a stateless application. So it immediately failover into another data center in a millisecond and keep running, no one will even know about the failure. So our new generation of application development tools is going to enable us to modernize the server -- the Cerner technology at a rate that would be inconceivable a couple of years ago. Brad Zelnick: Amazing. Thank you. 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.
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  • 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.

Oracle Corporation (NYSE:ORCL) Stock Analysis and Insights

Oracle Corporation (NYSE:ORCL) is a major player in the software industry, known for its comprehensive suite of cloud applications and platform services. On June 10, 2025, Mark Murphy from Loop Capital Markets set a price target of $135 for Oracle. At that time, Oracle's stock was trading at $177.48, indicating a significant price difference of approximately -23.94% from the target.

Oracle is preparing to release its upcoming earnings, and the market is closely watching trends in the software sector. Rishi Jaluria from RBC Capital Markets discusses these trends, which could impact Oracle's performance. The stock has seen a slight increase of 0.33, or 0.19%, with a current price of $177.48. This reflects a trading range today between $174.37 and $177.84.

Jared Blikre from Yahoo Finance highlights key themes driving market momentum, such as global equity outperformance and cryptocurrency price action. These factors could influence Oracle's stock movement. Oracle's market capitalization stands at approximately $497.7 billion, showcasing its significant presence in the industry.

Julie Hyman from Market Domination analyzes volatility trends, noting that a decrease in the VIX could imply positive long-term returns. Oracle's stock has fluctuated over the past year, with a high of $198.31 and a low of $118.86. Today's trading volume for Oracle is 8,923,694 shares, indicating active investor interest.

Oracle Corporation's Upcoming Earnings: A Look into Cloud and AI Sectors

  • Oracle Corporation (NYSE:ORCL) is expected to report an earnings per share (EPS) of $1.64 and revenue of $15.58 billion for the quarter, indicating growth from the previous year.
  • The company's stock has seen a 25% increase since April, attributed to the demand for Oracle Cloud Infrastructure (OCI) and advancements in AI.
  • Financial metrics reveal a price-to-earnings (P/E) ratio of 41.93 and a debt-to-equity ratio of 5.75, showcasing Oracle's market valuation and financial leverage.

Oracle Corporation (NYSE:ORCL) is a leading technology company known for its comprehensive suite of software and hardware products. It specializes in database management systems, cloud solutions, and enterprise software. As Oracle prepares to release its quarterly earnings on June 11, 2025, analysts are keenly observing its performance, particularly in the cloud and AI sectors. Competitors like Microsoft and Amazon also vie for dominance in these areas.

Analysts project Oracle's earnings per share (EPS) to be $1.64, with revenue expected to reach $15.58 billion. This marks an increase from the previous year's earnings of $1.63 per share and $14.29 billion in sales. Despite potential disruptions from the Musk-Trump fallout affecting Project Stargate, Oracle's core business remains strong. The company's growth in remaining performance obligations (RPO) is anticipated to be resilient.

Oracle's stock has gained approximately 25% since April, driven by the demand for Oracle Cloud Infrastructure (OCI) and AI advancements. Jefferies analysts, who rate Oracle as a "buy," have raised their price target to $200, citing a turning point in OCI and backlog as capacity constraints ease. Meanwhile, Citi analysts maintain a "neutral" rating with a price target of $185, noting increased interest in OCI database modernization.

Oracle's financial metrics reveal a price-to-earnings (P/E) ratio of 41.93 and a price-to-sales ratio of 8.91, indicating the market's valuation of its sales. The company's enterprise value to sales ratio is 10.32, while its enterprise value to operating cash flow ratio is 27.75. Oracle's debt-to-equity ratio of 5.75 reflects its financial leverage, and a current ratio of 1.02 suggests its ability to cover short-term liabilities.

Historically, Oracle's stock has experienced negative one-day returns following earnings announcements, with a median drop of 4.4% and a maximum decrease of 13.5%. Traders may consider pre-earnings and post-earnings positioning strategies to navigate these patterns. As Oracle continues its cloud migration and AI infrastructure leadership, it is well-positioned for sustained revenue growth.

