- Total Revenue: $13.3 billion, up 8% from last year.
- Total Cloud Revenue: $5.6 billion, up 22%.
- SaaS Revenue: $3.5 billion, up 10%.
- IaaS Revenue: $2.2 billion, up 46%.
- Total Cloud Services and License Support: $10.5 billion, up 11%.
- Application Subscription Revenues: $4.8 billion, up 7%.
- Strategic Back-Office SaaS Applications: Annualized revenues of $8.2 billion, up 18%.
- Infrastructure Subscription Revenues: $5.8 billion, up 14%.
- Infrastructure Cloud Services Revenue: Up 46%, annualized revenue of $8.6 billion.
- OCI Consumption Revenue: Up 56%.
- Cloud Database Services: Up 23%, annualized revenues of $2.1 billion.
- Database Subscription Revenues: Up 4%.
- Software License Revenues: Up 8% to $870 million.
- Gross Profit Dollars of Cloud Services and License Support: Grew 9%.
- Operating Income: Grew 14%, operating margin was 43%.
- Non-GAAP EPS: $1.39, up 17% in USD, up 18% in constant currency.
- GAAP EPS: $1.03, up 20% in USD, up 22% in constant currency.
- Operating Expenses Reduction: $197 million due to change in accounting estimate.
- Cash and Marketable Securities: Nearly $11 billion.
- Short-term Deferred Revenue Balance: $11.5 billion, up 2%.
- Operating Cash Flow for Q1: $7.4 billion.
- Free Cash Flow for Q1: $5.1 billion.
- Trailing 12-Month Operating Cash Flow: $19.1 billion.
- Trailing 12-Month Free Cash Flow: $11.3 billion.
- Remaining Performance Obligations (RPO): $99 billion, up 52% in constant currency.
- CapEx for Q1: $2.3 billion.
- Cloud Regions: 85 live, another 77 planned.
- Stock Repurchases: 1.1 million shares for $150 million.
- Dividends Paid Over Last 12 Months: $4.4 billion.
- Quarterly Dividend: $0.40 per share.
Release Date: September 09, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Oracle Corp (ORCL, Financial) reported total revenue of $13.3 billion for Q1, up 8% from last year.
- Total cloud revenue increased by 22% to $5.6 billion, with SaaS revenue up 10% and IaaS revenue up 46%.
- The company announced a new partnership with Amazon Web Services, expanding its MultiCloud strategy.
- Oracle Corp (ORCL) achieved a gross margin of 43% and operating income growth of 14%.
- The remaining performance obligations (RPO) grew by 52% in constant currency, indicating strong future revenue potential.
Negative Points
- Oracle Corp (ORCL) exited the advertising business last quarter, which lowered total cloud applications revenue by 2% this quarter.
- Despite strong demand, supply constraints continue to outstrip the company's ability to meet it.
- The company expects fiscal year 2025 CapEx to be double that of fiscal 2024, indicating significant capital expenditure.
- The gross margins of OCI are currently lower compared to other segments, although expected to improve over time.
- The company faces ongoing risks and uncertainties that may cause actual results to differ materially from forward-looking statements.
Q & A Highlights
Q: Larry and Safra, there's a lot of good stuff here, but I'd like to ask a question on margins. You keep putting up strong cloud numbers, especially the OCI numbers that look really difficult to do. How should we think of overall margins versus profit for the entire company going forward?
A: (Safra Catz, CEO) Our business is starting to get real scale, and our OCI gross margins are increasing. The automation of OCI management helps us make more money as we grow. Our SaaS business also benefits from OCI expansion. (Lawrence Ellison, Chairman & CTO) Moving Fusion to Autonomous Database will save costs and improve margins. Our cloud's high level of automation and efficient networks contribute to better margins.
Q: Larry, how do you envision the market transitioning from the AI training phase to the AI inferencing phase?
A: (Lawrence Ellison, Chairman & CTO) The race to build better neural networks is ongoing and costly. Training AI models will continue to be a significant investment. Specialized models for specific applications, like medical diagnostics, will also require continuous training. The AI business will keep growing with no slowdown in sight.
Q: How do you think about the migration of database workloads from on-premise or cloud customer to the public cloud with the new hyperscaler agreements?
A: (Lawrence Ellison, Chairman & CTO) The availability of Oracle databases on AWS, Microsoft, and Google clouds will accelerate public cloud growth. However, we expect private clouds to outnumber public clouds as companies prefer dedicated environments for security reasons. Our private clouds are identical to our public clouds, offering the same features and automation.
Q: Where do you see the monetizable value of GenAI on the app side, and how long will it take for GenAI to be a meaningful revenue driver?
A: (Lawrence Ellison, Chairman & CTO) GenAI is integral to our applications, especially in healthcare. AI assists in diagnostics, electronic health records, and more. AI is embedded in our systems, making them more efficient and secure. The monetization of AI is already happening through our expanded healthcare business.
Q: Could you update us on supply availability and your ability to stand up data center infrastructure efficiently?
A: (Safra Catz, CEO) Demand is outstripping supply, but we are expanding rapidly. Automation helps us lay out data centers efficiently. We are also securing larger locations to meet demand. (Lawrence Ellison, Chairman & CTO) Our private clouds are identical to our public clouds, fully automated, and scalable. We are prepared to manage thousands of data centers.
Q: How is being more secure helping to win large OCI deals, especially with governments?
A: (Lawrence Ellison, Chairman & CTO) Security is a major focus. We are eliminating passwords and implementing biometric authentication. Our Zero Trust Packet Routing technology ensures secure network communications. Automation reduces human error, enhancing security. AI-based security systems are crucial in defending against cyberattacks.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
