Welcome to Oracle's third quarter 2018 earnings conference call. I'd like to turn today's call over to Ken Bond, Senior Vice President.
Thank you, Holly. Good afternoon, everyone, and welcome to Oracle's third quarter fiscal year 2018 earnings conference call. A copy of the press release and financial tables, which include a GAAP to non-GAAP reconciliation and other supplemental financial information, can be viewed and downloaded from our investor relations website. On the call today are Chairman and Chief Technology Officer, Larry Ellison, and CEOs Safra Catz and Mark Hurd. 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 made today.
We caution you against placing undue reliance on these forward-looking statements, and we encourage you to review our most recent reports, including our 10-K 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. As a reminder, Safra's comments today will use constant dollar growth rates unless stated otherwise, and Mark's comments will use U.S. dollar growth rates. We are not obligating ourselves to revise our results or publicly release any revision to these forward-looking statements in light of new information or future events. Before taking questions, we'll begin with a few prepared remarks. With that, I'd like to turn the call over to Safra.
Okay, thanks, Ken. Good afternoon, everyone. I'm going to focus on our non-GAAP results for Q3. I'll review guidance for Q4 and turn the call over to Larry and Mark for their comments. As you can see, we had another solid quarter. Before discussing Q3, let me just point out that the GAAP income statement was impacted by a one-time net charge totaling $6.9 billion related to the 2017 Tax Cuts and Jobs Act. This is clearly a one-time event. For ease of comparison, we have excluded it from our non-GAAP calculations. Back to the quarter. Total cloud and software revenues were $8 billion, up 7% and up 3% in constant currency. Inside of cloud and software revenue, GAAP total revenue for applications, which is new licenses, license updates, including support and SaaS, were $2.7 billion, up 9% or 6% in constant currency.
GAAP total revenues for platform and infrastructure, which is new licenses, license updates, including support, and PaaS and IaaS, were $5.3 billion, up 8% or 3% in constant currency. Cloud SaaS revenue for the quarter was $1.2 billion, up 21% on a non-GAAP basis from last year in constant currency. Fusion Cloud revenues up 52% in constant currency. Cloud PaaS and IaaS revenue for the quarter were $416 million, up 24% from last year in constant currency. Cloud PaaS and IaaS revenue, excluding legacy hosting services, saw growth of 49% in constant currency and 56% in U.S. dollars. As legacy hosting services become a smaller part of total PaaS and IaaS, the underlying growth of PaaS and next-generation IaaS will be more visible. As for cloud margins, our SaaS business continues to scale and grow, and the growth margin has expanded to 67%, up from 65% last Q3.
We expect to see further improvement and remain committed to our goal of 80% SaaS growth margin. The growth margin for PaaS and IaaS was 35%, down from last year. In looking ahead, I believe we're at the point where PaaS and IaaS growth margins will begin to improve, with Q4 slightly higher than Q3. Total new license and license updates, including support revenues, were $6.4 billion, up 4% in USD, with software updates and support revenue of over $5 billion for the first time ever, reflecting continued excellent renewal rates and the strength of our installed base of customers. Total non-GAAP revenues for the company were $9.8 billion, up 1% from last year in constant currency and up 5% in U.S. dollars. Non-GAAP operating income was $4.3 billion, up 4% from last year in constant currency, 9% in U.S. dollars.
The operating margin was 44%, which was up from 43% last year. There were a couple of one-time in and outs in the expenses impacting this, but basically, the operating margin has now increased year-over-year for six consecutive quarters. While I can't promise this will happen every quarter, I do expect that operating margins will continue to expand. The non-GAAP tax rate for the quarter was materially lower than guidance at 16.1%, reflecting the impact from the Tax Cuts and Jobs Act, as well as other one-time benefits. The GAAP tax rate was 222%, reflecting the $6.9 billion tax charge related to this Tax Cuts and Jobs Act. Non-GAAP earnings per share was $0.83 in U.S. dollars, up 20% in USD, and up 15% in CD. The GAAP loss per share was $0.98, driven by the one-time charges related to the Tax Cuts and Jobs Act.
