Oracle (ORCL) Q3 2022 Earnings Name Transcript

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Oracle ( ORCL 0.72% )
Q3 2022 Earnings Name
Mar 10, 2022, 5:00 p.m. ET

Contents:

• Ready Remarks
• Questions and Solutions
• Name Contributors

Ready Remarks:

Operator

Good afternoon. Thanks for standing by. Welcome to Oracle’s third quarter 2022 convention name. It is now my pleasure at hand at the moment’s convention over to Oracle’s senior vp, Ken Bond.

Ken Bond — Senior Vice President

Thanks, Holly. Good afternoon, everybody, and welcome to Oracle’s third quarter fiscal 12 months 2022 earnings convention name. A replica of the press launch and monetary tables, which features a GAAP to non-GAAP reconciliation and different supplemental monetary info, may be seen and downloaded from the investor relations web site. Moreover, an inventory of many shoppers who bought Oracle Cloud companies or went reside on Oracle Cloud not too long ago can be out there from the investor relations web site following this name.

On the decision at the moment are chairman and chief know-how officer, Larry Ellison; and CEO, Safra Catz. As a reminder, at the moment’s dialogue will embody forward-looking statements, together with predictions, expectations, estimates or different info that may be thought-about forward-looking. All through at the moment’s dialogue, we are going to current some essential components referring to our enterprise, which can doubtlessly have an effect on these forward-looking statements. These forward-looking statements are additionally topic to dangers and uncertainties which will trigger precise outcomes to vary materially from statements being made at the moment.

Because of this, we warning you towards inserting undue reliance on these forward-looking statements, and we encourage you to evaluation our most up-to-date experiences, together with our 10-Ok and 10-Q and any relevant amendments, for a whole dialogue of those components and different dangers which will have an effect on our future outcomes or the market worth of our inventory. And eventually, we aren’t obligating ourselves to revise our outcomes or these forward-looking statements in mild of recent info or future occasions. Earlier than taking questions, we’ll start with just a few ready remarks. Nonetheless, we can be making no feedback relating to Cerner.

With that, I would like to show the decision over to Safra.

Safra Catz — Chief Government Officer

Thanks, Ken, and good afternoon, everybody. I would like to begin by acknowledging the tragic occasions unfolding in Jap Europe because of the Russian invasion of Ukraine. We’re working extremely exhausting to assist our Ukrainian workers and assist our prospects and companions. Now we have suspended all Oracle operations in Russia, and we did so nicely over every week in the past.

I will now flip to Oracle’s third quarter outcomes. I will evaluation our non-GAAP outcomes utilizing fixed greenback progress charges except I say in any other case. And clearly, we had a superb quarter with complete income rising over 7%. Not solely was complete income above the midpoint of my steerage, nevertheless it was additionally the best natural progress charge since we started our transition to the cloud.

We noticed broad-based outperformance in all segments. And for the primary time in additional than 10 years, all segments of our enterprise noticed progress. Whole cloud revenues, when annualized, at the moment are $11.2 billion, and so they grew 26%. I anticipate the cloud income will exit the fiscal 12 months rising within the mid-20s.

Whole cloud companies and license assist revenues for the quarter had been $7.6 billion, up 8% and accounted for 73% of complete firm income. GAAP utility subscription revenues noticed report degree natural progress of 10% and had been $3.2 billion. Fusion apps had been up 29%, with strategic back-office purposes now having annualized income of $5.1 billion and rising 30%, together with Fusion ERP, up 35%; and Fusion HCM, up 22%; and NetSuite ERP, up 29%. GAAP infrastructure subscription revenues had been $4.5 billion, up 7% and better than final quarter.

And excluding legacy internet hosting companies, infrastructure cloud companies grew greater than 60%. And I anticipate the infrastructure income progress charge will pattern larger over time. OCI consumption, which incorporates Autonomous Database, was up 93%, additionally larger than final quarter. And complete cloud at buyer income was up 43%, with the backlog for cloud at buyer machines rising to triple digits.

Database subscription revenues, together with database assist and database cloud companies, had been up 4%, and once more, larger than final quarter. License revenues had been $1.3 billion, up 4%, with sturdy efficiency in our tech enterprise. So all-in, complete revenues for the quarter had been $10.5 billion, up over 7%, and as I discussed earlier, our highest natural progress charge in over 10 years. Working bills had been up 10% this quarter as we make investments to satisfy rising demand for our cloud companies.

The gross margins for cloud companies and license assist was 84%, and the gross revenue {dollars} grew 5%. I anticipate the total 12 months progress in gross revenue {dollars} for cloud companies and license assist can be larger than final 12 months. Our plan is to proceed to develop income whereas we push our top-line progress into double digits subsequent 12 months. Non-GAAP working earnings was $4.8 billion, up 4% from final 12 months.

