financial analyst meeting - oracle · gaap financial measures are not meant to be considered in...

Copyright © 2017, Oracle and/or its affiliates. All rights reserved. |Copyright © 2017, Oracle and/or its affiliates. All rights reserved. |

Financial Analyst Meeting

October 5, 2017

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Copyright © 2017, Oracle and/or its affiliates. All rights reserved. |

Oracle Cloud Business UpdateOracle OpenWorld – Financial Analyst Meeting

Mark Hurd

Chief Executive OfficerOracleOctober 5, 2017

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Copyright © 2017, Oracle and/or its affiliates. All rights reserved.

Safe Harbor Statement

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Statements in this presentation relating to Oracle’s future plans, expectations, beliefs,

intentions and prospects, are “forward-looking statements” and are subject to material risks

and uncertainties. Many factors could affect our current expectations and our actual results,

and could cause actual results to differ materially. A detailed discussion of these factors and

other risks that affect our business is contained in our U.S. Securities and Exchange Commission

(SEC) filings, including our most recent reports on Form 10-K and Form 10-Q, particularly under

the heading “Risk Factors.” Copies of these filings are available online from the SEC or by

contacting Oracle’s Investor Relations Department at (650) 506-4073 or by clicking on SEC

Filings on Oracle’s Investor Relations website at http://www.oracle.com/investor. All

information set forth in this presentation is current as of October 5, 2017. Oracle undertakes no

duty to update any statement in light of new information or future events.


Non-GAAP Financial Measures

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To supplement our financial results presented on a GAAP basis, we use non-GAAP measures,

which exclude certain business combination accounting entries and expenses related to

acquisitions and other significant expenses including stock based compensation, that we believe

are helpful in understanding our past financial performance and our future results. Our non-

GAAP financial measures are not meant to be considered in isolation or as a substitute for

comparable GAAP measures, and should be read only in conjunction with our consolidated

financial statements prepared in accordance with GAAP. Today’s discussion includes certain non-

GAAP financial measures, which were included in our earnings releases. A PDF copy of these

press releases and financial tables, which include a GAAP to non-GAAP reconciliation, can be

viewed and downloaded on the Oracle Investor Relations website at www.oracle.com/investor.

Copyright © 2017, Oracle and/or its affiliates. All rights reserved. 5

Safe Harbor Statement

The following is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decisions. The development, release, timing and price of any features or functionality described for Oracle's products may change and remains at the sole discretion of Oracle Corporation. Fees apply for new Database product offerings.


Oracle Cloud

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Database Update

Applications Update


SaaS Revenue Model

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Pipeline

Bookings (ARR)

New Revenue Layer

Renewing Contract Base

Total SaaS Revenue


SaaS Pipeline . . . Pipeline growing at 54% CAGR

FY14 FY15 FY16 FY17 FY18

Beginning SaaS Pipeline

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Pipeline figures in constant currency and exclude vertical SaaS services. Pipeline CAGR based on compounded growth FY14 to FY18.


SaaS Bookings (ARR) . . . Drives SaaS Revenue

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SaaS ARR (new & expansions bookings) amounts are in US Dollars.

$247M$345M

$661M

$861M

$1.2B


SaaS ARR

+38%


SaaS Revenue . . . Drives Applications Ecosystem Revenue

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Amounts and growth rates are non-GAAP constant currency excluding vertical SaaS services. Applications Ecosystem is the sum of applications software license, applications software support and SaaS.

+23%

+36%

+42%

+64%


SaaS Revenue


Application Ecosystem Revenue…Drives Market Share Gains


On-Premise SaaS

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Amounts and growth rates are non-GAAP constant currency and exclude vertical applications and vertical SaaS services. Applications Ecosystem is the sum of applications software license,applications software support and SaaS. Market growth based on Gartner Group data.

+64%+42%+36%+23%

2 Year CAGR

• Oracle +6%

• Market +4%

+8%


Conversion of Support . . . More Revenue & More Profit

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+64%+42%+36%+23%

1.00

3.00 3.00

0.95

2.012.40

0.00

1.00

2.00

3.00

On-Premise Supportcurrent 95% Gross Margin

SaaScurrent 67% Gross Margin

SaaStarget 80% Gross Margin

Revenue Gross Profit

Support current gross margin % derived from MD&A presentation in Oracle’s Q1’18 10-Q; SaaS current gross margin % derived from Oracle’s Form 8-K filing on 9/14/2017. Target gross margin estimate is a forward looking statement.

