Oracle Corporation (NYSE:ORCL) Q2 2019 Earnings Conference Call - Final Transcript

Dec 17, 2018 • 05:00 pm ET

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Oracle Corporation (NYSE:ORCL) Q2 2019 Earnings Conference Call - Final Transcript

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Presentation
Executive
Safra Catz

remaining performance obligations are well referred to as contract backlog will be in the 10-Q and is now $30.1 billion, of which approximately 62% will be recognized as revenue over the next 12 months. We remain committed to returning value to shareholders through acquisitions, internal investments and the return of capital with stock repurchases and dividend. This quarter we repurchased 203 million shares for a total of $10 billion. Over the last 12 months we've repurchased 602 million shares and reduced the absolute shares outstanding by over 12%. The Board of Directors again declared a quarterly dividend of $0.19 per share.

Turning to currency, I expect the strengthening US dollars will increase the currency headwinds to 4% for Q3 and a $0.03 headwind to earnings per share. So, for Q3, my guidance is total revenues are expected to grow 2% to 4% in constant currency. I continue to expect that second half revenue growth will be higher and we remain committed to delivering a higher constant currency growth rate for all of fiscal 2019 when compared to last fiscal year. You may remember that last year's Q3 EPS included some onetime evens which I called out at the time which helped by about $0.03 last year. In addition, my EPS guidance assumes a base tax rate of 20% which is nearly 4 points higher than last year because last year's tax rate was a catch-up quarter for the new tax law.

Certainly, onetime tax events could cause actual tax rates for Q3 to vary from the bank's rate, but I expect that in normalizing for these onetime events, our tax rate will average around 20% for fiscal year 2019. Okay with all that, for this quarter non-GAAP EPS in constant currency is expected to grow between 7% to 9% and be between $0.86 and $0.88 and non-GAAP EPS for Q3 in USD, in US dollars is expected to grow between 3% to 5% and be between $0.83 and $0.85. And while my double-digit constant currency EPS growth guidance for fiscal year '19 has not been a specific number, I can tell that internally I have in fact raised my fiscal year '19 constant currency EPS growth rate estimate.

And with that, I'll turn it over to Mark for his comments.

Executive
Mark Hurd

Thank you, Safra. Solid quarter for us from top to bottom. Total revenue was up 2% in constant currency with cloud services and license support up 5%, and of course, EPS up 19%. It's the seventh consecutive quarters we've had reported double-digit EPS growth. Apps had a spectacular quarter, we had great momentum growing 7% for the overall ecosystem over $11 billion in trailing 12 months and 91% of that is now recurring revenue. We continue to grow revenue faster than the market, and we have an enormous opportunity ahead of us, particularly in ERP as well as HCM.

To Safra's point about the numbers, let me give you some numbers about our SaaS business. Overall ERP and HCM now