And the working margin was 46%, larger than all of our rivals. Earnings per share was adversely affected by round $0.05 per share, primarily resulting from share worth declines of fairness investments impacted by the widespread downturn in fairness markets final quarter. The non-GAAP tax charge for the quarter was 19%, in step with our base tax charge. And earnings per share was $1.13 in U.S.

{dollars}, up 1% in fixed forex and down 3% in U.S. {dollars}. The GAAP tax charge was 18.4%, barely under our base charge. And the GAAP earnings per share was USD 0.84.

Working money movement for the final 4 quarters was $10.4 billion, and our free money movement over the identical interval was $6.6 billion. Each outcomes had been negatively affected by a onetime litigation cost in Q2. Capital expenditures for the final 4 quarters had been $3.8 billion, and capex for Q3 was $1.1 billion. And we’re on observe to take a position $4 billion in capex this 12 months.

We now have greater than $23 billion in money and marketable securities. The short-term deferred income steadiness is $7.9 billion, up 1%, with gross deferred income rising 6%. The remaining efficiency obligation, or RPO, steadiness is $38.5 billion, up 13% in fixed forex resulting from very sturdy bookings. Roughly 59% is anticipated to be acknowledged as income over the subsequent 12 months.

As we have stated many instances earlier than, we’re dedicated to returning worth to our shareholders by technical innovation, strategic acquisitions, inventory repurchases and prudent use of debt and the dividend. This quarter, we repurchased 7 million shares for a complete of 600 million as we diminished the buybacks prematurely of the acquisition of Cerner. We have paid out dividends of $3.5 billion over the past 12 months, and the board of administrators once more declared a quarterly dividend of $0.32 per share. Our enterprise is powerful as our fast-growing cloud enterprise continues to grow to be a bigger proportion of the general enterprise.

A number of factors. First, my steerage assumes that Cerner doesn’t shut in This fall, although it very nicely might shut within the quarter. And once more, Cerner ought to be accretive within the first 12 months. Secondly, cloud is basically a extra worthwhile enterprise to on-premise.

And I anticipate that our full 12 months non-GAAP working margins for fiscal 12 months 2022, which we’re ending now, can be 1% to 2% larger than prepandemic ranges of 44%. Let me now flip to my steerage for This fall, which I will present on a non-GAAP foundation. Now the U.S. greenback strengthened dramatically in November.

And as you all know, it was lots of fluctuations this quarter. However assuming forex alternate charges stay the identical as they’re proper now, I anticipate we are going to see a forex headwind of two% to three% on income and $0.05 unfavorable for EPS in This fall. After all, the greenback might simply strengthen from right here. Whole income for This fall is anticipated to develop between 6% to eight% in fixed forex and develop between 3% to five% in USD.

Cloud service and license assist income for This fall is anticipated to develop between 6% to eight% in fixed forex and develop between 4% to six% in USD. Non-GAAP EPS for This fall is anticipated to be between $1.40 and $1.44 in fixed forex. GAAP EPS is anticipated to be between USD 1.35 and USD 1.39. Now each non-GAAP and GAAP EPS are anticipated to say no 12 months over 12 months resulting from some giant funding beneficial properties we noticed final 12 months, in addition to a really low tax charge final 12 months.

It was 10.7%. Each of those masked the sturdy earnings progress and momentum we proceed to see out of our core cloud enterprise. My EPS steerage for This fall assumes a base tax charge of 19%. As I at all times say, nevertheless, onetime tax occasions might trigger precise charges for any given quarter to be larger or decrease, however I anticipate that in normalizing for these onetime tax occasions, our non-GAAP tax charges will common round 19% or so.

And with that, I will flip it over to Larry for his feedback.

Larry Ellison — Chairman and Chief Know-how Officer

Thanks, Safra. I’ve two components to my feedback. I’ll begin with, if you’ll, enterprise as normal. And that’s going from power to power in our ERP and HCM cloud companies.

I’ll go over the wins and the go-lives for our strategic SaaS enterprise. Second, I’ll speak about our brand-new MySQL HeatWave product. I feel, it is honest to say, and I’ll learn the quotes — what I’ll do is communicate a little bit bit about it, after which I’ll learn the quotes from analysts and prospects. And I feel, you may discover that we have by no means had a product so nicely obtained by prospects and analysts in our historical past.

I am undecided the {industry} has both. These are actually — it is a outstanding innovation, however I’ll get to that in a second. First, how is our SaaS enterprise doing proper now? General, we have now unbelievable progress, profitable increasingly within the ERP and HCM again workplace. Q3 was an exceptionally sturdy quarter for ERP cloud gross sales.

We now have over 10,000 Fusion ERP, HCM prospects. And for the primary time, we’re starting to see — we have been on this enterprise lengthy sufficient. We’re starting to see us roll up sure industries, beginning with the most important {industry} on Earth, healthcare. OK.

