Please welcome Senior Vice President of Investor Relations, Ken Bond.
Wow. Real people. Wow. Luis, who works with me, we're the IR army at Oracle, the two of us. He just reminded me yesterday. He goes, "You know, we haven't seen each other in three years." It just clicked because I see so many of you, like, on Zoom and we, you know, we e-talk all the time, and you feel like you're connected, but it's really been three years since we actually physically connected. It's great to see you all here. Thank you for coming. I'm gonna do a little bit of housekeeping. I'm gonna walk you through some of your favorite slides because I know this is the one everybody always comes for. I know it's that slide. Just some logistics. If you're not on Wi-Fi, the password is CloudWorld. You've got electrical power.
The bathrooms are out the door in the hallway. You can find your way, so we'll cover that. Let me talk a little about what we're gonna cover today. We're gonna start. Jason's gonna come up in a moment here, and many of you probably remember Jason from his time in the investment community. Jason now runs our revenue operations, and he'll talk with you all about, if you didn't get a chance to go to the keynotes, what are some of the key themes that we kinda covered this week. Jason will, in turn, bring up some of our innovation and development leads, and we'll talk about some of the themes, but we'll talk about it a little differently than we have in the past. In the past, we'd say, "Let's talk about database. Let's talk about Java.
Let's talk about apps." This time they're all coming up together and they're talking about broader themes, end-to-end solutions and multi-cloud. They'll talk more about that. Now, if you think about the development guys being more, if you will, like, a little theoretical, we're gonna then bring up Jonathan. Jonathan will come up and talk to you about real customers. Jonathan leads our global strategic accounts group, and he, in turn, basically works with those customers in taking these products, the technology and the solutions and bringing them together. He'll give you, like, a real world perspective with real customers. We'll go to a break. Following the break, Doug Kehring will come up. Many of you already know Doug. He's our EVP of Corporate Operations. Doug will basically walk you through some of the numbers.
What we're seeing, what we expect to do, why we see such great opportunities, and then he'll leave some conclusions on what we think we can see in the future. Following that, Safra will come up, and she'll speak with you all about, from her perspective as the CEO, things that she's seeing and why some of the things that we're pretty darn excited, and hopefully you'll see the same. Following that, Larry will come on up. He'll do his normal traditional Q&A. Which brings you all to your favorite slide. I need to do this. What I'm gonna do is I'm gonna do this one time. Any speakers that are presenting the slides, you'll see the slides up there for just a quick moment.
They'll just say, "This is the slide Ken was talking about." As a reminder, today, we will be making forward-looking statements today. These forward-looking statements, they're subject to risks and uncertainties. Many factors can affect these forward-looking statements, and it can cause actual results to differ from what we're telling you. A detailed discussion of these factors and other risks, you can find those in our filings with the SEC, specifically Form 10-K and Form 10-Q. All information being presented today is current as of today, and we take no obligation to update anything that's subsequent to the events and discussion today. Okay? Additionally, you'll see some people, predominantly Doug, will make reference to some non-GAAP measures. We do this normally. It's part of our operating practice. Just keep in mind that we will be using non-GAAP measures in the conversation today.
With that, I think let's now shift right into the discussion. Let me bring up Jason Maynard, EVP of Corporate Operations.
All right. Good morning, everybody. Welcome to Las Vegas. Welcome to Oracle CloudWorld. It is so great to see so many friendly faces, old faces from the past. I really appreciate you guys coming out today. I'm gonna spend a few minutes and give you a quick overview of what we've been talking about, what we've been engaging with our customers about over the last few days, and then I'm gonna bring up the panel, and we can dive into some of the announcements and some of the great technology that our teams are building. We've had a great time in Las Vegas. This event is really all about our customers, right? This was the first gathering, as Ken said, since 2019. The show was oversubscribed. We had 14,000+ people here in attendance.
We had another similar amount online in Oracle TV. If you missed anything, you can go back and watch the keynotes online. I was joking. Monday morning, everybody was here. They were, like, ready to go. They were having meetings already. I was a little nervous. I came down Monday morning and I was like, "Did I miss the opening of the show?" Like, they were ready to get going and start talking to us. Tuesday, we kicked off. Safra Catz gave a great keynote, really about our dedication to our customer success. Larry obviously followed on Tuesday afternoon. We talked about multi-cloud, and we really talked about end-to-end automation. How we're automating entire industries. We're not trying to just solve one little point problem, one little niche, if you will. We are tackling enormous challenges.
The theme of a lot of this was how do we solve those most complex problems that our customers are facing? The next day, we had Steve Miranda talking about application innovation. Simultaneously on the application front, Mike Sicilia was in Kansas City for the Cerner Healthcare Conference. He did double duty flying back and forth between Kansas City and Los Angeles, again, to talk to those customers about how we're modernizing, automating, and improving healthcare delivery. Clay Magouyrk was talking about multi-cloud and Oracle Cloud Infrastructure, all the momentum we're seeing in that area, and some of the new innovations that we released. I'm sure he's gonna talk about Alloy and some of the great new service delivery capabilities. There was a ton of new technology and announcements.
We've got a lot of great things that we brought to bear in the area around the core database with MySQL. Tremendous innovation that we unleashed over the last few days here. The theme, though, how do we solve our customers' problems? It really resonated throughout the event. We were oversubscribed with in-person meetings. We had to find more space. Our customers are dying to get and learn more, and that you're gonna hear that a lot over the next few sessions. An amazing event. We're gonna be back here in Vegas next year again, bigger, better. As Safra said yesterday, more and more and more and more. It's just gonna be a lot more. We hope to see you again, back here in Las Vegas next year.
With that, I'm gonna bring my colleagues up, and we are gonna have a little bit of a discussion here about all of the things that we talked about this week. Gentlemen. There's no particular order here. We can all sit down. All right. As Ken said, oftentimes we'll have these presentations where we'll tackle one little silo. If there's one theme that I want you guys all to walk away with is we're solving end-to-end problems. We're tackling things in the entirety. We do that as a team. We think of it as one Oracle. How do we take all of our technology, bring it together to solve a problem?
What I wanted to do, maybe to kick it off, I'm gonna start with Edward here to my right, is from your vantage point with the areas that you're responsible for, how does that fit into solving this end-to-end problem?
Well, all right. You know, I think actually kinda you sort of look at the history of Oracle, you know, what we've always tried to do is, you know, manage, you know, all of our customers' data through all of its entire life cycle, right? Over time, what's happened is the technologies and approaches and techniques and opportunity to do that has gotten richer and richer and richer. You know, cloud computing is the ultimate step for us. I mean, we can completely handle the entire problem for our customers and do it very well and do it very securely. It gives us chances. It gives us a way to engineer solutions that just aren't possible in legacy IT approaches.
One of the things I'm responsible for is MySQL. The MySQL HeatWave cloud database achieves amazing performance for analytics. It does a great job at OLTP. You know, that's not something that we were ever able to do with the MySQL on-premise version.
That's great. Clay, you had a lot yesterday that you covered in that area, so love to hear your thoughts.
Yeah. Well, I think that the fact that Oracle is both an infrastructure and an application provider is something that most people don't fully realize the benefits of. Obviously, you know, OCI is a great infrastructure that many of our customers are choosing. Fusion, NetSuite, our vertical industry apps as well as recently with the changes we're making, things like Cerner, also are entire platforms that our customers are betting their businesses on. I think that what's really exciting about what we're doing across all of Oracle is that we can actually marry those together. Sometimes that means being able to build regions where we need to all around the world.
Sometimes that means being able to integrate the actual application to the service with things like Fusion, Analytics Warehouse, our Digital Assistant, and much more. The net result, though, is that we're actually solving end-to-end customer problems across the entire application stack. That's something that I think is incredibly unique about what we're doing at Oracle.
Clay, do you wanna weigh in a little bit from a database perspective?
Sure. You know, it's an interesting thing this week. It's been like a repeated conversation. I've been talking to a lot of customers, and a lot of it boils down to this complexity of data management. There's all this proliferation of data management products. You know, there's stuff for machine learning, there's stuff for graph, there's stuff for spatial. It's just growing and growing. The conversation I'm having is, "Hey, this is getting really complicated. I'm deploying this stuff all over my company, and it's like I'm subscribing to all these little TV streaming things." After a while, you know, the first one felt good. By the time you get to the tenth one, the bill is coming due and the complexity is growing exponentially.
I'm having more and more conversations with people saying, "Hey, this is crazy. Can you guys do this?" Actually, we can, you know. You know, what's happened is from the bottom up of the organizations, they've brought in all these little specialist products. In fact, we have all this capability, whether it's spatial, whether it's graph, whether it's JSON, whether it's machine learning. We built it in, and we've been working on this stuff for years. They're like, "Hey, you can solve the whole problem. I don't have to keep moving my data around. I don't have to keep installing new products, maintaining, patching, doing all this stuff." Yeah, the you know. It's interesting. As budgets kind of get examined again, we're in a budget examination process.
People are like, "Why do I have 20 streaming services?" It's like, "Do I really need all this? No way. This is a bad idea." Yeah, it's very interesting. That conversation is repeated over and over again. It's very topical.
Yeah, no. Steve, it's interesting point, apps and tech deliver end-to-end. Maybe you had a, you know, a lot of great stuff yesterday talking about B2B Commerce and the application innovation.
Well, I think the first most important thing is we sit on our apps just on top of everything that these three gentlemen, their teams do and build, and we don't have to worry about it. I think that the customers that I'm talking to are CFOs and CHROs and head of supply chain, head of sales. Frankly, they don't understand most of what we're doing, but they just know they get it faster, more reliable, more secure. Then when you look at our apps competitors, we focus exclusively on solving the business problem, how to make ERP better, how to make HCM better, how to make life. We just sort of inherit for free-
You know, Clay puts up four more data centers, and I could tell our customers we're in four more countries in the world. You know, Java gets a little bit faster, and our apps get a little bit faster, and with really no effort on behalf of us or our customers. That's a significant difference that none of the other application vendors have. It allows us to just focus on just solving the business problem and, you know, abstracting away a ton of complexity, which is a ton of value to customers.
Yeah. I think one of the interesting things is the unique differentiation of having apps and tech, but also having industry apps. Like, maybe cover a little bit of the range that you
Yeah, sure. Much like Steve said, we consume all of the infrastructure. In fact, we've almost neatly walked the stack here. Almost accidentally here going through it. We consume all the infrastructure, and we actually even consume some of Steve's applications as well, like CX, for example, where we're building vertical functionality for utilities, for hospitality, for communications right inside our CX product, not as a separate product, but inside. I think, you know, one of the other things that's become unique since we own so many bits, if you will, the industry applications, the horizontal applications, the infrastructure, is to be able to deliver that. All of that as a service is very compelling for our customers because we're the only one in the space that can deliver the entire thing as a service.
We take it a step further, you know, particularly sensitive in healthcare and financial services, where data sovereignty is, you know, a key factor. Our strategy is to build a large number of small data centers. Without doing that, it'd be very difficult to digitize the world's healthcare systems because the data, personal health information, can't leave the borders of a country. Lots of other folks are just unwilling to build data centers or unable to build data centers at the level and scale that we are throughout the world.
I think that, you know, this sort of end-to-end thing comes together in so many different points, whether it's, you know, the graph database that was created that we use for our anti-money laundering cloud, whether it's sovereign infrastructure from Clay's team, horizontal and vertical integration between ERP and HCM. You know, it all comes together very neatly as a service, and I think gives us a very unique advantage. Our customers have a lot of value, which is the most important part.
I think one thing that came up, too. Mike mentioned the industries. Having the industry applications and the industry focus, my team, even though we built larger horizontal applications, we learn so much from getting into the customer's actual operating system. When you talk to a hospital that's running Cerner, and then they tell you how they actually use supply chain, it's a vastly, you said what do you call it, theoretical as opposed to some. I mean, it takes away from theory into really practical what's happening. It's a huge advantage for us in terms of what we have to build and in terms of verticalizing and really making it industry specific. There's nothing like talking to a customer who's using the actual industry applications.
Yeah. One of the things I wanna touch on the application front, Steve, yesterday, and this is a shameless plug, watch the keynote again. There was tons of great stuff in there. Even though we're doing end-to-end, we're still even open from an application standpoint. I think it's worth covering what were your announcements yesterday around our B2B Commerce.
Yeah. Well, the major announcement was B2B Commerce. Essentially, it's taking what the traditional borders are for ERP and fully automating. I mean, it's really the theme of the whole conference, right? Fully automating the process, not just having hospitality system and ERP system. In this case, not just having an ERP system. All of our customers, 100% of them, have the ERP and payables, but they connect to a bank, and that's a very laborious offline process. They also connect to oftentimes a logistics provider, FedEx, our partner, or DHL, UPS, other carriers. You have this semi-automated process, kind of the B2B transactions in one ERP system talking to another, talking to financial services, talking to a logistics provider.
By the way, most of which running in our cloud, and then some running in other clouds. When Clay talked about multi-cloud, so that's what we're doing, kind of taking that concept of full end-to-end automation, extending it beyond our traditional borders, not doing it ourselves, doing it with partners, you know, we think two of the most marquee partners in the world in their space, and interoperating, you know, in an open way, as Clay talked about, in a multi-cloud fashion. Because the reality is, even though today a customer has to go offline and go to a bank and offline into the FedEx portal, they're in a cloud as well, and we're just connecting through their APIs. FedEx, ironically, happens to be in our cloud. We're literally just putting systems together, to end-to-end automation.
Yeah. Mike, I was gonna ask you, in the healthcare industry, and now that Cerner's part of Oracle, what are some of the opportunities you're seeing to, if you will, bring that level of end-to-end to healthcare?
Yeah. I think just as important as developing the applications and, you know, adding new features that help providers, doctors, nurses and patients benefit from the systems is actually what Steve talked about. It's defining the fabric for how all of these systems fit together. Since we have an industry reference architecture, which could be end-to-end Oracle, it doesn't always mean that it always will be, but we understand the ingress. We understand the egresses. We understand the APIs. What we're building here is a set of public APIs to make all this work. In the very same way that we're going to integrate Cerner to the supply chain application, we're using a public API that'll be published, and everybody else can use it too, if they happen to use Epic.
We actually hope Epic customers will come and join that because they'll get tremendous benefits from having a standardized public way to interface with supply chain management systems, with HCM systems, with payer authorization systems. I think that, you know, it's difficult if you don't own at least all of the pieces to define that industry reference model of working together. In the old days, we used to call them industry reference architectures in the on-premises stage. I think it's a great word, and I think we can bring it back.
Yeah.
The key is no private APIs. All public APIs, and that means that any bit of the stack can be subbed out for a competitor or partner as needed.
Yeah. It's interesting. Sometimes when we talk about being end-to-end automation, and we talk about having apps and techs, it can feel like we're talking about a closed system. I think it's really important that we stress that, which is there's an ecosystem of partners, there's ISVs, system integrators. Clay, you spent a lot of time talking about connecting clouds. Larry was talking about connecting clouds. Maybe walk us through a little bit of this multi-cloud view of the world and how it manifests throughout the technology line.
