Oracle Q3 2024 Earnings Call Transcript

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Provided by Quartr
March 11, 2024

There are 9 speakers on the call.

Operator

Good afternoon. My name is Christa, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Oracle Corporation Third Quarter Fiscal Year 20 24 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.

Operator

Thank you. I would now like to turn the conference over to Ken Bond, Senior Vice President, Investor Relations. Mr. Bond, you may begin your conference.

Speaker 1

Thank you, Christa. Good afternoon, everyone, and welcome to Oracle's Q3 fiscal year 2024 earnings conference call. A copy of the press release and financial tables, which includes a GAAP to non GAAP reconciliation and other supplemental financial information can be viewed and downloaded from our Investor Relations website. Additionally, a list of many customers who purchased Oracle Cloud Services or went live on Oracle Cloud recently will be available from our Investor Relations website. On the call today are Chairman and Chief Technology Officer, Larry Ellison and Chief Executive Officer, Safra Katz.

Speaker 1

As a reminder, today's discussion will include forward looking statements, including predictions, expectations, estimates or other information that might be considered forward looking. Throughout today's discussion, we will provide some important factors relating to our business, which may potentially affect these forward looking statements. These forward looking statements are also subject to risks and uncertainties that may cause actual results to differ materially from statements being made today. As a result, we caution you against placing undue reliance on these forward looking statements, and we encourage you to review our most recent reports, including our 10 ks and 10 Q and any applicable amendments for a complete discussion of these factors and other risks, which may affect our future results or the market price of our stock. And finally, we are not obligating ourselves to revise our results or these forward looking statements in light of new information or future events.

Speaker 1

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

Speaker 2

Thanks, Ken, and good afternoon, everyone. We had another excellent quarter with 3rd quarter revenue coming in as expected and EPS $0.02 above the high end of my guidance range. Now before I get into the results of the quarter, I wanted to touch on the strength of our Infrastructure Cloud Business. OCI has emerged as the largest driver of our overall revenue acceleration growing much, much faster than our cloud competitors. Customers have figured out that by moving to OCI, they can really get more while paying less.

Speaker 2

But it's not just the cost that matters to our customers. Beyond the superior price performance of OCI, customers are choosing Oracle and Oracle Services for multiple reasons. First, we know better than anyone what it takes to run the full stack of technology that goes into mission critical workloads. I'm talking about running at enterprise scale with comprehensive security and unparalleled support. And that's from decades of experience running the world's most important workloads and optimizing clustering technology which is critical to artificial intelligence workloads and database services.

Speaker 2

Secondly, our AI capabilities are unique as they're built in to help customers drive business outcomes. This is more than integrating generative AI across our Fusion and Industry Cloud applications and autonomous database, which we have done. It's also about enabling and refining these AI models with the customers' own data to better understand and serve their operations without them losing control of their own data. 3rd, we provide deployment flexibility for customers based on how they want to run-in the cloud. In addition to offering public cloud services, we remain the only vendor which also offers a dedicated and complete cloud to customer, dedicated regions, sovereign clouds and alloy, our partner cloud.

Speaker 2

So customers don't have to compromise the services they receive while meeting their deployment needs. And finally, we provide multi cloud offerings so customers can consume our cloud services in the public cloud of their choice. We offer Oracle Database at Azure with Microsoft as well as MySQL HeatWave through multiple clouds and you can expect more multi cloud services to come. Now to Q3 results, which I'd like to point out, I had the actual results on day 5 and signed off with my auditors days ago. So I'm just bragging a little bit, but I couldn't help it.

Speaker 2

I know a lot of CFOs are pretty jealous. As I mentioned earlier, total revenue came in at the midpoint of my constant currency guidance and EPS was above the high end of guidance. As was the case when I gave guidance last quarter, currency had little effect in Q3, but I'll still discuss our results using constant currency growth rates in the few areas that the rates are slightly different. So here we go. Cloud revenue that's SaaS and IaaS excluding Cerner was 4,400,000,000 dollars up 26%.