So how are we doing in healthcare? We have already got Tenet Well being, Kaiser, Mayo Clinic, Cleveland Clinic, Northwell Well being, Mount Sinai, Atrium Well being. I can go a protracted listing of ERP and HCM wins within the healthcare — these are all healthcare suppliers. We have added some extra healthcare suppliers, primarily hospitals and clinics. We have added the CHS, Group Well being Providers.

That is a consortium, that is 83 hospitals, and it is an ERP, HCM, SCM win there. And we’re changing Kronos. I name that out as a result of Kronos — the hospitals actually are — whereas they don’t seem to be acknowledged having some similarities to Uber, they’ve lots of people that work at hospitals that aren’t workers on the hospitals. Hospitals have a gig economic system.

Docs work in a number of hospitals, a number of clinics, have their very own places of work. Nurses, identical factor. Scheduling and paying the workforce in hospitals is without doubt one of the most intricate issues ongoing in our altering economic system. And we have now tailored our HCM methods in order that we do assist the hospitals recruit, observe, schedule and pay for his or her well being professionals.

The one different firm that was doing that, somebody not very well-known is Kronos. And we’re starting to interchange out Kronos within the hospital area, and we did it at Group Well being Programs. We gained an HCM deal over Workday at TriHealth. Loma Linda College’s healthcare, well being facilities, we gained an HCM over there, and so they have already got our ERP.

Well being care is attention-grabbing. I began by speaking about hospitals, present — individuals who present healthcare. The healthcare {industry} is way larger than that. There are medical system producers.

There are pharmaceutical corporations. There are the payers, insurance coverage corporations and authorities companies which are all a part of this healthcare ecosystem. So we’re not simply centered on suppliers like hospitals and clinics, but in addition we gained a giant ERP deal over SAP at Johnson & Johnson, at J&J. We gained a giant ERP deal over SAP on the medical system firm, Haemonetics.

We gained an ERP deal at Saskatchewan Well being Authority, one of many authorities payer, and a lot of the payers in healthcare are governments. So it is this whole ecosystem that we’re constructing particular options and capabilities for to automate healthcare throughout the board. Nobody’s been capable of roll up healthcare. Everybody’s tackled this portion, simply the suppliers, simply the ambulatory clinics, simply the inpatient hospitals, simply the payers, simply the pharmaceutical firm, simply the medical system.

We’re going after the whole built-in ecosystem, and we’re having some nice outcomes. Clearly, that influenced our choice to purchase Cerner. Now we have nice go-lives at Franciscan Missionaries Well being System. That is a consortium of over 20 hospitals.

We gained on Entegris Well being. They went reside on our ERP, HCM d SCM, 16 hospitals. Nemours Kids’s Well being went reside in HCM with 34,000 customers. So healthcare has been an actual power for us.

And clearly, we’ll get stronger with Cerner as we offer extra functionality to suppliers. OK. The opposite {industry} that we have at all times outlined as being a key strategic goal of ours along with healthcare are — is monetary companies. And we have now a really sturdy place in monetary companies, Financial institution of America, J.P.

Morgan Chase, Santander, Financial institution New York Mellon, HSBC, Lloyds, Macquarie, Credit score Suisse, UBS, Credit score Agricole and much more are our prospects in ERP and HCM. We simply gained TD Financial institution, ERP win over SAP at TD Financial institution. We simply gained Silicon Valley Financial institution, one other win over SAP. We gained Societe Generale in France.

We now have two of the three largest banks after profitable Credit score Agricole in Q2, and we are going to get the opposite one. We are going to get Paribas very quickly. J.P. Morgan Chase simply did an enormous growth of our — on our HCM product.

Uncover, the bank card, simply went reside on ERP. So once more, sturdy in monetary companies, getting even stronger. In communications, our huge prospects, AT&T, Orange, MTN, Bharti Airtel, all all over the world. We simply added a giant ERP win at Rogers Communications.

Large go-live at Wind Tre, and that was a alternative. The go-live at Wind Tre was a alternative of SAP, not a win over SAP, however changing an present SAP system. In logistics and transportation, we had — the place our huge prospects are UPS, FedEx, Knight Swift, Yellow, Schneider Nationwide and so forth. We had a giant ERP HCM win over SAP at U.S.

Xpress. We had an HCM win at TD for its freight the place we changed Workday. Did not beat Workday. We changed an present Workday system.

Go-live at DHL. DHL is absolutely attention-grabbing. It was a go-live in Germany and Austria, proper in SAP’s yard. And we have now a lot of wins in Germany.

I feel, for this reason we’re fairly assured lately towards the previous winner — the winner on the on-premise ERP wars, SAP. In Germany, in SAP’s yard, we gained DHL. We gained Deutsche Publish. We gained Deutsche Bahn.

