ORACLE CORP — Call Transcript 2026

I would now like to hand the conference over to Mr. Ken Bond. Please go ahead, sir. Thank you Lisa, good afternoon, everyone. Welcome to Oracle's fourth quarter and fiscal year 2026 earnings conference call. On the call today are Chief Executive Officer, Mike Sicilia, Chief Executive Officer, Clay Magouyrk, and Chief Financial Officer, Hilary Maxson. A copy of the press release, including financial results tables, supplemental financial metrics, and guidance are now available from the investor relations website. Also is a slide deck being introduced this quarter, which you'll see momentarily, a GAAP to non-GAAP reconciliation, other supplemental financial information, and lists of many customers who purchased Oracle Cloud services or went live on Oracle Cloud recently. These items will be available after today's call. As a reminder, today's discussion will include forward-looking statements, we will make some important comments around factors relating to our business. These forward-looking statements are also subject to risks and uncertainties that may cause actual results to differ materially from statements being made today. As a result, we caution you against placing undue reliance on these forward-looking statements, we encourage you to review our most recent reports, including our 10-K and 10-Q and any applicable amendments. 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 any questions, we'll begin with a few prepared remarks. With that, I'll turn the call to Hilary. Thanks Ken. Hi, everyone. Great to be here with you today. As new CFO, I thought I'd start with a few thoughts on why I'm so excited to join Oracle at this time. I've spent my career all around the world at companies that use technology and data to drive transformation, both internally and for customers. I believe that the most valuable transformational change sits at the juxtaposition of the physical and virtual worlds across business models, from infrastructure to enterprise software. Oracle understands that intersection is now uniquely positioned for one of the most significant technology transitions we've seen in decades. Very few companies can help customers across the entire technology stack, from the cloud infrastructure that powers AI workloads to the mission-critical applications that run their businesses. Oracle can do both. This is a company with deep technical expertise, differentiated technology, and a long history of helping customers turn technology innovation into tangible business value. While I've only been here for two months, everything I've seen has reinforced my confidence in the company's strategy, execution, and opportunity ahead. I'm excited to be part of the team and look forward to helping Oracle capitalize on the opportunities in front of us to drive return on investment and shareholder value. As we pursue these opportunities, we'll remain focused on disciplined capital allocation, maintaining a strong balance sheet, and preserving our investment-grade credit rating. With that, let me turn to our Q4 and fiscal year 2026 results. Like Ken said, we've introduced a short presentation to accompany our earnings call so you can follow along with the numbers and key comments we'll make today. In terms of Q4, it was a record quarter, driven by strength in both our cloud infrastructure and cloud apps businesses. Revenue was $19.2 billion, up 21% in US dollars. Cloud infrastructure revenue grew 93%, reflecting strong demand for both AI workloads and our database services, and cloud apps was up double digits at +10%. Mike and Clay will give more detail on these businesses in just a moment. Our non-GAAP operating income increased 22% in US dollars to $8.6 billion, driven by our strong revenue progression. Our operating margin increased slightly, with our gross margin declining, driven by impacts from ramping up our data centers and the acceleration in our infrastructure revenue. This was more than offset in the quarter by a reduction in operating costs, for us, that's the lines in our P&L, starting with sales and marketing, due to efficiency actions in our cost structure. Our non-GAAP EPS reached $2.11, an increase of 24% in US dollars for the quarter, partly due to a one-time net gain on investment. Excluding this, our non-GAAP EPS increased by 20%. Turning to the full year, we surpassed revenues of $67 billion for the first time, which translated into strong non-GAAP operating income of $29 billion, up 16% in US dollars for the year. Our non-GAAP EPS was up 27% in US dollars to $7.63, including one-time gains on investment. Excluding these gains, our non-GAAP EPS was $6.83. For the full year, our gross margin stepped down around five points, as expected, as we start to see the impacts from the build-out of our infrastructure business and the acceleration in its revenues, primarily offset by lower operating costs as a percentage of revenue, driven by operating efficiencies. All of this translated into strong cash flow from operations of $32 billion, up 54%. We did continue with our program of capital investments tied to unlocking the strong growth opportunities in front of us. Our net cash outlay for capital expenditures for the full year was $48 billion, taking into account prepayments and timing impacts of around $8 billion. You can see the table showing the details of net cash outlay for CapEx in our press release. We think this measure is important to better understand our funding needs. Our remaining performance obligations, or RPO, finished at $638 billion, up 363%. This unprecedented level of RPO provides exceptional visibility into our future revenue growth, all supported by long-term contractual customer commitments, and reflects the strong customer demand we see across both AI infrastructure and cloud services. To give a bit more detail on our RPO, we expect 12% to be recognized in the next 12 months, and another 34% between 13 and 36 months. These percentages are both expected to accelerate over the coming quarters based on our current long-term outlook. Mike and Clay will now get into a bit more detail on our cloud businesses, and then I'll be back with our outlook for fiscal year 2027 and Q1. Thank you Hilary, and welcome to Oracle. I'm going to cover our Cloud Apps and Cloud Database business in a bit more detail, both of which performed quite well in Q4. We're on the front end of one of the most interesting times in the technology business. Our customers are now focused on how to leverage AI in their own businesses. They want AI to increase productivity, enhance customer service, and create real competitive advantages. They want to do it quickly and within their existing budget envelope. Oracle's unique advantage is that we deliver the applications, the data, the infrastructure, the AI tooling, and the industry expertise together. That combination invariably puts us at the center of customer conversations, whether they're existing Oracle customers or not. Our customers have moved past the experiment stage with AI. They are ready to implement enterprise-grade, complete agentic solutions to help run their businesses. Over the past year, we have delivered more than 1,000 AI agents across our application suites. These agentic-based offerings can reason, decide, and execute work across processes. The quickest, most affordable, and most productive way customers can begin consuming AI is just to continue using Oracle's applications, since every three months, they get more and more of the AI features built for them and ready to go. This is a major shift in enterprise software, and Oracle is uniquely positioned to lead it. You can see it in our Q4 results. Oracle Cloud Applications generated revenues of $4.1 billion, which was up 10%, and our SaaS deferred revenue was up 16% in the quarter. Across the company, we took thousands of customers live last quarter, over 300 in Fusion alone. Exelon adopted our utilities platform to manage operations. Wright County Sheriff's Office went live with our Public Safety Suite. Westfield Insurance implemented Fusion ERP, and Piraeus Bank went live with Oracle Banking, just to name a few. All of these customers are upgrading to a better and modern applications platform that also comes with AI built right in. In Q4, we also continued our electronic health record deployment at the U.S. Department of Veterans Affairs. In Q4, we added four VA medical centers in Michigan, and in early June, added another four VA medical centers in Ohio. Oracle now supports 14 VA medical centers, serving 29,000 clinicians and 500,000 veterans across the United States. While not part of our Q4 bookings, the United States Office of Personnel Management today announced an agency-wide award to Oracle for Fusion HCM. This is obviously a strong start for us in our FY 2027 applications business. In addition to discussions around AI within our applications, I am also having very interesting conversations with our customers around leveraging their own proprietary datasets with AI. Much of this data already sits in an Oracle Database or is generated by Oracle applications. For many enterprises, inferencing against decades of rich operations data is where the benefits of AI compound exponentially. Oracle's full stack offerings allow customers to get up and running quickly, leveraging AI together with their private datasets. This is why Claro, a major telecommunications provider in Latin America, chose OCI, Field Services applications, and our Oracle AI Data Platform to automate customer service for their 30 million subscribers this quarter. UK National Health Service Shared Business Services. Oldest the Brazilian retailer, and QXO, the fastest growing building products distributor in the United States, combined AI-ready Oracle infrastructure or database products with Oracle applications to move their businesses forward. Again, just to name a few. Last quarter, we also released a long list of major new AI functionality in the Oracle Database. Here are just two examples. The Oracle AI Agent Memory is a library that helps developers build agents that can remember, reason, and act with enterprise context. Oracle Deep Data Security adds data access rules at the database level. This protects against both unauthorized access. It limits precisely what data a user and any AI agent acting on their behalf can see or act upon. All of these innovations I've just described and many more are available in our cloud, our partners' clouds, and in our customers' environments. In Q4, our cloud database