Welcome to Oracle's 4th Quarter 2021 Earnings Conference Call. Now I'd like to turn today's call over to Ken Bond, Senior Vice
President. Thank you, Erica. Good afternoon, everyone, and welcome to Oracle's Q4 fiscal year 2021 earnings conference call. A copy of the press release and financial tables, which includes a GAAP to non GAAP reconciliation and other supplemental financial information can be viewed and download it from our Investor Relations website. Additionally, a list of many customers who purchased Oracle Cloud Services or went live on Oracle Cloud recently will be available from our Investor Relations website as well.
On the call today are Chairman and Chief Technology Officer, Larry Ellison and CEO, Safra Cat. As a reminder, today's discussion will include forward looking statements, including predictions, expectations, estimates or other information that might be considered forward looking. Throughout today's discussion, we will present some important factors relating to our business, which may potentially affect these forward looking statements. These forward looking statements are also subject to risks and uncertainties that may cause actual results to differ materially from the statements being made today. As a result, we caution you in placing undue reliance on these forward looking statements, and we encourage you to review our most recent reports, including our 10 ks and 10 Q and any applicable amendments for a complete discussion of these factors and other risks that may affect our future results or the market price of our stock.
And finally, we are not obligating ourselves to revise our results or these forward looking statements in light of new information or future events. President. Before taking any questions, we'll begin with a few prepared remarks. And with that, I'll turn the call over to Safra.
Thanks, Ken, And good afternoon, everyone. We are again reporting earnings earlier than last year. And with Fusion ERP, Company. We are now filing our quarterly and annual financial statement faster than any other company in the S and P 500. This is Investor Relations Officer, the highly automated and machine learning enabled system that helps us complete the accounting of financial transactions Investor Relations and Company.
As you can see, we had a fantastic quarter with revenue nearly $200,000,000 above my guidance. Q4 is really a story of every product, every region and every metric exceeding expectations. The credit for the excellent full year results in the quarter goes to our global team of employees who supported our customers without interruption this past year. We were successful by continuing to deliver Investor Relations and Information, many who reinvented themselves in real time because of the pandemic. Now the growth rates we are reporting today are entirely organic, reflecting Customer Acquisition related growth across our product portfolio.
Total cloud services and license Corporate revenue for the quarter was $7,400,000,000 up 8% in U. S. Dollars, 4% in constant currency, Application subscription revenues were $3,000,000,000 up 11% in U. S. Dollars and 7% in constant currency.
Our strategic back office cloud applications now have an annualized revenue of 4,400,000,000 and grew 32% in constant currency for the quarter, including Fusion ERP, which was up 42%, NetSuite ERP up 22% and Fusion HCM up 30%. Our back office cloud application revenue is not only bigger than our nearest competitor, subscription revenues were $4,300,000,000 up 6% in USD, up 2% in constant currency. Infrastructure Cloud Services now have an annualized revenue of more than 2,300,000,000 OCI consumption revenue, which was up 103% in constant currency, Autonomous Database up 56% and CloudCustomerrevenue up 50%. Database subscription revenues, including database support and database cloud services were up Investor Relations Officer, 8% in USD, 4% in constant currency. Customers are adopting OCI Because of its unique focus on performance and security at the most competitive price, The highly differentiated autonomous database which is available there and the flexibility of deploying Oracle Cloud both in our own data center, what we call public cloud, or behind our customers' Firewall Cloud Ad customer.
License revenues were $2,100,000,000 up 9% in Investor Relations Officer, up 8% in USD, 4% in constant currency. Operating expenses were up 6% in constant currency this Quarter as we made significant investments in our cloud business. And while you can see some of the ROI in FY 'twenty one's revenue growth, Investor Relations. We expect the most of the return will be realized in FY 'twenty two and beyond. Non GAAP operating income was 5,400,000,000 up 6% in USD and the operating margin was 49%.
The non GAAP tax rate for the quarter was 10.7% and below our base tax rate of 20 Investor Relations as a result of some discrete items that hit in the quarter. EPS was 1.54 Investor Relations Officer, up 29% in USD and up 22% in constant currency. Investor, Curry. Now for the full fiscal year, total cloud services and license support revenue was 28 $700,000,000 up 5% in USD, up 3% in constant currency. Customer Care at USD 2% in constant currency.
