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Oracle Corporation (ORCL) Q4 2025 Earnings Call

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Jun. 12, 2025 1:15 AM ET | Oracle Corporation (ORCL) Stock, ORAC:CA Stock | ORCL, ORAC:CA | 1 Comment

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Q4: 2025-06-11 Earnings Summary

Insights

EPS of $1.70 beats by $0.06 | Revenue of $15.90B (11.31% Y/Y) beats by $315.98M

Oracle Corporation (NYSE:ORCL) Q4 2025 Earnings Conference Call June 10, 2025 5:00 PM
ET

Company Participants

Ken Bond - Senior Vice President of Investor Relations

Lawrence J. Ellison - Co-Founder, Chairman & CTO
Safra Ada Catz - CEO & Director

Conference Call Participants

Benjamin Alexander Reitzes - Melius Research LLC

Brad Alan Zelnick - Deutsche Bank AG, Research Division
John Stephen DiFucci - Guggenheim Securities, LLC, Research Division
Mark L. Moerdler - Sanford C. Bernstein & Co., LLC., Research Division
Raimo Lenschow - Barclays Bank PLC, Research Division
Sitikantha Panigrahi - Mizuho Securities USA LLC, Research Division

Operator

Hello, and welcome to the Oracle Corporation Fourth Quarter and Full Year 2025 Earnings
Call.
[Operator Instructions]

I would now like to turn the conference over to Ken Bond, Head of Investor Relations. Please
go ahead.

Ken Bond

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 GAAP to non-GAAP 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
Catz.

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 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. 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 Safra.

Safra Ada Catz

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 EPS 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've 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 noncancelable 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% IaaS 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 outstrip 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% SaaS
revenue was $3.7 billion, up 11%.

Application subscription revenues, which include 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 USD 1.19 in U.S.. 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. SaaS revenue was up 10% to $14.3 billion for the
year. Non-GAAP EPS for the full year was USD 6, 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 billion. 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
FY '26 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 1 million shares for a total of $150 million.

And over the last 10 years, we've reduced shares outstanding by more than 1/3 at an average
share price of just over $54. In addition, we have paid out dividends of $4.7 billion over the last
12 months, and the Board of Directors again declared a quarterly dividend of $0.50 per share.
Since it's the beginning of FY '26, 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 FY '25 I expect that cloud
infrastructure revenue will grow over 70%, up from 51% in FY '25. I expect total revenue will be
at least $67 billion, up 16% in constant currency and up more than $1 billion from our prior
guidance. RPO is likely to grow more than 100% in fiscal '26. And lastly, I expect we will
exceed the revenue growth target we previously provided for FY '27. Beyond FY '27, I'm even
more confident in our ability to meet and likely exceed our previously provided FY '29 targets.
We will provide a more fulsome update on our long- range financial targets at the Financial
Analyst Meeting at Oracle Cloud World 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 $0.02 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 USD 1.46 and USD 1.50 in. Lastly, my EPS guidance assumes a
base tax rate of 19%. However, onetime 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.

Lawrence J. Ellison

Thank you, Safra. Oracle's future is bright in this new era of cloud computing. Oracle will be the
#1 cloud database company. Oracle will be the #1 cloud applications company, and Oracle will
be the #1 builder and operator of cloud infrastructure data centers. We will build and operate
more cloud infrastructure data centers than all of our cloud infrastructure competitors
combined. First, database. Most of the world's most valuable data is stored in an Oracle
database. All of those databases are moving to the cloud. Oracle's Cloud, Microsoft's Azure
cloud, Amazon's cloud or Google's Cloud. Oracle runs everywhere. The latest vector version of
the Oracle Database, Oracle 23 AI, is an AI data platform, the only database that can make all
of the customer's data immediately available to all of the popular AI large language models
while maintaining complete data privacy for the customer. As use of AI increases, so will
Oracle's database market share. Oracle will be the largest and most profitable cloud
applications company in the world. Oracle developed suites of integrated AI agent-based
applications for ERP, for EPM, supply chain, manufacturing, human resources and customer
engagement, plus industry applications for health care, banking, utilities, retail, hospitality and
many other industries.
We use the most modern application generators and AI database technology to build our
application suite. And then we add AI and analytics using OpenAI, xAI, Google, Llama and
other popular LLMs on top of that application data. No other company is even attempting to
build the depth and breadth of AI-based applications that we have already built. Oracle will
build more cloud infrastructure data centers than all of our infrastructure competitors combined.
All of our OCI data centers from the smallest low-cost data center to the largest gigawatt AI
training data center include all Oracle OCI capabilities. A large percentage of those capabilities
are autonomous. So labor costs are minimized and human error is dramatically reduced.
Oracle is already prospering in this new era of cloud computing and AI, and it's just the
beginning. Back to you, Safra.

