The conference call for Oracle Corporation's second quarter fiscal year 2024 earnings is being conducted by conference operator Emma. Chairman and Chief Technology Officer Larry Ellison and Chief Executive Officer Safra Catz will be speaking. The call will include forward-looking statements and caution is advised in relying on them due to potential risks and uncertainties. Relevant financial information can be found on the Investor Relations website.

In the second paragraph, Safra Catz discusses the company's financial results and highlights the growth of their cloud services and license support, which now accounts for 74% of their revenue. She also mentions the success of their Oracle Cloud Infrastructure (OCI) and how it has become a leader in the market for strategic cloud platform services. Catz attributes this success to the company's focus on creating a second generation cloud that is more scalable and efficient, as well as their expertise in running at enterprise scale. She concludes by stating that customers are choosing OCI for its unique differentiation and price performance capabilities.

The company has a 45-year history as a leading enterprise software company and understands the requirements for running mission critical systems. They offer deployment flexibility through various cloud options, including dedicated cloud to customer, dedicated region, sovereign clouds, and partner clouds. The company believes in the importance of multi-cloud offerings and is working to meet the increasing demand for cloud services. In the second quarter, they saw strong results with total revenue meeting guidance and cloud revenue increasing by 25%. Their strategic cloud applications, autonomous database, and Gen 2 OCI were key drivers of revenue growth. Application and infrastructure subscription revenues were also up, with infrastructure cloud services revenue growing by 50%.

In the fourth paragraph, the article discusses the revenue and margin growth for Oracle in the second quarter. Database subscription revenues were up 4%, driven by Exadata and autonomous database services. Cloud services and license support gross margin was 78%, with support and SaaS margins remaining consistent and IaaS margins improving. Non-GAAP operating income and margin also increased, with a 7% growth and 43% margin. The non-GAAP tax rate was 19% and non-GAAP EPS was $1.34. Cash and marketable securities totaled $8.7 billion and operating cash flow for the last four quarters was $17 billion.

In the last quarter, the company had $6.9 billion in capital expenditures and their remaining performance obligation is over $65 billion. They have signed large deals and expect to recognize 48% of their RPO as revenue in the next 12 months. The company plans to spend $8 billion on CapEx this fiscal year to meet the demands of their pipeline and backlog. They have 66 customer-facing cloud regions and are building more, including regions that will interconnect with Azure. The company also has plans for dedicated, national security, EU sovereign, and Alloy cloud regions. They are committed to returning value to shareholders through various means, including stock repurchases and dividends. In the last quarter, they repurchased 4 million shares and paid out $4.1 billion in dividends. The Board of Directors declared a quarterly dividend of $0.40 per share.

The speaker discusses their guidance for the third quarter, including expected growth in revenue and EPS. They also mention their commitment to financial goals for the future. Larry Ellison then adds that there is a high demand for Oracle's Cloud Infrastructure and Generative AI, leading them to expand and build more data centers. They expect to sign more billion-dollar contracts in the near future and have been recognized as a leader in cloud services by Gartner.

The demand for Oracle cloud infrastructure services and data centers is widespread, driven by various customers such as Generative AI, nation states, large banks, telecommunications companies, and industrial companies. Oracle is also partnering with other hyperscalers and cloud service providers to co-locate and connect their clouds with Oracle's data centers. The company is rapidly building new data centers and has received orders from several nation states and large companies to build dedicated data centers for their workloads.

During the earnings call, Oracle executives discussed the growing demand for their Gen2 cloud infrastructure and data center technology, citing examples such as the company's recent contracts worth $1 billion each. They expect OCI to continue growing rapidly, with the only limiting factor being their ability to fill up data centers fast enough. The addition of more GPUs will also contribute to the acceleration of revenue. The backlog for OCI is growing astronomically, with no signs of slowing down.

The speaker believes that OCI will experience significant growth, possibly exceeding 50%, as more data centers come online. There is a high demand for cloud databases and sovereign clouds, especially in Japan. The company is not currently limited by demand. The speaker expects OCI's growth rate to be over 50% for the next few years. There is also a focus on profitability, with the company investing in building capacity for AI super clusters, which may take time to generate revenue. The speaker is unable to provide specific information on future cloud gross margins.