FY 2021 recurring cloud services and license support revenue as a percentage of total revenue now represents 71% of total company revenue, up from 70% last year, EPS for the year was $4.67 up 21% in USD, The full year operating margin percentage was 47%, actually our best results in 7 years and up Corporate basis points from 44 last year. Operating cash flows Consumer Financial Officer, over the last 4 quarters was a record $15,900,000,000 up 21% in USD. Our free cash flows was also a record $13,800,000,000 up 19% in USD with capital expenditures of $2,100,000,000 during the year. For the quarter, Capital Markets. Operating cash flow was $4,800,000,000 up 34% in USD and free cash financials.
The cash flow was $4,100,000,000 up 30% from last year. As an aside, free cash flow would have been Investor Relations, about $300,000,000 lower as some CapEx targeted for Q4 was actually spent in the last Earnings. Earnings and earnings per share was $8,800,000,000 up 10% in USD, 5% in constant currency. The remaining performance obligation or RPO balance is 41,300,000,000 Investor Relations Officer, up 8% in constant currency due to strong bookings. Approximately 60% is expected to be recognized as revenue over the next 12 months.
As you've heard me say many times before, We are committed to returning value to our shareholders through technical innovation, strategic acquisitions, Capital Markets and the dividend. This quarter, we Repurchased 107,000,000 shares for a total of $8,000,000,000 Over the last 12 months, We repurchased 329,000,000 shares for a total of 21,000,000,000
Investor Relations. Over the last 10 years, we
have reduced the shares outstanding by more than 44%. In addition, we paid out dividends of $3,100,000,000 over the last 12 months and the Board of Directors declared a quarterly dividend President of $0.32 per share. Now to the guidance. Let me first start with my confidence in the continuation of our revenue growth acceleration for fiscal year 2022. As I've said many times over the last 2 years, Our overall revenue growth is continuing to accelerate as our fast growing cloud business becomes a larger portion of our total revenue.
I see total revenue for fiscal 2022 growing faster Given our increasing confidence in revenue growth and our unique and differentiated position in the market, we are going to invest Investor Relations, and I'll now turn the call back in the business at a greater rate so we can further accelerate the top line. We also see cloud as being fundamentally a more profitable business compared to on premise. And as everyone knows, Investor Relations. Our annual non GAAP margins of 47% and that's what we run the business at are in fact the highest Non GAAP Margins of all of our competitors, and we believe that now is the right time Investor Relations Officer to increase our investment to capture market share. As such, we expect to roughly double Investor Relations.
Our cloud CapEx spend in FY 2022 to nearly $4,000,000,000 We are confident Investor Relations, that the increased return in the cloud business more than justifies this increased investment and our margins who will expand over time. Let me now turn to my guidance for Q1. I'll review this on a non GAAP Advisors and assuming currency exchange rates remain the same as they are now. Currency should be about 2% to 3% positive on total revenue and $0.03 positive on EPS in Q1. However, Q1 are expected to grow from 3% to 5% in USD and are expected to grow 1% to 3% in constant currency.
Cloud Service and license support revenue growth for Q1 will be about the same as Q4 6% and be between $0.94 $0.98 in USD. Non GAAP EPS growth in constant currency Consumer Markets. Now my EPS guidance assumes a base tax rate of 19%. Company. However, one time events could cause actual rates for any given quarter to vary, but I expect to normalize and for these one time events, our tax Officer, who will average around 19 or so.
Finally,
we want
to thank our employees around the world for working so hard and staying focused and our customers and partners during the pandemic. And we also want to send particular thanks and warmest wishes including providing vaccinations. We just want to thank all of you and congratulate you all on a successful year year end. You've all been remarkable. So thank you.
And with that, I'll turn it over to Larry for his comments.
Thanks, Dapo, and great job. Your team delivered a spectacular Q4. Clearly, our strategy to develop cloud applications with cloud infrastructure is now beginning to drive top line revenue growth to go along with years of consistent double digit earnings per share growth. Our strategy Is this easy to explain as it is technically challenging to implement? That's a good thing.