Sure. Well, I think to start with, the thing to understand is that the need for multi-cloud interoperability is not really new. If you go back to kind of what you hear from Mike and Steve, no one expects that just because they use Teams, they suddenly, you know, can't also integrate with Slack, or because they use Exchange, they can't interoperate with Salesforce. In the application space, there's a clear expectation that you're able to acquire these services and functionality and then make them work together. The reality is in cloud infrastructure, that's really not possible today. What's happening though is that the vast majority of customers already have multiple cloud infrastructure providers, right? They have two or three, and as the world moves forward, they're gonna have more.
What customers are asking us for is make that not just possible, make it easy. Make it really easy for me to move my workloads and use the best services available. Part of what we've been doing at Oracle is a multi-pronged approach. As Edward was talking about with MySQL HeatWave, you know, we have highly differentiated services that can really provide a lot of value to customers, and we make that available on our cloud. But also there's a lot of customers that run MySQL on AWS or Azure, so we wanna make sure that we make that same massive acceleration available for them there. That's just good business sense.
I think though there's a logical continuation of the world that we see, which is that, in the same way that, the isolation between clouds is so strong, as we break that down, I think it suddenly unlocks. You know, Oracle has a long history and a huge portfolio of really differentiated services and technology. As we connect that together, the adoption of those services just accelerates even faster.
That's great. Seems like a good point to spend a little more time talking about MySQL.
Yeah.
some of the announcements that we're doing there.
Yeah. I mean, I think there are two key things we announced. I mean, the first is what Clay mentioned. We're now generally available on AWS with MySQL HeatWave. It wasn't just a simple port. I mean, we really tuned MySQL HeatWave on AWS infrastructure so that previously we'd announced benchmark comparison against Redshift and Snowflake, and we're many times faster on AWS. We're still many times faster and less expensive, right? It gives customers on AWS a real choice, right? And the second thing that we announced, which I think actually is very significant is MySQL HeatWave Lakehouse.
Most databases, if you wanna analyze the data, operate on the data, query the data, you need to take the data and put it into storage, which is specific to the database. Lakehouse does not require you to do that. Instead, you can pull the data directly out of files stored in some kind of cloud object store directly into you know, HeatWave query nodes and operate on it there. This is the business that Snowflake is in. You know, their entire business is running queries on data stored in files. Well, now we do that with MySQL Lakehouse. To test it, we actually ran a 400 TB TPC-H benchmark.
Now if you're you may not be familiar with it, but the Transaction Processing Performance Council defines the benchmark. They only define it up to 100 TB because that's already ridiculously large. We had to actually blow through warnings on the data generator to get up to 400 TB. When we ran it on a 400 TB benchmark, we also ran a 400 TB benchmark on Redshift and on Snowflake, right? We were. I can't remember the numbers exactly. I think we were 17 times faster than Snowflake on that 400 TB benchmark, and we were, I think, 6 X faster than Redshift on that 400 TB benchmark. Now you might think, hey, what we did is we threw a massive amount of compute resource at this just to get an incredible number, right?
No, we ran the configuration that's 30% less expensive than the configurations we use for Snowflake and for Redshift.
Yeah. There's a theme here around saving money, getting more performance, and maybe that's a segue from one to talk a little bit about what we're doing with the core Oracle Database and some of the autonomous capabilities and how that, you know, what you've heard this week and playing out for customers.
Sure. I mean, our announcement, you know, one big announcement we had this week was we announced the beta of our next generation of Oracle Database. You know, the theme of that is app simple. We've shifted the simplification as, you know, a real primary goal. You know, we're traditionally known as mission critical, highly available, highly secure, scalable. That's been our focus for decades. We're really good at it, and we're not taking that away. Now we're really trying to focus a lot more on making it simple to develop new apps, address new developer needs. There's kinda four themes we focused on for that release. One is JSON. JSON's become very popular with developers. We've introduced breakthrough JSON technology that nobody else has even thought of, so that's interesting. Graph is another one.
Graph is becoming an increasingly popular tool to use for things like fraud detection, customer 360, that kinda stuff. Another one is microservices.
Simplifies app development a lot, but it complicates the data architecture a lot. We've taken another look at that, and we think, "Hey, we can fix this. We can make you get the win on the app side and the win on the database side." Then just general developer simplification. The whole theme, we wanna be mission-critical and super easy and autonomous database, of course, the thing we've been talking about for years, make the database self-driving, self-managing. It's a huge deal. Everybody can have a stock exchange level availability, scalability, performance for any database, no matter how small, no matter how big. It's kinda like you get your own jet plane, and you just tell it where to go and it goes. You don't have to compromise anything anymore.
That's been a big, big focus of ours.
Yeah. We've covered this idea of automating industries from end to end. We've talked about the benefit of having apps and tech, industry apps, horizontal apps, obviously, the franchise of the core database underlying all this, and we're doing it in an open manner. We also, Clay, you announced some new stuff in your keynote yesterday, and I think it'd be worthwhile to spend a little bit of time talking about Alloy and then also some of the at the very end of the keynote, some of the new capabilities with your APIs.
Sure. Well, one of the things that we've been investing very heavily in over the past few years is what we call OCI Dedicated Region. The idea behind that is really how do we take all of the functionality that we make available in our public cloud, and how do we shrink it down into a small enough package that individual customers can use that and deploy it in their own data center? We've been very successful with that. We have a lot of customers in production running very important workloads. For example, the Nomura Research Institute runs a large portion of the financial services in Japan on top of their pair of OCI Dedicated Regions. There are many more. As we did that, we also got a lot of feedback from customers.
What those customers were telling us is, "Hey, we think it's really great that I can go and, you know, use all of this technology. It would be really useful if I can take the same technology and extend it and offer it to my customers." You know, for example, conversations with NRI, Nomura Research Institute, they're like, "It would be great if we could, in addition to just our financial services cloud, we could offer this infrastructure, but we should offer it not only to our existing clients, but also to governments." We've been hearing that consistently from lots and lots of customers. Rather than just ignoring it, 'cause I feel like oftentimes in life, it's not about being too smart, it's about just listening when people keep telling you the answer to the test.
What we did is we said, "Well, what would it actually take if we wanted to have a good offering to solve that problem?" That's what we built, and we called it Oracle Alloy. It's a platform that takes all of the same core OCI public cloud functionality in a small footprint and allows someone to go out and operate it themselves, support their customers, brand it their way, price it. We think it's gonna be, you know, very exciting. One of the things that sometimes people ask is, "Well, do you see this as fundamentally competitive with your current offering?" The reality is we don't. If you look at the adoption of the cloud, we're still only, like, 30% penetrated into cloud workloads.
The vast majority of stuff still runs in people's own data centers or colos. What Oracle Alloy is about is how do we go in and unlock a lot of these latent workloads that just aren't available to move to public cloud. With Oracle Alloy and our partners that will operate and run this, we're very excited about the acceleration this is gonna, you know, allow for us all around the world.
That's great. We've got 15, 20 minutes left, and we wanted to make sure that we were gonna open this up to the audience as well, let you folks ask some questions. I'm sure everybody has some specific things on their minds. So I believe we have Ken with a mic. So if you have a question, raise your hand. Ken will get it in front of you. Tell us who you are and ask away.
Hey, guys. Alex Zukin here with Wolfe Research. I guess I'll start it with Alloy. That was a pretty exciting announcement. How do we think about that from who is it replacing, you know, providing the ability to provide a, basically, a public cloud service in an OEM fashion for, like, Nomura Research Institute? What's the opportunity there? How do you plan to tackle it? And then how does that. You know, also, there's been some supply chain constraints over the course of the last few years. Have those eased enough that you can, you know, if you get a rush of demand, you can actually facilitate it?
Sure. Well, I'll take the first part, and I'm glad I have my buddy Edward here who can talk about supply chain. I'll do the easy part of the question, and then I'm going to just slide aside. In all seriousness, I'll answer that question by using a time machine. If you go back 10 or 15 years ago, there were an enormous number of managed service providers and differentiated solution providers all around the world, and they ran essentially their own clouds. They would put it together with off-the-shelf hardware, some storage solutions, networking options, right? That's what those people did.
If you look at what's happened over the past 10, 15 years, all of those providers had to kind of give up on offering their differentiated solutions and said, "Okay, because we don't have the technology of the cloud that we can offer this way. Instead, we have to kind of help people run their stuff on someone else's cloud." They had to give up the level of control and functionality they expected. What we're saying is, as we reintroduce that technology, suddenly those people, all of those business models are still valid and rational. We don't have to go out and kind of, like, create a market. This is actually the market was there, and it's been kind of squeezed due to lack of technology. I think there's lots of different geographies, right? When we talk about what's happening in,
Japan or Korea, we're talking about in the Middle East. There's a lot of customers that are very, very excited about Alloy. I think the way in which customers will adopt it and the way that this business model plays out is very similar to what happened in the past. I mean, even differently, if you remember when everyone was kind of trying to do their own OpenStack clouds. Well, I don't have to go convince that we don't have to. They all, everyone tried to do this. The problem was the technology wasn't there. Now that we have the technology solution, I think this is going to actually take off very, very rapidly. In terms of supply chain.
Yeah. I mean, things have basically almost entirely eased up. I mean, you know, the things that were a problem for us were actually not like big-ticket things like, you know, processors, right? I mean, it was little tiny components on boards, you know, like little electronic fuses, things like that. Because those are used in common with consumer products, the fact that consumer demand has really fallen a lot has freed up, you know, the supply chain for all those things. You know, we're at the point where it's basically no longer an issue.
No.
Thanks very much. Brad Zelnick with Deutsche Bank. Juan, your comments about the next generation of Oracle Database focusing on the needs of application developers and making it developer simple really resonated. I was wondering if you could just double-click a little bit more about some of the innovation. Like, Oracle's always been a database of choice classically for ISVs. Maybe talk about it from the ISV perspective versus the end customer. Every company's a software company today. Every company is developing apps. If you could double-click a little bit deeper, perhaps on some of the innovations, such as what you're doing with JSON as an example, you know, that's very unique and for meeting the needs of developers into the future. Thanks.
Yeah, it's kind of a long topic. You asked a big question. You want to double-click on all that stuff. Okay. Let me take a step back and just say again, what's happening. There's you know, in the last 10 years, a huge amount of new data technologies come into the market. It keeps it exciting for people like me because, you know, 20 years ago, people, "Yeah, database, it's done, whatever." Actually it's the exact opposite happened. There's been a proliferation of new technologies. What's happened is each one of them kinda comes with its own platform. You know, we have some competitors that are very fast to market with a point product. They're like, "Hey, I'm really good at this JSON thing. I'm really good at this graph thing." But they can't do everything else.
It takes us a little bit longer 'cause we integrate the whole thing. We have to make it all work together. We got to make JSON work with graph, make it work with machine learning, work with parallelization, work with all the security, work with the parallels, you know, everything. What we're doing is once we get that, the architectural simplicity. I mean, there's point simplicity and architectural simplicity. The architectural simplicity of not having 80 different databases that you gotta manage, you gotta secure. How are you gonna secure 80 different. I mean, you just can't ever secure that thing. The architectural simplicity of having an integrated solution is unbelievably great, right, for CIO. For developers, what they want is a simple way to get started and simple APIs.
That's not always been there with things like relational 'cause you have to format your data in tables and columns, and that's not really natural to developers. On the JSON side, what people have said is, "Hey, these documents are really easy for developers, and they make it really easy for them to get started and get going." What we've done in the last few years is say, "Hey, that JSON technology, again, it's like we can build that into the Oracle Database," and we have. In fact, we can go beyond what anybody else has done. We can, you know, we've introduced this concept of duality between relational and JSON, which gives all the flexibility of relational with all the simplicity of JSON.
You know, I talk about you can cook with basic ingredients or you can cook with cake mix. There's not really one or the other. We've been kind of the basic ingredient guys. Well, you can cook whatever you want. Here, we'll give you the platform. Other people have said, "Hey, that platform is kind of a pain. I'll give you the cake mix, you can make a cake." Now what we're doing is we're giving you both. You know, hey, you want something, you want a simple approach, we'll give you that. Underlying that is the power of a generic platform where you can make anything you want. Anyways, I'm not sure if that answers, but.
Just one thing I would add to that, which is that you mentioned things that developers want, but another thing they want is ease of management, right? And the thing about APEX, right, is because it's actually running right out of a database, there's no additional thing to manage like in a middle tier, right? And so that means, you know, they don't have to create an architecture for how do I fail over the middle-tier application state. I mean, it's very, very simple, right?
Right. Yeah. The other thing I would add is for simplicity, Autonomous Database, you know, we initially had it in our public cloud. It's great. It makes it super simple to use, you know, the world's most sophisticated database. We've taken in the customers with Cloud@Customer. Now multicloud makes it available for developers that are committed to other clouds. It's a big deal, that multicloud thing is a big deal. A lot of developers like to say, let's say you're married to Visual Studio from Microsoft. Well, you're not really gonna come to Oracle Cloud for Visual Studio. You kinda wanna stay on Azure for that. Now you can connect to Autonomous Database 'cause you can have the best of both worlds.
You can have your Visual Studio that you love, and you can have your Oracle Database that you love on the back end. That's actually a really big deal.
Well, you talked about ISVs earlier and then the ease of management. Ease of management for an ISV that's moving to cloud, Fusion being probably one of the largest, if not the largest, ISV on top of the database, it is orders of magnitude more important. 'Cause on-premise ease of management was one thing, but it was deflected across thousands of our customers' IT organizations. Now it's all on us.
Right.
1,000x.
We have some of the largest ISVs inside Oracle. Cerner, Micros
These are customers of Juan's. You know, think about things like JSON, and I think we work together to push to make it better. I mean, JSON support is massive for the healthcare industry. I mean, today, it's not uncommon that fax machines. I mean, you know, medical schools still teach people how to use fax machines today. If we can intercept at the time of a fax and have an OCR to JSON bridge, we have the ability to medically encode pieces of paper immediately and get rid of a very old technology that's going to die on the vine at some point, literally, and turn it into, you know, a JSON, you know, a JSON object in the database, which would be, you know, which would be just fine. Way better than a piece of paper.
We have the real industry reference use cases before we even go to market with brand-new databases, because we're using these things internally to power our ISV, our internal ISVs.
Mark Moerdler of Bernstein. Mike, MySQL HeatWave, heard a lot of buzz about it, a lot of interest in it. Obviously, the benchmarks you've talked about are really interesting. Can you give us a sense of where it is on the maturity level as a product adoption? How easy it is for customers who are MySQL customers to add HeatWave to it? You know, how do you see that growing? Where do you see the opportunities?