business revenue grew by 29%, with multi-cloud growing much faster. Multi-cloud revenue was up 404% year-over-year, and bookings were up 325% year-over-year. One example of an enterprise using a wide range of Oracle technologies is Vodafone, who turned to us in Q4 to consolidate and modernize their operations. Vodafone selected OCI Dedicated Region in their data centers, our multi-cloud database offering in a partner cloud, and our applications to reduce costs and run their processes faster, in some cases up to 60% faster. Finally, we are working with our customers to deliver quick ROI within their AI budgets. To do so, we are simplifying how customers consume and pay for agentic capabilities. Our new agentic pricing aligns with customer value. Much of our AI innovation in our core applications continues to be included at no extra charge. Customers can also purchase additional agentic capacity in a simple, predictable way by purchasing bundles of tokens that can be used across our application suites. We're also introducing outcome-based commercial models that align pricing directly to the value derived. For example, interview agents that are priced based on the number of candidates screened, or hospitality upsell agents priced on the percentage of end consumer upsell transactions. In Q4, we started a limited rollout of our token bundles and had 33 customers, like Aon Services Corporation and Liberty Energy, pre-purchase tokens that have access to more advanced reasoning and models. All of this helps our customers control their costs and align their spending with the value being generated. With that, I will turn it over to Clay. Thanks Mike. You just heard from Mike about our applications and database businesses. Oracle has been in these businesses for decades, they continue to impress us because of their ability to continually grow aggregate margin dollars through a combination of durable differentiation and increase in market size. I want to share how we see our infrastructure business in that same category and the evidence that enforces that belief. Differentiation comes in many forms, technological innovation, supply chain execution, operational ability, and more. We created OCI as the most highly secure, highest performance, most flexible, lowest cost infrastructure available anywhere. We deliver that through innovation across all layers, from deploying the smallest and the largest clouds, to inventing technologies like Accelerons that provide the highest performance and lowest cost networks. We combine the power of OCI and Fusion applications to implement an incredibly efficient and flexible supply chain. We architect across data center design, power distribution, data hall layout, and networking to deliver the most efficient and the most flexible infrastructure available anywhere. Oracle has a long track record of durable differentiation. This is because we know the real differentiator is the organization, the people, the company itself that can adapt to new requirements, invent solutions, and deliver them to customers rapidly. OCI has been the fastest-growing cloud provider for years. Now with AI infrastructure, we've shown to everyone the power of the organization we've built, the technology we've created, and the value we're delivering to customers. OCI is continually releasing new services, hardware, networks, and cloud regions to ensure we are always the best place for our customers' infrastructure workloads. Cloud infrastructure has become a very large market because of the ever-growing demand for server-side computing. AI infrastructure makes the existing cloud infrastructure market look small. Everything we see shows this market size is $trillions per year. Combined with our previously outlined 30%-40% margin profile, OCI should grow into an extremely large and extremely profitable business. These beliefs are supported by compelling and multiplying amounts of evidence. We signed $67 billion in AI infrastructure contracts this quarter, the majority of which was either bring your own hardware or prepaid. This increases our combination of bring your own hardware or prepaid customer contracts to $75 billion, with those contracts having no degradation in margin compared to our other contracts. Customers are showing they chose OCI to deliver their infrastructure, even when they are bringing the capital themselves. Design, delivery, and operation of this large-scale infrastructure is extremely demanding. Q4 finalizes an impressive FY 2026, where we delivered more than 1.2 GW to customers. Our pace of delivery continues to accelerate, with our FY 2027 Q1 delivery approaching 1 GW, nearly the same capacity as we've delivered in the previous four quarters combined. There will be many winners named, our strategy is to have them all as customers. We continue to diversify across our largest customers, with four customers contracting for more than $8 billion this quarter. Our infrastructure is fundamentally multi-tenant, we continually allocate capacity between customers. In Q4, 35,000 GPUs from 59 separate customers were up for renewal. 49% of those customers renewed for 92% of those GPUs. That doesn't mean, though, that 8% of those GPUs are idle. Most of those GPUs themselves were subsequently sold to other customers in the same quarter. Our global GPU utilization rate is 97.5%. It's also clear that AI is here to stay. AI is delivering value on multiple fronts, but the most clear and obvious is agentic coding. This is an area where we have a front-row seat as both the provider and the consumer. Agentic coding tools have completely changed how Oracle operates, and we see no slowdown in our own demand for such capabilities. The same is true for all the customers and partners we work with. The demand for AI infrastructure in this domain alone is enormous, ignoring the many, many other growth areas. Okay. Now, before I end, let's look at a summary of our five largest sites and the significant progress we're seeing across all of them. To begin, let's look at Abilene, Texas. Abilene, Texas today has delivered 42% of the total capacity. An additional 35% of capacity will be delivered in the next 90 days, with the remainder delivering in the subsequent quarter. Moving forward to Shackelford, Texas. We contracted this in August of 2025. Customer delivery begins in the first half of calendar year 2027. 115 MW of power capacity is already available online, more than one month ahead of schedule. If we take a look at Doña Ana County, New Mexico. We contracted this in September of 2025. Customer delivery begins in the first half of calendar year 2027 as well. Power design is based on gigawatts of clean, energy-efficient Bloom fuel cells. We look at Saline, Michigan. We contracted this in October of 2025. Customer delivery begins in the second half of 2027. The network core is ahead of schedule and delivered at the end of this calendar year. To the final site I want to touch on, Port Washington, Wisconsin. This was contracted in September of 2025, and delivery begins in the second half of calendar year 2027. I think you can see from all of these pictures the massive progress that we're making across a very large number of sites. It's an incredible time to be in technology and to have the privilege of doing that at a company like Oracle. It's especially fun to have an inside view of the birth of a new business that can join the likes of our application and database businesses. Hopefully, these beliefs and the data points give you some insight into why we are so excited about OCI and where that's going to take Oracle. With that, I'm going to hand it back to Hilary. Thanks Clay. Before I get to our fiscal year 2027 and Q1 guidance, I'd like to share some comments on our funding expectations. We already mentioned throughout the call the compelling opportunities we see at Oracle based on our portfolio positioning. Our strong Q4 results reflect this well. Customer demand and our growing visibility into future revenues is what underpins the long-term financial outlook we shared at our most recent Analyst Day of plus 31% revenue CAGR and plus 28% EPS CAGR through our fiscal year 2030. In order to unlock this unique growth opportunity, we started a program of capital investments. We'll continue those investments in our fiscal year 2027, with an expected net cash outlay for capital expenditures of around $70 billion. This includes customer prepayments and timing impacts expected at around $20 billion-$25 billion, so our reported CapEx will be higher by this amount. Importantly, these investments are being driven by committed customer demand reflected in our record RPO, giving us confidence in our long-term outlook, as well as strong returns on the capital we're deploying. As Clay already mentioned, this demand is allowing us to garner customer prepayments and bring your own hardware at similar or better margins than the rest of our contracts. To support our capital investments program, we expect to raise around $40 billion in debt and equity in our fiscal year 2027. That includes our already announced $20 billion at-the-market equity issuance. We don't anticipate raising additional debt funding in calendar year 2026. To our fiscal year 2027 guidance, you can start to see the strong translation of our RPO into revenues, with expected growth in our total revenues of +34% in constant currency, surpassing the five-year revenue CAGR included in our long-term outlook. Our fiscal year 2027 gross margins will step down due to timing for the ramp-up of our data center projects into their full revenue contribution, plus impacts from mix. While these investments are creating pressure on the near term to gross margins in our infrastructure business, we expect margin performance in infrastructure to improve rapidly as we reach full contractual revenue levels at our data centers. Operating costs we expect to be slightly negative year-over-year in dollar terms due to efficiency actions driving improved operating leverage. Net-net, we expect our non-GAAP EPS for the year to be $8.05, up 18% in constant currency, excluding the net one-time investment gains we booked in fiscal year 2026 from Ampere and Bloom Energy. I'll finish with guidance for our Q1 2027. In Q1, we'd expect growth in total revenues of between 27% and 29% in US dollars. Of that, we expect growth in cloud revenues of between 58% and 64%. In non-GAAP EPS, we expect between $1.72 and $1.76, up between 17% and 20% in US dollars. We anticipate revenues and earnings will accelerate in the second