We gained Durr IT Providers, and we simply added a win at Daimler truck over SAP. In Japan, a rustic actually not recognized for getting bundle utility software program very a lot. We have a fairly good place in Panasonic. We’re in Panasonic.

We’re in Toyota. We’re at Mizuho Monetary Providers. This quarter, huge wins at Canon — a giant ERP win over SAP at Canon. An enormous win at Taisei that is one of many 5 largest common contractors in Japan.

So doing nicely in Germany, doing nicely in Japan, doing nicely in these huge economies the place, traditionally, we have now not achieved that nicely in purposes, however we at the moment are. In grocery, the place we have now Sainsbury, Co-op, Tesco, Auchan, Kroger and Albertsons. We had an enormous ERP growth at Kroger and a giant go-live at Albertsons with 280,000 customers. Albertsons is now reside on each HCM and financials.

So very sturdy in grocery. Motels and resorts had been our huge logos are Marriott, Hilton, Caesars, MGM. We simply gained Intercontinental Motels and Resorts changing — it is an HCM win. Changing — we’re not allowed to call who we changed in HCM apart from to say they seem to be a very giant cloud competitor of ours.

Hilton, we went reside with HCM, the most important HCM growth within the U.Ok. Greater ed. Greater ed the place our huge logos are UCLA, Princeton, Rutgers, Vanderbilt, Pennstate, College of Texas. We added an HCM win on the College of Cambridge within the U.Ok.

We added three extra campuses of the College of California system for ERP. We now have six of the 9 UC campuses for ERP. Tennessee, College of Tennessee, we gained ERP and HCM. The College of Arizona, huge ERP win, all larger ed.

However a few of the different industries, in client items, we had a extremely essential win in ERP, SCM at a division of Unilever. And that was an SAP alternative. Not a win over SAP, we changed them. In aerospace and protection, we gained ERP and SCM at BAE Programs — a win over SAP.

We gained HCM over SAP at Tata Metal. We gained a giant, a full suite growth at Cummins. Eni, in oil and gasoline, which has at all times been an SAP — very, very sturdy {industry} for SAP. We beat them, Eni, at a gasoline firm.

Within the public sector, we acquired, nicely, a vital company lately. IOM, the UN company — Worldwide Group for Migrants. This, once more, was a alternative of SAP. We additionally gained the U.Ok.

Ministry of Protection. We went reside with a giant bang, ERP, HCM, SCM for over 50,000 person go-live. In excessive tech, Zoom went reside on ERP and SCM. Iron Mountain went reside on ERP, SCM.

I will attempt it once more, Mattress Bathtub & Past, that is exhausting to say quick, went reside on ERP. Tiffany went reside on an HCM growth for 300 of their shops. In engineering and development, Jacobs went reside on ERP and SCM. Environmental companies, waste administration, huge suite go reside on ERP and provide chain.

And I will end it off in skilled companies the place ABM went reside. OK. So very, very sturdy quarter for us within the again workplace in ERP and HCM. Now I would like to change from SaaS to Infrastructure.

And we had a serious announcement and — are making a serious announcement about our different database. The 2 hottest databases on the planet are Oracle and MySQL. MySQL is the world’s hottest open supply database. MySQL is superb at transaction processing, however traditionally has not been good at question processing.

So MySQL prospects normally use the MySQL database for question — for transaction processing. After which, they’re going to transfer their knowledge from the MySQL database into Redshift, at Amazon or into Snowflake to do the question processing. That is the way it’s usually used. MySQL for transaction processing, Redshift, Snowflake for question processing.

By the way in which, AWS has their very own model of MySQL. They name it Aurora. And the AWS, MySQL Redshift — MySQL Aurora, Redshift enterprise is a multibillion-dollar enterprise. Oracle — now we’re going after that enterprise in two methods.

We constructed a product, MySQL HeatWave, which is totally different than earlier variations of MySQL. MySQL HeatWave is sweet at each transaction processing and question processing. So MySQL HeatWave does not merely exchange Aurora. It replaces each Aurora and Redshift or it replaces each Aurora and Snowflake as a result of MySQL HeatWave does transaction processing very nicely, changing Aurora.

And it does question processing lots higher than Redshift or Snowflake. As a result of HeatWave runs — and we determined for the primary time to make this a multicloud product. So Oracle HeatWave will run — runs already within the Oracle Cloud, however it’s — we even have it up and working in AWS. And Azure customers will be capable of use it as nicely.

So it’s a multicloud product. AWS customers — why did we do this? We did that as a result of we’re going after the Aurora person base and the Redshift and Snowflake person base. We wish to make it very easy to transform from Aurora and Redshift or Aurora and Snowflake to Oracle HeatWave. And if we’re working on AWS, for instance, you press a button, a few buttons, and your knowledge is moved instantly to Oracle MySQL HeatWave.