Ken Bond

Thank you, Larry. Before we go to the Q&A, just to repeat one number. FY '25 cloud
infrastructure revenue was up 51% to $10.2 billion for the year with consumption revenue up
59% from last year. Sarah, if you could please poll the audience for questions.

Question-and-Answer Session

Operator

[Operator Instructions]

Your first question comes from Mark Moerdler with Bernstein.

Mark L. Moerdler

Larry, Safra and the whole Oracle family, congratulations on the strong quarter and the strong
year. You've been promising and are now starting to deliver extraordinary growth acceleration,
something we've not seen at other very large software companies. Yet there's a lack of
understanding across the street of your AI business. Can you give us color or break out any
numbers to help investors understand the durability and profitability of the AI business?

Lawrence J. Ellison
Okay. Well, the interesting thing is a lot of people are talking about that they have all the data.
So these other companies say they have all the data, so they can do AI really well. They can
build all these AI agents on top of all of that data. The only problem with that statement is they
don't have all the data we do. We have most of the world's valuable data. The vast majority of it
is in an Oracle database. And the latest version of the Oracle database is an AI-centric piece of
technology, a vector database called Oracle 23 AI. So what it does, it allows -- it's the key
enabler for companies to use AI. Using AI, I mean, the current AI models are trained on the
Internet, otherwise known as publicly available data. Do you think JPMorgan Chase makes all
of their internal data publicly available?

Do you think those AI models train on JPMorgan Chase's data? Companies want to be able to
use AI models on top of their own data. That is essential. Oracle applications make all of the
data inside the Oracle applications available to AI models like Rock or ChatGPT or all -- by the
way, all the rest of them, from Google, from whomever, from Meta, Llama, all of us, we have all
of those LLMs are in our cloud or in the Oracle Cloud. So this is our value proposition. Our
database takes all of your data. our applications take all of your application data and make that
data available to the most popular AI models, like if you like ChatGPT, you use ChatGPT. If you
like Grock, you use Grok, you use that in the Oracle Cloud. We are the key enabler for
enterprises to use their own data and AI models. No one else is doing that.

Mark L. Moerdler

That makes sense.

Lawrence J. Ellison

It's a huge -- this is not a small point. This is why our database business is going to grow
dramatically. Think about it. You have to put all of your data into a database. So that database
must be highly secure. It must be scalable. It must be economical. It must be reliable, 7 days a
week, 24 hours a day. It has to be fall tolerant. It can never break. That's how Oracle got
popular in the first place. But then it has to hold the data in a way that's consumable by the AI
models. In other words, the data has to be vectorized and searchable by the AI models and
you use that data to train up those models on your data? Who else is doing that. Let me
answer the question, nobody.

Operator

The next question comes from John DiFucci with Guggenheim.

John Stephen DiFucci

Safra, your quote in that press release that you repeated on this call about next year was pretty
amazing and a strong a statement as I've seen you make. And I've known you a long time. So
putting that in print means a lot to me because I know it means a lot to you. Can you help us
unpack that statement a bit? For instance, is Stargate part of the more than 70% growth you
expect in IaaS in fiscal '26? And we don't know the timing of Stargate or even your financial
share. Like we know there's big numbers out there, but not how much

of it's yours or you're going to be involved. But is Stargate also in the RPO growth of more than
100% in fiscal '26? And any other color beyond Stargate to help us get our heads around those
massive growth numbers for IaaS would be helpful.

Safra Ada Catz

Thanks, John. And yes, we have known each other a very long time, longer than to admit. So
the reality is that Stargate is still in formation. The work -- there are a lot of partnerships we are
in the middle of right now that are all part of this enormous growth rate. We are the destination
for everyone who wants AI workloads who want database workloads and want -- want
applications. We are really -- and all of that together comes in our RPO. We have so much in
pipeline right now that -- and of course, we have so much in RPO, meaning those are
noncancelable contracts, and we see the demand. I am still in a position where our supply is
not meeting our demand. We actually currently are still waving off customers from -- or
scheduling them out into the future so that we have enough supply to meet demand. This is a
situation that we have not seen in our history. And the numbers themselves are so enormous.