half of the year as we bring further megawatts online at our data centers to fulfill customer demand. I look forward to speaking further with all of you over the next few weeks and months leading into our Q1 and at our next Oracle Investor Day, scheduled for October 28th in Las Vegas. With that, I'll turn the call back to Ken for the Q&A. Thank you, Hilary. Lisa, if you'd please poll the audience for any questions they might have. Absolutely. Ladies and gentlemen, once again, that is star one if you have a question. We ask that you limit your questions to one. The first question comes from John DiFucci from Guggenheim Securities. Thank you. My question is a question that I've dealt with all this quarter. Clay, that was a ton of information you gave, which is helpful, really helpful. There's one little nuance here. You spent a little bit more this quarter on CapEx than we expected, and that's sort of the topic a little bit, it adds into it. We all know that component costs have gone up a lot, especially memory. It's grown significantly, right? Even though you said that most 3Q and 4Q contracts are large-scale AI contracts that were prepaid for GPUs, you have a lot of other contracts. This has been an issue for a lot of software companies and large cloud companies. I don't think it's as much of an issue for you, given my understanding of how you construct your contracts. Can you explain that to investors, like when it comes to these very long-term contracts, like between you and the end customer and the suppliers? Sure. Yeah. Good question, John. Good to talk to you again, as always. Look, I'll answer, I think, that in two parts. In terms of the capital expenditures, at least from what we're seeing in Q4, any increase in CapEx that is not due to component prices from our perspective, that's largely around timing. Right? Part of my job is to figure out ways to actually accelerate CapEx. Hilary has a tough life. My job is to try to spend the money a little bit faster so I can get ramped revenue sometimes. I don't see that as related to component prices. Now, talking about component prices in general, look, I think everyone knows that memory prices have definitely gone up, SSD prices, hard drive prices, et cetera. One of the things that we do, John, is it's actually quite simple. When we're selling stuff at a time period where we have certainty, whether that be certainty because the capacity's already deployed, or we have certainty because we have locked prices across the spectrum, whether it be space and power costs, energy costs, people costs, component costs. When we know those costs, we will then do fixed price contracts. Times that we don't know those costs because it's out too far in the future, or we have too much supply chain risk, whether that be due to just the way the world works or a lack of things being locked in, we then do not do fixed price contracts with our customers. We have a mechanism whereby those costs end up being floating. I don't like it when costs go up. Our customers don't like it when costs go up, and honestly, I don't think our suppliers do. I think they'd love to be able to give us everything we want. When the costs do go up, we have, I think, a very robust set of mechanisms to ensure that Oracle is not sitting there with reduced margins. That is really helpful. It makes a ton of sense. If I could, just a quick one. Hilary, you kind of alluded to what I'm going to ask, but this is the second question I get a ton of questions on. You have long-term targets out there. You're a new CFO, right? Congrats, it's great to have you on the line. Can you just comment on those long-term targets at all? I know you've only been there a couple of months. Yeah, that was the intention of putting it in the slides. I think that we're reconfirming those long-term targets in the sense of the CAGRs that we put into the slide today. We feel comfortable with that. You can see the RPO building to the level that you can start to have a lot of belief, I think, in those long-term targets. Exactly. Full reconfirmation from my side on the long-term targets. All very clear. Thank you very much. Nice job, you guys. The next question comes from Brad Zelnick, Deutsche Bank. Great. Thank you so much for taking the question. Hilary, welcome to Oracle. Hilary, as you come to Oracle from a capital-intensive business in another industry, how would you suggest that investors evaluate Oracle's progress and returns during this period of heavy investment? Yeah. The way I think about it, as we said in the earnings call, we feel the returns for the infrastructure business, that CPU and GPU business, are quite strong. Probably from a back-of-envelope standpoint, the way I'd think about return from that business model is in return on invested capital. What we see is return on invested capital in the high 20s at a steady state, once the revenues have ramped for large projects at the project level. That doesn't take into account upsides like who knows if the GPUs don't need to be replaced over the long term and things like that. Just purely in the steady state, when we're at the steady state of the contracts that we have. As we're generally able to preserve and improve margins in the case of things like bring your own hardware, the ROIC for those types of structures will be even higher. Again, that back of envelope, I'm just calculating return on invested capital as after-tax operating margin plus depreciation divided by gross investment, so total gross CapEx at the project level. Maybe that gives you a little bit of an idea. Of course, we're happy to talk more about that over the next couple quarters. That's really helpful, Hilary. Thank you, and congrats to the whole team on the execution this quarter. Nice job to everybody. Thank you. Up next, we'll take a question from Mark Moerdler from Bernstein. Thank you very much for taking my question, and also congrats on the quarter. Hilary, welcome, and we're really looking forward to working with you. Clay and Hilary, with so many vendors entering the market to deliver AI data centers, including the Neocloud, SpaceX, which is now going to build data centers in space, etc.. Where does Oracle see itself in the competitive landscape, and how do you see that increase in capacity impacting your ability to, one, retain customers, renew contracts, two, capture new customers, and three, maintain or improve margins? Thank you. Yeah. Thanks Mark. Look, first, I think it's very important that we stay focused on customers. The nice thing is that I think whether you see it from existing RPO or increased contracts that we're getting, yes, there's a lot of things happening in the market, but we have a large, diverse set of customers, both very large and also smaller customers. What I spend all of my time doing is I wake up every day and I go, "How do I make sure those customers are as happy as possible with us?" When I shared the numbers, for example, in the prepared remarks about the extremely high utilization rate, even when things come back for renewal, they're instantly snapped up. Those are all indicators that we have great customer relationships, they're happy with the products, and they're very satisfied with the prices that we're charging for them. Look, I think there's going to be a lot of people who enter the space. I think there's clearly, several years in, there's still a massively higher demand than there is supply. I think there are going to be more and more people trying to figure out how to meet that demand. I don't worry about that. I really focus on how do we make sure that we can meet as much of that demand at a reasonable margin profile. That's what I think you've seen us invent new business models, to go out and try to serve. In terms of how does that affect our future renewals, I find that largely what affects future renewals is the several years relationship that we're going to have between now and then. We're fundamentally in the service business. If you think that you're just buying something and then you're done with it's not the way it works, right? These people are relying on what we do at Oracle to run and maintain these massive clusters every day. Our ability to do that extremely well creates a extremely positive relationship that then ensures that renewals go well. In terms of the margin profile, look, I've been at Oracle now for 12 years, the whole time I've been working on OCI. What I can tell you, it's not easy to build a extremely efficient, highly secure, robust cloud. I think that our customers see and appreciate the value of what we provide, the flexibility that we give them, the comprehensive set of services that we provide. I think that over time, as the market continues to mature, and we deploy more and more of our research and development dollars into making things more efficient, I think there's ways that Oracle gets higher and higher margins, but we actually can offer lower and lower prices to our customers. That's ultimately the job that is on our shoulders. What we've been doing over the past decade is why the biggest and most robust customers come our way. That's really helpful. I do really appreciate it. Thank you. The next question today is Keith Bachman from Bank of Montreal. Yes, thank you very much for the question. Mike, I wanted to direct this to you, if I could. You mentioned two things, as net new. One was moving towards outcome-based commercial pricing models. The other was rolling out some incremental token packages. I wanted to see if you could flesh out the why. More specifically on the outcome-based commercial pricing models, how do you think this reduces friction, and is this related to what modules? In other words, I assume this is the SaaS portfolio, ERP, HCM. What models might this relate to? Then finally, how do you think this might impact growth? That's it for me. Many thanks. Sure. Yeah. Thanks for the question, Keith. Outcomes-based pricing is not entirely new for us. This is something we've been doing in our construction business, based upon construction value under management, a general contractor, a subcontractor, cash flow and payments, upsell wheels, as I mentioned in my prepared remarks, with hospitality and even in healthcare, in our new AI-based, automated agents, we're automating doctors' notes, we're automating lab orders. We're able to measure and actually price based on patient throughput, which is one of the things providers fear about is how many people can we get through a healthcare system, reduce waiting queues, give better