Speaker 2

Including Cerner, total cloud revenue was up 24% at $5,100,000,000 with IaaS revenue of $1,800,000,000 up 49% and SaaS revenue of $3,300,000,000 up 14%. This quarter marks the first time our total cloud revenue is more than our total license support revenue. So we have crossed over Total cloud services and license support revenue for the quarter was 10,000,000,000 dollars up 11%, driven again by our strategic cloud applications, autonomous database and OCI. Application subscription revenues, which includes product support were $4,600,000,000 and up 10%. Our strategic back office SaaS applications now have annualized revenue of $7,400,000,000 and we're up 18%.

Speaker 2

Infrastructure revenues, which includes license support were 5,400,000,000 dollars and up 13%. Infrastructure Cloud Services revenue was up 49%. Excluding legacy hosting services, OCI Gen2 Infrastructure Cloud Services revenue grew 52% with an annualized revenue of 6,700,000,000 dollars OCI consumption revenue was up 63%. Were it not for some continuing supply constraints, consumption growth would have been even higher. Database subscription revenue, which includes database license support were up 5% and highlighted by cloud database services, which were up 34% and now have annualized revenue of $1,900,000,000 Very importantly, as on premise databases migrate to the cloud, we expect these cloud database services will be the 3rd leg of revenue growth alongside strategic SaaS and OCI.

Speaker 2

Software license revenues were $1,300,000,000 down 3%. So all in total revenues for the quarter was $13,300,000,000

Speaker 3

dollars up

Speaker 2

7% including Cerner and up 9% excluding Cerner. Now to margins. The gross margin for cloud services and license support was 77%. This is as before a result of the mix between support and cloud in which cloud is growing much faster than support. Support and SaaS gross margin percentages are consistent with last year, while IS gross margins improved substantially year over year.

Speaker 2

While we continue to build data center capacity, overall gross margins will go higher as more of our cloud regions fill up. We monitor these expenses carefully to ensure gross margin percentages expand as we scale. And to that point, gross profit dollars of cloud services and license support grew 8% in Q3. Non GAAP operating income was $5,800,000,000 up 12% from last year. Operating margin was 44%, up from 42% last year as we continue to drive more efficiencies in our operating expenses, which continue to trend down as a percentage of revenue.

Speaker 2

Looking forward, as we continue to benefit from economies of scale in the cloud and drive Cerner profitability to Oracle standards, we will not only continue to grow operating income, but we will also expand the operating margin percentages. The non GAAP tax rate for the quarter was very close to my guidance at 18.9% and non GAAP EPS was $1.41 in USD, up 16% in both USD and constant currency. GAAP EPS was $0.85 At quarter end, we had nearly $9,900,000,000 in cash and marketable securities and short term deferred revenue balance and the short term deferred revenue balance was $8,900,000,000 up 4%. Over the last 4 quarters, operating cash flow was $18,200,000,000 up 18% and free cash flow was $12,300,000,000 up 68%. Capital expenditures were $6,000,000,000 over the same time period as we continue to see cash flow benefit from our cloud transformation.

Speaker 2

Our remaining performance obligation or RPO is now over $8,000,000,000 with the portion excluding Cerner up 41% in constant currency. We signed several large deals this quarter and we have many more in the pipeline. Approximately 43% of our total RPO is expected to be recognized as revenue over the next 12 months and this reflects the growing trend of customers wanting larger contracts as they see firsthand how Oracle Cloud Services are benefiting their businesses. And we expect to have some very nice joint announcements with NVIDIA next week. Now while we spent $2,100,000,000 on CapEx this quarter, The $1,700,000,000 in the cash flow statement is slightly lower just due to the timing of payments.

Speaker 2

So the $2,100,000,000 is actually what we spent, and we'll pay for. We are working as quickly as we can to get the cloud capacity built out given the enormity of our backlog and pipeline. I expect the CapEx will be somewhere around $7,000,000,000 to $7,500,000,000 this fiscal year, meaning our Q4 CapEx should be considerably higher. To that point, we now have 68 customer facing cloud regions live with 47 public cloud regions around the world and another 8 being built. 12 of these public cloud regions interconnect with Azure and more locations with Microsoft are coming online soon.

