Oracle Corporation

Welcome to Oracle's first 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 first quarter fiscal year 2021 earnings conference call. A copy of the press release and financial tables, which includes a gap to non-gap reconciliation and other supplemental financial information, can be viewed and downloaded from our investor relations website. Additionally, a list of customers being mentioned on this conference call which have purchased Oracle Cloud Services or went live on Oracle Cloud this quarter will also be available from our investor relations website. On the call today are Chairman and Chief Technology Officer Larry Ellison and CEO Safra Katz. 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 statements being made today. As a result, we caution you from 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 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 publicly release any revisions to these forward-looking statements in light of new information or future events. Before taking questions, we'll begin with a few prepared remarks. And with that, I'd like to turn the call over to Safra.

Thanks, Ken. And good afternoon, everyone. Before I start, I want to make sure you understand that we will be making no comments regarding the press reports about TikTok. So there's no need to ask. So now to Oracle's results. As you can see, we had a great quarter. As usual, I'll review our non-GAAP results using constant dollar growth rates, unless I say otherwise. This quarter, revenue was more than $150 million above the midpoint of guidance, and EPS was $0.70 above the midpoint. Currency helped a little, but this quarter was all about solid execution on the sales side and disciplined management of our operations, as operating income grew 8%. our best result in three years. As I've said previously, and only briefly interrupted by COVID-19, our mix of business is increasingly favorable. What that means is that our growing businesses are growing faster and are now larger than our declining businesses. Our Fusion SaaS momentum is very strong. We're seeing the success of Autonomous Database, which will continue to get even better now that we have Autonomous Database available on clouded customer. Our total cloud services and license support revenues for the quarter were 6.9 billion, up 2% from last year, and accounted for 74% of total company revenue. GAP application subscription revenues were $2.8 billion, up 4%. But our Fusion apps were up 26%, with Fusion ERP up 33%, and NetSuite ERP up 23%. Fusion HCM was up 22%. And our fusion retention rates, which are already high, continue to go up. Gap infrastructure subscription revenues were $4.1 billion, up 1%. But with database revenue, up 3%. Autonomous database consumption revenue was up 64%. And annualized consumption revenue for OCI was up 130%. License revenues were $886 million, up 8%. So all in, total revenues for the quarter were $9.4 billion, up 2%. As usual, we have continued to be disciplined in our spending with operating expenses actually down 3% this quarter. Non-GAAP operating income was $4.2 billion, and as I said, up 8% from last year, and our best operating income growth in three years. Obviously, we're thrilled with this result, and I expect the Q2 will be good as we're beginning to see our operating income become a bigger part of our EPS growth. Operating margin was 45%, up nearly 300 basis points from 42% last year. The non-GAAP tax rate for the quarter was 19.1, slightly below our base tax rate of 20%, as a result of some discrete items, and EPS was 93 cents in U.S. dollars, up 15% in U.S. dollars, 14% in constant currency, and that is despite an interest expense being $120 million higher year over year for the quarter. The GAAP tax rate was 13.3%, also a result of some discrete items, and GAAP EPS was 72 cents in U.S. dollars, up 16%, and up 15% in constant currency. Operating cash flow over the last four quarters was 13.1 billion, with capital expenditures of 1.6 billion, and free cash flow of 11.5 billion over that same period. We now have more than $42 billion in cash and marketable securities. The short-term deferred revenue balance is $9.9 billion, down 4% in constant currency from a year ago, due entirely to timing differences in customer payments. Gross deferred revenue was, in fact, up in constant currency, and it was up 2%. As we've said before, we're committed to returning value to our shareholders through technical innovation, strategic acquisitions, stock repurchases, prudent use of debt, and a dividend. This quarter, we repurchased nearly 90 million shares for a total of $5 billion. Over the last 12 months, we've repurchased 361 million shares for a total of $19.2 billion. Over the last 10 years, we have reduced the shares outstanding by 40%. In addition, we've paid out dividends of $3 billion over the last 12 months, and the Board of Directors again declared a quarterly dividend of 24 cents. Now to the guidance. Again, my guidance today is on a non-GAAP basis and in constant currency. Now, currency, though, is extremely volatile, as you can see in what happened in this quarter. But assuming current exchange rates remain the same as they are now, currency should have a slightly less than 1% positive impact on total revenue and potentially 2% positive effect on EPS for Q2. So with that, total revenues are expected to grow between 1% to 3% in U.S. dollars. And because we will have slightly under a 1% tailwind, so in constant currency, that kind of rounds into 0% to 2%, probably at the higher levels. side. Non-GAAP EPS in constant currency is expected to grow 8% to 12% between $0.96 and $1 in constant currency. But again, that's assuming a $0.02 tailwind. So non-GAAP EPS in USD is expected to grow 10% to 14% and to be between $0.98 and $1.02 in U.S. dollars. Now, my EPS guidance for Q2 assumes our base tax rate is 20%. However, as you see, it's usually a little below it. Sometimes it's a little above it. However, one-time tax events could cause the actual tax rates for any given quarter to vary. But I expect in normalizing for these things, it'll average to 20%. So that's what I've targeted in this guidance. And with that, I'll turn it over to Larry for his comments.