Oracle Corporation (NYSE:ORCL) Q2 2018 Earnings Conference Call - Final Transcript

Dec 14, 2017 • 05:00 pm ET


Oracle Corporation (NYSE:ORCL) Q2 2018 Earnings Conference Call - Final Transcript


Loading Event

Loading Transcript


Welcome to Oracle's Second Quarter 2018 Earnings Conference Call. Now I'd like to turn today's conference over to Ken Bond, SVP.

Ken Bond

Thank you, Holly. Good afternoon, everyone, and welcome to Oracle's Second Quarter Fiscal Year 2008 (ph) Earnings Conference Call. A copy of the press release and financial table, which includes 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 Chief Technology Officer, Larry Ellison; and CEOs, Safra Catz and Mark Hurd.

(Forward-Looking Cautionary Statements)

Before taking questions, we'll begin with a few prepared remarks. And 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 Q2. I'll then review guidance for Q3 and turn the call over to Larry and Mark for their comments.

As you can see, we had another excellent quarter. Customer adoption of our cloud products and services continues to be very strong, and what we have called our on-premise business remains robust. Bottom line, our transition to the cloud is going well. Despite the currency benefit being less than my guidance, total revenue was more than the high end of my guidance range, and earnings per share was at the high end, even at a higher tax rate than expected.

Cloud SaaS revenue for the quarter were $1.1 billion, up 47% from last year. Fusion cloud revenue was up 56% for the quarter. Cloud PaaS and IaaS revenue for the quarter was $398 million, up 20% from last year. But just as a reminder, part of the Cloud Paas and IaaS business is our legacy hosting services, which don't share the same high growth characteristics as PaaS and next-gen IaaS services. This portion of PaaS, IaaS saw growth of 46% in CD and 49% in USD, while the traditional hosting services, which we are defocusing, were down nearly 10%. As traditional hosting services become a smaller part of total PaaS and IaaS, the underlying growth of PaaS and next-gen IaaS will be more visible.

I want to also take a moment to review the announcements we made in October of bring your own licenses, what we call BYOL, and autonomous database. Unlike the applications business, where customers move to SaaS subscriptions, stock buying upfront licenses and shelve their application support, BYOL customers can leverage their years of investment in Oracle Database and technology software and bring those licenses to the Oracle Cloud infrastructure instead of canceling their licenses and support and moving to rent new licenses. With BYOL, we are seeing a strong increase in our technology installed base as customers renew their unlimited license agreements, invest in more licenses and options and renew support. Because BYOL is now available and customers better understand their transition options to move to the Oracle Cloud, technology new software license revenue is dramatically improving from the declines we were seeing previously. We expect this trend to