You shouldn’t have to vary your utility in any respect. You press a few buttons, and you progress it. OK. Why would you do this? Nicely, as a result of the price efficiency advantages of shifting to MySQL HeatWave are extraordinary.

Now I’ll cease speaking, and I’ll begin studying. And I’ll begin studying analyst quotes, and I’ll learn them phrase for phrase. So after I say the advantages are extraordinary, I am understating what they’re saying. So let me carry up the slides.

I’ll simply begin studying just a few quotes. OK. One {industry} analyst, “Mixed with HeatWave and Autopilot — mixed with HeatWave and Autopilot, MySQL database service might very nicely be the one best innovation in open supply cloud databases prior to now 20 years. MySQL HeatWave and Autopilot signify a quantum leap with prime mild question efficiency and very good transaction assist.

Oracle desires to open up a second entrance within the battle for the database market management. They’re attracting a wholly totally different person base with this product.” Wikibon believes that the know-how underlying MySQL HeatWave is an inflection level in database design and structure. The MySQL HeatWave know-how is by far the most effective available in the market. “Oracle have proven AWS and Snowflake how you can design and architect a real MySQL cloud database.

Prospects can anticipate MySQL HeatWave to outperform about seven instances sooner than Amazon Redshift or Snowflake at two instances to 5 instances decrease value. The advantages towards Amazon Aurora are even larger.” “New entrants resembling Snowflake might want to enhance their cloud know-how quick to remain aggressive with HeatWave.” That is all phrase for phrase what analysts are saying. And these are essentially the most distinguished database analysts within the enterprise. The underside line is we consider the competitors simply acquired outplayed in each measurable metric possible.

This represents a wake-up name for the {industry} and a impolite awakening to the database cloud competitors as all of them should reply now to the MySQL innovation juggernaut. HeatWave is the bodily manifestation of almost 10 years of deep database engineering methods, over 5 dozen patents and demonstrates what actual cloud database innovation seems like in 2021. “Oracle launched MySQL HeatWave, and so they did ship shock waves as a result of they named and shamed principally each database firm on the market.” And my favourite is what they talked about with Snowflake. “You possibly can spend $80,000 on HeatWave, and that may value you $420,000 to run on Snowflake.

It is a no-brainer.” These new absolutely clear benchmarks — by the way in which, we put all of our benchmarks on GitHub. It is all public, the code, the information. The shoppers can reproduce all of those benchmarks that the analysts are speaking about. That is what the analysts did.

The analysts went out and ran their very own benchmarks. They usually had been shocked. These new, absolutely clear benchmarks reveal HeatWave’s efficiency, worth and scale benefits over all different MySQL and cloud databases. Clearly, the cloud knowledge warehouse market wasn’t prepared for this.

And now, the competitors must scramble as they grapple for solutions. For organizations utilizing MySQL, Oracle has given them but one more reason to spend money on its HeatWave providing by delivering seven instances the efficiency at one-fifth the price of options resembling Snowflake. Along with huge scale-out capabilities, this mix makes MySQL HeatWave soften down Snowflake and vaporize — it seems like I wrote it, however I did not. These are — and we’ll offer you all of those quotes, all in — full context, names, quotes.

These are all analyst quotes. “Taken along with huge scale-out capabilities, this mix makes MySQL HeatWave soften down Snowflake and vaporize Amazon Redshift with AQUA. MySQL HeatWave’s TPC-H analytics testing actually blows away Amazon’s Redshift with AQUA in each efficiency and value efficiency. It is 6.8 instances sooner and 47% inexpensive.

Amazon Redshift with AQUA is eighteen instances slower, leading to MySQL HeatWave coming in at a unprecedented 17 instances higher, 17 instances higher value efficiency. MySQL HeatWave with Autopilot units the bar orders of magnitude larger than AWS, Azure, Google and Snowflake. I feel, I will cease proper there and switch it again to Safra.

Ken Bond — Senior Vice President

Thanks, Larry. Holly, in the event you might please put together the viewers for Q&A portion of the decision.

Questions & Solutions:

Operator

[Operator instructions] And our first query for the day will come from the road of Brad Zelnick with Deutsche Financial institution.

Brad Zelnick — Deutsche Financial institution — Analyst

Nice. Thanks very a lot, and congrats on the continued momentum and particularly all these nice buyer wins, Larry. I’ve one fast one for Safra after which a follow-up for you. Safra, simply taking a look at my mannequin, it seems such as you had your strongest natural income progress in 10 years this quarter.

And I simply wish to be sure I’ve acquired that proper, and I am not lacking something.

Safra Catz — Chief Government Officer

Yeah, you have acquired that proper. And it is principally due to what I have been telling you all for some time, which is our fastest-growing enterprise, which is our cloud, is now attending to be very huge. And once you’re rising totally different components of the enterprise, 25%, 30%, 40%, 60%, and it is a huge quantity, it causes these — it is simply math right here. It will increase the general charge of progress of the enterprise.

