Oracle FY 3Q15 Earnings Call Notes

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Currency headwind was 6-7%

“As you probably remember, I didn’t provide U.S. dollar guidance for Q3, given the unusually high volatility in exchange rates. The currency headwind ended up being 6% for software and cloud revenues as well as total revenue, 7% for total hardware revenue, and $0.06 a share – and $0.06 for earnings per share.”

Now bigger than Workday in cloud

“our Cloud results were much, much better than expected as we are clearly growing faster than Salesforce. We’re more than three times the size of Workday now. Software and Cloud revenues were $7.2 billion, up 7% from last year. Software updates and product support revenues drove nearly half of total company revenue at $4.7 billion, up 8% from last year. Attach and renewal rates remain at their usual high levels as our growing install base of customers continues to power earnings and cash flow. New software license revenue was $2 billion while we continued to enable our customers with their ongoing transition to Cloud.'”

A lot of cash

“We now have over $43 billion in cash and marketable securities. Net of debt, our cash position is approximately $11.5 billion.’

More ERP customers than Workday has acquired in their lifetime

“This quarter Oracle sold cloud ERP systems to 160 new customers. That’s more ERP customers than Workday has acquired in all the years they’ve been in the cloud business. Not one of our 160 cloud ERP deals was competitive with SAP. As Mark said, we just don’t see them in the market. By the end of this quarter, Oracle will have sold over 1,000 cloud ERP systems. We are on our way to building the largest ERP business in the cloud.”

We’re going to beat Salesforce this year, not in 2016

“On our last quarterly conference call, I predicted that in our fiscal year 2016 Oracle would likely sell more SaaS and PaaS new business than I was way too cautious and conservative. Our cloud business is growing a lot faster than even I expected. Our cloud bookings are now growing at over 100% per year, so I’d like to revise my prediction.

I now believe that Oracle will sell more new SaaS and PaaS business than in this current calendar year, 2015. It’s going to be close, but I think we’re going to sell more in the cloud than they do this year. I suspect that might come as a big surprise to a lot of people out there. You won’t have to wait very long to find out who’s going to win this.”

We make it much easier to move to the cloud

“The use cases that are spurring adoption of Oracle, the Oracle database in the Cloud is the very simple fact you can take any workload, any database that you currently have running in your data center and move your database with the push of a button and move your application with the push of a button and run it in the Oracle Cloud. Nobody else can do that.”

SAP is just running their same old stuff

“you’ve got to understand one thing, this is the same old SAP. This is all written in ABAP. There’s 30-year-old code in S/4 business suite. There is nothing new about this. They’re simply hosting it on someone else’s computer.

I also can’t find a website where you log on and try it. Everyone else lets you log on – you know, let’s you log on, you go to a website if you want to buy our stuff, you want by SaaS, you want to buy PaaS, you go to the website, you get provisioned, and you go. Not so with SAP. This is 30-year-old code renamed S/4HANA. Now they did add a new user interface called Fiori to the old code but that’s all they did.”

We’ve built a better product than Workday

“In the context of HCM, I think with each subsequent release of HCM, whether it had been release 7, release 8, release 9, and now release 10, we have simply engineered now a better product than Workday”

We’ve seen the beginnings up uptake of 12c aided by emergence of private clouds

“we’ve seen a strong uptake of – well I shouldn’t say that. Let me say it another way. The beginnings of the uptake of 12c, I believe that also helps, and it also helps in the context of what we see as 12c and the emergence of private clouds that exist within our customers where you see many of these architectural moves to these engineered systems as well.”

We redid everything for the cloud 10 years ago

“We made a big announcement almost 10 years ago that we were rebuilding all of our applications for the cloud. Now, it wasn’t called the cloud 10 years ago, it was called SaaS. But we said that we were rebuilding everything on this thing called Fusion, and networks, were going to rebuild our middleware for the cloud, build our applications on top of our cloud middleware, and change our database for the cloud, make it multi-tenant, make it in-memory, do all of those things. We started a project 10 years ago to rewrite everything. When – Fusion ERP, every single line of code is brand-new. Fusion HCM, every single line of code is brand-new.”‘

Workday didn’t do it right, we did

“We think we put multi-tenancy at the right level of the stack in the database rather than multi-tenancy in the application which creates real security problems which I’m not going to go into. But we think we have a huge advantage over someone like Workday that doesn’t have a database. Workday kind of build their own little database. And that’s what you’re buying into when you buy Workday. We built our own little database. It’s called Oracle. Workday has its own programming technology. We haven’t, we used this programming technology called Java.”

These are some of the advantages of the cloud in memory capabilities:

“I think a lot of things that used to take a long time will take less time. So manufacturers will run MRP much faster than they used to. People that used to get reports overnight will get those reports instantaneously so they’ll have access to more information. I think there are some very interesting applications in terms of security for immediate detection of intrusion, being able to analyze the data so quickly we actually can do a better job in security, that’s one of the big things that we’ve been working on for some time. I think there are a lot of existing applications that you used to wait overnight for. You’ll get that data instantaneously, and then there’ll be a host of new applications.”