The speaker explains that their cloud and support services are both profitable, with their SaaS and IaaS businesses being particularly successful. They also mention that their gross margins are higher than expected and continue to increase as they grow. Unlike other companies, they are able to match their spending with revenues due to their engineering deployment flexibility and highly automated data centers. Their cloud is powered by autonomous databases and applications.

The company has automated processes for their databases and installations in their data centers, which require little labor. They focus on autonomous services and their operating system is fully autonomous. This model allows them to run data centers quickly, inexpensively, and efficiently. As a result, their gross margins have consistently grown. However, the migration of on-prem databases to the cloud is still in its early stages and represents a significant potential revenue opportunity for the company.

The paragraph discusses the potential for multi-cloud options and the importance of the Oracle database in mission critical systems. The autonomous database is expected to have higher gross margins due to its elastic nature and lack of labor costs. This will differentiate it from other databases, such as Amazon's, which require a set number of cores.

Mark Moerdler from Bernstein asks about Cerner's declining license revenue and the timing of Oracle's multi-tenant SaaS solution for Cerner. Larry Ellison corrects him, saying that half of Cerner's customers will be moved to OCI by February and that they have also developed a Health and Data Intelligence platform for public health management, which is already available and fully staffed. This platform provides a national view of hospital rooms and COVID cases.

The Cerner pieces are being integrated into OCI, with some already online and others gradually moving. The transition will result in a shift to a subscription basis. Millennium will be fully SaaS, but will be upgraded piece by piece. New products are being added for various sectors in the healthcare ecosystem, making it a larger market than Cerner previously had. This is expected to lead to growth for Cerner.

In a recent conference call, Oracle executives discussed the growth potential for their company and the impact of their partnership with Cerner. They also talked about the potential for migrating mission critical workloads to OCI and the positive response from customers. Oracle's history of running on various platforms has made them well-suited for the multi-cloud environment, and their partnership with Microsoft will allow them to offer their database capabilities in Azure data centers.

In this paragraph, Larry Ellison discusses the demand for Oracle's services in various regions, particularly in Japan. He mentions the Tokyo Stock Exchange's use of the Oracle database and the ability for partners and companies to have dedicated regions of Oracle Cloud Infrastructure (OCI) for their own use. This level of flexibility and customization is a unique feature of OCI that sets it apart from other cloud providers.

Larry Ellison discusses the GenAI functionality within the applications portfolio, specifically Fusion and NetSuite. He mentions the success of using it in the new telecommunication module in Oracle Health, where it automatically generates a summary of a consultation between a doctor and patient without the need for a scribe. This has been one of the hardest tasks assigned to the large language model.

The speaker discusses how their company is using AI technology in various fields, including product and job descriptions, drug design, and healthcare. They have partnered with an Israeli company to diagnose cancer from biopsy images. The company is seeing a lot of success with this technology and is monetizing it through their enterprise applications in healthcare, such as clinical trials and diagnostic databases. They have a different approach than Microsoft, with a focus on efficiency and competitiveness for their employees and company.

The company's monetization strategy for its AI technology is focused on providing high-end services, such as cancer diagnosis and patient compliance reminders, to healthcare applications. The company also offers its AI services to partners and other companies to enrich their own applications while keeping their data private. Examples of this include an Israeli company using the company's AI to develop a healthcare application for cancer diagnosis.

The last question of the conference call is from Brad Zelnick of Deutsche Bank. He asks about Oracle's plans to build 100 new cloud data centers and the capital requirements and time frame for this project. Larry Ellison responds by saying that Microsoft's order for 20 cloud data centers has created a lot of demand for Oracle's services, leading to the need for more data centers. Safra Catz adds that the number of data centers does not include the many customers who have started small with Oracle's cloud services and later decided to have their own dedicated region.

The speaker explains that they did not use all of their capacity this past quarter because they had to make decisions about whether to build something small and recognize revenue immediately or wait for larger capacity. They also mention working with customers to meet their needs and give an example of providing GPUs to Elon Musk's company xAI. The demand for large language models is high and the company is working to increase capacity each quarter. A replay of the conference call will be available on the Investor Relations website.

The operator thanks everyone for attending the conference call and informs them that the call is now over. They can disconnect from the call.

This summary was generated with AI and may contain some inaccuracies.