And the reason is because our technology is different. As Larry has said on previous calls, the
cloud we built runs faster and has more capabilities than our competitors and that are built for
enormous amounts of data. And so we are very much the destination of choice. As Stargate
forms, that will contribute into all of this. But some of our partners, many of our partners, some
of them will be in Stargate. Some are outside of Stargate. We really are working with many,
many companies right now and have enormous pipeline as a result.

Lawrence J. Ellison
So let me give you a couple of -- let me chime in here also a little bit. Let me surprise you with -
- there are huge contracts that have nothing to do with even AI. We got a gigantic contract from
Temu that would have been unprecedented, except for all the other gigantic contracts we've
also been getting. But Temu is a very large company that's growing extremely rapidly. And they
are basically moving their infrastructure to the Oracle Cloud. That was a very big contract.
We're seeing huge growth in multi-cloud from the data centers we've already built and the data
-- I mean, it's revenue, obviously, data centers we already built. And -- but the future -- the
growth rate in multi-cloud is astonishing.

In other words, our database is now moving very rapidly to the cloud, I think because -- a few
reasons because the database has now all these AI capabilities, but also, quite frankly, now
people can get it in whatever cloud they want. If you're dedicated to using Microsoft Azure, you
can get the Oracle database and Microsoft Azure. The fully capable Oracle database in
Microsoft Azure with all of our fanciest features, including the new AI features. You can get it at
Google, you can get it in Amazon, you can get it at the Oracle Cloud. It's all the same in every
place. And that's given our customers a lot of comfort that Oracle is not only where they store
all of their current data, but they want to keep using the Oracle database and expand their use
of the Oracle database and move all of that data to the cloud as quickly as they can, and
they're now able to do it at the place of the cloud that they're choosing. So the database
business is growing rapidly. This next generation of companies like ByteDance, TikTok, which
obviously, we do business with them. Temu's another. But Uber, I mean, there are just lots of
these companies. A bunch of the security companies have moved to the Oracle Cloud. It's a
multi -- it's growth coming from many, many different directions.

John Stephen DiFucci

So if I could just -- so Stargate is just part of it. There's a lot of things happening here. And --
but I just wanted -- just to clarify, it sounds like it's part of RPO, but is it also part of that 70% in
IaaS revenue growth, too?

Lawrence J. Ellison

Well -- go ahead, Safra.

Safra Ada Catz

Stargate is not formed yet, but some of our business with OpenAI, which is one of our partners
in Stargate is part of our future very much so. But you understand, we work with OpenAI. We --
those are still small numbers in the scheme of everything else we're doing, but it will ultimately
be bigger.
Lawrence J. Ellison

Okay. Next question, please -- let me add 1 little thing. If Stargate turns out to be everything is
advertised, then we've understated our RPO growth.

Safra Ada Catz

Correct.

Operator

The next question comes from Ben Reitzes with Melius Research.

Benjamin Alexander Reitzes

Safra, Larry, great to be speaking with you today. Nice presentation. Your CapEx in the quarter
was much higher than expected. I mean, $5 billion more than we expected to get to the $21
billion. And now you're thinking about it going to $25 billion. Just wanted a little more color on
what it was spent on? How is it helping you yield more revenue? And how do you know 25% is
the right number for this year? And Larry, you usually have some pretty good color on
architecture when you answer this question. So I'm looking forward to that as well.

Safra Ada Catz

Okay. So let me start and let Larry make it perfect. The reality is that, as I mentioned on the
call, our CapEx is usually about equipment. We're not -- we have building partners who charge
us rent once they finished constructing things. And when we all of a sudden have higher
CapEx, it means we are filling out data centers, and we are buying components to build our
computers, which are different than other people's, and we are putting them on the floor. We
had an opportunity to buy up and for deployment, and so we did. And we are putting out as
much capacity as we possibly can as quickly as we can. I do believe that the $25 billion next
year may turn out to be understated. So it is all to meet demand. We don't order, we don't build
unless we've got orders for our capacity to be built out. And we have so much in orders right
now that I actually expect, I believe I said on the call, over $25 billion this next quarter. And that
is, again, to match demand.