Yeah. MySQL HeatWave has been in production now for almost two years. I mean, we've had good customer adoption. A lot of customers use it for just transaction processing. A lot of customers use it for mainly analytics and you know, growing number of them are using it for both. I think you know, one interesting thing to think about is you know, every cloud database I know of, other than MySQL HeatWave and Oracle Autonomous Database, I mean, it's either transaction processing or it's analytical, right? You know, and there's really no such thing as a pure OLTP application. Every OLTP application has any kind of complexity at all, has complex queries it needs to run, right?
You know, MySQL users who come to use MySQL HeatWave, I mean, without changing their application at all, you know, they get significant speed ups on the complex query parts of their application. You know, we've actually seen that already on AWS, right? Because we had limited availability for a few customers for them to try it out. You know, I mean, the thing that they rave about is that speed up of complex queries that's in their OLTP application. You know, they really love that. You know, I think, you know, you ask how easy is it to move to it if I'm an existing MySQL user? Very easy. It's exactly the same query language, right?
One thing that we do is we track the current releases of the open source version of MySQL, which of course we produce and release, right? Every single kind of new, you know, SQL language feature or API that's part of that open source version is immediately available in MySQL HeatWave. That's, by the way, not true of the other MySQL-based cloud databases by other companies, right? They trail behind the open source version of MySQL. That means not only do they not get new features right away, sometimes they don't get security fixes right away. There are security bugs that we fixed in the base MySQL open source code that have not yet been rolled into those other databases.
Great. Karl Keirstead at UBS. I'll direct this question to Steve. Steve, you're probably not surprised by the success of Oracle's back office SaaS applications, but I think some investors are. What I mean by that is, this is not supposed to be the segment that's supposed to prosper as we head into an economic downturn. What typically happens is that these projects, back office, not customer facing, get deferred. Yet your SaaS business has gone through a huge acceleration. Workday sounds pretty good. For some reason, this category is holding up better. I'd like to ask you why is that? What's different this time?
I am surprised that Workday is holding up pretty good. I think even before any kind of downturn. The last time we met, I was talking to customers about the need for rapid innovation because of the constant change. At the time, it was disintermediation. It was the being, you know, replaced. It was, you know, Uber is gonna take us over or Amazon is gonna take us over. We saw a trend of most of our organizations had Y2K was when they adopted the big ones. They were either through M&A or I mean, just look at us. We did 80-odd M&A since we implemented in 2000, and we're a completely different company. We went from products to services.
We had, you know, from billing the database and support to, you know, tracking usage and billing, I mean, just completely different. We wanted to do, in fact, Clay wanted to do more pricing to keep up with our competitors, and that was fundamental changes at ERP. You couldn't do that with a ERP. We heard all these different stories, whether it was, you know, "Hey, we don't wanna be disruptive. We gotta go from product to services. We have M&A that we haven't really taken advantage of." Okay, COVID hit, and that added a whole other dimension where some people were talking about becoming digital with customers, but that just took off.
Now you get in areas like HCM where, I don't know if you got a chance to hear from J.P. Morgan and Hilton spoke on our behalf this week as well. You know, Hilton, I'm gonna get their numbers a little bit wrong, but, you know, they had a huge workforce and they furloughed a bunch during COVID, and they had this huge spike, and now they're dealing with, you know, employee shortages in different parts of the world. The recruiting just really magnified, talent management, comp magnified. It's been a convergence of all those pressures that have done it. One thing that I'll just add, in the B2B commerce announcement, we didn't spend any time having to convince J.P. Morgan or FedEx to partner with us because we have a real ecosystem now.
That Fusion ERP is an ecosystem. You know, if you watch Taka on stage from J.P. Morgan, I mean, pretty big size, payments business. I mean, his eyes lit up. He's got 1,000+ customers sitting there. I mean, major customers of ours running ERP. I mean, I think he got three leads last night at the party, but like, you know, significant companies. It's a major ecosystem that we have, and that's what we wanna leverage by expanding those partnerships. That's some of the reasons why we're sitting here.
I'll ask you a question, Steve, if you don't mind. How would you compare-
What could go wrong?
How would you compare the cost of implementing Fusion applications to doing an E-Business Suite upgrade?
Oh, orders less. I mean.
Right. Okay.
Yeah. I mean.
How would you compare the cost of managing Fusion applications?
Oh.
Compared to managing E-Business Suite on-premise, the application, the infrastructure beneath it, the networking, the data center?
Well, I mean, it's less expensive if you assume that you didn't touch anything from EBS.
Yes.
Meaning-
Yes.
All of our customers have moved to OCI Gen 2, so they've all got a brand-new data center, brand-new Exadata, brand-new version of the database, brand-new block storage, brand-new networking, brand-new op.
I think-
I think if an actual customer did that.
I think there's just a basic economic, right?
10x, 100. I mean, yeah.
I mean, listen.
It's 10x easily.
It's very cheap to upgrade into Fusion, right?
Yeah.
You wind up spending less money, right?
Yes.
Like, if you don't have a lot of money to spend, you know, moving to Fusion makes a lot of sense.
Yeah. That's a carrot-and-stick argument, right? I mean, I think oftentimes some people are there with like, "Hey, let's just save money in a downturn." That's kind of the stick, if you will. To be honest, it's a lot of times the carrot, where they're wanting new capabilities and be able to scale faster. That's what we're seeing.
Yeah. Innovation for a lower cost.
Yeah.
That's a good equation.
Look, I'm gonna throw one other thing in here, you know, I know a little bit about the NetSuite business. Let me tell you one thing that's been really interesting. When NetSuite was acquired, it was mostly selling into English-speaking countries, okay? Minimal data center footprint, and it was a roll-your-own data center. NetSuite runs on OCI, Autonomous Database, right? Gross margins go up, spend less money, global footprint, selling in more countries. Because of the leveraging all of the core technology, we're actually able to create new SKUs to be lower priced to service a broader total available market, you know. I know we all like TAM, right? TAM downmarket, TAM globally. We had TAM to the left of us, TAM to the right of us.
Because we moved to OCI, and we were able to take advantage of all of the innovation on the core technology. That's how you grow your market. That's how you grow the business.
We have time for one last question.
Thanks, Ken. John DiFucci from Guggenheim. I have a question for, I think, Juan and Edward maybe, and it's something that I've always wondered about. It was about 10 years ago, you came out with a database option called multitenancy, which I think is a little different than the way most people think of multitenancy in this room. I thought it was cool as hell, and I thought it was gonna be the next rack. If it happened, we didn't really see it, at least not the people in this room. The way you talked about bringing all these technologies, all these data stores together, and when I think about how the evolution of technology and the hyper-distributed nature of so-called modern architectures, it seems to play right into that.
I guess my question is, does multitenancy apply to everything you just talked about bringing all this? Can it apply to all that? A lot of people in this room think I'm really stubborn. Can I actually end up being right on that?
Yeah. Well, look, I'll give a short answer first. You're absolutely right, okay? Because, you know, Multitenant is the heart of Autonomous Database, right?
Yeah.
The way that we can deliver Autonomous Database service is because we have Multitenant. You're totally right.
Yeah. I mean, the cloud is a multi-tenant environment. I mean, we can have a dedicated cloud sometimes, but the bulk of cloud is lots of tenants sharing infrastructure in a highly secure fashion, right? That's what that kind of multi-tenant capability in Oracle kind of shown. A lot of the stuff that we've had, like Exadata also. Exadata is a huge differentiator for us in the cloud. It was originally developed for on-prem. It's a giant differentiator for us in the cloud. Multi-tenant is what allows us to create a very low cost, low entry point, you know, mission-critical database for any customer in the world.
Ten years ago, it was truly a differentiator. Is it still today? Does anyone else-
Absolutely.
Okay.
Absolutely. Yeah.
All right. We got one minute left, Ken.
Yes.
We're good.
Thank you.
All right, guys. Thank you guys very much.
Thank you, everybody.
Appreciate it. Thank you.
Okay. Should be a slide coming up here momentarily. Excellent. Couple things here. I don't know if any of you've noticed, but we have an issue with one of the lights. We've cleared the people so that nobody gets splatted. At lunch, we were planning to have you take your lunch right here and bring it back. We're gonna need to clear the room. We need to get some facilities people in here, take care of that, so we don't have a problem. Just as a heads-up. Now, over the weekend.
Here's what you're gonna be binging. This is what you wanna watch. Instead of watching your Netflix or your AWS or whatever it is that you watch this. You got a little bit of a taste here, but I was at a dinner last night, and I was telling people at dinner that, you know, in the 12 years I've been here now, I've never been more excited than I am right now. Everything is just lining up perfectly. I mean everything is just lining up perfectly. You got a taste of it here, but watch these videos. In particular, Clay and Steve, watch those. Watch the first part of Larry to get OCI. Watch the second part to go for a deep dive on healthcare. Watch Safra to see the customer focus. You know, watch TV, watch Oracle.
You're gonna come away extremely excited about like, wow. Now, some of you may say, "Well, we'll see." Fine, but you were told here at this CloudWorld how this is going to play out. You were told, I'm on record, it's all recorded. Thank you very much. What we'll do now is, we're gonna now shift to a conversation talking about reality, real customers, right? And what we're do-
Hope you can hear me okay. Yeah. Ken was really nice, and he called me and said, "Jonathan, do you mind talking a little bit about what we're doing with our largest customers in three of the largest industries in the world?" I said, "Sure, yes." He said, "Can you do it in 15 minutes?" Clearly I fell for it. Thanks for that, Ken. Look, just to introduce myself, and I think I need to click this for this to happen. Oh, that's Ken's slide. Just to introduce myself. Basically, what my job in Oracle is to spend time with our top 200 customers and earn the right to partner with them to solve their biggest problems.
These are big problems with big customers, and it leverages everything you've heard about so far. It leverages all of our technologies, all of our applications, all of our partners' applications that have become part of the solution. When you think about that, it is a big and exciting job, and I thank everyone for giving me the opportunity to do that. I would say this. Here's the nub of this. To get a customer from buying to calling us when they have a problem or they have an opportunity, that's the big shift, and that's what we're trying to achieve. I'm gonna talk about two things across three industries. First of all, how do we solve big problems today? I'm gonna talk about how we're partnering with our customers for the future. Right? I'm gonna talk about what it takes.
I'm gonna talk about what are the things that we have to focus on in order to be successful with that. This is probably my first mistake was that I didn't talk about telco when we had so many of our customers talking about telco all week. Hopefully you've missed their sessions, and you can have an abstraction of what they said coming from me. When I think about the telco industry today, when I talk to telco customers, they have a buzz. They have a spring in their step. They've gone through a decade of putting all the capital to build 4G networks all around the world and then let Netflix and Facebook and others take all the money. They suffered badly for a decade, right? Sometimes even more.
5G is coming, and 5G is their opportunity to come back. I don't know if you heard Scott Petty from Vodafone is talking the other day, and he was saying, "We have a decade to live or die as telcos." This is a dramatic moment. The opportunity is there, and it's great, but it isn't easy to do. When you think about 5G, everyone thinks about the network and how much the bandwidth is gonna be, and this is gonna be great. How do you monetize that? That's super complicated. Let me take you through a scenario, right? If you're running a 5G network, right, you might decide to run it on your own, you might decide to run it on cloud. One of the things that 5G allows you to do is to differentiate for level of service.
Today, all of us have a mobile phone, and we suffer exactly the same if we're in the wrong cell or in a different place and the network goes down. With 5G, you can pay more and get better service. Now, to do that, you need to prove that you can actually offer better service. A lot of the telcos are gonna want to run networks twice, on their own and in the cloud, on two clouds. That's a big challenge, right? Let's say you solve that problem, you put everything on OCI, put everything on another network, on another, cloud platform. Well, here's your problem. You've done that, but there's no provisioning system today in the world that knows how to provision into two networks at the same time. You gotta think about your provisioning platforms.
Now, you obviously need to change your billing platform because the concept of level of service does not exist in your billing platform, right? Your billing platform counts clicks, not a high-value click. Right? Now, you do that, you need to change your product catalog. You need to change that, you need to change your CRM systems, you need to change your ability to take the revenues. When you think about the small thing, oh, let's just monetize 5G, the big question is, how do I do that and not just solve one bottleneck in this big problem, but how do you remove all the bottlenecks, right? That's what we're trying to do. That's what we're working with our customers. None of them is doing all of it at the same time. We're starting in different places, and you see some of our good friends here.
I mentioned Vodafone already, but AT&T working with us on the ERP side. Vodafone is working with us across the board and also on the infrastructure and OCI side. The point is this is a big problem that they all face. Now, the second thing is, now that you've enabled yourself to monetize 5G, well, what are you gonna sell, right? If you look at it historically with 4G, the focus was consumers. In 5G, there's an opportunity to move to the enterprise space, but for that, you need to sell enterprises new things. Now, most of the telcos do not have the capability to do just that, right? Because they cannot develop industry applications that will be sufficiently valuable for people to pay for. They don't know how to sell industry applications.
We're partnering with a lot of the people who you see here on the screen on how to develop industry applications. For example, we partnered with, I'm trying to think what I'm allowed to say, with Telecom Italia around providing services to government. That contract's just been awarded. We've partnered with Orange, which is not on the screen, in West Africa to deploy healthcare solutions. You look at that and you think, "Oh, so how's that gonna work," right? The key is it's a partnership. They need the industry applications. We need the connectivity. Those things don't work today because the applications have not yet been fully developed, so we gotta do it together. If you think about the end-to-end challenge here, it's gonna take time because you're solving bigger problems.
I believe that Oracle is uniquely positioned because we're the only people who can do both, solving not just the network problem, but all the way through the value chain, but then develop industry applications on top. So if I through telcos, which is probably less risky, I'm gonna talk about banking, which I think is really interesting choice of an audience 'cause you probably know about it much more than I do. If I were to talk about banking at the very abstract level of what we're doing with our customers, there's obviously huge turbulence in the markets, and everyone talks about that, and you need to be very effective in a volatile market. There's also two more things that I think are putting huge pressure.
One is obviously fintech and the disintermediation of banks. Now, you will say to me, "Yeah, but the large fintechs are regulated," but they win a lot of mind share before they get to win a lot of market share. Before they're regulated, they're already destructing you. Whereas you as a bank, you're regulated and you provide the service. The reality is that you need to compete with fintechs, even if they're not successful. That's a tough business. Now, you then think about the fact that they're regulated, right? Regulation, we think about it as, oh, you need to manage your risk. Which is true, they do have to manage their risk, and I'll talk about that in a second. They also, this also has implications on their cost base, right?
If you just look at infrastructure, some of the bigger banks, infrastructure is 7%-9% of their entire cost base. Now, how do you move to cloud if you're operating in 90 countries? No one has cloud in 90 countries. How are you gonna do that where you have data residency issues and you have control issues? That's one of the things that we've helped. I think there's a colleague here from Deutsche Bank. Gordon from Deutsche Bank was talking about it with Safra the other day. We're helping to do that by bringing the cloud to all of their locations around the world. If you think about those pressures, I'll just talk about two things that we're doing. One is risk and finance.