service to patients. What is new is that we're now expanding that offering across our entire fleet, as you mentioned, across all of our applications, including our Fusion piece. The sort of difficult thing is if you're not creating the outcome in the first place, that's a tricky thing to price in. Since we've made this full stack investment, and since we're able to very easily take the best of the output from the large language models to our customers, pair that with both our horizontal applications and our industry applications, we have a very easy way to measure outcomes for our customers. As I mentioned, one of the things we're increasingly hearing from customers is, "How much am I going to spend on AI, and how do I get ROI very quickly?" I think we have a very unique advantage. Since we're in the infrastructure business, we have large LLM vendors training on there. We've got all of our applications business, both horizontal and vertical businesses. We are naturally generating these outcomes for customers, and it really gives us the ability to help them understand their own AI budgets, as well as align that to the value, again, which is really easy to measure. I think it's a unique offering. It relies on the full stack investment that we made, and as I mentioned, early days, but certainly resonating very well with customers. They appreciate the transparency. They appreciate being able to align outcomes to AI spec. I also mentioned the token models. If customers want this, again, a lot of what we're doing in our Fusion applications, our industry applications, we continue to add at no additional charge. If customers want access to advanced reasoning, if they want it, essentially, for more tokens at the models, we have prepackaged bundles to allow them to do that. We're allowing as much flexibility and as much alignment to value in our pricing models across our entire application suite as we possibly can. I expect that will continue to resonate well with customers as it did in the quarter, and as we roll it out across our entire fleet, certainly should be helpful for our growth story as well. Thanks Mike. Your next question is from Raimo Lenschow from Barclays. Hey, perfect. Welcome to the team as well from me. The question I had was, we talked a lot about AI and the growth, great momentum you have today, but you still have the classic Oracle business that we all grew up with. There's a lot of noise in the market at the moment, especially on the investor side, what's happening to software, et cetera. Can you address a little bit what you're seeing on the database side? There's OCI, Azure, et cetera, and overall database momentum. On the application side, the growth rate ticked down a little bit, but then you also mentioned on the call some very nice customer wins. Can you talk to what you see in the classic business? Thank you. Yeah, sure. It's Mike. I'll take a stab here and then ask Clay to jump in as well. On the applications business, we think double-digit growth on an in-quarter run rate of $4.1 billion is pretty good, and we're certainly happy with our continued double-digit growth. As I mentioned, our deferred position in the quarter grew by 16%. When our deferred position is growing faster than our in-quarter revenue, it gives us confidence. As far as impact of SaaS apocalypse, I would say maybe a couple quarters ago, there were some delayed decision cycles out there as customers thought through that. Really, particularly in the mission-critical system space, which is where we play at Oracle, people have quickly moved on to that, and realized that enterprise software, particularly when you have AI built into our SaaS solutions, is certainly a very good approach and is necessary to move forward for the modernization and protection of their businesses. I expect that our applications business will continue to be a healthy contributor to Oracle as it has been. As far as the database, look, they grew cloud database 29% in the quarter, with, as I mentioned, multi-cloud revenue growing at 4X, tokens growing 3.25X in the quarter. And here's the really good news on database. We're in early age, very early days on multi-cloud database. We continue to unlock new regions and unlock new partnerships, in some cases with our competitor clouds. We expect that business to continue to be an outsized growth engine for Oracle going forward. And I'll say the final piece is that in addition to multi-cloud, the innovation in the database, I mentioned a couple of the database security and Agent Memory that we put in the database. Things like vector database search and features that we've been adding into the database are part and parcel to companies' AI strategies. Data strategy matters, data architecture matters, and as the embracing market starts to take hold, which is in, again, also in early days, a lot of that data's just in an Oracle database across the world. And we expect to see continued investment and growth on our database business. As a result, multi-cloud, all facets of database, Oracle Cloud, multi-cloud, as an underpinning support pillar for all of our applications and all the bespoke workloads in the world that are running Oracle database. Prognosis is very good. Perfect. Thank you. Our last question today comes from Kirk Materne from Evercore ISI. Yeah. Thanks very much for taking the question. I had one, maybe sort of a two-parter around the bring your own hardware and prepaid dynamics, maybe for Clay and then for Hilary. I guess, Clay, for you, about 12% of RPO is now related to these type of deals. When you look at the pipeline, where do you think that split could ultimately go? When you go into these type of deals, especially on the bring your own hardware side, what's the value differentiation that maybe those deals have that some of the ones that include GPUs, or I guess, how does that differ versus the GPU-type deals? Hilary, just to clarify on the CapEx guide, I think you said $70 billion in CapEx, but that was excluding, I think, $25 billion from some of these prepaid deals. Could you just, I guess, talk about this dynamic as it relates to sort of your CapEx outlook? Thanks. Yeah. I'll start and then hand it to Hilary. Look, I would like to tell you that we know all about how things are going to change in the future. I can't say that today. The reality is that what's driving, I think, the mix change is an evolving business model. Right? You have a lot of different types of accelerators. You have a lot of different customers. You have a lot of different business arrangements. Ultimately, one of the things that Oracle can provide to our customers is that we can go out and put up front capital and then depreciate that over a period of time and help finance the customer's usage of that. That's not the only thing we provide, and for a lot of customers, it's not even the most important thing to provide. What they contract with us for is the ability to go out and get these data centers constructed, design them properly, secure them, design networks that go inside of them, install a cloud, give the complimentary set of services around the specific hardware, because it turns out that a set of these accelerators on their own is not a functioning cloud. You need general purpose compute, you need general purpose storage, you need load balancers, you need security functions, you need identity. You need all of that to actually make this stuff usable, and Oracle provides all of that. Anyone that thinks that these things are easy to operate is very confused. You're not just buying a single rack and putting it into your data hall. These are extremely complex clusters that require constant care and feeding, constant maintenance across the network and the hardware itself. When you add all that together, I think that what you're seeing is that you've got different entrants in the market around accelerators that are helping customers find ways to procure their accelerators. You've got different customers who have different ways of thinking about that. I can't tell you exactly the mixture of when we do bring your own hardware versus when we do prepay versus when we bring the capital. What I can say is that, I think you'll continue to see innovation and evolution in this model, given the rapid changes that are happening across this entire ecosystem. Hilary? Let me just start. We said on the call a couple of times that we also see the margins in those structures, either at or better than the prior contracts that we have. That's good news in terms of economics. We did introduce this quarter, this net cash outlay for capital expenditures, which I think is pretty important to understand our funding requirements. Indeed, for 2027, fiscal year 2027, we expect around $70 billion in net cash outlay for capital expenditures. That does exclude the $20 billion-$25 billion in repayments that we will collect, or there's some timing difference is in there, but it's just associated with third-party manufacturers. Not vendor financing, just third-party manufacturers. $20 billion-$25 billion. The sum of those is our reported CapEx. From a funding standpoint, what's happening here is that these structures are enabling us to have a lower cash CapEx requirement when we look at how we plan our business. Also from an economic standpoint, of course, because we're collecting money up front. In normal cases, we would put out the CapEx amount, and then later we would collect money from customers. Here, we collect money from customers up front, and actually, so that doesn't come out of our funding to pay for the CapEx or not 100% of it. Therefore, the return on capital is going to be a bit better as well. Thank you Hilary. That's very helpful. Thank you all. Thank you Hilary. For next quarter, this is new for everybody, we expect our Q1 fiscal year 2027 earnings results will be announced on September 10th. Any changes in the date will be publicly announced. Also, as a reminder, Hilary brought this up earlier, but our Investor Day will be held on October 28th in Las Vegas. We look to see you all there as part of AI World. A telephonic replay of this conference call will be available for 24 hours on our investor relations website. As a reminder, the slides that you saw today will be posted up to the website shortly. Thank you for joining us today. With that, I'll turn the call back to Lisa for closing. Once again, ladies and gentlemen, that does conclude today's conference. We would like to thank you all for your participation today. You may now disconnect.