If it wasn't hard to do, Others would be able to do it. Our strategy in applications depends on Oracle becoming the world's largest provider Cloud ERP Systems. Then building upon that strong ERP foundation, We're going to expand into manufacturing CRM and industry specific applications. We are successfully executing this strategy. Oracle Fusion and NetSuite are now the world's 2 most Customer Cloud ERP Systems.
SAP, the leader in on premise ERP, never rewrote their ERP system for the cloud. This has caused hundreds of customers to abandon SAP and migrate to Oracle Fusion ERP. That's already happened. But over the coming months, Several more major banks and utilities and a lot
of other
companies will complete their Oracle Fusion implementation projects and go live on Fusion ERP. Oracle is taking massive amounts of share Investor Relations and NetSuite services. It's crucial to our future. While our Fusion and NetSuite services President and CEO of the Board of Directors and Company has long been growing. We have also developed a complete new generation of cloud application suites.
Our new manufacturing systems fully support and manage automated robotic factories. No one else does that. Our new cloud CRM applications help you sell more by fully automated Internet Advertising, Lead Generation and Qualification. Nobody else does that. Our healthcare initiative is an outgrowth of the National Public Health Management Systems that we built to manage the COVID-nineteen vaccine clinical Health and Vaccine Distribution in the United States and in other countries around the world.
In summary, our cloud application portfolio is more complete than other app vendors and Better Integrated because almost all of our applications were developed internally, not acquired. Our infrastructure strategy depends on AI technology, specifically neural networks and machine learning Customer Service that we use to develop 2nd generation autonomous cloud services, such as the Oracle Autonomous Database, The Oracle Autonomous Linux Operating System and an array of autonomous cybersecurity defense bots that automatically identify and neutralize cyber attacks. All of Oracle's cloud applications then run within Investor perimeter of Oracle's autonomous cloud infrastructure, the most reliable and secure platform in the world. And that's increasingly important in a world plagued by cyber warfare, data theft and ransomware. Oracle's autonomous database and other autonomous services eliminate human labor.
No human labor means no human error or opportunity for human mischief. Automy makes computer systems and cars much safer and more reliable. The Oracle Autonomous Database offers 99 0.995 percent availability. That means only a few minutes of downtime a year. And we have 0 downtime security patching and Upgrade available today for infrastructure and very soon available for all of our applications.
Economics is also important. OCI has by far the best cost performance of any infrastructure hyper Senior Execute. That's why so many service providers like Zoom have chosen to expand into OCI. OCI's cost performance is continuously getting better. Our new version of MySQL, the world's most popular open source database, Every minute you don't use is money saved.
Our new ARM microprocessors from technology partner Ampere and by far the lowest energy usage of any server microprocessor in the world. So our latest infrastructure technologies are good for our applications, good for your budget, good for the health of the planet and very good for Oracle's future. Back to you, Setha.
Thank you, Larry. Erica, if you could please now prepare the audience for questions.
On your telephone keypad. Our first question comes from Mark Moerdler with Bernstein Research.
Thank you and CEO. Congratulations to the team on a clean, nice quarter. I'd like to try to get some more color on the drivers of the success CEO of the Oracle Cloud ERP solution. Can you give us some more sense of how much of Oracle Fusion ERP is from new Oracle ERP customers? Partners.
How much is international versus the U. S? How much is large enterprise? Where is the sweet spot? Any color you can give to get a sense of what's really driving the growth and how much of that is new to versus existing customers would be very helpful.
Yes. This is Larry. There are more new customers than upgrades from on premise ERP with Oracle Fusion. So, it's probably about sixty-forty or in the 60s, 40. It's probably not quite 2 to 1 new customers, But most of the a majority of the business is coming from new customers.
We're also upgrading our installed base More revenue is coming from new customers, In for customers, people like that, than coming from our installed our on premise installed base. So that's a really good trend. And we think that trend is actually going to accelerate in favor of new customers because the SAP migration phenomena is relatively recent in the last 12 months Over the last 2 years, but it's really accelerating now in the last 12 months. So we think that's going to hold. So Another way to look at it is it's a very as people migrate to Oracle Fusion ERP and Smaller companies migrate to NetSuite ERP.