Operating cash flow over the last four quarters was $15.2 billion, up 13% in U.S. dollars, and free cash flow over the last four quarters was $13.3 billion, also up 13% in U.S. dollars. Capital expenditures for the quarter were $286 million. I expect that cloud CapEx spending will continue to be driven by our ARR, and should we see higher than expected ARR growth, we'd expect to see higher CapEx investments as well. We now have more than $70 billion in cash and marketable securities. Net of debt, our cash balance is nearly $10 billion. The short-term deferred revenue balance is $8 billion, up 4% in constant currency. This quarter, we repurchased nearly 81 million shares for a total of nearly $4 billion. Over the last 12 months, we've repurchased 143 million shares for a total of $7 billion, and we also paid out dividends of nearly $3.2 billion.
The board of directors again declared a quarterly dividend of $0.19 per share. As we move to Q4 guidance, I want to remind you that we have a bit of a tough comparison, as last Q4, we beat our EPS guidance by $0.10. I will give you guidance for non-GAAP Q4 in USD and also in constant currency. Assuming current exchange rates, currency could be as much as 3% positive on total revenue and $0.03 positive on earnings per share. For Q4, cloud revenues, including SaaS, PaaS, and IaaS, are expected to grow 19%-23% in USD, 17%-21% in constant currency. Total revenues are expected to grow from 1%-3% in USD and -2% to 0% in constant currency.
Non-GAAP EPS in USD is expected to be between $0.92 and $0.95, and EPS in constant currency is expected to be between $0.89 and $0.92. This assumes a non-GAAP tax rate of around 20%. The important thing for you to know is that for fiscal 2019, I expect the new Tax Cuts and Jobs Act will translate for us to a tax rate of 19.5%. However, in any given quarter, we could see one-time tax events that will cause our actual tax rates to vary from our base rate. I expect that in normalizing for these one-time tax events, our tax rate will average around 19.5%. With that, I will turn it over to Mark for his comments.
Thanks, Safra. I'm just going to start with a few customer wins for the quarter and then make a couple comments, and I'll turn it over to Larry. First, in ERP wins. Avis Budget Group, Barrick Gold, by the way, also bought HCM at the same time. Baylor Scott & White Health, ERP and Fusion HCM. Blue Cross Blue Shield of Florida, Fusion ERP. Broadcom, Fusion ERP. Caesars Entertainment, Fusion ERP and HCM. Dubai Ports, Fusion ERP. Eastline Technologies, Fusion ERP. Master Lock, MTN Group, Wm Morrison Supermarkets, all Fusion ERP. In HCM, Arthur J. Gallagher & Co., City of Memphis, Diebold, again, Dubai Ports, Grant Thornton, Henkels & McCoy, Molina Healthcare. Also, MTN bought HCM.
National Oilwell Varco, Principal Financial Group, Hearst Group, also Wm Morrison Supermarkets, and a really, really large U.S. bank who bought HCM from us, which is one of the largest HCM transactions ARR that we have ever received. With that, a couple comments on the quarter. Safra mentioned our revenue numbers, up 6% with software and cloud revenue year-to-date, up 8% in operating income, up 10%, and EPS up 16%, up 20% in Q4 alone. Let me talk to you a little bit about our ecosystems. Our app ecosystem year-to-date is up 12%, and continue to grow faster than the market. Less than 15% of our apps customers have started to move their core apps to the cloud. Between customers that are partially moved and those not started yet, we have an enormous opportunity in front of us. SaaS bookings ARR.
ARR was roughly where I expected it to be in Q3. With SaaS revenue now approaching $5 billion, I'll focus my comments on SaaS revenue as opposed to ARR. SaaS revenue up 24%, now over a $4.6 billion run rate. ERP up 62% organically. Overall, ERP is now a $1.5 billion annualized run rate. Fusion HCM was up 71%. That's a revenue number, doesn't include the bookings that I described a couple of minutes ago. Verticals up 20%. Let me move to tech. By the way, on the verticals, I want to mention the 20% growth is compared to up 110% last year. On our tech ecosystem, year-to-date, our technology ecosystem is up 6%, with the database ecosystem also up at the same time, roughly 6%. Again, we're growing faster than the market.
The fact is that we are taking market share. With Autonomous Database just beginning to show up in our pipeline, this will only strengthen our technology ecosystem growth. PaaS infrastructure revenue is up 28%, with our next-gen PaaS infrastructure business growing 56%, already over a $1.1 billion annualized run rate. A few highlights, Oracle PaaS, which includes Database as a Service, up 34%. Public cloud infrastructure was actually up 142%. Storage infrastructure up 82%. Compute infrastructure up 121%. Network infrastructure up 181%. Cloud revenue, 25% growth, now at a $6.3 billion annual run rate. 80% of our trailing 12 months software and cloud revenue is now recurring in nature. We're executing well on a big and growing pipeline. Our pipeline is at a record level. Our year-to-date performance with top-line growth of 6% USD and 16% EPS growth reflect our success.
