Oracle 1Q14 Earnings Call Notes

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This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings.

Made changes to reporting to break out cloud revenue

“we’ve made some significant changes in our financial reporting and in our guidance to match our company’s fundamental transition. We’re now firmly into the transition to the cloud and we had previously disclosed our SaaS revenues in the 10-Ks and Qs. As the cloud revenue has become larger and more significant, we’ve gone ahead and disclosed some on the phase of our income statement.”

Why Oracle will win in cloud

“First, we have the most complete and modern portfolio of SaaS products in the cloud.”

“Second, all of those SaaS applications run on the world’s most powerful platform in the cloud, the Oracle in-memory, multi-tenant database and the world’s most popular programming language, Java.”

“Third, we have dramatically expanded, specialized and lined up our sales forces to sell SaaS and PaaS subscriptions against the new generation of cloud software competitors and it’s working.”

Going to beat Workday, Salesforce and SAP

“We are the only company that has a whole suite of cloud applications. We are salesforce.com’s primary competitor, Workday’s primary competitor. And in the cloud we’re many times the size of Workday, we’re bigger than SAP, and we are going to pass Salesforce in cloud.”

Products identified as quadrant leaders

“As industry analysts build their waves and quadrants they name cloud leaders in specific cloud areas and Oracle today is the leader across more cloud solutions than Salesforce, Workday and SAP combined.”

Sales force agnostic to selling license vs. subscription

“The sales force is motivated by their commissions. And we’ve made it commission neutral. In other words the sales force doesn’t really care if they sell a license or they sell a subscription. They get paid the same amount in either case.”

Competitors are all based on the Oracle database

“Most of the cloud companies are based on the Oracle database. We are, for example, this last Q4 we did a huge — a big deal with SAP was success factors is based entirely on Oracle. So people are using the Oracle database in the cloud. So we had a nice deal with them. We had a nice deal a year ago, nice deal with Salesforce.com, obviously net suite at abate. But virtually everybody with the exception of Workdays based on the Oracle database.”

In memory feature and multi-tenant feature are important

“we think these two features the in-memory feature and the multi-tenant feature really will allow us to deliver by far the best database experience in the cloud. And that should drive our database sales for the next few years.”

Multi tenancy important to get ISD community onto the cloud

“there are a lot of companies that want to get to the cloud. I mean I’m going just take out of thin air Cerner, who really don’t have multi-tenant products, but would like to get to the cloud. They’d be a perfect example of the company who runs on top or Oracle that would like to get to the cloud where the Oracle multi-tenant database gives them fast track to the cloud, and fast track of — very fast big data analytics with our in-memory options. So those two things I think will be instrumental get us moving our huge ISD community for the cloud on top of our platform.”

Every ISD runs on the Oracle database and wants to move to the cloud

“virtually every ISD runs on top of the Oracle database. Virtually all of these companies would like to be able to move their offerings to the cloud. We now enabled that. Our platform is just coming out this fall. This is a net new business for us going forward, moving all these ISDs into the cloud. We think this might be the biggest single — in an opportunity-rich world as we’re seeing our SaaS applications, the growth is accelerating.”

Multi-tenancy and in-memory are two fo the biggest parts of modern computing

“the in-memory piece allows you to offer big data analytics. And what you’re asking me, which is more important, big data analytics or multi-tenancy in the cloud, I think they’re both crucial to modern computing. These are two of the biggest, biggest parts of modern computing. People spend a lot of time talking about the cloud and getting to the cloud, getting your business to the cloud and modernizing it. And big data analytics, I mean they’re number one and number two in the conversation about technology these days in all of the meeting I’ve been.”

Software and platform as a service are high margin, but infrastructure is low margin

“the two parts of the cloud business that we’re focused on are SaaS, the applications and PaaS, the platform database and Java programming language. We think inherently those businesses are 40%-50% margin businesses. We think that’s not the case in Infrastructure-as-a-Service business. We think that’s a lower margin business, but we think we can run it profitably in association with our SaaS and PaaS businesses.”

Infrastructure is something we sell as convenience to customers. We are our own supply chain

“Where we’re really trying to grow the business, where we’re determined to be number one is in SaaS and PaaS. We’re in infrastructure of service as a convenience to our customers, who want to have one stop shopping and buy their applications platform and infrastructure at the same place. But we think collectively, those three businesses, as Safra said we’re our supply chain. So we buy electricity in buildings; everything else we make. And we think we can deliver the cloud services without compromising our margins whatsoever.”