Oracle Corporation (NYSE:ORCL) Q2 2024 Earnings Call Transcript

Payers, including governments, including insurance companies, providers, including ambulatory clinics and hospitals, pharmaceutical companies, research companies, and public health departments in national governments and state governments. So we have products for the entire healthcare ecosystem, which is a much larger footprint than Cerner ever had. So we are going after a much larger market than Cerner was. So we expect Cerner to be a growth story. I guess that’s what I’m getting at.

Mark Moerdler: Right, that’s where I’m going with the question.

Safra Catz: Yeah, so let me just tell you, I think for the year, for the full fiscal year, Cerner will be sort of negative 1 to 2 points. But that will be it. It’ll end this fiscal year. And from then on, it will be a growth story. So it will no longer be a drag on Oracle growth. Okay?

Mark Moerdler: Perfect. Thank you so much. I really appreciate it. It was very helpful.

Safra Catz: Great.

Operator: Your next question comes from the line of Siti Panigrahi with Mizuho. Your line is open.

Siti Panigrahi: Thanks for taking my question, Larry and Safra. Many mission critical workloads still run on Oracle database, and you have a sticky [Indiscernible] team. And we expect Oracle will start migrating those database workloads to OCI, which will bring 3x revenue uplift, which you call even the third leg of cloud growth. You also have now OCI inside Azure data center. So my question is, how does this being multi-cloud change your outlook for Oracle database? And what are you hearing from your database customer in terms of their comfort and preparedness to move their Oracle database to the cloud, either OCI or Azure?

Safra Catz: Larry, why don’t you start with this?

Larry Ellison: Safra, can you go first?

Safra Catz: No, yes, I do. You go.

Larry Ellison: Okay, thanks. Our customers are very happy with the idea. Remember Oracle started as one of the first databases that ran everywhere. We ran on IBM mainframes. We ran on personal computers. We ran on digital equipment, if you remember them, mini computers, [broadly] (ph) and HP mini computers. We ran on every operating system on every computer. Now, in cloud, they’re very happy to see that they can not only get the Oracle database at OCI, they can also get the identical capability from Microsoft. Microsoft, we are building data centers for Microsoft inside Azure. And Microsoft, it wasn’t us that decided 2000 was the right number of Exadata machines to install in those 20 data centers. That was Microsoft. The demand is enormous.

They want the same flex — our customers want the same flexibility they’ve always had with Oracle. They want to use Oracle. They want to transition. But if they’re using the Microsoft Cloud, they want to run the best and latest and greatest version of Oracle in the Microsoft Cloud. They’d want to do that in other clouds as well. Some of them, it’s very important to have it in Japan, for example. It’s very important for some of that data remaining in Japan. One of the things the Oracle database does is it runs the Tokyo Stock Exchange. And it does that in a dedicated data center run by Nomura Research, who supplies financial services and Oracle Cloud, Oracle Gen2 Cloud services to the Japanese market. There are a number of other partners in Japan that are going that same direction.

So they used to — in Japan, they used to buy the Oracle database from Nomura or they used to buy it from Fujitsu, or they bought it from Hitachi, or they bought it from NEC. They wanted that Oracle database. It is quite natural for all of those companies to build their own, have their own dedicated regions of OCI and sell to their and support their customers out of those regions. That’s the flexibility we allow that’s something that nobody else can do. We can build these regions for our partners. We can build these regions for sovereign states. We can build these regions for large companies that want to have — that don’t want their data commingled with anyone else’s data. They want a public cloud, they want a full OCI, they want every part of OCI.

But they don’t want anyone else in their region. They want it to be theirs and theirs alone. We can do that. Nobody else can.

Ken Bond: Next question, please.

Siti Panigrahi: Thank you, Larry.

Operator: Your next question comes from the line…

Larry Ellison: Let me summarize. That means literally any way you want to get Oracle, any way you want to get Oracle, you’ll be able to get it. It’ll be a little bit back to the future. And we think the impact on demand — on database demand, we’re seeing it already. Let me close with 2,000 Exadata racks. That’s a stunning number in terms of how many customers you can put on that. That’s tens of thousands of customers you can put on that much hardware.

Siti Panigrahi: Thanks, Larry, for the color.

Larry Ellison: And that’s Microsoft alone, okay.

Operator: Your next question comes from the line of Alex Zukin with Wolfe Research. Your line is open.

Alex Zukin: Hey, guys. Thanks for taking the question. I wanted to ask around some of the GenAI functionality inside of the applications portfolio, specifically Fusion and NetSuite. Any update or uptick that you’re seeing or can share around some of your partnerships around Cohere? Maybe any early feedback from the field that informs incremental value capture, whether or not it’s starting to resonate either in the form of increased migration activity, increased market share gains, or increased monetization opportunities around the application portfolio?