These are both enormous businesses. Fusion ERP. I mean, certainly much bigger than $10,000,000,000 NetSuite is bigger than $10,000,000,000 Fusion is probably bigger than $20,000,000,000 As these businesses mature.
Yes. And as far as where it's happening, I have to tell you, it is It's so broad based. It is a worldwide phenomena for us. Our Fusion, Nest Suite are just Chugging along, it was an incredible Q4 and Q1 looks enormous. So imagine bookings are way up and there's just a lot of success.
We have so many customers that have gone live. So we have references from some of the largest companies in the world to really small or medium sized companies that it's pretty consistent. Almost any prospect can find many companies Just like it already being incredibly successful. And I think that frankly, the pandemic taught many of our prospects and customers that moving quickly is really required these days. I think that Folks used to think moving quickly is risky.
I think they really saw that they had to move to much more modern, flexible, digital businesses and that we are the destination for them
Thank you. That's great. I really do appreciate.
Analyst. I'd like to add one thing. We almost never lose a competitive ERP deal in the cloud, virtually never.
And our next question is from Keith Weiss with Morgan Stanley.
Excellent. Thank you guys for taking the questions. And congratulations on another year of 20% or a year of 20% plus earnings Group. And frankly, nice to see the stock starting to reflect the durability of earnings growth you guys have seen over the past couple of years. So it's nice to see that.
I wanted to dig in a little bit on the infrastructure side of the equation, in particular OCI. Another quarter of, I think you said 103% growth in OCI consumption. Can you dig in a little bit on sort of what are the workloads that are being done on OCI? Is this just all Oracle database workloads? We know there's a lot of those out there that just run so well on OCI?
Or is there a broader perspective of The big workloads that guys are bringing over. Not looking for commentary on any specific customer, but just broadly, what do you see in this space? Like where do you guys do well? Where do you win with OCI.
Okay. It's really easy to remember. About half of it is database, half of it is everything else. So everything else The database you understand, they're lifting and shifting existing database workloads and developing new Oracle database workloads on OCI. The other thing varies from things like Zoom, who have moved over, but also in simulations.
And We're very, very good at running simulation software. So almost so a large number of car companies have moved all of their craft simulations To the Oracle Cloud because we do it faster and cheaper than any other cloud. So We have actually a pretty balanced portfolio right now where we have the Oracle database contributing to half of the Workloads running on running in OCI and the other half is a variety of new customers doing new applications, not database related.
Yes. Yes. That's super helpful.
Keith, thank you. First of all, thank you for the sense. The reality is that any customer that is really focused on performance, security, like Larry mentioned, and cost, which happens to show up in many, many workloads. One of the areas we're doing particularly well are ISVs who are obviously experts at running their workloads. They're in the business and they are coming to us extensively because they're really studying the benefits that we bring them.
And of course, as I mentioned, and as we never stop mentioning, Security, while still giving you incredible performance at lower costs. I mean, once we are given a try, what happens is close comes, one more close comes and it's usually followed by many others. And so it's we've got a lot of momentum, let's say.
I want to emphasize one thing. I said it, but I want to say again is there are new Oracle workloads being developed, especially in the area of genomics where there have been a number of new databases moved to Oracle and OCI that track things like the genetic variance of COVID-nineteen. But there are a number of these things and you'll see a whole series of announcements coming out Where we've moved aggressively into healthcare and one of the big new applications for our database is tracking the genomics of pathogens. And those databases are being developed right on Oracle Autonomous Database from scratch.
Outstanding. That's great color guys. Thank you.
Our next question comes from Derrick Wood with Cowen and Company.
Great. Thanks for taking my questions and congrats as well on a strong quarter. I've got one for Safra and one for Larry. Zafra, in the past, you've talked about the potential revenue opportunity for the app space if you were to migrate everybody to SaaS. I wanted to ask about the database side and in particular Exadata.
Can you give us a sense of what the revenue potential or uplift could be if you shift With all Extadata customers, the CloudCustomer and how you feel about the strength of those motions heading into the new fiscal year. And then for Larry, I mean, as you guys push to drive adoption of autonomous database, should we think of CloudCustomer being the biggest vehicle for adoption or what routes to market do you see working best?