Brad Zelnick — Deutsche Financial institution — Analyst

Thanks, Safra. And Larry, you now have an growing variety of ISPs that at the moment are supporting and embedding OCI, in addition to focused applications the place you may have a few of the largest international SIs on the planet actually leaning in. Are you able to speak to us about the way you’re profitable the ecosystem with OCI? And as nicely, in the event you can replace us on the combination of conventional versus nontraditional Oracle workloads. Simply assist us get a way of how the use circumstances are evolving and the place you see that blend going.

Thanks.

Larry Ellison — Chairman and Chief Know-how Officer

Nicely, I feel, it is broad-based. I feel, one among — the again workplace — one among our companions — we’re working with one of many largest banks on the planet with — on a cost system, a B2B cost system as a result of the ERP prospects are coming to Oracle. So in the event you have a look at the longer term with the truth that we’re so sturdy, dominant, I would argue, in cloud ERP, what does the B2B buy appear like? A B2B buy seems like, in a contemporary cloud world, one Oracle ERP system making a purchase order from one other Oracle ERP system. And we wish to automate that B2B transaction, that the 2 Oracle ERP methods are speaking to at least one one other.

To automate that transaction, we have now to have the ability to pay for that — we have now to have the ability to verify credit score, finance the funds, prepare logistics. So we’re working with a big — a really giant financial institution and a really giant logistics firm to automate that side of our ERP enterprise. A few of it is by no means been — you do not consider ERP doing that, nevertheless it’s this community of those ERP methods speaking to at least one one other. That is an enormous enterprise income alternative to activate that B2B cost system.

So the banks are becoming a member of in. Logistic corporations are becoming a member of in as a result of the shoppers are right here. As soon as the ERP prospects began coming to Oracle, the entire adjoining purposes and all of the ISVs with adjoining purposes wished to be in the identical cloud because the ERP prospects. The integrators needed to grow to be aware of the cloud as a result of that is the place the shoppers are, and that is the place prospects are going.

The ISVs. And these are form of attention-grabbing ISVs. Large banks, large logistics corporations placing up their logistics and cost methods in our cloud to facilitate B2B transactions between our ERP system is only a gigantic enterprise alternative that nobody actually ever thought of earlier than.

Brad Zelnick — Deutsche Financial institution — Analyst

That is actually useful. Thanks a lot, Larry. Congrats once more.

Operator

And our subsequent query will come from the road of Raimo Lenschow with Barclays Capital.

Raimo Lenschow — Barclays Capital — Analyst

Thanks. I am attempting my luck right here, Safra, however like several feedback on the TikTok rumors that got here out at the moment? After which, in case you do not wish to reply that. Larry, one for you on, on that success within the again workplace methods, like, is that pushed by post-pandemic folks realizing, “Oh, shoot, I really want to replace that.” In order that’s form of extra momentary increase that you simply’re seeing right here? Or do you suppose there’s extra legs to that? Thanks.

Safra Catz — Chief Government Officer

The one factor I can inform you is we have now a superb relationship with the parents at TikTok. 

Larry Ellison — Chairman and Chief Know-how Officer

Yeah, I will second that. It is wonderful. Let me take the opposite a part of your query, which is, do I feel it is a form of a 12 months 2000-like pandemic increase, folks speeding to get to the cloud, and it may decelerate after now that the pandemic, thank God, is starting to recede. Simply the other.

We’re actually nonetheless within the early days. We’re within the early days of both understanding how totally different cloud ERP is from on-premise ERP. And I simply talked about this one attention-grabbing instance in that within the fashionable world, as increasingly folks go to cloud ERP and you purchase — you procure one thing, that it is actually one Oracle ERP system speaking to a different Oracle ERP system, nevertheless it must be facilitated by — with a monetary — a finance companion and possibly a number of finance companions and a number of logistics companions and — to automate and finance and transfer that product from A to B and finance that product and perceive when it may be delivered, all of these issues. So no, I feel, we’re actually within the early — actually early days.

Although we now have 10,000 prospects in Oracle ERP Fusion, and one other virtually 30,000 prospects in complete, together with NetSuite, I nonetheless suppose we’re within the very early days of doing this. It is simply getting sooner. I imply, the expansion — our progress is accelerating, accelerating, accelerating. You have a look at our progress charge, it is not taking place.

We’re getting larger, and the expansion charge, and we’re sustaining that mid-30s — excessive 20s, mid-30s progress charge with NetSuite and Fusion regardless of the very fact we have greater than doubled.

Raimo Lenschow — Barclays Capital — Analyst

Congrats, yeah, sounds actually thrilling. Thanks.