Speaker 2

We also have 11 dedicated regions live and 13 more plans, several national security regions and EU sovereign regions live with increasing demand for more of each. And finally, we already have 2 alloy cloud regions live with 5 more planned where Oracle partners become cloud providers offering customized cloud services alongside Oracle Cloud. And of course, we have also many, many, many cloud customer installations. As I mentioned earlier, the sizing, flexibility and deployment optionality of our cloud regions continues to be incredible advantage for us in the marketplace. And as we've said before, we're committed to returning value to our shareholders through technical innovation, acquisitions, stock repurchases, prudent use of debt and a dividend.

Speaker 2

And this quarter we repurchased 4,000,000 shares for a total of 450,000,000 In addition, we paid out dividends of $4,400,000,000 over the last 12 months and Board of Directors declared a quarterly dividend of $0.40 per share today. Now, before I dive into Q4 guidance, I'd like to share some thoughts on what I see for the next 12 months or so. As demand for our cloud services continues getting stronger, our pipeline is growing even faster and our win rates are going higher as well. As our supply constraints ease, revenue growth rates will accelerate higher as our capacity expands and we get into fiscal year 2025. I should also say that we continue to expect the FY 2024 of which we are now in the Q4, total revenue excluding Cerner will accelerate from last year as it has for the past 3 years and will likely be significantly higher in FY 2025.

Speaker 2

In addition, Cerner, which is a significant headwind this year, we expect to return to growth next year. And finally and I remain firmly committed to our FY twenty twenty six financial goals for revenue, operating margin and EPS growth. However, some of these goals might prove to be too conservative given our momentum. Let me now turn to my guidance for Q4, which I'll review on a non GAAP basis as always. And if currency exchange rates remain the same as they are now, currency should have little effect on total revenue and EPS.

Speaker 2

However, of course, actual currency impact may be different. So at least right now, all the numbers are the same for constant currency and USD. Total revenues including Cerner are expected to grow from 4% to 6%. Total revenue excluding Cerner are expected to grow 6% to 8%. Total revenue the total cloud revenue excluding Cerner is expected to grow from 22% percent to 24% as more capacity comes online in Q4.

Speaker 2

The EPS growth rate will be affected by the compare as our Q4 tax rate last year was 9.2%, which I believe most of you have already accounted for in your models. And my EPS guidance for Q4 assumes a base tax rate of 19%. As always, one time tax events could cause actual tax rates to vary from my guidance like they did last year. So with that non GAAP EPS is expected to be down 2% or to flat and be between $1.62 $1.66 And with that, I'll turn it over to Larry for his comments.

Speaker 4

Thank you, Safra. Well, Oracle signed another big generation 2 cloud infrastructure contract with NVIDIA in Q3. Oracle's Gen 2 AI infrastructure business is booming. That's become pretty clear to everybody. But in addition to selling infrastructure for training AI large language models, Oracle is also completely reengineering its industry specific applications to take full advantage of generative artificial intelligence.

Speaker 4

The best example of this is in healthcare where Oracle did not just add a bit of AI around the edges of existing applications. Instead, we developed completely new applications using our Apex application generator and our autonomous database. These all new applications use generative AI throughout the application. The best example is in healthcare, where our new ambulatory clinic system is being delivered to customers this Q4. This completely new application features a voice interface called the clinical digital assistant.

Speaker 4

The clinical digital assistant listens to a doctor's consultations with a patient and automatically generates prescriptions, doctor's orders, doctor's notes, then automatically updates the patient's electronic health records. The clinical digital assistant's voice interface makes our new healthcare systems dramatically easier to use and saves hours of doctors precious time every day, which now can be spent with patients rather than typing into a computer. The delivery of our new AI centric healthcare cloud applications, including the ambulatory clinic system, the clinical digital assistant and the health data intelligence system will enable the rapid modernization of our customers' healthcare systems and transform Oracle Health and Cerner into a high growth business for years to come. Ken, back to

Speaker 2

you. We don't hear you, Ken.

Speaker 1

Thank you, Larry. Sorry about that. Christa, if you could please poll the audience for questions and if we could proceed from there. Thank you.

Operator

Absolutely. Your first question comes from the line of John DiFucci from Guggenheim Securities. Please go ahead.

Speaker 5

Thank you. Safra, the infrastructure as a service growth of 49% implies a Herculean increase in new business coming online, new ARR, the way we model it anyway. Something I just thought you wouldn't be able to do this quarter given how much you had to do. Though we realized we don't know the timing of when deals come online, but last quarter you said you were going to reallocate resources to focus on some of these very large OCI deals to get them implemented earlier, so you start to get revenue earlier. Is that what happened this quarter?