Looking forward for the full year, I expect our apps ecosystem, as I said early in the year, will grow around 10%. The tech ecosystem will grow around 5%. Our EPS will be above 10%. With that, I'll turn it over to Larry.
Thank you, Mark. Oracle's fully autonomous self-driving database is now available in the Oracle Cloud. No other cloud provider has a fully automated database, one that automatically and immediately applies security patches without requiring any scheduled downtime. Oracle's Autonomous Database features are absolutely unique. There are more autonomous cloud services to come. Over the next few months, we expect to deliver autonomous analytics, autonomous mobility, autonomous application development, and autonomous integration services. Oracle's new suite of autonomous PaaS services delivers an unprecedented level of automation and cost savings to our customers. Our highly automated suite of autonomous PaaS services reduces cost by reducing human labor and improves reliability and security by reducing human error. No other cloud provider has anything like it.
Thank you, Larry. Holly, if we could prepare the audience for Q&A, please.
Ladies and gentlemen, to ask a question, press star then one on your telephone keypad. To withdraw a question, press the pound key. Our first question will come from the line of Raimo Lenschow, Barclays. Raimo, please go ahead with your question.
We don't hear you, Raimo.
Go ahead. Yes, we can hear you now.
Okay. Sorry, thank you. I had a question around IaaS PaaS. You saw an acceleration of growth, which is great. Mark, you talked in February when we talked about bring your own license as a factor that we need to kind of consider. Can you talk a little bit about momentum you saw around IaaS PaaS and bring your own license this quarter? Thank you.
Yeah, Raimo, it's why I continue to try to focus you on the ecosystem number. I think, again, without Autonomous Database, frankly, being GA at this point, being generally available, as Larry mentioned a bit in his comments, we grew the tech ecosystem 6%. It shows up in different categories. It shows up in license. Again, licenses today are not really on-prem. Licenses are now currency that you can use in the cloud or you can use on-prem. Licenses are now able to be used both ways. We've seen strong database momentum in the context of being able to license and use sort of in the cloud or on-prem. By the way, we continue to see support grow in database at the same time.
You saw, as I mentioned in my comments, growth in Database as a Service simultaneously 34%. All of the core next-gen infrastructure categories grew in excess of 100%. Storage is actually up 82%. Compute up 121%. Yeah, we saw good momentum. Again, the key for us, though, is that whole tech ecosystem growth. I think with Autonomous Database, as we get a GA and build references, it's going to do nothing but get better.
Perfect. Thank you.
Our next question will come from the line of Kash Rangan, Bank of America, Merrill Lynch.
Hi, thank you very much, Safra. I'm looking at your SaaS guidance. Clearly, the business seems to be moderating into the 20-ish% type growth rate. At this point, how do we get the margin leverage that you've always talked about heading to 80%? Seems like, on a year-over-year basis, you're showing good improvement, but from 66%, 67% to get to 80%, in what looks to be perhaps, I'm not putting words in your mouth, in the space of a year. Seems like a pretty big leap, and I'm curious to get your thoughts how the company manages to accomplish that goal. Thank you. That's it for me.
Well, in running our SaaS business, it's really now getting to a scale, and we're able to use a number of new technologies that we're rolling out through the business that is giving us a lot more capacity. Before, we had to invest more for the same amount of users than we do now. We've got quite a lot of capacity improvement. In fact, we're not going to need to make too many more infrastructure investments into the SaaS business and yet handle a much larger install base. I don't know if anybody else wants to add to that.
For example, as we fully deploy database multi-tenancy in our SaaS estate, we double our capacity without spending one penny on hardware. We can handle twice as many customers, twice as many transactions, twice as many users without spending one dime.
Yep.
Those are the kind of technologies we can add that allow us to dramatically improve our SaaS margin.
Yeah, Kash, by the way, it's just straight math, right? At our current SaaS business, and you now play out, we're spending $1.3 billion, roughly speaking, in expense when you reverse engineer the gross margin. To Safra's point, we're just simply not having to buy a lot right now. Buy a lot in the context of adding to more expense. If you just dial forward our bookings, you put $1 billion of revenue on the top, you're roughly at that number.