Speaker 10: I would now like to hand the conference over to Mr. Ken Bond. Please go ahead, sir. I would now like to hand the conference over to Mr. Ken Bond. i would now like to hand the conference over to mr ken bond Please go ahead, sir. please go ahead sir

Speaker 6: Thank you Lisa, good afternoon, everyone. Welcome to Oracle's fourth quarter and fiscal year 2026 earnings conference call. On the call today are Chief Executive Officer, Mike Sicilia, Chief Executive Officer, Clay Magouyrk, and Chief Financial Officer, Hilary Maxson. A copy of the press release, including financial results tables, supplemental financial metrics, and guidance are now available from the investor relations website. Also is a slide deck being introduced this quarter, which you'll see momentarily, a GAAP to non-GAAP reconciliation, other supplemental financial information, and lists of many customers who purchased Oracle Cloud services or went live on Oracle Cloud recently. These items will be available after today's call. As a reminder, today's discussion will include forward-looking statements, we will make some important comments around factors relating to our business. Thank you Lisa, good afternoon, everyone. thank you lisa good afternoon everyone Welcome to Oracle's fourth quarter and fiscal year 2026 earnings conference call. welcome to oracle's fourth quarter and fiscal year 2026 earnings conference call On the call today are Chief Executive Officer, Mike Sicilia, Chief Executive Officer, Clay Magouyrk, and Chief Financial Officer, Hilary Maxson. on the call today are chief executive officer mike sicilia chief executive officer clay magouyrk and chief financial officer hilary maxson A copy of the press release, including financial results tables, supplemental financial metrics, and guidance are now available from the investor relations website. a copy of the press release including financial results tables supplemental financial metrics and guidance are now available from the investor relations website Also is a slide deck being introduced this quarter, which you'll see momentarily, a GAAP to non-GAAP reconciliation, other supplemental financial information, and lists of many customers who purchased Oracle Cloud services or went live on Oracle Cloud recently. also is a slide deck being introduced this quarter which you'll see momentarily a gaap to non-gaap reconciliation other supplemental financial information and lists of many customers who purchased oracle cloud services or went live on oracle cloud recently These items will be available after today's call. these items will be available after today's call As a reminder, today's discussion will include forward-looking statements, we will make some important comments around factors relating to our business. as a reminder today's discussion will include forward-looking statements we will make some important comments around factors relating to our business These forward-looking statements are also subject to risks and uncertainties that may cause actual results to differ materially from statements being made today. As a result, we caution you against placing undue reliance on these forward-looking statements, we encourage you to review our most recent reports, including our 10-K and 10-Q and any applicable amendments. 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 any questions, we'll begin with a few prepared remarks. With that, I'll turn the call to Hilary. These forward-looking statements are also subject to risks and uncertainties that may cause actual results to differ materially from statements being made today. these forward-looking statements are also subject to risks and uncertainties that may cause actual results to differ materially from statements being made today As a result, we caution you against placing undue reliance on these forward-looking statements, we encourage you to review our most recent reports, including our 10-K and 10-Q and any applicable amendments. as a result we caution you against placing undue reliance on these forward-looking statements we encourage you to review our most recent reports including our 10-k and 10-q and any applicable amendments Finally, we are not obligating ourselves to revise our results or these forward-looking statements in light of new information or future events. 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 any questions, we'll begin with a few prepared remarks. before taking any questions we'll begin with a few prepared remarks With that, I'll turn the call to Hilary. with that i'll turn the call to hilary

Speaker 3: Thanks Ken. Hi, everyone. Great to be here with you today. As new CFO, I thought I'd start with a few thoughts on why I'm so excited to join Oracle at this time. I've spent my career all around the world at companies that use technology and data to drive transformation, both internally and for customers. I believe that the most valuable transformational change sits at the juxtaposition of the physical and virtual worlds across business models, from infrastructure to enterprise software. Oracle understands that intersection is now uniquely positioned for one of the most significant technology transitions we've seen in decades. Very few companies can help customers across the entire technology stack, from the cloud infrastructure that powers AI workloads to the mission-critical applications that run their businesses. Oracle can do both. Thanks Ken. thanks ken Hi, everyone. hi everyone Great to be here with you today. great to be here with you today As new CFO, I thought I'd start with a few thoughts on why I'm so excited to join Oracle at this time. as new cfo i thought i'd start with a few thoughts on why i'm so excited to join oracle at this time I've spent my career all around the world at companies that use technology and data to drive transformation, both internally and for customers. i've spent my career all around the world at companies that use technology and data to drive transformation both internally and for customers I believe that the most valuable transformational change sits at the juxtaposition of the physical and virtual worlds across business models, from infrastructure to enterprise software. i believe that the most valuable transformational change sits at the juxtaposition of the physical and virtual worlds across business models from infrastructure to enterprise software Oracle understands that intersection is now uniquely positioned for one of the most significant technology transitions we've seen in decades. oracle understands that intersection is now uniquely positioned for one of the most significant technology transitions we've seen in decades Very few companies can help customers across the entire technology stack, from the cloud infrastructure that powers AI workloads to the mission-critical applications that run their businesses. very few companies can help customers across the entire technology stack from the cloud infrastructure that powers ai workloads to the mission-critical applications that run their businesses Oracle can do both. oracle can do both This is a company with deep technical expertise, differentiated technology, and a long history of helping customers turn technology innovation into tangible business value. While I've only been here for two months, everything I've seen has reinforced my confidence in the company's strategy, execution, and opportunity ahead. I'm excited to be part of the team and look forward to helping Oracle capitalize on the opportunities in front of us to drive return on investment and shareholder value. As we pursue these opportunities, we'll remain focused on disciplined capital allocation, maintaining a strong balance sheet, and preserving our investment-grade credit rating. With that, let me turn to our Q4 and fiscal year 2026 results. Like Ken said, we've introduced a short presentation to accompany our earnings call so you can follow along with the numbers and key comments we'll make today. This is a company with deep technical expertise, differentiated technology, and a long history of helping customers turn technology innovation into tangible business value. this is a company with deep technical expertise differentiated technology and a long history of helping customers turn technology innovation into tangible business value While I've only been here for two months, everything I've seen has reinforced my confidence in the company's strategy, execution, and opportunity ahead. while i've only been here for two months everything i've seen has reinforced my confidence in the company's strategy execution and opportunity ahead I'm excited to be part of the team and look forward to helping Oracle capitalize on the opportunities in front of us to drive return on investment and shareholder value. i'm excited to be part of the team and look forward to helping oracle capitalize on the opportunities in front of us to drive return on investment and shareholder value As we pursue these opportunities, we'll remain focused on disciplined capital allocation, maintaining a strong balance sheet, and preserving our investment-grade credit rating. as we pursue these opportunities we'll remain focused on disciplined capital allocation maintaining a strong balance sheet and preserving our investment-grade credit rating With that, let me turn to our Q4 and fiscal year 2026 results. with that let me turn to our q4 and fiscal year 2026 results Like Ken said, we've introduced a short presentation to accompany our earnings call so you can follow along with the numbers and key comments we'll make today. like ken said we've introduced a short presentation to accompany our earnings call so you can follow along with the numbers and key comments we'll make today In terms of Q4, it was a record quarter, driven by strength in both our cloud infrastructure and cloud apps businesses. Revenue was $19.2 billion, up 21% in US dollars. Cloud infrastructure revenue grew 93%, reflecting strong demand for both AI workloads and our database services, and cloud apps was up double digits at +10%. Mike and Clay will give more detail on these businesses in just a moment. Our non-GAAP operating income increased 22% in US dollars to $8.6 billion, driven by our strong revenue progression. Our operating margin increased slightly, with our gross margin declining, driven by impacts from ramping up our data centers and the acceleration in our infrastructure revenue. In terms of Q4, it was a record quarter, driven by strength in both our cloud infrastructure and cloud apps businesses. in terms of q4 it was a record quarter driven by strength in both our cloud infrastructure and cloud apps businesses Revenue was $19.2 billion, up 21% in US dollars. revenue was $19.2 billion up 21% in us dollars Cloud infrastructure revenue grew 93%, reflecting strong demand for both AI workloads and our database services, and cloud apps was up double digits at +10%. cloud infrastructure revenue grew 93% reflecting strong demand for both ai workloads and our database services and cloud apps was up double digits at +10% Mike and Clay will give more detail on these businesses in just a moment. mike and clay will give more detail on these businesses in just