Okay. Let me get Started and then Larry can finish. So Derek, I'm glad you asked because when customers move from running their own Dozen or 100 Exadata. When it's time for a refresh or a new set, We prefer that they go to CloudCustomer and or have a dedicated region. However, just so that you know, since you all focus on the numbers, you have to understand that when we sell hardware regular way, we recognize All that revenue once it's delivered, all that hardware is delivered.
But when we Installed CloudCustomer, Exadata CloudCustomer or Dedicated Region. We President of Finance. I don't recognize that revenue upfront. And so and you don't even see that that is All happening right now in our income statement and yet we're still growing. So as a general matter, first of all, Investor Relations.
It is much even though, we believe we make around 3 times, maybe more In revenue in the case of CloudCustomer versus selling just selling the hardware can be anywhere from 3 to 5 times. The customer actually ends up spending less because we manage their entire Estate. We update their databases, etcetera, depending on what services they're using. And they get the benefit of always having capacity, always having the most up to date system, the most secure system 5 times as much. In fact, they end up spending much less to maintain that estate.
So for it's kind of a win win, because we are much more efficient, fully automated Education Systems. Okay. I guess Larry's question, what was it again, Derek?
It was your own autonomous database and what kind of the route to market to drive adoption. Is cloud customer really the biggest vehicle or are there other routes that are working well too?
Well, autonomous database only runs in the cloud. It does not run on premise. It doesn't run on even the Exadata appliance. It runs on customer or public cloud. So Right now, the public cloud is the most popular route for autonomous database And CloudCustomer is becoming more popular as people scale up.
So but right now, The most popular way to use autonomous database is in the OCI public cloud. Great. Thank you.
Our next question is from Kirk Materne with Evercore ISI.
Thanks very much and thanks for taking the question. I was wondering, Safra, could you just talk about sort of the performance in Europe this quarter? It looks like it bounced back nicely. And I guess along those same lines, can you just talk about Cloud Adoption on sort of the geographic. Is this maybe what you're seeing in the I assume you guys is probably leading the charge, but what you're seeing in other Regions just following maybe close behind it.
Thanks.
Sure. So first of all, I have 2 new leaders Investor Relations in Europe, Middle East, Africa. I have a very refreshed and new and really successful Financial Management team in Europe, and they are pretty much firing on all cylinders. It is extremely broad throughout Europe, Middle East, all of EMEA. I'd also tell you incredible strength worldwide.
Latin America doing Phenomenally. Japan doing phenomenally as a result of JPAC doing very, very well and of course led by North America. I have to tell you, it's been an amazing year. It was a phenomenal quarter, Truly an amazing year worldwide, and I'm more than satisfied. I am delighted by the Results of the team.
And for me, this was my 1st full year with the field. So I really applaud the team for doing a spectacular job worldwide.
Our final question comes from Raimo Lenschow with Barclays.
Hey, thanks for squeezing me in. Safra, the one thing that was interesting that we didn't really talk that much about is your RPO and RPO growth. Can you talk to that again? Because like the growth there is actually even better than I see on the revenue line. And that to me suggests that this wasn't just Q4.
It looks like things are coming together growth based in the coming quarters as well. Thank you.
Yes, Toremo, you are so right. Q4, but really it's just coming together all around. The RPO, I'm glad you really, really strong. Bookings are were truly enormous. Obviously, they don't show up in the income statement right away, but they The future is just so positive and you might have heard me.
I was hinting to that In my comments and one of the reasons we're so comfortable leaning into our investment because We really want to make sure we've got the capacity to take on the enormous amount of bookings that are flying in and that both were contracted during the year and are going online. And so, will be recognized over this next year and beyond. But there is just an enormous backlog for us customer of customers that are going live and that will start consuming and We're very optimistic. So thank you so much for asking and I'm glad you noticed that.
Thank you. Okay, congrats.
Thank you, Safra.
If If there
are any questions coming out
of this call, please feel free to call the Investor Relations hotline. Otherwise, I'll turn the call back to Erica for closing.
President. Thank you for joining today's Oracle's 4th quarter 2021 earnings conference call. We appreciate your participation. You may now disconnect.