Speaker 5

Is that what we're seeing? Or is that still to come?

Speaker 2

Honestly, John, that is still to come. So this is just pretty much our regular way business. That's what you're seeing. We have enormous amounts of demand. I tried to make that clear last quarter and we have more capacity coming online, but we had tried to focus on much larger chunks of data center capacity and electricity and all of that.

Speaker 2

And that's just that's all to come. This is really our regular way business and our customers just growing and a whole bunch of new customers by the way. I think there are many, many customers who have come on and that haven't gotten capacity yet. We've got at least 40 new AI bookings that are over a 1,000,000,000 that haven't come online yet.

Speaker 4

That sounds John.

Speaker 5

Go ahead, Larry. Sorry.

Speaker 4

Okay. Let me add that Oracle is building data centers at a record level. And a lot of people I think are aware that we can build fairly small data centers to get started when we want to. That's the unique thing about Oracle's data centers, they're all identical except for scale. You do not have custom data centers.

Speaker 4

They all have all the Oracle services. They are all complete one of the things that's unusual about them, they're all completely automated. They come up on their own and they kind of run their selves. I mean, look, we do have a bunch of people working on these data centers. But they are extremely high they're highly automated.

Speaker 4

Our operating system is autonomous Linux. Our database is the Oracle autonomous database. Our new HeatWave database, Microsoft MySQL HeatWave, it's highly automated. And therefore we can build every time we build a data center it's like the data center we built before except for one thing scale. We can go very small.

Speaker 4

We can get a full cloud data center with all the services in Kenrocks, RAS. But this is what I want to point out. We're also building the largest data centers in the world that we know of. We're building an AI data center in the United States where you could park 8 Boeing 747s nose to tail in that one data center. So we are building large numbers of data centers and we were in some of those data centers are smallish, but some of those data centers are the largest AI data centers in the world.

Speaker 4

So we're bringing on enormous amounts of capacity over the next 24 months because the demand is so high. We need to do that to satisfy our existing set of customers. Give you an idea, one more thing in terms of data centers, we're building 20 data centers from Microsoft and Azure. They just ordered 3 more data centers this quarter. They're adding to that already.

Speaker 4

And there are other multi cloud agreements that are being signed. There are multi cloud a number of multi cloud agreements in Japan, in Japan, where computer manufacturers in Japan are adopting our cloud and will be reselling our cloud as partners. And we think NRI is already doing that, but there are a number of other companies that are going to be doing that. So that's something we're seeing over demand for data centers of people who want to buy alloy and then resell our cloud services with their proprietary cloud services on top of it. We're seeing that.

Speaker 4

So some of our largest customers all over the world want their own Oracle region. They don't want to share a public cloud. They want a cloud region dedicated or actually multiple cloud regions dedicated to that bank or that technology company or that telephone company. So they're building their own data centers which are identical. Those are Oracle cloud data centers.

Speaker 4

They are again they're all identical. So we're able to automate and run those with not of that lot of additional labor costs. It's a huge advantage for us.

Speaker 5

Well, thank you, Larry and Safra. Listen, what you put up this quarter in Infrastructure as a Service, it just looks pretty impressive, but it sounds like there's a lot more to come. Thank you for taking my question.

Speaker 4

John, my last comment would be the growth in RPO is what's to come. And RPO is obviously growing faster than revenue because we can't meet the demand. That's the measure of demand. The $80,000,000,000 RPO is quite an acceleration of demand. So demand is not slowing down.

Speaker 4

It's actually increasing quite a bit.

Speaker 5

Well, there were a lot of questions on that last quarter. And I guess there won't be any on this one. Thank you.

Speaker 1

Thank you, John. Next question please.

Operator

Your next question comes from the line of Raimo Lenschow from Barclays. Please go

Speaker 6

ahead. Hey, thank you. Congrats from me as well. I wanted to talk a little bit about Cerner. In the announcement, you talked about that most of Cerner now is running out of your OCI.

Speaker 6

Well, first of all, that's a very quick turnaround here, so well done. What's kind of the implications for that both from running efficiency but also innovation on the platform? Thank you.