People in banking say risk and finance very quickly, but the reality, it's a very big problem to solve, and most people focus on the finance. For example, you've heard from Macquarie. You've heard from SMBC. They're solving the finance problem. When it comes to risk and finance, the problem is slightly different. I'm gonna do that in one minute. When you look at managing risk, you're managing at a very granular level of data. You're managing at the transaction level. What's the risk of that transaction? How do I abstract the risk from those transactions into the position that the bank has? Then you report that to the regulators, to the rest. When you look at finance, you're looking at your positions from a completely different perspective. It's abstracted.
It's transactions coming in and out in terms of you and your own finances. It's a completely different thing. The problem is, how do you match the two things, right? How do you make sure that your risk data and your finance data corresponds to each other? That's a tough problem to solve. Now it says the top ten bank. Look, banks don't wanna talk about it when they're doing this because the regulators wanna see that it works, right? We're working with some of the biggest banks in the world. You will hear about it when they go through their entire regulatory approvals of these platforms.
We're working with them to solve this big problem using Mike's Oracle Financial Services Data Foundation, Steve's Oracle Fusion Accounting Hub, and linking all of that, and more importantly, linking all of those platforms to huge amounts of data sources, core banking platforms, payment platforms, Forex platforms, using our technology. That's a big problem that we're solving there on the left. Steve talked about J.P. Morgan. He talked about what we're doing in terms of payments. You may remember, it's been through the pandemic, we also partnered with HSBC. We linked HSBC's commercial banking services into NetSuite. Now, if you think about that use case, 'cause you've heard about the other one already, it's a really interesting situation.
NetSuite is the platform which I don't know if it's exactly the majority, but a huge share of companies that go through IPO in the U.S. use. Now, they go through IPO, they get all this money. First thing they need to do is go and globalize, right? Go earn new markets. Now, the challenge for them is they're small companies, right? They don't have the sophistication of treasury Forex managing across different countries. They can click on HSBC tab within NetSuite and link to their commercial banking to get Forex, to get treasury. Now, you think about embedded banking in this context, the simplification for enterprises is unbelievable. The value to the banks is unbelievable because they work directly with their customers. They're earning new customers with a click of a button, which for us is a hugely exciting proposition.
I'm gonna spend the last few minutes on an industry that usually, if we're honest with ourselves, we're not very well known in, right? You know, we talk about telcos, we talk about banking, we talk about healthcare, we talk about security, but we rarely talk about consumer packaged goods. If I look at the very highest level, the two main things that we're looking at with consumer goods customers, the one thing is the notion to go to direct to consumers. Now, you gotta remember that these guys are manufacturing stuff that you put in shelves, in supermarkets usually, right? They have huge dependency on retailers. When they upset their retailer, they put them in the low shelf in the back, right? No one finds it. That means that all their margin goes.
Nespresso is a really exciting story because what they did is they decided, Nestlé decided, Nespresso is a separate business unit, we're only gonna go direct, right? Our highest profit product is gonna be direct to consumers, and we're gonna avoid all of our distribution channels. That's a bold move, right? It's a $10 billion in its own right, and I think I don't think there are many hotel rooms around the world that don't have an espresso machine, which I'm grateful for. The point is they built these capabilities on Oracle Cloud@Customer. Now you say, "Well, but that's technology. You're talking about business here." Well, there is no direct-to-consumer app, right? You're talking about a small number of very big companies with very different requirements, and they all need to do it themselves.
What they do is they choose the best architecture to do that and then use components on top. Some of them from us, some of them they develop, some of them from other people. That allowed them to go direct to consumer. On the other side, that's a huge pressure on CPG companies, logistics companies, transportation companies, is sustainability. Sustainability is exceptionally important to these customers more than usual. The reason is the following. The reason they can go direct to consumer, the reason they can get the best place on the shelf in the supermarket is because of their brand. Now, consumers are way ahead of enterprises in terms of their genuine belief in the need for sustainability.
If they know that the product that they're buying is not sustainable, they will move to a different brand. They have to be sustainable, or the brand value is gonna diminish. From their perspective, they need to focus on that. They do that by making dishwasher powder more efficient, but they also do that in the logistics side of the business. Unilever deployed our Oracle Transportation Cloud across the world. Now, this is about optimizing how you get your trucks to the stores or to your shops. This is a bit different when you do it in India. I just came back from Mumbai a couple of weeks ago. Different in India than in Copenhagen, believe you me, right? You've got to do all of it, and they did that.
They deployed across the world to improve their cost base and improve their sustainability. That's just a whistle-stop tour in 30, 40 minutes of some of the exciting things we're doing with our largest customers in three industries. Thank you so much.
Please welcome Executive Vice President, Corporate Operations, Douglas Kehring.
Okay. It's great to be back, and it's really great to be back in person. It's been three years, as we were discussing earlier, and I think as you all have seen earlier in the day, amazing amount of technology that we've been able to generate in the last couple of years. What I wanted to do today is provide a transition. I'll talk a bit about the financials between what we're doing on the technology side and really in preparation for Safra and Larry to talk more on the strategy side. We'll just go through the usual safe harbor statement, if we can get the slides up, that Ken went through. Also, the non-GAAP financial measures, which I'll be using throughout my presentation today.
Let me start with kinda where we're at. It's a really exciting year, as I think most of you know. Our consensus expectations for this fiscal year is to reach the $50 billion revenue milestone. It's a huge hurdle here for Oracle because I think as most of you know, there are very few technology companies that have ever reached this marker. We're really excited at Oracle to talk about how we not only how we got to $50 billion, but really how we're gonna get even more in the bank going forward. Let me recap real quickly the mission because this is an encapsulation of what we discussed earlier and really throughout the week here.
That, again, is a very crystallized vision that we have, which is to focus on delivering end-to-end automation to solve the most complex business challenges for our customers. It's the reality of what we put together puts us in a very unique position. On top of that, before I talk about some of those differentiators, I just wanna talk about these three pillars that are up here that are really built around this idea that we've been moving from a product-based company to a services-based business. I've spent the last seven or so years at Oracle helping us internally transform to really focus on these things. On the first point here is the customer focus.
You know, we are, and I think as you heard from Jonathan and others, really oriented to how do we best help our customers? Part of that is having flexibility. We don't just have one model, for instance. We don't just have the public cloud. We've got public cloud, we've got on-premise, we've got hybrid, and we've got these dedicated region notions of putting it in your data center. It really helps us be in a position where no matter where an organization is in their life cycle, if it's a startup growing fast or it's a more mature company trying to just wring out efficiencies, doesn't matter where they're at, we can help them succeed on that mission using automation. In the middle is a really interesting concept which is around accountability.
You know, given the breadth of our portfolio, we're in a unique position compared to our competitors to be the single throat to choke. You know, but more appropriately, the single point of accountability, full responsibility. More of a positive statement as opposed to the negative one. The idea being is that we can get in there and really whatever it is, whatever their product technology requirements are, we'll make sure it works. We've got it, not only just the technology, but all the services that back it up, all the advanced customer services, our support organization, our development and engineering teams. All of these groups are now working in very close harmony in order to make sure that customers succeed. That really drives to the third pillar, which is value maximization.
You know, at the end of the day, none of this works if it doesn't drive an ROI for our customers. Part of what we've been doing is building on, for instance, as Clay has talked about, this common technology platform, which really allows us and our customers to run their workloads much more efficiently than they would have otherwise. Not only that, but they get all the great things like security, scalability, reliability, et cetera, that they've come to expect if it's in their own data center that they can get from Oracle. Now, what sets us apart? You know, as we look back and reflect on this week, you know, one of the interesting things, and I'll be recapping a lot of what you've already heard and try to crystallize it.
We really believe we're the most complete enterprise technology vendor that's out there. It puts us in a very unique position because we not only across the applications, I mean, you've heard about Steve Miranda and the back office strength, but we also have the CX applications. Then with Mike and the industry-based applications. You know, being able to harmonize all these things to uniquely help customers is something that none of our competitors can do. We don't stop there. We also have the full platform. Not just the compute and storage, but all the way through to the most popular database in the world.
When our applications, our own applications are built on this infrastructure, it creates those unique attributes that we talked about earlier that really drive all the ability for us to scale up and help our customers. Now we're seeing it even more and more because our ISVs are coming to us. I mean, a lot of what I spent this week, I also have part of the partner network where we're reinventing for our ISVs how they can really take advantage of the Oracle Cloud Infrastructure to run their applications, but also to then connect easily into our broader application ecosystem.
Now, it's not just about having the most complete enterprise portfolio in the, we think, in the world, but it's also the idea that it's a very big addressable market. When we look across applications and infrastructure, we're talking about $750 billion just on the software spend. That doesn't even account for other things like professional services and hardware. We're at $50 billion, targeting $750 billion just in software. There's still a lot of room for us to improve. We get to do that because we have one of the largest installed bases in the world. 430,000 customers run different parts of Oracle technology. Those relationships that have been built up over 40 years give us a very unique position in order to help them out.
Now we've been busy spending time the last few years really talking to them about customer centricity, and we've changed a lot of the culture, and Safra Catz will can touch on this or take questions on it. But, you know, we've transformed internally kind of how we help customers. It's really about diving in, helping customers succeed, and if we do a great job with that, the financials will take care of themselves. Given those unique differentiators, how does that help us from an investor standpoint or shareholder perspective to think about what the future holds? The reality is our growth is being driven principally by our cloud. It's really helping accelerate our revenue around two different pillars, which is one is cloud is becoming a bigger portion of our overall revenue.
If you look back at FY 2020, cloud was about 20% of our overall revenue portfolio. It's now expected this year to go over 30%. It's a big deal. The bigger that percentage gets, the more it's impacting our overall revenue growth. Because the other pillar of this is that our cloud growth is also accelerating itself. If you go back and look at organic growth rate in FY 2020, in the cloud, it was about 13%. As we've talked about publicly, we see that growing more than 30% this year. Not only is that cloud portion growing fast, it's becoming a bigger portion. You can see how it starts to impact the overall revenue acceleration. Let me draw.
I'm gonna spend the rest of my time drilling into why we believe we can continue to do this effectively, and it's around three different elements. One is growing our applications business through more and bigger transactions across not just horizontal, but industry-based applications. In the infrastructure, same thing, more and bigger cloud infrastructure transactions, not just across the OCI platform, but including our PaaS services like the database, the MySQL HeatWave and other initiatives we have. Finally, let's not kid ourselves, Oracle will never forget about profitability. We are focused on continuing to scale our operating margins as we grow our business. Let me dive into this further. Let's start. Again, I'm not gonna spend too much time, but I just wanna recap. Industry-based, very unique.
You can look at these points up here, whether it's food and beverage or communications or hospitality. We are doing things uniquely with these customers that almost no other vendor can do. Larry talks a lot about healthcare. He did that earlier in the week. This is really an easy way to bring it all together. You know, whether you're in the hospital and you need another test or you need another MRI or other equipment, you know, we start with our procurement and supply chain capabilities in order to make sure the right goods are in the hospital at the right point in time.
All the way through to the physician when they're meeting with patients and capturing clinical information and making sure that the patient is well taken care of and we secure the record. All the way through to extending how we can help a hospital through things like our life sciences applications, so that hospitals can bring on test patients, so that the people in their hospital can get access to new drugs and other innovations in order to help cure the problems they may have. All the way through to the back office, which includes obviously core financials, which we're great at, but through things like when do the nurses need to be there? When do the physicians need to be there? The complexity of the HCM space.
Again, we're able to do all of that uniquely with a hospital. When we do that, it drives efficiencies in terms of the ability to serve their customers better, but it also drives efficiencies as well. It's not us that have been recognizing how great we're doing or our customers, but industry analysts, as you can see here in the last two years, have rated Oracle applications as the cloud leader 58 x across our horizontal applications. Customers are voting with their feet. We now are over 45,000 customer count running Oracle Cloud applications with some of the best brands, as you see up there. Now I talked a little bit about that.
This slide's a little harder to see on the right, but I'll walk you through it to highlight on the financial side. As I said, it's about more and bigger. You see on the left, over the last four fiscal years, we've doubled the number of new and expansion transactions annually. On the right, it talks about that multi-pillar concept, which is something we really focus a lot on, is we don't wanna just sell ERP, we wanna sell the cadre of the of the pillars across the suite. That's up 75% or almost 75% over the last few years. Now, as you know, our Oracle Cloud applications are more mature because we're a lot earlier to the market than we were on the infrastructure side.
I think as you all know, relative to our $15 billion total ecosystem in applications, cloud is now a majority of that revenue. In fact, what's really growing that inside that cloud is that those strategic back office applications, including Fusion Cloud ERP, Fusion Cloud HCM, and NetSuite, are up almost 3 x the size from five years ago. That's really driving a lot of the growth, and now we're getting all the other applications, including things like the industry apps that are continuing every quarter, more and more of them coming onto the cloud and we're offering to customers and will help drive our growth. Now there still is a huge opportunity for us in the applications space. We still have a $5 billion installed base of on-premises support with our applications customers.
We know through the yields we've experienced when we migrate a customer to our cloud, that we see a 3x to 4x expansion in the dollars that they spend with Oracle when they buy subscriptions. Just in applications, we see in our own installed base, another $10 billion-$15 billion more of upside. Not to count the huge SAP installed base that's just waiting for us to take it as we move forward. Let me move over to the infrastructure side. Again, a little bit more early, but, as we like to talk about, we're not the legacy vendor in the infrastructure. We are the hot start-up. Why is that the case? Because we built the second generation of infrastructure. In fact, I think we'd all argue AWS is now the legacy vendor.
We've come a long way. In 2016, we had one public data center running five cloud services. That's how it all started. Today, we're now up to over 40 regions that have been deployed and another nine that have been announced. This doesn't even count the dedicated Cloud@Customer concept that we've talked about in the past, as well as the opportunity with Alloy. We think today now we have the most expansive set of regional data centers available to our customers of any public cloud. I talked about the services as well, going from five to now 105 cloud services. I mean, this is an amazing amount of innovation in a very short period of time.
In fact, if you look at the type of workloads that we're now running, going from bare metal as our first offering, all the way through to the litany of different workloads that we're able to accommodate with our customers. We've got a lot of diversity now going across our infrastructure. Again, that's helping us to go and win new transactions and get new revenue opportunities. We're not the only ones that are recognizing it. I think as most people are fully aware of by now, you know, when Gartner comes out with how they rank the infrastructure vendors, in the most recent survey, OCI has now eclipsed Google, and we're well on our way to catching Azure and AWS.
As I said a little earlier, there aren't quite as many customers, but 18,000 is not a bad number that are now running Oracle Cloud Infrastructure, including some, again, some of the most amazing brands up here like FedEx and NVIDIA, Zoom, etc. There's also that third leg of this amazing stool at Oracle, and that's called the Oracle Database. We've got the great cloud, we've got the great infrastructure, and we've got the most amazing database. I'm not gonna belabor this because you had a lot of this discussed by Juan when he was up here, who's our database expert. The differentiations are it's the most complete. It can handle any type of workload.