Operator

And our subsequent query will come from the road of Phil Winslow with Credit score Suisse. 

Phil Winslow — Credit score Suisse — Analyst

Hey, earlier than my query, congrats on one other quarter of accelerating progress. One remark out of your script at the moment actually stood out to me, and that was continued to develop income whereas we push our top-line progress into the double digits subsequent 12 months. Now clearly, that is continued reacceleration from the 6% to eight% the previous two quarters and your steerage, clearly, on a constant-currency foundation for This fall. So my query to you, Safra and Larry is, are you able to assist simply unpack this for us by way of the places and takes between database and apps, cloud and on-premise, and many others., that offer you confidence for continued acceleration within the double digits, but in addition, such as you stated, whereas rising income?

Safra Catz — Chief Government Officer

OK. In order you have seen, we have made lots of investments. We principally — our capex this 12 months is double final 12 months, and that is as a result of we have been placing out lots of functionality all over the world. Concurrently, our revenues have been growing.

However over the previous few years, we have had components of the enterprise that had been vital components of the enterprise that had been shrinking. And now, as you see on this quarter, for instance, all strains of companies are growing. Now we have totally different strains of enterprise have bookings progress, a few of that are as excessive as nicely over 100%. And so, what’s occurred is the — a lot of the enterprise is now rising.

And so, they are much much less of the negatives. And the issues that we’re getting smaller like utility license, for instance, is a really small quantity now. After which, in fact, our know-how license goes very, very nicely, together with, simply this quarter, know-how was up 9%. So the cloud enterprise is on an absolute function.

You possibly can see it within the numbers already and ERP, HCM, but in addition, in fact, OCI straight and Autonomous Database. And simply all these components of the enterprise at the moment are rising, and so they’re giant. And the shrinking components of the enterprise — to start with, there’s lots much less shrinking. We grew, and to the extent that we have now some provide chain loosening the place we’re capable of ship all of our bookings, we simply anticipate progress type of all over.

And so, we’re very upbeat about this subsequent 12 months. 

Phil Winslow — Credit score Suisse — Analyst

Nice. Thanks very a lot. Recognize that.

Operator

Our subsequent query goes to return from the road of Keith Weiss with Morgan Stanley. 

Keith Weiss — Morgan Stanley — Analyst

Glorious. Thanks, guys, for taking the query, and congratulations on an amazing quarter. It is nice to see the momentum actually exhibiting by to the outcomes now. Final quarter, you guys talked lots about an growing deal with verticals, significantly banking and healthcare.

This quarter, you are speaking about rolling up a few of these verticals. Are you able to speak to us a little bit bit extra concerning the strategy on the way you construct up and create that roll up within the vertical? How a lot of that effort is constructing like vertical-specific merchandise? How a lot of it’s a new go-to-market technique, if you’ll, or aligning the go-to-market technique for these verticals? And the way a lot work is left to be achieved on these two sides?

Larry Ellison — Chairman and Chief Know-how Officer

Nicely, let me simply begin with healthcare since you consider healthcare as a vertical, and Cerner is actually in a vertical, which is an epic they compete for suppliers. And folks consider that as, nicely, that is healthcare. However that is not healthcare. There’s medical trials for — in pharmaceutical corporations.

You wish to combine — the medical trials the pharmaceutical corporations pay for and run, however truly probably not. The suppliers run these medical trials. So the entire ecosystem — nobody’s ever tried to do the whole ecosystem. However to reply your query, we had — we’re tremendously enhancing our HCM system for hospitals in order that they’ll have nurses that work three days every week or 4 days every week and medical doctors that work in a few totally different hospitals.

And scheduling these unbiased contractors, if you’ll, could be very sophisticated. You do not of consider hospitals as being a group of unbiased contractors, nevertheless it’s full-time staff and unbiased contractors, and scheduling them is complicated. Paying them is complicated. A few of them are unionized.

The foundations are complicated. So we’re doing a large — we’re doing lots of industry-specific options for hospitals to assist them handle their workforce. In stock, hospital stock is not in a warehouse. Hospital stock, the drug, they’re scattered all all through the hospital.

Nurses stations have medicine — there’s an attention-grabbing drug referred to as tranexamic acid, which is used to cease bleeding. Nicely, you possibly can’t go to the warehouse — somebody’s bleeding, you possibly can’t go to the warehouse and search for the drug. You have acquired to have the ability to discover it instantly, and it is acquired to be near the working room. It is acquired to be near — the place intensive — the intensive care unit.

So the stock is distributed all all through the hospital. So we’re placing RFID tags in all of the stock so yow will discover issues very, in a short time. So how we deal with stock is being enhanced particularly for hospitals. And I can go on and on.