Speaker 4

Well, two things. One is we save a huge amount of money moving them into our standard data center, right, because our OCI costs are much lower than the cost of the Cerner Dedicated Data Center in Kansas City. Also the big thing that we're excited about is OCI is highly secure. It's got a highly secure perimeter and therefore those applications are much less vulnerable to ransomware or other kind of attacks than if they were in a different kind of data center. So we're very happy that these are now secured.

Speaker 4

The third thing is now that they're in our cloud, we're able to update those applications on a regular 3 month cadence. So we're able to modernize those first for ambulatory clinics and then eventually for acute care hospitals. And the ambulatory clinic system is coming out this quarter And we're able to automatically deliver that system to existing customers. It's not a reimplementation. It is literally an update to what they've already got running in the Oracle Cloud.

Speaker 4

Even though it's an all new application, I'm not going to get into too much technical detail, but it uses the same underlying data schema. So we literally can bring up the new application without the customer having to go through any implementation process. We can do it just as an update like when we ship a new version of Fusion to an existing Fusion customer. We can now ship a new version of an all new version of the Cerner application to a Cerner customer in OCI. So it allows us to modernize their infrastructure very, very rapidly, deliver the voice clinical digital assistant, make the system easy to use, save doctors time, deliver a lot more value, put in the diagnostic imaging systems, the health data intelligence system, deliver all of that automatically on a regular 3 month cadence.

Speaker 4

So it allows us to modernize this Cerner base very, very quickly while keeping them safe from ransomware.

Speaker 6

Perfect. Thank you.

Operator

Your next question comes from the line of Ben Reit from Melius Research. Please go ahead.

Speaker 7

Yes, thanks. It's a pleasure to be speaking with you this afternoon. Larry and Safra, can you talk a little bit about CapEx? Your guidance implies almost doubling of CapEx in the Q4. And then what kind of trajectory is needed for the next fiscal year given this RPO growth?

Speaker 7

What kind of uptick is needed? And Larry, if you don't mind, what if you can give some color on GPU availability and how that plays in versus data center requirements in terms of that spending? Thanks so

Speaker 2

much. So, for fiscal year 2025, I'm looking at about $10,000,000,000 in CapEx because it's also involves not only some big centers, but it also involves expansion of existing centers. So we've already got some areas that we'll be filling out. So at least preliminarily, we're looking at $10,000,000,000 for next year. And then, it's not too complicated to figure out the math here when, I'm looking at somewhere between 7% and 7.5% for the full year and you've got all the numbers for Q1, Q2 and Q3 at this point.

Speaker 2

And I would include for Q3, the one we just are announcing, I would add in the amount we haven't paid yet as the CapEx number for this quarter. Okay. And I guess that would be and then Larry gets the second question. But anyway, so 2.1 for this quarter and you've got Q1 and Q2 and I'm going to be somewhere between $7,000,000 $7,500,000 for the full year, which is actually a little bit lower than I thought, but we were able to do pretty well. You know how we spend very carefully.

Speaker 7

Great. Thanks. And Larry, the amount that how is the GPU availability in terms of you hitting your goals and vis a vis other bottlenecks that could be out there?

Speaker 2

Can I take the early part of this? The GPU and GPU are good. We are actually very good in our GPU access and capability. So building the computers and that it's much more making sure we've got the power on that.

Speaker 4

Yes. And as Safra says, we have a great relationship with NVIDIA. They're a customer of ours as well as us being a customer of theirs. And we work very closely together. So that's going pretty well.

Speaker 4

Building these I mean the scale of some of these data centers is breathtaking. Again, the one we're building in Salt Lake, again, you can park 8,747s nose to tail. We can give you a video of this thing under construction, but it's hard I mean, it's breathtaking. So there's a tremendous amount of demand. The data centers take longer to build than we would like.

Speaker 4

That said, we are getting very good at building them quickly. And getting the building and the power and communication links in, we're doing faster than we ever have in the past. And the thing is once we deliver the hardware, the hardware comes up very, very quickly because the process of bringing up the hardware is now all automated. It's very different than it used to be. So we're able to bring additional capacity online very quickly if we have the electric power and the communication lines.