Mark, I think you've just said that only 15% of apps customers have moved to the cloud, so the other 85% is ahead of you. Couldn't the company grow even faster in SaaS, given that you have a significant opportunity ahead of you? And that's it for me. Thank you.
Kash, I can clarify. First, you understand that that 15% have started. This is not 15% have moved all of their apps to the cloud. They've just started. There's a ton of room here. Tons.
There's a lot wrapped into that quote that I put out there. Let me try to unpack it a little bit. In terms of you looked at core, meaning I had a core E-Business Suite solution, and I replaced it with a cloud financials SaaS application. That percent of our user base that has moved is low single digits. The less than 15% number we put out is the percent of our user base that has some cloud application that they are now using. The percent of our user base that is in our pipeline now is getting to be fairly extent, meaning it's multiple tens percent of our user base. To your point, when we convert a traditional on-premise application to SaaS, we typically get 3x the revenue.
The bulk of our bookings, the bulk of our revenue today is not from our user base. In addition, one of the biggest users we have has now just migrated to the cloud, and that would be us. Oracle. We have migrated the entire company to SaaS. That's an important point because we've moved really the suite of ERP capabilities that we had traditionally on-premise now to the cloud. To your point, the ability to accelerate that growth rate, and I've not given this number, what we could do by taking market share and all of the above, which we truly believe we are and will continue to do. Just moving the user base does turn us into a very large SaaS business. To your point, very well accelerates our growth rate.
I'd like to add one thing to that, is that we have some very high growth rate SaaS businesses like ERP and HCM, that we developed organically. We have some slower growth rate SaaS businesses that we've acquired many years ago. As the mix changes, you see all the growth is coming from Fusion ERP, Fusion HCM, NetSuite is also, we expect, is going to have a good quarter this quarter. As you see this shift to the higher growth rate SaaS services, I expect that mix changes and Fusion ERP, Fusion HCM, and NetSuite become a larger percentage of the total. Again, to quote Mark, the math just says the growth rate should accelerate because of the mix change. I also think that's very important. Also, the renewal rates are much higher in the high growth SaaS services.
Fusion ERP, Fusion HCM, NetSuite have much higher renewal rates than we have in some of the older acquired SaaS products. The combination of faster sales and higher renewal rates should dramatically increase our growth rate in our SaaS business.
You asked a simple question, and you got a lot of data back.
A very analytical answer from Larry. Thank you. The rest of you.
It's right. The reason I say it to you is because it's important to understand, we actually don't have a SaaS business that really grows at the rate we report SaaS. We have acquired businesses that are growing low single digits that we've had for a while. Fusion growing mid-60s with the potential to grow higher.
Yeah.
We have NetSuite that we acquired that's growing mid to high teens, that to Larry's point, we think is going to start, we're starting to see the numbers grow faster. Vertical businesses that are growing roughly 20.
Yeah.
As you see, Fusion becoming a larger and larger percentage of our total SaaS business. The change in mix. Right now, you certainly have a very large Fusion SaaS business growing at a high rate, which then dwarfs those slower-growing acquired businesses. The re-acceleration, again, to quote Mark, is just a matter of math. Next question, please.
Our next question will come from the line of John DiFucci, Jefferies.
Thank you. My question also, I think, has to do with BYOL, I'm just trying to figure this out because, Mark, from our field due diligence, the flexibility offered customers with BYOL is something they really appreciate, it's certainly unique out there. Just nobody else is doing that, naturally other vendors are getting pressure to do it because you guys are doing it. I guess, when I look at your results here, I see the cloud revenue been moderating pretty aggressively over the last couple of quarters, I buy into the whole ecosystem thing that you're talking about. It makes sense to me that BYOL, that would be a result. I'm just trying to figure it out because it looks pretty aggressive, I'm getting pinged with emails too.
Is that what it is, or is it sort of the law of large numbers too? I'm not sure if we're going to. You said "accelerate" a couple of times, you used that word. When I think of that whole ecosystem, is that what you guys think will start to happen at some point, hopefully in the near future?
Okay. That was about 20 questions. I'm going to try to do my best to unpack it.
Okay.