a moment Our non-GAAP operating income increased 22% in US dollars to $8.6 billion, driven by our strong revenue progression. our non-gaap operating income increased 22% in us dollars to $8.6 billion driven by our strong revenue progression Our operating margin increased slightly, with our gross margin declining, driven by impacts from ramping up our data centers and the acceleration in our infrastructure revenue. our operating margin increased slightly with our gross margin declining driven by impacts from ramping up our data centers and the acceleration in our infrastructure revenue This was more than offset in the quarter by a reduction in operating costs, for us, that's the lines in our P&L, starting with sales and marketing, due to efficiency actions in our cost structure. Our non-GAAP EPS reached $2.11, an increase of 24% in US dollars for the quarter, partly due to a one-time net gain on investment. Excluding this, our non-GAAP EPS increased by 20%. Turning to the full year, we surpassed revenues of $67 billion for the first time, which translated into strong non-GAAP operating income of $29 billion, up 16% in US dollars for the year. Our non-GAAP EPS was up 27% in US dollars to $7.63, including one-time gains on investment. Excluding these gains, our non-GAAP EPS was $6.83. This was more than offset in the quarter by a reduction in operating costs, for us, that's the lines in our P&L, starting with sales and marketing, due to efficiency actions in our cost structure. this was more than offset in the quarter by a reduction in operating costs for us that's the lines in our p&l starting with sales and marketing due to efficiency actions in our cost structure Our non-GAAP EPS reached $2.11, an increase of 24% in US dollars for the quarter, partly due to a one-time net gain on investment. our non-gaap eps reached $2.11 an increase of 24% in us dollars for the quarter partly due to a one-time net gain on investment Excluding this, our non-GAAP EPS increased by 20%. excluding this our non-gaap eps increased by 20% Turning to the full year, we surpassed revenues of $67 billion for the first time, which translated into strong non-GAAP operating income of $29 billion, up 16% in US dollars for the year. turning to the full year we surpassed revenues of $67 billion for the first time which translated into strong non-gaap operating income of $29 billion up 16% in us dollars for the year Our non-GAAP EPS was up 27% in US dollars to $7.63, including one-time gains on investment. our non-gaap eps was up 27% in us dollars to $7.63 including one-time gains on investment Excluding these gains, our non-GAAP EPS was $6.83. excluding these gains our non-gaap eps was $6.83 For the full year, our gross margin stepped down around five points, as expected, as we start to see the impacts from the build-out of our infrastructure business and the acceleration in its revenues, primarily offset by lower operating costs as a percentage of revenue, driven by operating efficiencies. All of this translated into strong cash flow from operations of $32 billion, up 54%. We did continue with our program of capital investments tied to unlocking the strong growth opportunities in front of us. Our net cash outlay for capital expenditures for the full year was $48 billion, taking into account prepayments and timing impacts of around $8 billion. You can see the table showing the details of net cash outlay for CapEx in our press release. We think this measure is important to better understand our funding needs. For the full year, our gross margin stepped down around five points, as expected, as we start to see the impacts from the build-out of our infrastructure business and the acceleration in its revenues, primarily offset by lower operating costs as a percentage of revenue, driven by operating efficiencies. for the full year our gross margin stepped down around five points as expected as we start to see the impacts from the build-out of our infrastructure business and the acceleration in its revenues primarily offset by lower operating costs as a percentage of revenue driven by operating efficiencies All of this translated into strong cash flow from operations of $32 billion, up 54%. all of this translated into strong cash flow from operations of $32 billion up 54% We did continue with our program of capital investments tied to unlocking the strong growth opportunities in front of us. Our net cash outlay for capital expenditures for the full year was $48 billion, taking into account prepayments and timing impacts of around $8 billion. we did continue with our program of capital investments tied to unlocking the strong growth opportunities in front of us. our net cash outlay for capital expenditures for the full year was $48 billion taking into account prepayments and timing impacts of around $8 billion You can see the table showing the details of net cash outlay for CapEx in our press release. you can see the table showing the details of net cash outlay for capex in our press release We think this measure is important to better understand our funding needs. we think this measure is important to better understand our funding needs Our remaining performance obligations, or RPO, finished at $638 billion, up 363%. This unprecedented level of RPO provides exceptional visibility into our future revenue growth, all supported by long-term contractual customer commitments, and reflects the strong customer demand we see across both AI infrastructure and cloud services. To give a bit more detail on our RPO, we expect 12% to be recognized in the next 12 months, and another 34% between 13 and 36 months. These percentages are both expected to accelerate over the coming quarters based on our current long-term outlook. Mike and Clay will now get into a bit more detail on our cloud businesses, and then I'll be back with our outlook for fiscal year 2027 and Q1. Our remaining performance obligations, or RPO, finished at $638 billion, up 363%. our remaining performance obligations or rpo finished at $638 billion up 363% This unprecedented level of RPO provides exceptional visibility into our future revenue growth, all supported by long-term contractual customer commitments, and reflects the strong customer demand we see across both AI infrastructure and cloud services. this unprecedented level of rpo provides exceptional visibility into our future revenue growth all supported by long-term contractual customer commitments and reflects the strong customer demand we see across both ai infrastructure and cloud services To give a bit more detail on our RPO, we expect 12% to be recognized in the next 12 months, and another 34% between 13 and 36 months. to give a bit more detail on our rpo we expect 12% to be recognized in the next 12 months and another 34% between 13 and 36 months These percentages are both expected to accelerate over the coming quarters based on our current long-term outlook. these percentages are both expected to accelerate over the coming quarters based on our current long-term outlook Mike and Clay will now get into a bit more detail on our cloud businesses, and then I'll be back with our outlook for fiscal year 2027 and Q1. mike and clay will now get into a bit more detail on our cloud businesses and then i'll be back with our outlook for fiscal year 2027 and q1

Speaker 9: Thank you Hilary, and welcome to Oracle. I'm going to cover our Cloud Apps and Cloud Database business in a bit more detail, both of which performed quite well in Q4. We're on the front end of one of the most interesting times in the technology business. Our customers are now focused on how to leverage AI in their own businesses. They want AI to increase productivity, enhance customer service, and create real competitive advantages. They want to do it quickly and within their existing budget envelope. Oracle's unique advantage is that we deliver the applications, the data, the infrastructure, the AI tooling, and the industry expertise together. That combination invariably puts us at the center of customer conversations, whether they're existing Oracle customers or not. Our customers have moved past the experiment stage with AI. Thank you Hilary, and welcome to Oracle. thank you hilary and welcome to oracle I'm going to cover our Cloud Apps and Cloud Database business in a bit more detail, both of which performed quite well in Q4. i'm going to cover our cloud apps and cloud database business in a bit more detail both of which performed quite well in q4 We're on the front end of one of the most interesting times in the technology business. we're on the front end of one of the most interesting times in the technology business Our customers are now focused on how to leverage AI in their own businesses. our customers are now focused on how to leverage ai in their own businesses They want AI to increase productivity, enhance customer service, and create real competitive advantages. they want ai to increase productivity enhance customer service and create real competitive advantages They want to do it quickly and within their existing budget envelope. they want to do it quickly and within their existing budget envelope Oracle's unique advantage is that we deliver the applications, the data, the infrastructure, the AI tooling, and the industry expertise together. oracle's unique advantage is that we deliver the applications the data the infrastructure the ai tooling and the industry expertise together That combination invariably puts us at the center of customer conversations, whether they're existing Oracle customers or not. that combination invariably puts us at the center of customer conversations whether they're existing oracle customers or not Our customers have moved past the experiment stage with AI. our customers have moved past the experiment stage with ai They are ready to implement enterprise-grade, complete agentic solutions to help run their businesses. Over the past year, we have delivered more than 1,000 AI agents across our application suites. These agentic-based offerings can reason, decide, and execute work across processes. The quickest, most affordable, and most productive way customers can begin consuming AI is just to continue using Oracle's applications, since every three months, they get more and more of the AI features built for them and ready to go. This is a major shift in enterprise software, and Oracle is uniquely positioned to lead it. You can see it in our Q4 results. Oracle Cloud Applications generated revenues of $4.1 billion, which was up 10%, and our SaaS deferred revenue was up 16% in the quarter. Across the company, we took thousands of customers live last quarter, over 300 in Fusion alone. They are ready to implement enterprise-grade, complete agentic solutions to help run their businesses. they are ready to implement enterprise-grade complete agentic solutions to help run their businesses Over the past year, we have delivered more than 1,000 AI agents across our application suites. over the past year we have delivered more than 1,000 ai agents across our application suites These agentic-based offerings can reason, decide, and execute work across processes. these agentic-based offerings can reason decide and