When something new comes out, we're busy getting it innovated and incorporated into that database, which again, when you do that, no matter what happens, you always get the unique security, scalability, availability that comes with the Oracle Database. But it's also simple, and Juan was highlighting that as well. As more and more customers are adopting Autonomous Database, what you're finding is that our opportunity is not just to help our biggest customers run their database workloads on Oracle more easily, it's actually giving us an opportunity to go further down market. What used to some people might have said, "Gee, maybe it's too complex for me." It's actually the simplest database to use now when you think about it being self-securing, self-repairing, self-driving. We're seeing great growth on that front.
Over 200% improvement in our cloud database service revenue over the last couple of years. That's really being enabled by the fact that customers are now, a majority of them, upgraded to Oracle Database 19c. That's a key enabler for them to be able to take advantage of the autonomous features. Not only that, we're also offering it in the multi-cloud concept, not just the database service with Azure, but we've talked about MySQL HeatWave for AWS, and I'm sure there'll be more to come. Now we have a couple thousand customers running Oracle Autonomous. That's been critical to get those references so that other customers see it, get the tangible results, and the growth quickly comes behind it.
We're really excited about what's happening in the cloud database side. Now, kind of talked about this a little bit earlier, as I said, on the infrastructure side, we've got about a $23 billion ecosystem on the infrastructure, but only about 15% of that is coming from the cloud today. Huge opportunity going forward to capture more revenue. I will point out just one other little side fact, which is that if you include the services that Clay provides to our internal SaaS applications, that's another $1 billion of revenue that would otherwise be charged to an ISV. There's a lot going on underneath here from a cloud standpoint. Let's look at that opportunity. Fourteen billion dollars of infrastructure support today.
When we look at our yields, when we work with a customer who takes an Oracle on-premise database workload, moves it to the cloud, it's not just the database, it's not just the application, it's the application that's sitting on it's also the ecosystem of other applications that surround it that get moved with that. All of that moves up. We actually have a 4x to 5x uplift in dollars that we achieve as a result of those full transformations. When you turn that into value, that's about a $40-$55 billion opportunity. If you think about it, just within our installed base, if we can capture our applications and infrastructure, $50 billion becomes $100 billion.
Doesn't even count all the other opportunities that are outside our ecosystem. Let me talk final pieces around scaling our business. Again, no doubt that Oracle is laser-focused on operating margin contribution. When we look at the incorporation of Cerner, pro forma for that, it's about a 42% operating margin. That's nearly double the average of all of our closest peers. We run a much more efficient organization than almost anyone else out there, but we're never happy. We always want to do better. What are the areas that we're focused on in order to improve our operating margins? The first one, we talked about the cloud applications business. As we've talked about, all of our cloud applications are moving and running on OCI. They're nearly complete.
As we do that completion, we have a line of sight to over 5% of additional improvement to our cloud applications gross margins. It's already a very significant number, but even then it can go higher. On the infrastructure side, which again has been a big CapEx investment, where we got to all these regional deployments that we've talked about, building all these hotels, if you will, all around the world. A lot of that's largely complete now, so that the incremental investments at this point is really building out the hotel room. Hotel rooms only get built when revenue comes. As a result, as we deploy inside the data centers with the hardware, that gets deployed as customers show up.
Contributes quickly to gross margin, which again, between these two things, as we look at our infrastructure gross margin, we have line of sight to over 20% uplift in our overall infrastructure gross margin. The final thing is around operating efficiencies. Clearly, Cerner is a new and large acquisition, and trust me, I am getting called by Safra every day to ask how we're doing in driving operational efficiency there. We have a very large team focused on that. We think there's a tremendous opportunity as we move Cerner from being a services-led company to a product-led company to drive a much higher margin, which will continue to get closer and closer to our overall operating margin contribution. Finally, we're not satisfied with what we do internally, ever.
As I said, I'm busy with myself and the rest of the internal team thinking about operational excellence. We're continuing to find ways to drive out manual activities and increase automation, which means we can run this company even more efficiently. That all helps with the bottom line. Speaking of the bottom line, this is the big slide. This is the big reveal. This, I'm gonna lead into Safra, but we like to tell you about what we see in the future. If we look out to fiscal year 2026, we believe we can achieve the following, $65 billion in revenue on an organic basis, increasing our operating margin, including Cerner, to 45% at a minimum.
All the while continuing to focus on what we've always done at Oracle, which is to grow our EPS in a double digit annually. With that as a setup, I'm gonna turn it over to Safra.
I'm still looking at those numbers, huh? I think those are pretty good. Maybe we can do better. You never know. I don't think you drink that. Okay. More water. All right. First, let me start by thanking you all for coming. Okay? I hope that the show has been as worth it for you as it has been for me and for many of our customers. There is no question, coming out of COVID, it was a question of, if we have the show, will they come? I think it is very, very clear that everyone is showing up.
The quality of the folks who have come here is so high. The thing I had always hoped for in this show is that we would have such great products in every place that a customer who came to CloudWorld for ERP would look over here and see that we have industry applications or OCI or some new things in the database and make it all worthwhile. That is absolutely what is happening here. The big, big shift about Oracle, and I'm not gonna go through all the product announcements and all that because they are staggering, actually. I hope you see that. The big difference, and the thing we've been really working on is understanding our responsibility to our customers, to have our customers as the center of our universe.
Instead of selling them stuff, our job is to actually partner with them to run their businesses. For me, the best part of this show, as I've run into customers in the elevator or at the coffee stand or wherever, is to hear from them sort of one at a time, how they really feel it's a new Oracle. That level of trust is huge. We have invested billions, actually, in making sure we can help our customers be successful, whether they're bringing workloads into OCI or they're in the process of implementing any one of our products. In every single case, our involvement has been focused more and more about this long-term relationship.
Making sure they're successful. I have to tell you, it was hard to even decide which customers to have on the stage with me. I feel like, you know, I ran into so many, and I met with so many customers afterwards, and one by one, each one of them had an even more compelling story. I was sitting in a public sector roundtable, and there was the city of Tampa. They had implemented ERP, HCM, and SCM out of the box in 10 months. Okay? Now, boy, were they happy they had that. When the hurricane was originally tracked to hit them, they in some ways got unbelievably lucky, but they saved so. This is from the CIO. I'd never heard this story.
I don't even know if I'm allowed to tell you all, but nonetheless, I am, because he was so happy they implemented so quickly. They saved so much money that the CFO of the city gave them permission to get more modules. I mean, imagine this is what's going on. I'll tell you, he said it right after another state actually mentioned that it took them 18 months, and they felt so good until they heard 10 months. But that kind of thing is going on. Every single sector we've really focused on is becoming a roll-up in a way because we'll learn on Exelon and then we'll work with one of the other big utilities around the world. They already, you know, we've learned so much, and they've gone end-to-end Oracle.
The next group wants to go end-to-end Oracle. As you heard Jonathan talk about the banks, this is becoming. We have built momentum. It's not just HCM, it's financials. It's HCM and financials, and then it's the banking applications, the core banking applications, where we're partnering with them to fit these products perfectly for them. The big change for us, and I hope you see it because many of you have been coming for years, and of course, we used to sell a product. I would always say, and you've all heard me say this before, our geniuses in their ivory tower, no offense, guys.
They would build a product, and they would throw it out the window to our customer and lean out and say, "Give us a call if you need help, but we're hoping you're smart enough to use this." Then the SI and the customer would implement the product, generally, sometimes Oracle consulting. That was the relationship until they came up with something new and threw it out the window again. I am only kidding, but not entirely. Now that's just not what it is. I mean, we now have to basically move in with you, and we live in a townhouse with you, and the customer's on this side, and we're on this side, and they're connected, and we build the software and the service and the system, and our job is to make sure it works well for you.
We basically get rid of the wall between our two enterprises, us and you. The nicest thing I heard from customers, the thing that actually made me smile, is when they said things like, "I cannot tell where my people stop and your people start." This is so powerful for us. This is so transformative for us that I have now heard this, whether it's in applications or at OCI. It is unbelievable, because then they just continue to invest more. Every time they invest, by the way, they save so much more. We have companies, and they're gonna be just a mountain of additional announcements coming out after the show, where companies that have decided they are done with on-premise, and they're cool, famous companies, and they provide services that all of you use.
Often they're populated, their technical people are populated with Azure folks, AWS folks, and GCP folks. They give us a chance, sometimes, in my opinion, just 'cause they're curious or they think maybe they, you know, could use us as negotiating leverage. Oh, boy, that's the greatest, okay? Because they come out of this and they're in shock. When they inform the other folks up in Seattle and on Vashon, all those other folks that are up there, when they inform them that they're going with us, everyone is stunned, and that is what you're going to be seeing. That kind of stuff has been starting to show up. I know we haven't met. It's been like three years, right? Gosh.
I will tell you that even three years ago, I still felt like a cat with a little parakeet feather sticking out of my mouth, thinking, "I know something you guys don't believe yet." Okay? Little by little, we told you this would happen. We told you that the cloud percentage of our business would grow. We told you I mean, it seemed almost impossible, right? I mean, we ourselves had shrunk, and then all of a sudden, we not only grew, but our growth rate has gone, it continued to grow. Now it is unstoppable. I mean, unless I say something unbelievably foolish up here, it is basically unstoppable. More and more of our customers, you know, our goal has been, try it, don't commit, don't do something superhuman, just try our stuff, see how it goes.
We don't wanna sell you everything up front. Little by little, customers have come in and said, "I need a bigger commitment because I'd like to get a slightly better price," or, "I wanna know what is in my future." We didn't push that, and now larger transactions, more cross-pillar and up and down the stack. This is just proliferating. You know, to be fair, you have to understand, we, you know, a lot of things have already been said by the time I get up here, so I'm gonna let you ask questions, I promise. Oh, gosh, not that fast. I've 31 more seconds till questions.
The truth is that there is not a single one of our competitors, and they are all bigger than us, some of these hyperscalers. Every one of them has evidently an unlimited amount of money to spend, and yet we're the ones that innovated a footprint and a technical capability that not a single one of them has. In fact, recently, an agency of an allied nation went to us and went up north to visit the other folks. We land a footprint with all services, which means we can land it anywhere, in any undisclosed location you want, with all services. Not a crippled version, but we can land the full services. When they went up north, you know what our competitors said?
That's impossible." When your competitors are saying what you do is impossible and you've done it, you should understand how dangerous a position they're in. It means they are in an impossible. It is impossible for them. We are so different. It is a generation to cloud, and it has come. I'll tell you, that second mover advantage. We know a bunch of companies that were second mover. Google, second mover. Ever heard of them? They used to be big. Just kidding. You know, Meta, second mover. Remember the first ones? Second mover advantage, I think we're gonna coin it here. All right. Okay. I will stop. They're waving at me. Any questions? Yes.
Hi, Safra. Phil Winslow, Credit Suisse.
Phil.
Yeah, I really wanna focus on Oracle's industry strategy, which really stood out to me during our conversations here at CloudWorld. Obviously, as you mentioned, Oracle has a robust horizontal suite and many vertical specific applications in addition to the platform and infrastructure layer. You know, my question is: What is really the opportunity for Oracle to accelerate end-to-end automation from an industry perspective across this full enterprise stack relative to the competition? I mean, for example, there was a reference to industry reference architectures made earlier, bundles, potentially telco cloud, et cetera. How should we think about this?
It's almost an unfair fight, okay? Because think about who's number two, like, who's got almost as much as we have. I honestly, I don't even know how to answer that. You know, there's our legacy competitor at SAP, does not have any of these industry applications. Our hyperscaler friends do not have anything, let alone what we bring to the party. The opportunity is such that we've seen countless other times. If you prove it with big names, everybody goes, "She did that? I'll do that." One of the biggest banks in the world is doing not only Fusion, a complete finance transformation, but all the banking stuff, and they are not alone. That's what happens. All the banks, before you know it's all the retailers. Before you know it's you know, the healthcare situation.
You can imagine what an unfair fight that is now because this is incredible. The ability to save huge amounts of money for these enterprises is so dramatic. I mean, they will save, in most cases, at least 90% from what they're doing now. It's stunning. I'd like to have a little quiz here. Do how many of you believe that implementing one of Cerner's competitors at a hospital system could possibly cost $1 billion? You should. All your hands should be up. Okay? Can you imagine? All they're putting in is an electronic health record and some billing. These poor hospitals, and there are many of them, spend $1 billion implementing. Now, I know $1 billion is not a lot of money to you guys, but to me and to hospitals, I gotta figure it's a lot of money.
Yet I'd be perfectly happy taking $100 million, okay, and feel like I have just hit the jackpot. I mean, these kinds. Remember some of those billion-dollar SAP implementations? Do you remember some of those billion-dollar SAP implementations that were then thrown into the garbage? Yes. Again, this is a whole new world. These folks are starting to toss SAP even in Germany, I mean, where it's a matter of national pride. I have to tell you, this roll-up, once the momentum, it is Katy bar the door. You know, you just got to lean back and let it happen in front of you. That, by the way, is one of the things we were seeing here at OpenWorld, and I call it OpenWorld. I can't help myself.
I will tell you, and all our marketing people are probably terrified of what I say next, but you know how we call it CloudWorld, but actually, with multi-cloud, open, and with Alloy and with what Steve Miranda's team did, actually, open is even more correct, because once again, when you focus on the customer, you deploy any way they want, Cloud@Customer, Dedicated Region Cloud@Customer, public cloud, all the different options. Again, and connected to anything you want. I think OpenWorld still applies. More on that later. Okay. Sorry, Jason. Yes.
Hey, Safra. Kirk Materne with Evercore.
Kirk.
On your keynote on Tuesday, it was pretty evident that your message was to a lot of your customers that standing still is now dangerous to a certain degree. I think we all are watching the economic backdrop, but that seems to be resonating in sort of your performance and the discussions I think all of us have had with your clients at this or your partners at this event. Can you just talk about what's changed on that front from an executive perspective when you talk to them about, you know, it used to be an economic headwinds coming, we should just kinda pull back. It seems very much maybe it's the right time from a product perspective and industry perspective.
I was just kinda curious, you know, how confident you are that, I guess, the momentum you have right now can continue, you know, really because of that dynamic.
You know how I just told you, like, how do you feel like saving 90%? You know, it's pretty compelling. I mean, it's not a little bit of a saving. Many folks, they already know. Look, some folks barely got through the pandemic with, you know, with their shirts on. You know, it was pretty rough for some of them. They could not really adjust well. Some didn't make it all the way through. Those that did realize the limitations of their systems. They did not have digital connections at all with their customers, with their employees, with their suppliers. I mean, it was pretty hairy. I was meeting with a hospital system. They implemented HCM in the cloud during the pandemic because they could not otherwise staff the hospital, and let alone the hospital.
