Oracle Corporation

Hello and welcome to the Oracle Corporation fourth quarter and full year 2025 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, please press star one on your telephone keypad. I would now like to turn the conference over to Ken Bond, head of investor relations. Please go ahead.

Thank you, Sarah, and good afternoon, everyone, and welcome to Oracle's fourth quarter and fiscal year 2025 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 many customers who purchased Oracle Cloud Services or went live on Oracle Cloud recently will be available from our Investor Relations website. On the call today are Chairman and Chief Technology Officer Larry Ellison and Chief Executive Officer 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 the statements being made today. As a result, we caution you against placing undue reliance on these forward-looking statements, and we encourage you to review our most recent reports, including our 10K and 10Q, 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. Before taking questions, we will begin with a few prepared remarks, and with that, I'd like to turn the call over to Sabra.

Thanks, Ken, and good afternoon, everyone. As you can see, we had an excellent fourth quarter to finish out an amazing year, with Q4 total revenue and APS both exceeding my guidance. We are reporting our fiscal year-end results just 11 days after the last day of the quarter. Using Oracle Fusion, we continue to announce our quarterly and annual financial results faster than any other company in the S&P 500. Now, a few years ago, I told you that we'd reached a tipping point in our cloud transition and expected revenue growth to accelerate, and it has. In Q4, we hit double-digit revenue growth, and it's only going up from here, even as the company gets bigger. Our remaining performance obligations now stand at $138 billion, up $8 billion from last quarter and up 41% from last year, and yet the best is still to come. Our applications business was the first area we moved to the cloud more than a decade ago, and we are now the leader in enterprise back office with SaaS solutions for ERP, financials, EPM, HCM, supply chain, and manufacturing. With the addition of over 100 AI agents, along with strong bookings and higher renewal rates for our strategic SaaS products, I expect the cloud applications growth rate will accelerate this coming year. Our infrastructure business was the next area to move to the cloud. We made engineering decisions that were much different from the other hyperscalers and that were better suited to the needs of enterprise customers, resulting in lower costs to them and giving them deployment flexibility. OCI has seen exceptional demand for infrastructure services and those contracted non-cancellable bookings in RPO give us confidence that OCI revenue will grow over 70% this current year. Included in that is that Oracle Autonomous Database and the AI data platform. Enterprises know that their AI needs demand the most capable database to manage a company's full data set. Further, with our AI and autonomous features, our customers can bring all their data together, make it available for LLMs, and yet have the best security built in. In addition, our customers have the flexibility to run their Oracle databases in OCI, in private clouds, or in partner clouds with our multi-cloud offering. But what is clear, is that more customers will use the Oracle database to leverage AI. So, as a result of the strength in our cloud applications and infrastructure, including database services, we are raising our revenue guidance for fiscal year 26 to over $67 billion, up 16% for the year. Now, to the results, and as usual, I'll be discussing our financials using constant currency growth rates as it is how we manage the business. Total cloud revenue, SaaS plus IaaS, was up 27% at $6.7 billion. And total cloud services and license support revenue for the quarter was $11.7 billion, up 14%. IAS revenue was $3 billion, up 52%, on top of the 42% growth reported last year. OCI consumption revenue was up 62%, and demand continues to dramatically outstripped supply. Our infrastructure cloud services now have an annualized revenue of nearly 12 billion. Cloud database services, which were up 31%, now have annualized revenue of 2.6 billion. Autonomous database consumption revenue was up 47% on top of the 27% growth reported last year. As on-premise databases migrate to the cloud, either on OCI directly or through our database at cloud services with Azure, Google, or AWS, we expect that cloud database revenues collectively will be the third driver of revenue growth alongside OCI and strategic SaaS. We are currently live in 23 cloud regions with database at cloud services and have another 47 planned. Database subscription revenues, which include database license support, were up 7%. Infrastructure subscription