I think you started talking about database. Then you introduced my comments on acceleration, which was mostly in apps and mostly around one portion of the apps ecosystem, which is SaaS. Let me go to tech. I'm sure Larry's going to want to chime in on this as well. The concept around BYOL is we don't want our customers paying twice. They get the opportunity to buy a license, they can bring that license with them to the cloud, and they can bring, for example, a database license to the cloud, now take advantage of that, buy the appropriate infrastructure, compute, storage, and then with that, perhaps some PaaS automation. If customers choose to buy that way, that will improve our license business the way it's reported, and it may have an effect on our cloud business in tech.
That's why I focus you on the ecosystem growth and the ability for us to grow faster. Then you have to add to it, we are just really bringing Autonomous Database to the market now. That's going to go through its phases to bring to market. That, and I've told you this, John, over the past several quarters, our tech ecosystem without Autonomous Database has been taking a little bit of share. I think Autonomous Database is the most important thing we've announced in years. I don't think the Autonomous Database, I don't want to be sarcastic because I don't want to be misprinted. It will accelerate our tech ecosystem growth.
Okay. That's clear. Thank you.
Thank you. Yep. Next question, please.
Our next question will come from the line of Adam Holt, MoffettNathanson.
Hi, everyone. Thanks for the question. We've been very focused on your total new license or new software revenue, which includes license revenue and cloud. There's been some movement about which has been a little bit better, which has been a little bit worse in the last couple of quarters. How should we, if we were to boil down all the comments you've made on the last couple of questions, think about the mix between license growth and cloud on a go-forward basis? Do you think that license growth could get close to breakeven? And then just for you, Safra, you started to really buy back some stock, which we love this quarter. Could you give us maybe a sense for what we should be thinking about from a share count perspective going forward? Is this the new normal on the buyback level? Thank you.
Well, I don't usually tell you in advance how much I'm going to buy back. We did $4 billion in this quarter. Seems like a reasonable amount to do. Don't really know what to tell you because I don't usually give guidance on my buyback. Don't expect it to exceed that in the next quarter.
That's great. Then the question about license mix versus cloud.
Yeah. Well, there's no doubt that BYOL, when you're bringing your license to the cloud.
Encourages customers to continue license purchases, continue to buy more database licenses, continue to buy database options like multi-tenancy, to buy database options like Real Application Clusters and the like. You will see, and again, our customers love the idea that once they make an investment in a license, they can use that license on-premise or in the cloud. You can deploy either place. Where historically people have thought of our license business as our kind of traditional on-premise business, in tech, that is simply not the case. In tech, our license business is now more and more of our licenses are being deployed in our cloud. By the way, they're not just being deployed in our cloud. Our licenses are being deployed in the Salesforce cloud, in the SAP cloud, in the Microsoft cloud, in the Amazon cloud.
Again, our license business is not a legacy business. Our license technology business is not a legacy business. These licenses are going to be used, and are being used more and more in modern clouds, not just the Oracle Cloud, but our competitors' clouds as well.
Yeah, I guess I would just say that I know how badly everybody wants to micro-analyze every single number, and it's why I've tried to focus you back on this ecosystem. We've grown our software business year to date, 8%. Some of that shows up in license, some of that shows up in cloud. Now, we have a couple drivers we've talked about on the call. We have Autonomous Database. That's going to show up in both license and cloud. It's a fungible currency in the context of how, to the earlier question, that I can now buy a license and I can bring it with me to the cloud. It could show up in either bucket. Again, focusing on the overall ecosystem growth is important.
The apps, we've talked about the user base and our ability to migrate to that user base, what effect will that all have? That'll show that apps support revenue goes down. SaaS revenue goes up.
Right.
These things are going to go on simultaneously, again, I'll say one more time, I think trying to micromanage every line is probably the wrong way to look at the company because we've got multiple drivers here, but they're all driving towards more overall software growth. Some could come in cloud, some could come in license, but we're going to continue to gain share in both ecosystem segments.
That sounds great. Thanks very much.
Next question, please.
Our next question will come from the line of Heather Bellini, Goldman Sachs. Heather, go ahead with your question.
Hi, can you hear me?
Yes.
Hello? Okay, great. Sorry. Mark, I know you don't want us to micromanage and fixate on license revenue, but you guys were seeing this segment shrink 10%-15% over the last couple of years, and you've seen a big change in that performance over the last few quarters. One of the big questions that keeps coming up is what's driving the performance? Again, not trying to micromanage it, but there's a big debate of how much of it is just 12c R2 benefits and therefore maybe more one time in nature versus maybe customers that are recommitting to Oracle ELAs because of some of the things they see that you're doing on the innovation front.