Half of these folks were in tents outside the hospital, so let alone. Everybody realized they needed much better understanding of and a digital connection with everything that matters. I mean, this supply chain Armageddon we just lived through. I mean, I feel like I personally begged every component supplier for stuff, okay? Luckily for us, they were really very kind with us, and they also saw our volumes. There are suppliers of ours where we went from $100 million to $300 million, but there are others where we went from $1 billion to $3 billion with them. This is another customer. Almost every company had a supply situation, and they can no longer do it on those old systems. They cannot forecast anymore. They have to understand their inventories better. They have to make their investment decisions.
They cannot go through another massive shock like the epidemic or pandemic, I guess, without moving into the twenty-first century. Most of these systems were put in for Y2K. Yes, they were upgraded every few years, but they're twentieth-century systems. We are 22, almost 23 years into this twenty-first century, and they're just going to do it. Plus, they just frankly need to save the money. They cannot run these old systems. They're exorbitantly expensive, and they're unbelievably tired of being data center managers and all of that. They have no economies of scale. When you are your only customer, you just can't be the cost leader.
Thank you. Mark Murphy with J.P. Morgan. Safra, how wide do you want to open the aperture of OCI? Do you wanna go from 105 services to thousands? Do you wanna be able to handle any workload, anything any developer can dream up? Or would you prefer to have the focus really be on these Oracle workloads and the streaming use cases like Zoom and TikTok?
Oh, no. Well, first of all, Oracle workloads are great. We love Oracle workloads. We crush it in Oracle workloads. That's not even like first or second. It's like first and tenth, the next. Okay, Oracle workloads, of course. It's interesting because when Gartner does their analysis of capabilities, they grade almost based on what Amazon has, 'cause it's what there was, but they don't include some of the things we do do unbelievably well, which are very large databases and things like that. I think the report card is gonna change, by the way. Do we wanna do everything? Well, actually, in many ways, we have the ability to do anything because we have bare metal. We have all of these different levels of capabilities, and if something's important, we will do it.
We give this incredible flexibility because we have this massive price performance advantage even on base compute, okay? When you're killing them and you have a price performance advantage because all your stuff is new and designed in an unbelievably compact and performant way, which you know we're lunatics on security and performance. That's our thing. The fact that we are beating them, that you can bring your workload from one of the other guys who is so much bigger than us and save half the money. Depending on your egress, ingress fees that they're charging you, poor thing, you know, then, I mean, we absolutely. It's a no-brainer. This thing becomes an IQ test.
Are we gonna have every imaginable service where we're gonna have the capability for every imaginable service, but if no one's using it, if just a few developers, hey, we have all of these other things. They can just put whatever they'd like on top of it, and that's up to them.
Thank you.
This is Keith Weiss from Morgan Stanley. Safra Catz, thanks for hosting us today. It's been a great conference.
I made all the sandwiches too. How were they? Okay, I didn't.
The cookies were delicious as well. Thank you.
Oh, thank you. Thank you.
The question I had is, I've been to a lot of Oracle Analyst Days. I don't ever remember seeing a long-term target from you guys, and it was a really impressive long-term target. I don't think $65 billion was in many people's models. Two questions for you. One, why was this the right time to be putting forth that long-term target? What gives you confidence now to sort of look that far forward? Two, the $65 billion, is that organically or are there gonna be more kind of similar-
No, that's our organic number. That's assuming what we own now, okay?
That's assuming what we own now, okay? Honestly, it's not that aggressive a number because of our growth rates. I know that many of you are having kind of like a hard time to believe. Like, remember those guys, those dinosaurs? They might have crossed the chasm. The bunnies are running, okay? You've heard me say that before. I told you a while ago, last time we came, you know, when those dinosaurs cross the chasm, you don't wanna be one of those fluffy things. Your lunch. You know, you see like with the database what we're doing. I would not wanna be hopping around in front of us right now. We see our own numbers. We know our own contract base.
There are gonna be customers, individual customers that will pay us $1 billion a year, okay? Now, you don't need a lot of those. You just don't need that many. Then there will be thousands and thousands of other customers who pay us $10,000 and $100,000 and $1 million. You know what? $1 million here, $1 billion there, before you know it's real money, and it adds to $65 billion pretty easily. So. We thought we should reward you. You missed us, didn't you? We missed you.
Hi, Safra. It's John DiFucci from Guggenheim. You know, one of the questions I think we all get, and it's great to see those revenue numbers, but the profit line, which I know is near and dear to you. Your public cloud brethren, when they started approaching building out their public clouds, they sort of did it as a field of dreams, sort of.
Build it and they will come. Sometimes maybe a year or even years ahead of time, they were investing a lot of money. To their credit, it came, and they did really well. Over the past few years, you and Larry have talked about how Oracle is different in that respect, and how, listen, when we're spending, it's right on the eve of it coming. I guess to help us a little bit to think a little bit more about that profit line, or at least on the gross profit side, can you give us a little more on the timing? Like we're hearing a lot about big deals that are being signed, and that's really exciting. Is it? Do you expect those deals to ramp up to sort of full capacity over, think it'll take a year, a year and a half?
I know this can be different, but maybe even 'cause, you know, we're little Excel jockeys, kind of, and maybe sort of like an average-ish kind of thing, maybe.
It really depends what it is and who it is and what their commitment levels are. Again, it is both large deals, and it's like raining on us, okay? What's happened, for example, is, remember, it's not just like here in the United States, it's globally. I mean, we basically buzzed right through data centers in Japan, just built them, and they filled so fast. Built them, and they filled so fast, Brazil. Built them, and they filled so fast, Israel, you know, Saudi Arabia. I mean, we are in countries and places where our competitors do not have anything, okay? We are 45% of the market in some Middle East countries. How is that? Our competitors do not even have sites there. The only other folks around would be from another nation.
All of their, the workload they want for an American company is us. What happens is we're running a portfolio of centers. We put a lot up. That's 40 in just a few years, and then we've got 12 more. A lot of our government sites have only recently been certified. They sit ready. Now, just understand, there's a lot of cost in the original prep time, but then we fill them up with computers, and then it's sort of everything else is free. The computers, in many ways, are the cheapest part of the entire operation. There's all of the startup costs of each one of these. We expect significant gross margin improvement in IaaS this year. This year and then into next year.
You're going to see improvement because we are gonna be benefiting from the economies of scale, and as more and more of these centers fill and then are expanded, the expansion is not expensive as a general matter. It's gonna be very profitable. The other thing, by the way, which you don't totally see, is that all of our SaaS, sort of all the IaaS, we had to build out to move our SaaS and our GBUs or our industry business unit technologies into those data centers. They get it, and it's all included. Sometimes you will see it as our SaaS margin, but really it's partially our IaaS margin, it's not contributed into that line because it's all included. Over time, I think you're gonna see our cloud margin, gross margin continue to improve significantly. Yes.
Okay. Safra, thank you very much. Mark Moerdler at Bernstein. Congratulations on the FY2026 guidance. Very impressive, especially considering everyone stepping back on their numbers and getting concerned and worried and all the rest. I'd like to unpack the route to 45% operating margins for FY2026, given the facts of this move, mix shift to cloud, especially OCI Gen 2. Can you give us any color on how you get there? Obviously, everything's gonna drive it, but what are the bigger drivers that's gonna help you get there?
Okay.
Thank you.
There are a few what I would consider low-hanging fruit. Doug alluded to them. The situation at Cerner, that is just not how we run a place, okay? There's just nothing about how they operate. They're a great company, great people. You know us. You know, we throw around nickels like manhole covers, okay? It is not, you know, every single way we spend and the way we run an operation. We simplify everything. We automate everything. You all know that. I mean, I'm sure I've ruined many a afternoon when in September, when I've announced earnings a week and a couple of days after we've closed the quarter. Now, you have to understand. We just did it. We could have announced. Oh, now I get a chance to ask a question here.
We closed our August quarter, and we were ready to announce on the eighth. It was a Friday. Would any of you have liked us to announce on a Friday afternoon? No, I see a lot of no's. Okay. We had to wait. We were ready the eighth. Because of all of you, how about Saturday the ninth? That would have been a bad day too, right? Yeah. It's also, you know, people are at temple, and then Sunday, some of you are at church, so you don't wanna do. Okay. I had to wait till the eleventh to announce our results. Okay? Now this is, by the way, in the same quarter that we bought a brand new company that does $6 billion a year in revenue, right? We had to announce the eleventh. I'm pretty ashamed, but I blame you.
The reality is, when you ask, how do I spend less? Yeah, because we do that to them. If we just clean Cerner up, I mean, listen, Doug is a smart guy. When he throws a number up like that, he's thinking we can beat that number. We should be able to. Now, I've just upped the ante. It's not hard. Remember when I started at Oracle, we had 21% operating margins. I know some of you were in high school, but that was the number. The very first year we went to 34% operating margins, the first year I got there. Okay. I know that seems like terrible margins, but that pretty much beats all the rest of the industry, even today. Now, we're pretty ashamed of our 42% operating margins that were up there.
We're not gonna let that hang around long. It's just no way to run a business. By the way, spending money and getting nothing for it just slows you down. It's like empty calories. Bad idea. I know. Don't tell me. You know, we're gonna get ourselves in line, and I don't actually think that's gonna be the hard part. The bigger piece of this, by the way, is the massive economies of scale that you get. First of all, I don't know why those other cloud guys can't figure out how to make money. Honestly, I'm bewildered by it, because once your customer is in, and they expand and expand and expand, you have such massive economies of scale. There is no reason why the profit doesn't go right to the bottom line.
As customers are expanding and you have very little cost of sales associated with it and very little engineering, additional field engineering associated with it, you become extremely profitable. It is almost unstoppable. Every year, you're bigger and bigger and bigger. I'm convinced. It's obvious, we're going to be able to be much more profitable and meet our long-term goals. Any other questions? My boss is here. Okay. Now to the owner of Oracle, the largest shareholder, Larry Ellison.
Hi, everybody. Whatever you wanna talk about. Okay, that was fantastic. I'm going to London. Actually, it's true. I had a meeting with the Prime Minister, but I didn't get there soon enough. We're meeting with the NHS, actually, and the Prime Minister, but again, they don't have one. Well, I certainly don't want that job. That sounds scary. All right. That's the end of the comedy routine. Gentlemen, right here.
Thanks, Larry. Hey, Larry. Brad Zelnick with Deutsche Bank. Thanks so much for spending the time with us and for hosting a phenomenal CloudWorld. I'm confused 'cause I heard it referred to using its older OpenWorld term earlier today, but-
You know, we really wanted to call it Open Multicloud World. It turns out they wanted to charge us way more for the signage. We went with CloudWorld.
I think that it feels like there's a lot that's changing at Oracle.
Yeah.
Fantastic numbers that we saw put up. The growth is accelerating. Even the color scheme changed this year. Which I'm hoping changes back next year.
The color scheme is huge, by the way. I mean, Safra's really focused on margins, and so we went with the color scheme, and we
Red is more-
That's gonna have a huge difference. That's gonna really accelerate our margins.
My question, Larry. We see all this change. I'd be curious from your perspective, what is it that's changing inside of Oracle that maybe we don't see? You're 45 years old now as a company, and as we think about, you know, positioning yourselves for the next 45 years.
Yep.
How do we think about the culture evolving and what Oracle will ultimately become?
Such an interesting question, and I really have, I think, a very interesting answer. The acquisition of Cerner, you know, I mean, obviously it was, if you will, the final step in getting all the resources in position to make a real serious effort to automate the entire healthcare ecosystem. Not just providers, which Cerner has been focused on in their history. Cerner and Epic, you know, compete to automate big providers. We, we've got to continue to automate and actually improve the quality of automation in big providers. Ultimately, we wanted to go after not just providers, but also payers. Whether in the U.K., the payer is the government, in the United States, the payer is often an insurance company, sometimes the government when it comes to the V.A. or DoD.
It's a combination. We wanna automate the relationship between the providers who have to get approval to have the payers pay for a particular operation or a new complex, expensive immunotherapy drug. We wanna automate, you know, that interaction that goes on. We wanna make it easier for providers to buy pharmaceuticals and medical equipment. It should be as easy to buy that stuff as it is to buy from Amazon.com, right? There should be an e-commerce site. There's incredible complexity in dealing with the inventory in big hospitals. The inventory isn't in one place. It's distributed on nurses' stations and operating rooms, in ER triage centers. It's all over the place. There's just finding that stuff. You need to automate inventory.
The workforce is enormously complex. You know, a lot of the doctors and nurses and pharmacists don't work for the hospital. They or they work for multiple hospitals, plus they have their own offices. And recruiting and scheduling and managing that workforce is enormously complex. We're trying to, you know, tackle the whole thing. We're trying to tackle the whole thing. That's become not just a job because it's healthcare, it's a mission. Okay, your question was about culture. As we go after the largest vertical segment, the largest industry, if you will, on Earth, this multi-trillion-dollar industry called healthcare, it's not just about making money, you know. It's about doing the right thing, being more efficient, I mean, saving lives. It's about saving lives.
That has fundamentally this quest, this new mission that Oracle's adopted, has fundamentally transformed the culture at Oracle. I think the people at Oracle are enormously proud that we're taking on this huge challenge, because who hasn't lost a family member to some kind of health tragedy? We need better systems. We need better tools to give our caregivers so they can do a better job. Better job is keeping people out of the hospital and extending life and improving the quality of life. Now when we're out recruiting first-class engineers who are maybe in the middle of their career, where they've already made a lot of money at Google or wherever, Apple or, you know, one of these great companies, and they're interested in finding purpose in their lives, not just making more money.
They'd like, sure, they'd like to make more money, but I mean, what are they doing? What are they doing to, you know, to make the world a better place than the world they found when they first went into the workforce? We're able to recruit against anyone right now. We're able to hire most of the people we want. Engineers, our engineers are really committed to this mission. They are working harder, recruiting more of their friends, taking more pride, because what we're doing is really important. I think that's fundamentally changed the culture at Oracle. It will also have huge impact to our brand, if you will. We've never been a consumer company. You know, we sell technology to businesses.
We sell to JPMorgan Chase, and we sell to HSBC Bank, and you know, we sell to large car companies and large manufacturing, tech, other tech companies and, you know, Retail, the largest retailers in the world. We really have been a B2B company. We don't sell to consumers. We still don't exactly sell to consumers. We sell, if you will, or provide services to patients through the healthcare providers in our new patient engagement system that we're adding to our healthcare system. Oracle, which has been a bit of a hidden brand throughout the first 45 years of the company, is now going to be at the center of the next generation of healthcare.
The next generation of healthcare, the systems make direct contact with all of the patients. In that, what we call patient engagement system is what makes it easy for patients to interact and communicate with and share information with their caregivers, their doctors, their et cetera. People are gonna be carrying around Oracle in their pockets. It's not iTunes. Steve, 1,000 songs in your pocket way back in the day when it was only 1,000 songs, when he first came out with the first iPod, when he went back to Apple. Now, your interface to your caregivers is gonna be through an Oracle smartphone application. Your longitudinal health record will be available to you.