Lawrence J. Ellison
Let me add, we recently got an order that said we'll take all the capacity you have wherever it
is. it could be in Europe, it could be in Asia. We'll just take everything. I mean we never got an
order like that before. We had to move things around. We did the best we could to give them
the capacity they needed. The demand is astronomical. Now we have -- but we have to do this
methodically. The reason demand continues to outstrip supply is we can only build these data
centers, build these computers so fast. And we're also doing a lot of engineering around high-
speed networking. You'll see us making -- we are making large engineering investments to
speed up the networking, the reliability of the network and lower the cost of the networking. So
we're doing a bunch of things -- we are doing a bunch of things to lower our CapEx costs. But
even if we do that, CapEx is going to go up because the demand right now seems almost
insatiable. I mean I don't know how to describe it. I've never seen anything remotely like this. I
mean people are calling up and asking us, please, can you find us more capacity. We'll take it
wherever. It's in Malaysia, we'll take it fine. We'll take it there. We got some wherever.

Benjamin Alexander Reitzes

Are you having trouble getting GPUs?

Safra Ada Catz

No.

Lawrence J. Ellison

No, not right now. No.

Benjamin Alexander Reitzes

Got it. Appreciate it.

Operator

The next question comes from Siti Panigrahi with Mizuho.

Sitikantha Panigrahi

Congratulations on a strong Q4 and impressive guidance. I want to go back to the cloud

database, mainly you have massive database on on-prem. So what are -- what are you hearing
from customers in terms of migrating to cloud. Now you have multi-cloud strategy, you have
dedicated alloy customer. And Safra, what's your expectation on the cloud database revenue
contribution are driving that 70% growth of OCI in fiscal '26?

Safra Ada Catz

Okay. Let me just start. So first of all, the database business is really healthy, really growing. In
fact, you even see it in the number that I think folks didn't think was possible, which is in
license. You should understand that when our customers are buying more licenses, that
actually means often that they want to use the bring your own license pricing to go to the cloud.
So database support is up, is solid. License is up, all the cloud metrics, autonomous,
consumption, Oracle Cloud, all of multi-cloud is basically using up all capacity that gets put out
there. So the Oracle database is on fire. And it is only the beginning. I want to remind you what
a significant and large business it is and the bulk of it is still on-premise. As Larry said, now that
you can have it in any of the clouds you like with the database at Oracle in all the other clouds
also beyond just OCI or you can deploy it at cloud customer, another place where the numbers
are enormous in growth rates. So consumption going way up, more licensing, more bookings
and a lot of demand. And the database side of the world for all the reasons Larry said, is the --
is just a superb business and extremely compelling, especially to the extent you want to
leverage artificial intelligence?

Lawrence J. Ellison

You asked for a number or an easy number to figure out so let's say, 10% -- or $10 billion of
our support revenue -- our database support revenue, moves to the cloud. So that becomes at
least $50 billion because it includes all the computers and all the networking and all of that. So
the support was just 20% of the license fee. So you move $10 billion of our database to the
cloud, it becomes at least $50 billion in cloud revenue. It's almost as big as Oracle as now.

Operator

The next question comes from Raimo Lenschow with Barclays.

Raimo Lenschow

Congrats as well. The one subject we haven't really talked about was applications, but with all
the excitement around OCI, like I think you don't get enough credit on applications. Can you
talk a little bit about what's going on there because I had to go back in my model quite a bit to
see 22% growth on Fusion and the outlook looks really strong as well, and you talked about
accelerating growth there. With all the worries about tariffs and stuff like that, I kind of I'm
surprised to see kind of these very, very good numbers from you. Can you maybe talk about
that a little bit?

Safra Ada Catz

Sure. Tariffs have no impact really at all to play in this. What it does allow our customers to do
is do what I do when I announce on a year on day 11 is to be much more -- really much better
run and have a better idea of where their business is and how it's doing and to do more and
spend a lot less. What you're seeing now, and it hasn't been obvious in the numbers because,
as you know, we have our strategic SaaS products, and we break that down for you in the
release to some extent.

And those are going gangbusters. And we've had other things in the numbers that have made
you not be able to really see. We have some nonstrategic products. And in addition, we've also
had an advertising business, which we are now lapping. I stopped even mentioning it because
what's the difference, a few hundred million. But the reality is what you're starting to see is our
strategic SaaS products as they roll out in our customer sites and as they ramp up, they're
very, very popular. They're obviously compelling because only if you're in the cloud, can you
use the AI capabilities. See many customers are still on on-premise ERP products. those can't
really use the advanced AgentX and AI capabilities. So if you want to use that and many do for
automation and to do more spend less, you've got to move to Fusion or NetSuite. And those
are just very, very compelling, and it's just now starting to show through the noise.

