Oracle Corporation (NYSE:ORCL) Q1 2020 Earnings Conference Call Transcript

Sep 12, 2019 • 05:00 pm ET

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Oracle Corporation (NYSE:ORCL) Q1 2020 Earnings Conference Call Transcript

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Presentation
Executive
Safra A. Catz

and accounting for nearly three-quarters of total Company revenues, and most of all of this revenue is recurring. Cloud and On-Premise License revenues were $812 million, down 6%, coming off 15% license growth last quarter. And as a reminder, because Q1 is normally our smallest quarter, we tend to see more volatility in new software license growth rates in Q1.

In terms of ecosystems, GAAP applications ecosystem revenues were $2.8 billion, up 3%, with Fusion apps up nearly 40%, including Fusion ERP up mid-40s and Fusion HCM, up low 30s. NetSuite ERP was up in the mid-20s. Vertical SaaS was up high single digits, while Data Cloud was down in the low teens.

On a trailing 12-month basis, more than 90% of our application ecosystem revenue is now recurring. GAAP infrastructure ecosystem revenues were $4.8 billion, up 3%, with total database revenue up similarly, highlighted by BYOL and Autonomous Database revenues, both up triple digits, but off a small base for now. On a trailing 12-month basis, more than three-quarters of our infrastructure ecosystem is now recurring.

In terms of geographies, we saw double-digit revenue growth in cloud revenue in all regions with especially strong results in Latin America and Asia Pacific. The gross margin for Cloud Services and License Support was 86%. And as we continue to scale and grow, I expect our cloud gross margins will go higher, driving an acceleration in our gross profit growth.

Total revenue for the quarter were $9.2 billion, up 1% from last year; non-GAAP operating income was $3.8 billion, up 4% from last year; and the operating margin was 42%, up from 41% last year. The non-GAAP tax rate for the quarter was at 9.8%, slightly below our base tax rate of 20%, and EPS was $0.81 and up 16% in constant dollar and 14% in USD. The GAAP tax rate was 13.9%, and GAAP EPS was $0.63 and up 13% in constant currency and 11% in USD.

Operating cash flow over the last four quarters was $13.8 billion. Over the last four quarters, capital expenditures were $1.7 billion, and free cash flow was $12.2 billion. We now have approximately $36 billion in cash and marketable securities, and the short-term deferred revenue balance is $10.9 billion. As we've said before, we're committed to returning value to our shareholders through technical innovation, strategic acquisition, stock repurchases, prudent use of debt, and the dividend.

This quarter, we repurchased 89 million shares for a total of $5 billion. Over the last 12 months, we've repurchased 611 million shares for a total of $31 billion. And over the last five years, we have reduced the shares outstanding by more than 25%. The Board of Directors increased the authorization for share repurchases by an additional $15 billion and, again, declared a quarterly dividend of $0.24 per share.

My guidance today is on a non-GAAP basis and in constant currency; assuming current exchange rates remain the same as they are now, currency should have a 1% negative effect