revenues in the quarter, which includes license support, were $6.7 billion, up 19%. Stats revenue was $3.7 billion, up 11%. Application subscription revenues, which includes support, were $5 billion, up 8%. Our strategic back office SaaS applications now have annualized revenues of $9.3 billion, and they were up 20%. Software license revenues were up 8% to $2 billion. So all in, total revenues for the quarter were $15.9 billion, up 11% from last year. Operating income grew 7%. Non-GAAP EPS was $1.70 in U.S. dollars, while GAAP EPS was $1.19 in U.S. dollars. The non-GAAP tax rate for the quarter was 9.7%, higher than my 19.7%, which was higher than my 19% guidance. For the full fiscal year, total company revenue was $57.4 billion, up 9%. Total cloud services and license support revenue, which is entirely subscription-based, and accounts for 77% of total revenue, was $44 billion, up 12%. Total application subscription revenue grew 7%, and infrastructure subscription revenues grew 17%. Total cloud services were up 24% to 24.5 billion. IaaS or cloud infrastructure revenue was up 51% to 10.2 billion for the quarter with consumption revenue up 59% from last year. SAS revenue was up 10% to $14.3 billion for the year. Non-GAAP EPS for the full year was $6 in USD, up 9%, and the full-year operating income grew 9%. As mentioned, remaining performance obligation at the end of Q4 is now 138 billion, up 41% in USD. Further, our cloud RPO grew 56% on top of the 80% growth last year, and now represents nearly 80% of total RPO. And approximately 33% of total RPO is expected to be recognized as revenue over the next 12 months. For the year, operating cash flow was up 12% at $20.8 billion and free cash flow was a negative $400 million with $21.2 billion of CapEx. Operating cash flow for Q4 was $6.2 billion while free cash flow was a negative 2.9 billion with capex of 9.1. The vast majority of our capex investments are for revenue generating equipment that is going into data centers and not for land or buildings. I expect that FY26 capex will be higher at over $25 billion as we work to meet demand from our backlog. As we bring more capacity online, our revenue and profit growth will further accelerate. At quarter end, we had $11.2 billion in cash and marketable securities. The short-term deferred revenue balance was $9.4 billion. We are 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 a little over a million shares for a total of $150 million, And over the last 10 years, we've reduced shares outstanding by more than a third at an average share price of just over $54. In addition, we've paid out dividends of 4.7 billion over the last 12 months. And the board of directors, again, declared a quarterly dividend of 50 cents per share. Since it's the beginning of FY26, I'd like to comment on the financial acceleration we expect to see in the coming years. Between our 138 billion RPO and even larger pipeline, we have a clear line of sight to future revenue growth. So for fiscal year 2026, I expect that total cloud revenue will grow over 40% in constant currency up from 24% in FY25. I expect that cloud infrastructure revenue will grow over 70%, up from 51% in FY25. I expect total revenue will be at least 67 billion, up 16% in constant currency, and up more than a billion from our prior guidance. RPO is likely to grow more than 100% in fiscal year 26. And lastly, I expect we will exceed the revenue growth target we previously provided for FY27. Beyond FY27, I am even more confident in our ability to meet and likely exceed our previously provided FY29 targets. We will provide a more fulsome update on our long-range financial targets at the financial analyst meeting at Oracle CloudWorld in Las Vegas in October. Now, let me turn to my guidance for Q1, which I'll review on a non-GAAP basis. Now, assuming currency exchange rates remain the same as they are now, Currency should have a 2% positive effect on EPS and a flat to 1% positive effect on revenue, depending on rounding. However, of course, the actual currency impact may be different. Total revenues are expected to grow from 11 to 13% in constant currency, are expected to grow from 12 to 14% in U.S. dollars. Total cloud revenue is expected to grow from 26 to 30% in constant currency and U.S. dollars. Non-GAAP EPS is expected to grow between 4 to 6% and be between $1.44 and $1.48 in constant currency. Non-GAAP EPS is expected to grow between 5% to 7% and be between $1.46 and $1.50 in USD. Lastly, my EPS guidance assumes a base tax rate of 19%. However, one-time tax events could cause actual tax rates to vary. We had a great year, and this year, The one we're in now will be better. Oracle is well on its way to being not only the world's largest cloud application company, but also one of the world's largest cloud infrastructure companies. And with that, I'll turn it over to Larry for his comments.