PresentPast Target


SaaS . . . Significant Opportunity

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• SaaS Bookings (ARR) . . . +48% CAGR FY13-FY17 . . . up 54% in Q1

• Non-GAAP SaaS Revenue . . . +68% in FY17 . . . up 62% in Q1

• Non-GAAP Apps Ecosystem Revenue . . . +8% in FY17. . . up 18% in Q1

• Cloud Short-Term Deferred Revenue . . . +69% in FY17 . . . up 54% in Q1

• SaaS Pipeline . . . +54% CAGR FY14-FY18 . . . BIGGER BASE entering FY18

All growth rates, except SaaS Pipeline, based on USD results. SaaS Pipeline based on constant currency amounts. Applications Ecosystem is the sum of applications software license, applications software support and SaaS.


Applications Ecosystem . . . Looking Forward

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ARR Growth Momentum

SaaS Revenue Growth

Applications Ecosystem Growth

Share Gain


Oracle Cloud

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Database Update

Applications Update

Copyright © 2017, Oracle and/or its affiliates. All rights reserved. |Copyright © 2017, Oracle and/or its affiliates. All rights reserved. |

Financial Analyst Meeting – AT&T VIDEO

October 5, 2017

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BYOL | License Mobility from On-Premise to Cloud

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Licensed Software

Customer Data Center

Customer Managed

On Premises

C

Cloud at Customer

Oracle Public Cloud

BYOL to PaaS

Cloud Service

Customer Data Center

Oracle Managed

BYOL to PaaS

Cloud Service

Oracle Cloud Data Center

Oracle Managed

C


Database Ecosystem Revenue

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4 Year CAGR

• Oracle +5%

• Market +4%

Amounts and growth rates are non-GAAP constant currency. Database Ecosystem is the sum of database software license, database software support and DBaaS. Market growth based on IDC Research.

+6%


Market Share

Since 2000, the Top 3 vendors are still the Top 3 vendors . . .and market share has increased 1%

Oracle remains #1 . . . below Top 3 Vendors is a pool of churn

IDC Top 3 vendors ~80% of relational database market

Based on IDC Research relational database market share data


Why do customers stay with Oracle Database?

• Unquestionably the best database– Fastest

– Most Scalable

– Most Secure

– Lowest TCO

• There is no business case to justify a move– Very Costly to Migrate

– Potential Business Disruption

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• Automated – Automatically provision, upgrade, patch, tune while running

– Eliminates human labor and human error

• Efficient– Minimize Hardware Resource Consumption

– Guaranteed half the cost of Amazon

• Reliable– Guaranteed 99.995% availability *

– Guaranteed 100x better availability than Amazon

Oracle Autonomous Database *

* - Software License for Oracle RAC, Multi-Tenancy and Data Guard required for Autonomous DB and guaranteed 99.995% availability.

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Database Ecosystem . . . Growing Faster than Market

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• Database Ecosystem Revenue . . . up 6% in FY17 . . . 5% Four-Year CAGR

We are gaining share and our biggest release in years is just now available

Growth rates based on non-GAAP constant currency results. Database Ecosystem is the sum of database software license, database software support and DBaaS. Market growth based on IDC Research.

On-Premise Cloud@Customer Public Cloud Service


Reconciliation Summary – GAAP to Non-GAAP

Note 1 Revenue numbers for SaaS, Applications New Software License and Applications Software Support exclude Vertical Application Products.

Note 2Application Ecosystem is the sum of Applications New Software License, Applications Software Support and SaaS. Database Ecosystem is the sum of Database New Software License, Database Software Support and DBaaS.

Note 3 We compare the percent change in the results from one period to another period using constant currency disclosure. We present constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the exchange rates in effect on May 31, 2017, which was the last day of our prior fiscal year, rather than the actual exchange rates in effect during the respective periods.

Slide 18

FY17

GAAP Growth Rates (in Constant Currency) 6%

Business Combination Accounting Adjustments 0%

Non-GAAP Growth Rates (in Constant Currency) 6%

Database

Ecosystem

Slide 10

FY14 FY15 FY16 FY17

SaaS Revenue GAAP Growth Rates (in Constant Currency) 23% 33% 38% 62%

Business Combination Accounting Adjustments 0% 3% 4% 2%

Non-GAAP Growth Rates (in Constant Currency) 23% 36% 42% 64%

Slide 11

SaaS

Revenue

Application

Ecosystem

FY14 GAAP Growth Rates (in Constant Currency) 23%









FY17 GAAP Growth Rates (in Constant Currency) 62% 8%

Business Combination Accounting Adjustments 2% 0%

Non-GAAP Growth Rates (in Constant Currency) 64% 8%

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