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Oracle(ORCL) - 2025 Q3 - Earnings Call Transcript
ORCLOracle(ORCL)2025-03-10 23:47
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Financial Data and Key Metrics Changes - The company reported a record booking quarter, adding 48billiontoitsbacklog,witharemainingperformanceobligation(RPO)balanceof48 billion to its backlog, with a remaining performance obligation (RPO) balance of 130 billion, up 63% year-over-year from 80billionlastyear[7][22]−TotalcloudrevenueforSaaSandIaaSwas80 billion last year [7][22] - Total cloud revenue for SaaS and IaaS was 6.2 billion, up 25%, with SaaS revenue at 3.6billion,up103.6 billion, up 10%, and IaaS revenue at 2.7 billion, up 51% [12][13] - Total revenues for the quarter were 14.1billion,up814.1 billion, up 8% from last year, with non-GAAP EPS at 1.47, up 4% in USD [20][18] Business Line Data and Key Metrics Changes - Infrastructure cloud services now have an annualized revenue of 10.6billion,withOCIconsumptionrevenueup5710.6 billion, with OCI consumption revenue up 57% [14][15] - Cloud database services revenue was up 28%, with annualized revenue of 2.3 billion, and Autonomous Database consumption revenue up 42% [15][17] - Application subscription revenues were 4.8billion,up64.8 billion, up 6%, while software license revenues were down 8% to 1.1 billion [17][18] Market Data and Key Metrics Changes - The company marked a milestone with its 101st cloud region coming online, with expectations to have more cloud regions than competitors combined [8][9] - The multi-cloud business grew 200% in the last three months, indicating strong demand across various hyperscalers [31] Company Strategy and Development Direction - The company is focused on AI training and inferencing, with a new AI data platform that allows existing database customers to utilize AI models [32][30] - The company expects total cloud infrastructure revenue for fiscal year 2025 to grow faster than 50%, with a target of 66billioninrevenueforFY′26[25][24]−Thecompanyiscommittedtoreturningvaluetoshareholdersthroughtechnicalinnovation,acquisitions,andprudentuseofdebt[23]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementexpressedconfidenceinmeetingrevenuetargets,citingstrongdemandforcloudservicesandAIcapabilities[25][66]−ThecompanyanticipatessignificantincreasesinRPOandrevenueascapacitycomesonlineanddemandcontinuestogrow[66][67]OtherImportantInformation−Thecompanyrepurchasednearly1millionsharesforatotalof66 billion in revenue for FY '26 [25][24] - The company is committed to returning value to shareholders through technical innovation, acquisitions, and prudent use of debt [23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in meeting revenue targets, citing strong demand for cloud services and AI capabilities [25][66] - The company anticipates significant increases in RPO and revenue as capacity comes online and demand continues to grow [66][67] Other Important Information - The company repurchased nearly 1 million shares for a total of 150 million and increased the quarterly dividend by 25% [23][24] - The company expects capital expenditures for fiscal year 2025 to be around $16 billion, more than double the previous year [21] Q&A Session Summary Question: Can you expand on Stargate and Oracle's unique value add? - Oracle's technology advantage allows for building large AI clusters that run faster and more economically than competitors, translating to economic advantages in securing large contracts [37][38] Question: How is demand unfolding across different environments? - Demand is strong across multi-cloud, OCI, and dedicated services, with significant growth in bookings and revenue expected [44][46] Question: What is the state of AI training versus inferencing opportunities? - The training business is growing rapidly, but inferencing is seen as a larger opportunity due to the vast number of Oracle databases available for training AI models [56][64] Question: How should we understand CapEx trajectory given RPO strength? - The company starts data centers smaller than competitors and grows based on demand, leading to higher utilization and lower CapEx [100][101]