One factor a physician does is earlier than I can authorize a check, earlier than I can authorize prescribing a drug for a affected person, I’ve to verify with the insurance coverage firm to verify they’re going to pay for it. Now — so the medical doctors and hospitals spend lots of time negotiating with the payer, the insurance coverage firm. Nicely, OK, given these signs, can I get this check paid for? Sure, no? Given these signs, can I get this drug paid for? Sure, no? We’re automating that interplay between the payers and the suppliers. So yeah, we’re including lots of industry-specific options to automate the interactions in the whole ecosystem.

And that is why we expect we’re in place to roll up healthcare, which is a huge {industry}. Nobody’s ever actually tried this earlier than, however we have now all of the items. Now we have the cost items. We automate lots of the insurers.

Now we have HCM, which permits us to assist them handle their workforce. Now we have ERP, which helps them hold observe of stock. And shortly, we may have Cerner, which is able to assist them to ship care to sufferers. So we’ll be — and we have now medical trial system for the pharmaceutical base.

Now we have the whole portfolio, and we’re interconnecting all of the items so we will make that ecosystem work effectively for the primary time. And really, the pandemic has confirmed we’re in determined want of such an built-in system.

Keith Weiss — Morgan Stanley — Analyst

Yeah, it seems like a large worth unlock if it will get all pulled collectively.

Larry Ellison — Chairman and Chief Know-how Officer

I feel, we will do it. We’re on our option to do it. And the advantages to Oracle are nice. However truly, it is — that is — not less than for me, personally, it is a mission.

I feel, the advantages to each affected person on the planet goes to be monumental. We have to do that. The pandemic has proven a wide range of weaknesses in our healthcare methods. Now we have the know-how to handle these weaknesses, and that is what we’ll do.

Safra Catz — Chief Government Officer

OK. Thanks. Let me simply say one different factor. So we have now a lot of vertical industries through which we have now merchandise, and our rivals haven’t got merchandise.

And this has been a core a part of how we work. We work with retailers. We work in monetary companies. We work in utilities.

We work in development engineering. We do not simply modify ERP methods barely and say we’re within the {industry}. We’re truly in operational methods within the {industry}, and it brings unbelievable worth to our prospects to have the ability to use these merchandise.

Keith Weiss — Morgan Stanley — Analyst

OK. Thanks.

Operator

And our final query for the day will come from the road of Kirk Materne with Evercore ISI.

Kirk Materne — Evercore ISI — Analyst

Thanks very a lot. Safra, I hoped you would broaden a bit on the power in cloud at buyer. And simply actually two issues about that. How ought to we take into consideration cloud at buyer being considerably of a number one indicator for adoption of Autonomous Database? After which, are any of the availability constraints beginning to loosen up a bit on that entrance by way of perhaps serving to to speed up rev rec in that space over the subsequent couple of quarters? Thanks.

Safra Catz — Chief Government Officer

Nicely, I’ll admit that the previous couple of years have been actually difficult, and I am extremely pleased with our group. I feel, our wonderful relationships with our fantastic suppliers made it potential for us to construct out our cloud, in addition to present {hardware} to our prospects. We could not meet each want as shortly as we’d have preferred, and we have now an especially giant backlog. That’s completely true.

That backlog additionally provides me monumental visibility as a result of these prospects have informed us they need cloud at buyer or they need {hardware}. And I’ve a line of sight to get it landed of their services. The fact is that we have now a lot occurring on the identical time. We have constructed out our cloud internationally.

We have constructed a lot of non-public clouds the place it’s precisely the identical functionality as our public cloud for our prospects who’ve regulatory necessities that require one thing particular or whether or not it is knowledge sovereignty or in any other case. And we’re assembly everybody’s wants. And I feel, that, once more, the unbelievable optimism you hear from me and Larry could be very a lot as a result of we have now line of sight to the huge demand that has been coming our manner and that we have been dealing with and a line of sight on how you can ship it. So now, I learn the newspaper — truly, I do not learn the newspaper.

I learn the pc that was once a newspaper. And so, we see every part that is occurring. However I am extraordinarily assured within the capabilities of my group to execute.

Operator

And that can conclude the Q&A portion of at the moment’s name. I’ll flip it over to administration for his or her closing feedback.

Ken Bond — Senior Vice President

Thanks, Holly. A telephonic replay of this convention name can be out there for twenty-four hours on our investor relations web site. Thanks for becoming a member of us at the moment. And with that, I will flip it again to Holly to shut the decision.

Operator

[Operator signoff]

Period: 52 minutes

Name individuals:

Ken Bond — Senior Vice President

Safra Catz — Chief Government Officer

Larry Ellison — Chairman and Chief Know-how Officer

Brad Zelnick — Deutsche Financial institution — Analyst

Raimo Lenschow — Barclays Capital — Analyst

Phil Winslow — Credit score Suisse — Analyst

Keith Weiss — Morgan Stanley — Analyst

Kirk Materne — Evercore ISI — Analyst

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