Oracle Corporation (NYSE:ORCL) Q2 2017 Earnings Conference Call - Final Transcript

Dec 15, 2016 • 05:00 pm ET


Oracle Corporation (NYSE:ORCL) Q2 2017 Earnings Conference Call - Final Transcript


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Welcome to Oracle's Second Quarter 2017 Earnings Conference Call. Now, I'd like to turn today's call over to Ken Bond, SVP. Please go ahead, sir.

Ken Bond

Thank you, Holly. Good afternoon, everyone, and welcome to Oracle's second quarter fiscal year 2017 earnings conference call. A copy of the press release and financial tables, which include a GAAP to non-GAAP reconciliation and other supplemental financial information can be viewed and downloaded from our Investor Relations website. On the call today are Chairman and CTO, Larry Ellison; and CEOs, Safra Catz and Mark Hurd.

(Forward-Looking Cautionary Statements)

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-K and 10-Q and any applicable amendments for a complete discussion of these factors and other risks that may affect our future results or the market price of our stock. Finally, we are not obligating ourselves to revise our results or publicly release any revisions to these forward-looking statements in light of new information or future events. Before taking questions, we'll begin with few prepared remarks.

With that, I'd like to turn the call over to Safra.

Safra Catz

Thanks, Ken. Good afternoon, everyone. I'm going to focus on our non-GAAP results for the quarter, I'll then review guidance for Q3, as well as give some direction on FY17 and turn the call over to Larry and Mark for their comments.

Clearly, we are pleased with our results as both total revenue and earnings per share exceeded the midpoint of my guidance. Our pivot to the cloud has been phenomenal. We continue to see accelerating growth rates in our cloud business, while our key competitors are slowing down, but more importantly, the increase in revenue from our cloud business is starting to overtake our new software license business decline.

Our cloud revenue will be larger than our new software license revenue next fiscal year, when the transition will be largely complete. While the investments we've made to transition our business to the cloud have limited our ability to expand earnings per share near-term, they've been important to ensure that Oracle remains the technology leader.

With cloud overtaking new software license revenue, we expect our business to once again exhibit the same pattern we delivered over the previous decade as a license business, increasing revenue that results an EPS and cash flow that grow even faster.

We continue to use constant dollar growth rates on our quarterly calls, so that we can have some measure of consistency across the quarters, as well as to reflect how we measure the business.

This quarter, the effects of currency movement were more than what I had included in my guidance, mostly because of the strengthening U.S. dollar after recent elections in U.S. and Europe, resulting in currency headwind of 1% in total revenue, 2% in some revenue categories and one penny to EPS. The devaluation of the Egyptian currency last month also negatively impacted EPS by a