Speaker 4

So the long pole in the tent is actually building the structure, electricity and connecting the communication lines.

Speaker 7

Thanks, Larry. Appreciate it. Congrats on the OCI growth.

Speaker 4

Thank you.

Operator

Your next question comes from the line of Derrick Wood from TD Cowen. Please go ahead.

Speaker 4

Great. Thank you. Larry, just within the last few months, you guys have enabled Oracle Database and OCI to be run on top of Azure, which seems like a fairly significant development. Can you talk about what the customer reception has been around this announcement? How you think it could change the arc of new investments on the Oracle Database platform?

Speaker 4

And what this means for potentially unlocking a stronger adoption cycle for Autonomous Database? Well, I think it is the key to unlocking a stronger adoption cycle for moving Oracle in general to the cloud in general and specifically the migration to autonomous database. Oracle, we expect the multi cloud initiative to continue to expand that we're seeing it expand in Japan, but we expect it to expand amongst other hyperscalers to adopt a similar multi cloud approach where we build OCI regions inside of and coexisting with their existing cloud infrastructure. We think the world that the era of walled gardens is coming to an end, where it used to be, okay, I'm going to move all my stuff to AWS, so I'm going to move all my stuff to Azure. What customers really want is the ability to use multiple clouds and for those multiple clouds to talk to one another.

Speaker 4

And I think I mean in the era of the Internet and now cloud computing, it is really called cloud computing. It's not called a bunch of separate clouds. So we expect that multi cloud to become the norm and Oracle to be available everywhere. And we think that and back to what you said, we think that will preserve our franchise and database where we've been the number one database in the IT ecosystem for a very long time. We think that's going to preserve that franchise and expand it because the autonomous database is a unique piece of technology and there's nothing like it in the world and maybe the most interesting thing no one else is working on anything like that.

Speaker 4

No one else is even trying to duplicate the autonomous database. So we think it will become a very successful product in every cloud.

Speaker 7

Thanks, Larry.

Operator

Your next question comes from the line of Kirk Materne from Evercore ISI. Please go ahead.

Speaker 8

Yes. Thanks very much for taking the questions and congrats on an incredible bookings quarter.

Speaker 1

Larry, I was wondering if you

Speaker 8

could just talk a little bit about the interest level on alloy in international markets where there might be a bit of a premium on data sovereignty and maybe how that's impacting the growth opportunity for OCI when we look out towards the balance of calendar 2024? Thanks.

Speaker 4

Well, I think Japan has maybe the most interesting market where we had early success with NRI. They run the Tokyo Stock Exchange. Now what NRI has is just is an Oracle a couple of Oracle Cloud regions, which they resell in the financial services community inside of Japan. And one of their applications is a major stock exchange, the Tokyo stock exchange. So think about how many clouds run stock exchanges that would be ours.

Speaker 4

It's got to be highly secure. It can never go down. It's got to have extremely high transaction rates. We can do that. And the success of NRI has caused other the other computer companies in Japan to become very, very interested in also reselling our cloud with and we also have the ability that they can add on some of their own technology to our cloud, so that our cloud is open.

Speaker 4

So you can plug in other things to the cloud. So imagine a big computer company in Japan adopting the Oracle Cloud, reselling Economist Database, reselling all of our technologies because we only make one kind cloud. They're all the same and they have all of the services. But then that company can add their own services for their customers. We think all of the cloud companies in Japan are going to adopt OCI, plus a lot of big companies, the big car companies in Japan will want their own.

Speaker 4

The phone companies in Japan will want their own. The technology companies in Japan will want their own Oracle regions. And because they're sovereign, because they're highly secure and because they're highly cost effective. So we think this allows us to enter a variety of new markets. Every government pretty much every government is going to want a sovereign cloud and a dedicated region for that government for not only so we see a number of countries.

Speaker 4

It's funny, we talk about winning business with companies. For the first time, we're beginning to win business country for countries for Sovereign Clouds, where the national government and the state governments are moving to that Oracle OCI region. And of course, it's got to be at least 2 of them for redundancy in case of disaster recovery. We have a number of countries where we're negotiating sovereign regions with the national government. We see that time and time again major companies, governments, computer suppliers reselling our Ally cloud.