You, the patient, will be controlling access to your health records and sharing it with doctors, but doing it electronically on a smartphone. It changes the culture. It changes our ability to recruit the very best computer scientists to work on this project. It changes the overall awareness of the company. Again, this new mission in healthcare is transformative to Oracle, transformative to Oracle's culture, transformative to Oracle's brand, and I think transformative to Oracle's business. Yes. I promise to call on people not in the first row very soon.
Hello, Larry. Kash Rangan of Goldman Sachs. I have great memories of, I think, the 1998 analyst statement. You were wearing the same kind of black T-shirt. The difference was-
Oh, I'm just trying to save money. This is the same sweater. I have one of these black V-necks. If it's Analyst Day, it just has a little drawer marked Analyst Day. I open it up.
The difference is you didn't have the SEC security posse back then. You actually dealt with us and quite great memories, and you were really funny, as you are right now. I wanted to just ask your thoughts on OCI Gen 2. I mean, Oracle achieved demigod status in databases for cracking the code that happened in the mid to late nineties. Is there something like that with infrastructure, like cracking the code, or is it more like a cat and mouse game? It's you know the Amazon Web Services, Microsoft, and you guys going back at each other. What does it take for you to achieve a level of demigod status in this infrastructure war?
Yeah.
as opposed to databases?
Well, I think there are multiple things. We just announced Oracle MySQL version of MySQL is running on Amazon right now, so. You know, when we announced it a while ago, actually, when we first announced Oracle MySQL HeatWave, we announced it is the fastest version of MySQL around, and it's 10-100 times faster than everyone else's version of MySQL, including Amazon Aurora. We published our benchmarks on GitHub and all the data on GitHub, so whoever wanted to reproduce the results could go ahead and just simply run, you know, run them off GitHub. It's very easy to reproduce the result. I mean, that of course is the fundamental aspect of the scientific method, is reproducible results, okay? Try Aurora.
Try MySQL HeatWave. You don't have to change your program at all. Just press this button, press that button, and see who wins. Amazon's comment was, "No comment." That was how they responded to that, "No comment." By the way, which is the best comment they could have made. Otherwise, they could have said, "Yeah, they run 10-100 times faster." That's what the results clearly show. I don't think Amazon was the first mover in infrastructure. We were the first mover in applications. In fact, the very first. Let's give them credit. I mean, they, AWS, started the infrastructure business. The cloud is made up of two, if you will, pretty different businesses.
There's the infrastructure business, where you have Amazon, AWS, Azure, Google, and us, kind of the big four in the United States and you know, on infrastructure. Then there are a number of companies that do applications on, in the cloud, which include us and Salesforce and, you know, Workday and Shopify and ServiceNow, and there are a lot of them. Well, the very first cloud company on Earth, the first, it was NetSuite, and that I started with Evan Goldberg way back in the day. We had the, kind of the first-mover advantage in applications. They had the first-mover advantage in infrastructure. First-mover advantage, you know, is important. We didn't have the first-mover advantage way back in database days. IBM did. How did we ultimately beat IBM?
We were faster and cheaper and more secure and more reliable. There's no magic in this. I mean, we have to be faster and cheaper and more secure and more reliable, and we think we've done that. I mean, our cloud, and I'll just take a couple seconds to describe, our cloud is fundamentally different than the other three infrastructure clouds. Let's just focus on infrastructure because I think we're on our way to clearly being the largest application provider in the cloud. You know. I think it's us or Salesforce right now. You know, take your pick. It depends how you categorize Salesforce's revenue. Is, you know, you gotta split their, you know, their application revenue with some of their other revenue. But we're around the same size in applications in the cloud. Close enough.
But then there's no one close to us. After you know, the you know, those two companies, there's no one close. They do very well in the front office. Salesforce, we do you know, we dominate ERP in the back office. But anyway, we're well established in applications. There's no doubt about that. I mean, our market share in cloud ERP is mid-nineties, higher, something like that. The big question about Oracle is. How is Oracle gonna do in infrastructure? Well, infrastructure, we've got to be faster, more secure, more reliable. When we were doing our infrastructure cloud, I actually canceled it. I canceled the project. It was a pretty kinda big disagreement between me and the powers that be at Oracle.
You know, I thought we were just copying what the other guys were doing, which I thought was a really bad idea. I wanted to start over and do this Gen 2 cloud. What I mean by starting over, well, I didn't wanna use the same hardware everyone used. I wanted to use fundamentally different hardware. They said, "You don't want to use Intel and AMD hardware. What are you, crazy?" No, no, it's gonna have Intel and AMD microprocessors in it. But I wanted all the machines that we quote, rent on in the cloud to have a separate microprocessor and a separate memory. So they had to have at least two. A minimum of two.
All the Oracle code would be in this one secure microprocessor that our customers could never get at. When we rented a computer to the customer, you know, they were in their own. They would be using the AMD or Intel microprocessor. They'd have their own memory, and they got the entire computer. That's not the way any of the other clouds work. None of the other clouds work that way. All of our computers in our cloud work that way, that the cloud software is in these control computers and the infrastructure that we rent, you get 100% of. We don't. Our code is not in the same memory as your code if you're a customer.
We can't see what you're doing, you can't see what we're doing. We use this to create virtual networks that literally isolate all the computers that you're renting from the network. No one else can even route a message to your computer. No one can hack our, you know, our computers unless it's an inside job. No one can hack our computers 'cause our computers aren't on the—our control computers aren't on the internet. There's no way to get at them on the internet. On the public internet, the private, you know, private internet, they just can't get at our control computers. It's inherently a much more secure architecture than the other cloud guys have, and we think that's become a bigger and bigger deal.
We also just are much faster and much less expensive to use than other people. I think you'll see very large brands. I mentioned this in the last call, very large brands moving off of AWS and into the Oracle Cloud. Now, I think the easiest ones to sell are the largest guys, their biggest customers. Well, that seems odd. Why would Amazon's biggest customers be their most vulnerable customers? Well, they're the ones that are spending the most money with Amazon, and if we can cut that bill in half, it's real money. We can give you better performance, much better security, and at a dramatically lower cost.
It's worth making the move, especially now that the unicorns aren't worth quite as much as they used to be worth. For the first time, as long as I can remember, you guys actually think these technology companies should make a profit. I mean, I'm shocked that I'm standing in front, you know. I'm not standing, actually, I'm sitting, aren't I? Here I am saying, "What? You guys think it's important to make money? I had no idea." I think Marc Benioff has done an amazing job with Salesforce. But they make a little bit of money, right? Not a lot of money, but they make a little bit of money. Marc obviously was no longer fashionable because losing vast amount of money seemed to be the way to go.
If you really want a big valuation, you totally, you know, just spend as much money as you could to grow as fast as you possibly can because profits just aren't considered. I mean, it's. Ultimately, you think, well, if you're growing really fast, eventually you'll make a huge amount of money. I mean, Snowflake is very interesting that they have to, you know, to run their stuff, they have to pay AWS, and they have to pay Google, and they have to pay Microsoft. They're getting. They're small, but they're getting decent growth. but they, you know, the economics of that business is really tricky. I know that because we have MySQL, we have MySQL HeatWave running on AWS, and I know how much we pay them.
All of a sudden, profitability matters to these, some of these unicorns, and they look at their AWS bill and they say, "Well, you know, gee." I mean, they come over to Oracle, and they try it. They try it. One thing I don't like is the conversation I invariably have with the CEO and said, "You know, my guys didn't even wanna try Oracle. You know? I mean, you know, we wanted to leave AWS, we're gonna try Azure, and we're gonna try Google. They didn't wanna try Oracle, but yeah, we finally said, 'Yeah, we're gonna try Oracle.' And then you guys were way better than anybody else.
Way better meaning much faster and much cheaper. I think, frankly, Larry, I'm very impressed, but why do you keep it a secret? Why is that your marketing strategy? We don't really understand. It has been a very well-kept secret, but the secret is out. We've got some very big customers that have either moved or are in the process of moving. We announced NVIDIA, we have a large number, and we'll have some very interesting announcements coming down the road. Ultimately, the Oracle database dramatically outperformed the Microsoft database and the IBM database, and we became utterly dominant in database because we were faster and cheaper and more reliable. If we can be faster and cheaper and more reliable in the cloud, and if profits matter. Profits don't matter, who cares?
If profits matter, and security does matter and always. Reliability always does matter. We have a chance to grow our business very rapidly in the cloud by grabbing some of these customers. It's happening. Your question, you know, how do we do it? The same way we did it last time. You've gotta build a better mousetrap. You don't have to be first, but you have to have the best price performance, and you have to be highly reliable. These days you have to be very secure. The cyber warfare that's going on right now is, you know, we don't publicize it. It's kept a secret.
When hospitals taken hostage or someone else is taken hostage for ransomware, it's like kidnapping. You know, we don't. You know, it doesn't make the news, but there is a lot of it. There's a lot of it that occurs in some clouds, and none of it occurs in our cloud. We think if we can, you know, we actually thought about maybe we should go in the ransomware insurance business, and I'm not just kidding, you know. It's like Tesla should go in the car insurance business, right? If you have self-driving, if you've got self-driving working and you're using self-driving, or you simply know all the driving characteristics of the people who drive your cars, you can get the rates right where no one else can.
We think the opportunity is enormous for us. We think we're already exploiting that opportunity and applications in a very big way, and that's growing very rapidly and growing very nicely. We think in infrastructure is now growing much faster than our applications business. We think we have the chance to bite at both sides of that apple in the cloud. Applications, already on our way. Infrastructure, looking incredibly promising. Again, it's now over a $4 billion business. Again, it's much smaller than AWS, but we're growing much faster. I think third row, right here.
Hi. Karl Keirstead at UBS. Larry, Jeff Bezos and others are warning that we could have a recessionary environment next year, get ready. What are your views, and what are you and Safra Catz doing to get Oracle ready from internal organization, pricing if we have an economic downturn next year?
Yeah. Well, I think everyone is handicapping it. It's way more than 50-50 we're gonna have a big recession, right? I don't think there's any doubt about it. We just went through relatively recently our budgeting, and I think we're very well prepared. If there's a recession, I think we've taken some measures already. I hope we don't. I don't know. I don't think we'll have to take additional measures. As Safra pointed out, we have very high margins. I don't think we'll have to take additional measures, but we've taken some measures already. We are being cautious. At the same time, we are taking on new big customers, which will require us to make some certain capital spending, but only once those customers show up.
Yeah. I mean, we would be foolish if we weren't very aware and very careful and very thoughtful about going into next calendar year. We would like to. We think we are judged by our top-line growth, of course, but also by, you know, not that we've never sacrificed profits to get the last dime of growth of top-line growth. We've never done that. We've tried to be very balanced in terms of we're growing revenue and we're growing profits, you know, in simultaneously. We're gonna grow our business, but we're not gonna sacrifice profits to do it. We don't. That's not what our particular shareholders have ever wanted us to do. I don't think it's a very good idea.
We think in stressful situation we have some basic advantages. The fact that we've got the lowest price cloud, we think is a big advantage in a recession. We think, you know, as people are under economic stress and they wanna lower their cloud bills, you don't leave Oracle, you come to Oracle to lower your cloud bills. We think we're in pretty good shape for the recession, but no one knows how deep this recession is gonna be. I mean, there's a war in Central Europe. What the hell? Who would have guessed? I'll never, you know, the Barack Obama, Mitt Romney debate, you know, where, you know, both they were both candidates at the time. One won, one lost.
They were asked, you know, what's the biggest threat to America? Mitt Romney said it was, you know, the former Soviet Union, Russia. He was ridiculed for that answer. Well, I mean, maybe they're not the biggest threat, but they're one hell of a big threat. I mean, who can believe there's a shooting war going on right in the heart of Europe? Who can believe that Europe has got inflation? I mean, our inflation is very bad, but it's still single digits. There's double, you know, I mean, the energy prices in Germany have more than tripled. Tripled. U.K.'s inflation is over 10%. I know they're turning over prime ministers like you, like some other country, you know. You don't think of the U.K. as turning over prime ministers at that rate.
There are some very unusual things going on. We're being very cautious and prudent. At the same time, we think we're in a position to grow our businesses even in difficult times. Again, we're watching things very closely. We'd be foolish not to. Over here.
Hi there. It's John DiFucci from Guggenheim. Appreciate your comments about the technical differentiation of Oracle or OCI versus your peers. You talked, and others have talked, about sort of like just-in-time build out of your cloud, when you build it, when it's needed, versus sort of the field of dreams of your peers that build it with the hope they'll come, and they came. Can you talk to us a little bit about the technology? Like, that's something I don't understand why you can do that and the others have had a hard time.
Okay. Yeah, no, I mean, one word, autonomy. Same word Tesla would use in terms of, you know, software. Our strategy, our cloud strategy is fundamentally different than our competitors. Yeah, and it's all of our competitors. All of our competitors' clouds kind of look alike, except ours, very different. We have two computers. You know, we have our control software, not sitting in that AMD processor, not sitting in that Intel processor. So we've segmented that. That's one of the things we've done. So the other is we can bring up a cloud. Well, let me go back. Their strategy is to build very, very large data centers, some number of very, very large data centers.
You know, I would say their overall strategy is to build dozens and dozens of large data centers all over the world. That is not our strategy. Our strategy is to build hundreds of data centers all over the world that aren't quite as large. We wanna have a data center basically in every major city on Earth or two data centers in every major city on Earth. Why? Why is this a radically different strategy? We think it's much more efficient to have the data centers close to the consumers. This is especially important, by the way, for certain kind of simulations and gaming and video streaming, all of that. It's just much more economical when the data isn't traveling so far in the network. It's a much better model.
If a data center, God forbid, should go down, ours really don't go down, you know, rarely. There was a case where we lost a data center, but we're fault-tolerant, so another data center immediately took over. The blast radius is smaller. Our approach is to build. It's kinda like Tesla's Starlink, a large number, very, very large numbers of small satellites rather than a few large communication satellites. You know, our approach, again, hundreds, maybe, you know, 1,000 data centers all over, you know, over the world, but an order of magnitude more than our competitors. We already have, I think, more data centers than any of our competitors. Though, I mean, AWS is way bigger than we are, but we have more data centers than AWS.
Why are you doing, you know, why are we doing that? I mentioned, you know, the more data, as you spread out the data centers, the economics get better, because the network usage goes down 'cause the data is closer to the consumers of the data. The network runs are smaller. If a data center is lost, the blast radius is less. How do you manage 1,000 data centers? How do you bring up 1,000 data centers? How does Tesla manage all those satellites? What has Tesla done that's really amazing? Not Tesla, SpaceX. What has SpaceX done that's really amazing about Starlink? They, you know, they did what none of the other satellite guys could do. They can manage thousands of satellites.