Oracle Corporation (NYSE:ORCL) Maintains Positive Trend with Analysts' Confidence

  • Jefferies maintains a "Buy" grade for Oracle Corporation (NYSE:ORCL), with a stock price target of $200, indicating strong future performance.
  • Oracle's stock has seen a recent increase of 2.6%, trading at $178.47, driven by analyst price-target hikes.
  • The company's stock has experienced volatility, with a yearly high of $198.31 and a low of $118.86, showcasing its growth potential and associated risks.

Oracle Corporation (NYSE:ORCL) is a leading technology company known for its comprehensive suite of software and hardware products. It specializes in database management systems, cloud solutions, and enterprise software. Oracle competes with other tech giants like Microsoft and SAP in the enterprise software market. On June 9, 2025, Jefferies maintained its "Buy" grade for Oracle, with the stock priced at $178.40.

Oracle's stock has recently seen a positive trend, rising by 2.6% to a trading price of $178.47. This increase is largely due to recent price-target hikes by analysts, including Jefferies and BMO, both of which have set their targets at $200. This indicates strong confidence in Oracle's future performance.

Currently, Oracle's stock is priced at $178.42, reflecting a 2.53% increase, equivalent to a $4.40 rise. Throughout the trading day, the stock has fluctuated between $173.80 and $178.72. This volatility is typical in the stock market, where prices can change rapidly based on various factors.

Over the past year, Oracle's stock has reached a high of $198.31 and a low of $118.86. This range shows the stock's potential for growth and the risks involved. Oracle's market capitalization is approximately $500.33 billion, indicating its significant size and influence in the tech industry.

The trading volume for Oracle is 6,496,557 shares, reflecting active investor interest. A high trading volume often suggests that a stock is liquid, meaning it can be easily bought or sold without causing a significant price change. This liquidity is beneficial for investors looking to enter or exit positions in Oracle.

Oracle Corporation's (NYSE:ORCL) Focus on AI Technologies Bolsters Long-Term Prospects

  • Oracle Corporation (NYSE:ORCL) maintains a promising outlook with a focus on AI technologies despite recent fiscal challenges.
  • Citigroup maintains an "Overweight" rating with a price adjustment, reflecting confidence in Oracle's future driven by AI demand.
  • Oracle's stock experiences fluctuations, yet its strategic focus on cloud services and AI technologies supports its long-term growth.

Oracle Corporation (NYSE:ORCL) is a major player in the technology sector, known for its comprehensive suite of software solutions, including database management systems and cloud services. The company competes with other tech giants like Microsoft and Amazon in the cloud computing space. Despite recent challenges, Oracle's long-term prospects remain promising, particularly due to its focus on AI technologies.

On March 11, 2025, Citigroup maintained its "Overweight" rating for Oracle, with the stock priced at $144.06. This decision comes despite Oracle's fiscal third-quarter performance falling short of expectations. Analysts, however, remain optimistic about Oracle's future, driven by strong demand in the AI sector, as highlighted by Benzinga. The company's stock has seen a decrease of 3.10%, with a current price of $144.18.

Analyst Thomas Blakey has maintained an Overweight rating on Oracle, though he reduced the price target from $214 to $175. Blakey noted that while Oracle's revenues were slightly below expectations, adjusted earnings met projections. The revenue shortfall was mainly due to the Software as a Service (SaaS) segment, but Oracle Cloud Infrastructure (OCI) performed as expected. The company's bookings exceeded expectations, driven by large deals, leading to an optimistic forecast for fiscal years 2026 and 2027.

Similarly, Analyst Keith Bachman reiterated a Market Perform rating and adjusted the price target to $175 from $205. Bachman pointed out revenue misses in several areas, including cloud revenues. Despite these challenges, the demand for AI continues to support Oracle's long-term prospects. Oracle is accelerating its OCI business, benefiting from the growing demand for AI technologies.

Oracle's stock has fluctuated between a low of $137.70 and a high of $145.78 during the day, with a market capitalization of approximately $403.27 billion. The company's trading volume today is 24,098,451 shares. Over the past year, Oracle's stock has reached a high of $198.31 and a low of $112.78, reflecting the market's response to its evolving business strategies and performance.