execute work across processes The quickest, most affordable, and most productive way customers can begin consuming AI is just to continue using Oracle's applications, since every three months, they get more and more of the AI features built for them and ready to go. the quickest most affordable and most productive way customers can begin consuming ai is just to continue using oracle's applications since every three months they get more and more of the ai features built for them and ready to go This is a major shift in enterprise software, and Oracle is uniquely positioned to lead it. this is a major shift in enterprise software and oracle is uniquely positioned to lead it You can see it in our Q4 results. you can see it in our q4 results Oracle Cloud Applications generated revenues of $4.1 billion, which was up 10%, and our SaaS deferred revenue was up 16% in the quarter. oracle cloud applications generated revenues of $4.1 billion which was up 10% and our saas deferred revenue was up 16% in the quarter Across the company, we took thousands of customers live last quarter, over 300 in Fusion alone. across the company we took thousands of customers live last quarter over 300 in fusion alone Exelon adopted our utilities platform to manage operations. Wright County Sheriff's Office went live with our Public Safety Suite. Westfield Insurance implemented Fusion ERP, and Piraeus Bank went live with Oracle Banking, just to name a few. All of these customers are upgrading to a better and modern applications platform that also comes with AI built right in. In Q4, we also continued our electronic health record deployment at the U.S. Department of Veterans Affairs. In Q4, we added four VA medical centers in Michigan, and in early June, added another four VA medical centers in Ohio. Oracle now supports 14 VA medical centers, serving 29,000 clinicians and 500,000 veterans across the United States. While not part of our Q4 bookings, the United States Office of Personnel Management today announced an agency-wide award to Oracle for Fusion HCM. Exelon adopted our utilities platform to manage operations. exelon adopted our utilities platform to manage operations Wright County Sheriff's Office went live with our Public Safety Suite. wright county sheriff's office went live with our public safety suite Westfield Insurance implemented Fusion ERP, and Piraeus Bank went live with Oracle Banking, just to name a few. westfield insurance implemented fusion erp and piraeus bank went live with oracle banking just to name a few All of these customers are upgrading to a better and modern applications platform that also comes with AI built right in. all of these customers are upgrading to a better and modern applications platform that also comes with ai built right in In Q4, we also continued our electronic health record deployment at the U.S. in q4 we also continued our electronic health record deployment at the u.s Department of Veterans Affairs. department of veterans affairs In Q4, we added four VA medical centers in Michigan, and in early June, added another four VA medical centers in Ohio. in q4 we added four va medical centers in michigan and in early june added another four va medical centers in ohio Oracle now supports 14 VA medical centers, serving 29,000 clinicians and 500,000 veterans across the United States. oracle now supports 14 va medical centers serving 29,000 clinicians and 500,000 veterans across the united states While not part of our Q4 bookings, the United States Office of Personnel Management today announced an agency-wide award to Oracle for Fusion HCM. while not part of our q4 bookings the united states office of personnel management today announced an agency-wide award to oracle for fusion hcm This is obviously a strong start for us in our FY 2027 applications business. In addition to discussions around AI within our applications, I am also having very interesting conversations with our customers around leveraging their own proprietary datasets with AI. Much of this data already sits in an Oracle Database or is generated by Oracle applications. For many enterprises, inferencing against decades of rich operations data is where the benefits of AI compound exponentially. Oracle's full stack offerings allow customers to get up and running quickly, leveraging AI together with their private datasets. This is why Claro, a major telecommunications provider in Latin America, chose OCI, Field Services applications, and our Oracle AI Data Platform to automate customer service for their 30 million subscribers this quarter. UK National Health Service Shared Business Services. This is obviously a strong start for us in our FY 2027 applications business. this is obviously a strong start for us in our fy 2027 applications business In addition to discussions around AI within our applications, I am also having very interesting conversations with our customers around leveraging their own proprietary datasets with AI. in addition to discussions around ai within our applications i am also having very interesting conversations with our customers around leveraging their own proprietary datasets with ai Much of this data already sits in an Oracle Database or is generated by Oracle applications. much of this data already sits in an oracle database or is generated by oracle applications For many enterprises, inferencing against decades of rich operations data is where the benefits of AI compound exponentially. for many enterprises inferencing against decades of rich operations data is where the benefits of ai compound exponentially Oracle's full stack offerings allow customers to get up and running quickly, leveraging AI together with their private datasets. oracle's full stack offerings allow customers to get up and running quickly leveraging ai together with their private datasets This is why Claro, a major telecommunications provider in Latin America, chose OCI, Field Services applications, and our Oracle AI Data Platform to automate customer service for their 30 million subscribers this quarter. UK National Health Service Shared Business Services. this is why claro a major telecommunications provider in latin america chose oci field services applications and our oracle ai data platform to automate customer service for their 30 million subscribers this quarter. uk national health service shared business services Oldest the Brazilian retailer, and QXO, the fastest growing building products distributor in the United States, combined AI-ready Oracle infrastructure or database products with Oracle applications to move their businesses forward. Again, just to name a few. Last quarter, we also released a long list of major new AI functionality in the Oracle Database. Here are just two examples. The Oracle AI Agent Memory is a library that helps developers build agents that can remember, reason, and act with enterprise context. Oracle Deep Data Security adds data access rules at the database level. This protects against both unauthorized access. It limits precisely what data a user and any AI agent acting on their behalf can see or act upon. All of these innovations I've just described and many more are available in our cloud, our partners' clouds, and in our customers' environments. Oldest the Brazilian retailer, and QXO, the fastest growing building products distributor in the United States, combined AI-ready Oracle infrastructure or database products with Oracle applications to move their businesses forward. oldest the brazilian retailer and qxo the fastest growing building products distributor in the united states combined ai-ready oracle infrastructure or database products with oracle applications to move their businesses forward Again, just to name a few. again just to name a few Last quarter, we also released a long list of major new AI functionality in the Oracle Database. last quarter we also released a long list of major new ai functionality in the oracle database Here are just two examples. here are just two examples The Oracle AI Agent Memory is a library that helps developers build agents that can remember, reason, and act with enterprise context. the oracle ai agent memory is a library that helps developers build agents that can remember reason and act with enterprise context Oracle Deep Data Security adds data access rules at the database level. oracle deep data security adds data access rules at the database level This protects against both unauthorized access. this protects against both unauthorized access It limits precisely what data a user and any AI agent acting on their behalf can see or act upon. All of these innovations I've just described and many more are available in our cloud, our partners' clouds, and in our customers' environments. it limits precisely what data a user and any ai agent acting on their behalf can see or act upon. all of these innovations i've just described and many more are available in our cloud our partners' clouds and in our customers' environments In Q4, our cloud database business revenue grew by 29%, with multi-cloud growing much faster. Multi-cloud revenue was up 404% year-over-year, and bookings were up 325% year-over-year. One example of an enterprise using a wide range of Oracle technologies is Vodafone, who turned to us in Q4 to consolidate and modernize their operations. Vodafone selected OCI Dedicated Region in their data centers, our multi-cloud database offering in a partner cloud, and our applications to reduce costs and run their processes faster, in some cases up to 60% faster. Finally, we are working with our customers to deliver quick ROI within their AI budgets. To do so, we are simplifying how customers consume and pay for agentic capabilities. Our new agentic pricing aligns with customer value. Much of our AI innovation in our core applications continues to be included at no extra charge. In Q4, our cloud database business revenue grew by 29%, with multi-cloud growing much faster. in q4 our cloud database business revenue grew by 29% with multi-cloud growing much faster Multi-cloud revenue was up 404% year-over-year, and bookings were up 325% year-over-year. multi-cloud revenue was up 404% year-over-year and bookings were up 325% year-over-year One example of an enterprise using a wide range of Oracle technologies is Vodafone, who turned to us in Q4 to consolidate and modernize their operations. one example of an enterprise using a wide range of oracle technologies is vodafone who turned to us in q4 to consolidate and modernize their operations Vodafone selected OCI Dedicated Region in their data centers, our multi-cloud database offering in a partner cloud, and our applications to reduce costs and run their processes faster, in some cases up to 60% faster. vodafone selected oci dedicated region in their data centers our multi-cloud database offering in a partner cloud and our applications to reduce costs and run their processes faster in some cases up to 60% faster Finally, we are working with our customers to deliver quick ROI within their AI budgets. finally we are working with our customers to deliver quick roi within their ai budgets To do so, we are simplifying how customers consume and pay for agentic capabilities. to do so we are