Speaker 4

The demand for our cloud regions is extraordinarily high. I believe we will end up well, this is a funny prediction, but okay, we'll end up with more data centers in cloud regions than all the other hyperscalers combined.

Speaker 2

Yes. I think that's what

Speaker 4

I believe.

Speaker 2

So just to make sure you have all the numbers between alloy and dedicated regions, we've got 13 live, we've got 18 under construction and we've signed 5 new ones just this past quarter. So for us it's they're just a list we're going through and trying to get them all because they are such a unique capability and in such high demand.

Speaker 4

And let me just add one last thing. Microsoft does not compete for this business. AWS does not compete for this business. Google does not compete for this business. We're the only ones in this business.

Speaker 3

Okay. Thank you all.

Operator

Our final question today comes from Brad Zelnick from Deutsche Bank. Please go ahead.

Speaker 3

Thanks very much for taking my question. Larry, my question actually follows on your answer to Kirk's question because I think it's so important. In talking to one of your GSI partners, we heard about a global public sector solution that they referred to as government in a box, where Oracle in partnership with the likes of Starlink, the Tony Blair project, are building solutions on top of OCI, including Apps and Tech and even Cerner to literally run entire countries' digital operations. So hoping you can add even a little bit more color about what you're doing here, how big an opportunity it is, Because it just seems like such a powerful example of the entire Oracle CloudStack coming together in a very meaningful way.

Speaker 4

Well, it is really, really it's very interesting and we've gone into the government national government and state government applications in a very, very big way. To give you an idea a little glimpse of what we're doing, yes, because we can deliver these cloud regions to medium sized countries. So for example Serbia is standardizing on these Oracle cloud regions for the national government. We're automating their healthcare and people know that we're in the healthcare business. What they might not know is in cooperation with StarLink, we're able to deliver an Internet service to for the entire country, rural the rural part of the country.

Speaker 4

By the way, we can deliver the Internet and we have delivered the Internet to let's say Kenya or Rwanda very inexpensively using Starlink and our sovereign cloud regions to backhaul the Internet traffic. So you can bring every school in Serbia online as Internet connectivity even if they're rural doesn't matter. Every school, every hospital, it's true of Rwanda, that's true of Kenya, we can do it very, very cost effectively. And one of the applications we have for agriculture, we actually do a national map of the country where we can show you each of the farms in the country what they're this farm is growing coffee, this farm is growing maize, this farm, which part of the fields are getting enough nitrogen, which part of the fields are getting enough water, what corrective actions you need to take to increase your agricultural output. We're doing that again in concert with Elon Musk and SpaceX to do this kind of mapping to provide this AI assisted and these maps are AI assisted, help them plan their agricultural output and predict their agricultural output, predict markets, the logistics of the agricultural output, doing all of those things as next generation national application.

Speaker 4

And it is one of the most exciting things we're doing. Of course, we do procurement and accounting and human resources and recruiting for the government. We do all of those applications. But in some of the newer applications regarding food security, making sure all the schools are online, rural schools are on line, that rural hospitals are online. It's automating those rural hospitals.

Speaker 4

It's automating their vaccination program, their health care program across the board. These next generation applications are very attractive. I'll tell you one other crazy thing that we do. We're another generative AI application. If you want to join the EU, it took Serbia 8 years to harmonize their laws to be able to join the EU.

Speaker 4

Albania is facing the same thing. But with generative AI, we can read the entire purpose of the Albanian laws and actually harmonize their laws with the EU and probably more like 18 months to 2 years rather than the 8 years it took Serbia. So there are all sorts of interesting new AI applications out there that people you probably never heard of before, at least I hadn't heard of before until this last 12 months that we've worked on and we're now in the process of delivering.

Speaker 3

Really amazing stuff, Larry. Thank you and congrats and Safra. Really great to see the firm reiteration of your fiscal 2026 targets. Thanks so much for taking my question.

Speaker 2

Thank you.

Speaker 1

Thank you, Brad. A telephonic replay of this conference call will be available for 24 hours on our Investor Relations website. Thank you for joining us today. And with that, I'll turn the call back to Christa for closing.

Operator

Thank you, everyone. This does conclude today's conference call. Thank you for your participation and you may now disconnect.

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Earnings Conference Call
Oracle Q3 2024
00:00 / 00:00
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