Because the software they have that manages satellites works on thousands, it's scalable, works on thousands of satellites. The software we have in our cloud allows us to autonomously bring up a new data center. We just ship in the hardware, turn it on, and it pretty much comes up on its own. All of our data centers are identical, not in size, but identical in software stack. We're the only cloud company that every one of our services is in every one of our data centers. That's not true of AWS. AWS has service A in this data center, not in that data center. If you wanna get this, you gotta go to this data center, not that data center. The data centers have differences. We think that's a terrible idea. iPhones don't have differences. Data centers shouldn't have differences. They should be the same.
It's much more reliable when they're all the same. You test them, and you just roll out another one and another one and another one. The rollout is completely autonomous. The running of the data center is autonomous as you can make it. We're spending a lot of time. Our database, you know, our signature foundation product, the Oracle Database, is autonomous. What does that mean? Why are we so focused on autonomous software? Why are we using AI to automate our data centers and automate our software? I thought you used AI to help, you know, recommend the next retail purchase for some guy on an e-commerce website. I thought, you know, you use that for AI or helping a doc diagnose a, you know, a malady.
Yeah, you use AI for that also. We're a huge internal consumer of AI that we made the Oracle Database our, you know, our, if you will, our foundation upon which most of our other technology is built, including our cloud, by the way. All the persistent storage or virtually all the persistent storage in our cloud is the Oracle Autonomous Database. Not an older version of Oracle, but the Oracle Autonomous Database. A database that updates itself. If it breaks, it heals itself or repairs itself. It fails over automatically. There are no DBAs. All the performance tuning is done automatically. There's no human intervention. There are no human beings involved. We did that for two reasons, autonomy. One, saves you a lot of money.
I mean, human beings, actually, they expect to get paid and, you know, and they expect benefits and insurance and all this other days off. You know, autonomous software, no days off, you know, no benefits, none of that stuff. Even more important than saving a lot of money with autonomy is they don't crash the car nearly as often as human drivers crash the cars. Our autonomous database doesn't make errors. Virtually. God, I wanna get in trouble. There's a big famous bank that ran on AWS that still runs on AWS that lost all their credit card data on AWS, and I made a big deal about it a couple years ago. What happened was they misconfigured their software. They, the customer, the bank, misconfigured its software on AWS, and therefore they lost all that credit card data.
Now, what does it mean the bank misconfigured the software? Well, some guy working for the bank made a mistake configuring the software at AWS, and they created a security vulnerability, and they got hacked, and they lost all their credit card data. Well, the great thing about the Oracle Autonomous Database, there's no guy that configures anything. You know, there's no human labor, no human error, no pilot error. The only way to make our software more secure, we have to continuously take out labor. It also makes it more economically efficient at the same time.
It also allows us to go from a strategy of a relatively small number of really big data centers that are all kinda custom with a lot of labor, you know, to bring up the data center and a lot of labor to run the data center to no, these are autonomous data centers, and they're scattered all over the world. They should be in every big city, and we should have 1,000 of them by the time we're done. That will give us overall a gigantic economic advantage over our cloud competitors. We'll be in every country. We'll be in Ghana. We'll be in Ivory Coast. Well, Indonesia is a very big country.
We'll be in small countries in Asia, in small countries in Europe. We'll be, you know, we'll be in every country. We'll be in every city. You know, data sovereignty is important to you, and believe me, data sovereignty is very important to nation-states. Healthcare records, for example, but, you know, other things as well. Their defense intelligence data, they don't wanna run in another country. I don't think the Israelis are gonna put all their intelligence data in Germany, for example. Maybe they will, but I don't know. I don't think so. Our approach, you know, to solving the problem is using AI to have a high degree of automation inside of our data centers and that.
Use that offensively to lower our own costs of running our data centers, lower the cost of the network because it's a much more distributed cloud than what our competitors are doing, which allows us to offer much lower prices and still make good margins in our cloud. The answer is autonomy. The answer is AI. We use it everywhere. I think Elon Musk famously said, you know, there are two kinds of software companies, those that, you know, use a lot of AI and the others. Over here. Any of these three guys.
Thanks. Kirk Materne with Evercore. Larry, can you talk about the relationship with Microsoft on the interconnect basis? You know, I have two questions around that. One, how hard is that to accomplish? Meaning, if you're correct and infrastructure does become more of a utility, can you plug in others if they decide to sort of join your view on this? Then secondly, doesn't this sort of shift the, I guess, the competition up a layer to the services that run on top of infrastructure where you all and others, perhaps you have an advantage or more, just history around the PaaS layer, if you will? Thanks.
Yeah. Well, I think the answer is it's what customers want, you know? I mean, I didn't have to persuade Satya. I didn't persuade Satya of anything. I think, you know, we talked about it and we both agreed. You know, we both came to the conclusion, yeah. People have investments in the Oracle Database. People have investments in Microsoft software. You know, both our companies have a lot of history. Microsoft has a lot of history. They have huge installed base. We have a huge installed base. They wanna use software from Microsoft and software from Oracle. You know, what a concept. AWS said, "No, just use software from AWS," you know, just. I mean, that's. I mean, it's say, "Come into my walled garden, never leave.
You try to move data out, I'm gonna tax you to move data out." Maybe that can work for a while, you know, in the early days of cloud. I think customers would like to use multiple clouds. Well, customers already use multiple clouds. It's not like they don't use AWS and Microsoft in the same company. The question is, how gracefully do AWS and Microsoft coexist inside of that customer? How gracefully does Microsoft and Oracle coexist inside of this customer? I mean, most of AWS's customers use Oracle databases. All of AWS customers use Microsoft Office and other Microsoft tools. It should be. I mean, there was a word, and this used to be called Oracle OpenWorld, and having open software used to be important.
It's gonna take a while for you to convince me now. No, no, in the cloud, you buy everything from AWS. That's completely different. You got one vendor. They supply everything. If it's not in the AWS cloud, you just don't use it. You rely on AWS for all innovation. Innovation comes from AWS. I mean, I don't think so. I don't think that works in the long term, and it's not working now. People use many different clouds. The question is, will the cloud vendors interconnect their clouds? I think the answer is, well, obviously, yes. Microsoft and Oracle decided to put a very high-speed interconnect. That's a very efficient interconnect.
If you use an Oracle database in the Oracle Cloud and attach to a Microsoft application, it runs at least as fast as if that Microsoft application was attached to a Microsoft database. We intentionally made sure that we gave you great low latency, high bandwidth performance for transaction processing, for, you know, for queries, et cetera. That was very, very important when we link these things together. I can't imagine why other clouds wouldn't want to do what their customers want them to do. Maybe, you know, maybe AWS will be a holdout for a while. I have no idea. I think ultimately all these clouds, there's gonna be an internet of clouds. Does it make sense that there are isolated pockets on the Internet? Does that make sense to anyone?
I mean, yeah, things can begin that way, you know. People can build up and you can get started that way, where you got, you know, where you have these walled gardens. Ultimately, if you're providing something like infrastructure, PaaS, applications, do you think anyone will ever buy an ERP application from Oracle and a sales automation application from Salesforce.com? I think it's important that, you know, these cloud companies interoperate and coexist gracefully, and the infrastructure clouds are linked, and you can mix and match the PaaS services you want. I think that's what customers want. I think that's what the cloud companies are gonna do. Oracle and Microsoft kicked this off. All I'm gonna say is we're gonna continue down this path of interoperability and connectivity.
We think that's what customers want. If there's a cloud company who thinks they don't have to do that if I don't want to, that's a really interesting concept. Go ahead and try that. I don't think it's gonna work. I don't think your customers are gonna like it. I think it's what customers want. That's why we're doing it. Left or right. Gentleman right here.
Okay. Thank you. Larry, we're coming to the end of scheduled time, but this group will stay as long as you want. Leave it up to you.
As long as I want. Okay.
Okay.
That opens up a number of questions. Yes, sir.
Hi, Larry. Thank you. Keith Bachman from Bank of Montreal. I wanted to ask about your vision and expectations for database growth, in particular, as Oracle's on the journey to $65 billion in revenue. If we look at some of the recent data provided in the past, Oracle's collective family of databases has actually undergrown the market. I just wanted to think about how you view the growth potential as you look out over the next three years. We heard just recently this show, the partner community is pretty excited about the next version of Autonomous coming out in 2023, I just wanted to hear why do you think database growth for the collective family improves? What are the key measures and any other insights you wanna offer? Many thanks.
Okay. I'm gonna surprise everyone, slightly arrogant. Everyone's gonna be really surprised by this. We're way better at database than anybody else. Forget the Oracle Database for a moment and look at the MySQL HeatWave database. Did you see the benchmark comparison between us and a product called Snowflake? Did you see it? Did anyone see it? Yeah, I mean, we're 17 x faster than Snowflake, one-third the cost. But with Snowflake, you have to go to a lot of effort to move your data out of your transaction processing system into your data warehouse. Once you do that, we're still 17 times faster and one-third the cost.
If we can't beat Snowflake at this, I mean, I think we'll have no trouble beating Snowflake. By the way, the Oracle Database is faster than the MySQL HeatWave database. MySQL HeatWave, open source. Snowflake ain't open source. What do we got? MySQL, open source, smokes Snowflake. Maybe open source isn't important anymore. This is all so interesting to me. But the economics and the ease of use of MySQL HeatWave is so much better than Snowflake that we think that's a problem for them. It was a problem for IBM when we were much faster. It was a problem for Microsoft when we were much faster than SQL Server. We won the database wars. We were dominant in the database wars.
The cloud showed up, and Oracle wasn't available really, you know, in Google and Microsoft and in AWS. You say, "Well, you know, Oracle's undergrowing the market." Well, because there was this interval where we were not available in all the clouds, but we intend to be available in all the clouds. If we're available in all the clouds, the question is, are we technically capable of beating Snowflake? Can we deliver better economics? In our cloud, you know, Snowflake pays AWS to be in their cloud. Snowflake pays Google to be in their cloud. Snowflake you know pays Azure to be in their cloud. In the Oracle Cloud, we just buy computers and put it on, and it's way cheaper, and it's way faster.
By the way, if you're in Azure, you can use MySQL HeatWave. If you're in AWS, you can use MySQL HeatWave. Our cost of running MySQL HeatWave are way less than Snowflake. Our performance is way better than Snowflake. Our ease of use is way better than Snowflake. We beat them in every way that matters. We've beaten every database company on Earth consistently, except, you know, we got a little bit of a hitch when the cloud showed up, and we were just not, you know. Can we beat Aurora? Can we beat Amazon Aurora and Amazon Redshift? Aurora is Amazon's version of MySQL. Can we beat them in the database business? Well, if we can beat Microsoft in the database business, and we can beat IBM in the database business in the glory days of those companies.
Microsoft's glory days are continuing. IBM's not so much. In the glory days of IBM, we beat them in database. We just have way better technology. If we beat them, I promise you we can beat Snowflake. I mean, you don't have to take me seriously, but we are at least a decade ahead of them in technology. They have nothing like Autonomous Database. They have nothing like this massively parallel processing that occurs in the Oracle Database and in HeatWave. They got a hot brand right now. We'll see how long that lasts.
We think we will preserve our franchise in database, and by making sure that our database is available in all the clouds and making sure our database is much faster, much more secure, much more reliable, and this is the one that freaks everybody out, and much cheaper than Snowflake or anything that Amazon sells. Because when you're much faster than the other guy, you are much cheaper, 'cause when you pay by the minute, time is money. Next question. Let's go over here. I'll, I mean, I'll stay till the last person leaves. Decided that's the best way to time it. When Safra has left, I know that I've really overrun my time.
Yes, sir.
This is Keith Weiss from Morgan Stanley. I appreciate all the time you're giving us. I wanted to come back to the healthcare opportunity. Massive opportunity, great mission. We've all viscerally felt the inefficiencies within the healthcare system. Other technology vendors have tried this, and it's not just the technology, it's also all the constituents you have to deal with, all the regulatory environment. There's a lot of cats to herd. How do you think you guys are gonna be able to approach that and sort of do better on that side of the equation versus other predecessors who have really had to pull back from efforts to try to do this?
Yeah. Well, right now, we have a great exemplar, right? We have this contract with the United States government for the Department of Defense, where we're doing the next generation system for the Department of Defense and the VA. I think nothing like delivering a fabulous system, you know, to replace what they currently have to create converts. We're just gonna delight our customers. I mean, delight this one prime customer in particular. That's very important because it's a huge number of people. You know, the idea is to. By the way, Cerner has a number of customers in NHS also.
Our plan is simply to deliver surprisingly great technology to our existing customers, just get it automatically, and include all of the public health systems that are layered on top of the provider clinical systems, include the patient engagement systems, include the automated payments approval system, include the workforce. Now, we have lots of customers that use our HCM, a lot of providers. Mount Sinai, Cleveland Clinic, Mayo Clinic already use our HCM. You say, "Well, what does HCM got to do with healthcare?" Managing their workforce is being done by our HCM system. Hiring nurses, scheduling nurses for the OR two weeks from now, at 6 a.m. on Monday morning when the operating theater opens.
Getting those people scheduled when, you know, those nurses do not work for you full time, they were contractors. Helping them manage their contract workforce, scheduling their contract workforce, pay, you know, paying them, helping them do a better job ordering and maintaining medical supplies and inventory through the procurement system. In addition to the clinical systems that provide all the patient's health records instantaneously available, just like all the patient's financial records are instantaneously available through the global credit system, all the patient's health records should be instantaneously available where it isn't now. To solve those problems is actually delightful to the existing set of customers, and delight to those customers. To deliver public health systems that start tracking in every hospital.
You know, we talk about looking for the next virus, having a surveillance system that looks, that scours the world, does gene sequencing of pathogens all over the world. It's called GPAS. We did it in concert with the University of Oxford. You know, where we're looking all over the world for the next pathogen that's gonna cause the next pandemic. That's very important. We're gonna do that. We're using the same system inside of every hospital to look for bacteria, these super bacteria that are resistant to antibiotics, and gene sequence out that bacteria and be able to identify that. That's something hospitals need to do every day.
That system, we're expanding the GPAS system now as we speak to tackle that problem of antibiotic resistance to bacteria that are uniquely found in hospitals that are very, very dangerous to do all of that. To deliver those to our existing customers, just show up as part of their Cerner system. If we do that, if we create these exemplars, then we show the world our customers and then the world that we can deliver this, then that will cut through all of the red tape than any other thing we can do. We just have to make our existing customers more efficient, more successful, keep people out of the hospital, improve lives. If the existing systems we deliver can do that, people will then adopt. More people will then adopt those systems.
Thank you all very much.
Okay. All right, everybody. Thank you. Thank you, Larry. Thank you all for coming. Really appreciate you spending some hard time out here with us. Remember, turn off your Netflix, turn off your Hulu, turn off Amazon Prime, turn on Oracle CloudWorld. Watch on demand, snuggle up with your loved ones. It'll be a great time. Take care. Good night, everybody. Bye-bye.
Thank you.