Lawrence J. Ellison

Look, I would add -- let me add one thing, which is companies don't really enjoy buying
applications from 5 different vendors and then making all of those applications work together.
So some companies, not all, but some companies are saying, Oracle, you build these
integrated suites of applications, and they're all -- and they are all AI agent-based applications.
So they're modern applications, they're modern cloud applications. And -- but all of your
applications are engineered to work with one another. So our ERP and EPM and supply chain
manufacturing, human resources, customer engagement, all those apps are designed as a
single suite of applications to run an enterprise or government agency. And all those pieces
then work together. So there's no cost of integrating those applications. So we're seeing a lot of
companies buying -- basically saying, I'm going to go all Oracle. I'm going to buy the complete
Oracle suite for ERP, EPM, supply chain, manufacturing. A lot of people don't have
manufacturing, supply chain, human report sources and customer engagement. They're
picking us -- if they pick our back-office applications, they'll sometimes pick our front office
applications over Salesforce as a result of that. And our customer engagement applications are
getting better and better. We continue to invest in those. And our intent is to give our -- some of
our biggest customers a one-stop shop where they can buy the entire suite to run their
enterprise from us. And that gets rid of a lot of headaches. Everything is in the same database.
Everything comes with the same AI data platform with it. All the analytics are there, everything
is there. You don't have to do the system integration. You don't have to fit -- buy a bunch of
pieces and make them work together. That has been our strategy for some time, and that's all
coming together as a bunch of companies are not successfully navigating this difficult,
admittedly difficult transition from on-premise to the cloud. There have been a lot of companies
that have not done it very well, and they are casualties, and we're picking up a lot of their
users. So the application business is very, very promising. And then I add Oracle Health and
Oracle Banking, Oracle Retail, hospitality, the different industries on top of that. There's no
other apps company that is trying to build such a broad-based integrated suite of AI cloud
applications. Who's closest? There's no one doing -- no one attempting to do what we're doing.

Operator

Your final question comes from Brad Zelnick with Deutsche Bank.

Brad Alan Zelnick

Congrats. Safra, Larry, the things you've been telling us would happen are clearly happening
and it's amazing. As we go forward, Larry, Oracle has always had the advantage of being the
only vendor with enterprise-grade technology from apps, all the way down to infrastructure --
and since the Sunday is optimized even down to the silicon, why does the full stack nature of
what you do remain important as we enter this new era of computing.

Lawrence J. Ellison

Well, such an interesting question because I think to some degree, people thought our biggest
weakness is that we were just spread too thin. We're trying to do infrastructure -- I mean,
database initially, infrastructure and then applications on top of that infrastructure. But what
made our database so good? I can argue there -- we made some good technology decisions.
But the other thing that made our database so good is we had -- we developed apps on top of
our own database.

In the same company, you have people using the database to develop applications and the
people who are developing that database. And if the applications found features missing from
the database, they found capabilities they wish were in the database that would make their
applications better, more reliable, more secure. We gain those insights by building those
applications. Building applications allowed us to understand how to build database better.
Building great databases made it much easier to build the cloud. there are a lot of databases
that run the cloud. You become -- there's a database of our users, all of our resources are in
databases. So the autonomous
database, the Oracle Autonomous Database is one of the reasons our cloud -- at some point,
we're going to rerisen our cloud from Gen 2 cloud to the autonomous cloud. Right now, that
would be too aggressive. We're not fully autonomous. But we're getting there. And because we
were able to use a lot of our existing database technology, specifically the autonomous
database technology to make our cloud more scalable, more reliable. And by the way, when
you eliminate human labor, when you have an autonomous database, you eliminate human
labor, you save money, but you also eliminate human error and human mischief. So it makes
your cloud much more secure.

One of the reasons our cloud is more secure. One of the reasons our cloud is faster is because
we have an autonomous database that runs it. So having all of these levels of technology
allows us to solve a technical problem at the right layer of the technology. Should we solve the
problem in the network fabric. Should we solve the problem with our cloud computer controller,
something we have with other people that we embedded different hardware to run the cloud.
We added -- we have different hardware architecture to make it more secure and more reliable.
So we've done innovation in the network. We've done innovation in our host computing. We
have an autonomous nonstop Linux operating system that we built, the autonomous database
that manages all the data in the cloud and so on. Being able to solve problems at different
layers of the technology, understanding the different layers of the technology allows us to build
an integrated solution that is faster, cheaper, more reliable than what our competitors can do.

Unidentified Company Representative

A telephonic replay of this conference call will be available for 24 hours on our Investor
Relations website. Thank you for joining us today. With that, I'll turn the call back to Sarah for
closing.

Operator

Thank you. This concludes today's conference. Thank you for joining. You may now
disconnect.
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