I guess, quite frankly, people are just trying to get a sense of how they think about growth and license as a result of all that over the course of the next year.
I think my answer may be yes, but I do think at the core of it is what we talked about earlier. Bring Your Own License gives now the customer, instead of having to figure out how much I'm going to buy here or there, I now get the ability to commit to a technology, and we, the customer, now have a currency that I can bring to whichever environment I want, whatever quantities I want. It now gives the customer ultimate flexibility, and that's what customers wanted. BYOL as a concept has given our customers a lot of relief. You add to that the fact that we also moved to Universal Credits, now gives the customer the opportunity to make even a cloud decision and reapply those credits across multiple cloud services.
This is a very, I know Heather has it, very customer-friendly environment we've created now in terms of the way they acquire our products, and it's having an effect on the market.
Let me try to be clear about this as I can be. With BYOL, when someone brings their database to the cloud, some of that revenue goes into license and some of that revenue goes into cloud. Without BYOL, if we didn't have BYOL, an Oracle customer went to the cloud, 100% of the revenue would go to the cloud. There's no question, BYOL has lowered our cloud revenue and increased our license revenue.
In technology.
In technology.
Next question, please.
Our next question is going to come from the line of Brad Zelnick, Credit Suisse.
Thank you so much for taking the question. On Autonomous Database Cloud, Larry or Mark perhaps, can you talk about the impact that it would have on conversion economics from on-prem, because I have to imagine you're going to get a better multiple than the 3x that you've talked about in the past, as you generally get with regular Database as a Service.
The amazing thing about the Autonomous Database is it's the only database on the planet that requires no human labor to administer the database. There are no DBAs tuning the system. There are no DBAs applying security patches. There are no DBAs backing up the system or recovering the system. It's all done automatically. The bulk of the cost of running a database is human labor. It's not buying the software, it's not buying the cloud service, not buying the hardware or the cloud services or anything else. It's the human labor, and we basically take that to zero. There's huge value by getting rid of this human labor. It's not only cost savings. I think I said earlier in my opening remarks, if you eliminate human labor, you eliminate human error. That gives you a much more secure system.
Nobody forgets to patch something and your CEO ends up getting fired or on the front page of a newspaper. No one forgets to apply a security patch and your data is stolen. That's all automated. You have a much more secure system. You have a much more reliable system. You got to be willing to pay less, because human beings cost a lot of money, and we've automated them out of the system. We think this new Autonomous Database is, again, maybe the most important thing Oracle's ever done in terms of data management. We are the number 1 data management company on the planet right now, and have been for some time. We think this is a very big deal. We think the bulk of our customers are going to move the Autonomous Database. Let me talk about migration.
When you move from an on-premise database to an Autonomous Database, you kind of press one button. You don't have to set up indexes or retune it or do anything else. Your data automatically moves from on-premise into our Autonomous Database in our cloud, running on high-performance gear that pretty much guarantees to give you. If you're running Exadata on-premise, it will run at the same speed. If you're not running an Exadata on-premise, it will run 10 times faster by moving to the cloud. It runs multiples of times faster than Amazon. I keep hearing you say, "Okay, Oracle's got a faster database than Amazon." No big surprise there. The interesting thing, Amazon charges by the minute, and we charge by the minute. Our prices are essentially the same or close enough.
If we run 10 times faster, we are one-tenth the cost of Amazon databases. That's what it is. We've run all these public benchmarks. You can go look at them. We're one-tenth the cost. We automatically apply security patches. We eliminate human labor. It's a huge benefit to our customers to move to the Autonomous Database. It just went live a couple of weeks ago, and we expect it's going to change the profile of our company forever. By the way, Brad, to your question about the multiple, the answer to your question is yes.
Okay. Thank you.
Next question, please.
Our next question will come from the line of Mark Moerdler, Sanford Bernstein.
Thank you very much. Safra, Mark. Software support and constant currency has been growing 2%, 3% year-over-year in the recent quarters, but was only up 1% this quarter in constant currency. Are you seeing increased cannibalization of the on-premise business by your own Oracle Cloud SaaS and PaaS, or are there other factors that are coming in?
Actually, all year-