simplifying how customers consume and pay for agentic capabilities Our new agentic pricing aligns with customer value. our new agentic pricing aligns with customer value Much of our AI innovation in our core applications continues to be included at no extra charge. much of our ai innovation in our core applications continues to be included at no extra charge Customers can also purchase additional agentic capacity in a simple, predictable way by purchasing bundles of tokens that can be used across our application suites. We're also introducing outcome-based commercial models that align pricing directly to the value derived. For example, interview agents that are priced based on the number of candidates screened, or hospitality upsell agents priced on the percentage of end consumer upsell transactions. In Q4, we started a limited rollout of our token bundles and had 33 customers, like Aon Services Corporation and Liberty Energy, pre-purchase tokens that have access to more advanced reasoning and models. All of this helps our customers control their costs and align their spending with the value being generated. With that, I will turn it over to Clay. Customers can also purchase additional agentic capacity in a simple, predictable way by purchasing bundles of tokens that can be used across our application suites. customers can also purchase additional agentic capacity in a simple predictable way by purchasing bundles of tokens that can be used across our application suites We're also introducing outcome-based commercial models that align pricing directly to the value derived. we're also introducing outcome-based commercial models that align pricing directly to the value derived For example, interview agents that are priced based on the number of candidates screened, or hospitality upsell agents priced on the percentage of end consumer upsell transactions. for example interview agents that are priced based on the number of candidates screened or hospitality upsell agents priced on the percentage of end consumer upsell transactions In Q4, we started a limited rollout of our token bundles and had 33 customers, like Aon Services Corporation and Liberty Energy, pre-purchase tokens that have access to more advanced reasoning and models. in q4 we started a limited rollout of our token bundles and had 33 customers like aon services corporation and liberty energy pre-purchase tokens that have access to more advanced reasoning and models All of this helps our customers control their costs and align their spending with the value being generated. all of this helps our customers control their costs and align their spending with the value being generated With that, I will turn it over to Clay. with that i will turn it over to clay

Speaker 2: Thanks Mike. You just heard from Mike about our applications and database businesses. Oracle has been in these businesses for decades, they continue to impress us because of their ability to continually grow aggregate margin dollars through a combination of durable differentiation and increase in market size. I want to share how we see our infrastructure business in that same category and the evidence that enforces that belief. Differentiation comes in many forms, technological innovation, supply chain execution, operational ability, and more. We created OCI as the most highly secure, highest performance, most flexible, lowest cost infrastructure available anywhere. We deliver that through innovation across all layers, from deploying the smallest and the largest clouds, to inventing technologies like Accelerons that provide the highest performance and lowest cost networks. We combine the power of OCI and Fusion applications to implement an incredibly efficient and flexible supply chain. Thanks Mike. thanks mike You just heard from Mike about our applications and database businesses. you just heard from mike about our applications and database businesses Oracle has been in these businesses for decades, they continue to impress us because of their ability to continually grow aggregate margin dollars through a combination of durable differentiation and increase in market size. oracle has been in these businesses for decades they continue to impress us because of their ability to continually grow aggregate margin dollars through a combination of durable differentiation and increase in market size I want to share how we see our infrastructure business in that same category and the evidence that enforces that belief. i want to share how we see our infrastructure business in that same category and the evidence that enforces that belief Differentiation comes in many forms, technological innovation, supply chain execution, operational ability, and more. differentiation comes in many forms technological innovation supply chain execution operational ability and more We created OCI as the most highly secure, highest performance, most flexible, lowest cost infrastructure available anywhere. we created oci as the most highly secure highest performance most flexible lowest cost infrastructure available anywhere We deliver that through innovation across all layers, from deploying the smallest and the largest clouds, to inventing technologies like Accelerons that provide the highest performance and lowest cost networks. we deliver that through innovation across all layers from deploying the smallest and the largest clouds to inventing technologies like accelerons that provide the highest performance and lowest cost networks We combine the power of OCI and Fusion applications to implement an incredibly efficient and flexible supply chain. we combine the power of oci and fusion applications to implement an incredibly efficient and flexible supply chain We architect across data center design, power distribution, data hall layout, and networking to deliver the most efficient and the most flexible infrastructure available anywhere. Oracle has a long track record of durable differentiation. This is because we know the real differentiator is the organization, the people, the company itself that can adapt to new requirements, invent solutions, and deliver them to customers rapidly. OCI has been the fastest-growing cloud provider for years. Now with AI infrastructure, we've shown to everyone the power of the organization we've built, the technology we've created, and the value we're delivering to customers. OCI is continually releasing new services, hardware, networks, and cloud regions to ensure we are always the best place for our customers' infrastructure workloads. Cloud infrastructure has become a very large market because of the ever-growing demand for server-side computing. AI infrastructure makes the existing cloud infrastructure market look small. We architect across data center design, power distribution, data hall layout, and networking to deliver the most efficient and the most flexible infrastructure available anywhere. we architect across data center design power distribution data hall layout and networking to deliver the most efficient and the most flexible infrastructure available anywhere Oracle has a long track record of durable differentiation. oracle has a long track record of durable differentiation This is because we know the real differentiator is the organization, the people, the company itself that can adapt to new requirements, invent solutions, and deliver them to customers rapidly. this is because we know the real differentiator is the organization the people the company itself that can adapt to new requirements invent solutions and deliver them to customers rapidly OCI has been the fastest-growing cloud provider for years. oci has been the fastest-growing cloud provider for years Now with AI infrastructure, we've shown to everyone the power of the organization we've built, the technology we've created, and the value we're delivering to customers. now with ai infrastructure we've shown to everyone the power of the organization we've built the technology we've created and the value we're delivering to customers OCI is continually releasing new services, hardware, networks, and cloud regions to ensure we are always the best place for our customers' infrastructure workloads. oci is continually releasing new services hardware networks and cloud regions to ensure we are always the best place for our customers' infrastructure workloads Cloud infrastructure has become a very large market because of the ever-growing demand for server-side computing. cloud infrastructure has become a very large market because of the ever-growing demand for server-side computing AI infrastructure makes the existing cloud infrastructure market look small. ai infrastructure makes the existing cloud infrastructure market look small Everything we see shows this market size is $trillions per year. Combined with our previously outlined 30%-40% margin profile, OCI should grow into an extremely large and extremely profitable business. These beliefs are supported by compelling and multiplying amounts of evidence. We signed $67 billion in AI infrastructure contracts this quarter, the majority of which was either bring your own hardware or prepaid. This increases our combination of bring your own hardware or prepaid customer contracts to $75 billion, with those contracts having no degradation in margin compared to our other contracts. Customers are showing they chose OCI to deliver their infrastructure, even when they are bringing the capital themselves. Design, delivery, and operation of this large-scale infrastructure is extremely demanding. Q4 finalizes an impressive FY 2026, where we delivered more than 1.2 GW to customers. Everything we see shows this market size is $trillions per year. everything we see shows this market size is $trillions per year Combined with our previously outlined 30%-40% margin profile, OCI should grow into an extremely large and extremely profitable business. combined with our previously outlined 30%-40% margin profile oci should grow into an extremely large and extremely profitable business These beliefs are supported by compelling and multiplying amounts of evidence. these beliefs are supported by compelling and multiplying amounts of evidence We signed $67 billion in AI infrastructure contracts this quarter, the majority of which was either bring your own hardware or prepaid. we signed $67 billion in ai infrastructure contracts this quarter the majority of which was either bring your own hardware or prepaid This increases our combination of bring your own hardware or prepaid customer contracts to $75 billion, with those contracts having no degradation in margin compared to our other contracts. this increases our combination of bring your own hardware or prepaid customer contracts to $75 billion with those contracts having no degradation in margin compared to our other contracts Customers are showing they chose OCI to deliver their infrastructure, even when they are bringing the capital themselves. customers are showing they chose oci to deliver their infrastructure even when they are bringing the capital themselves Design, delivery, and operation of this large-scale infrastructure is extremely demanding. design delivery and operation of this large-scale infrastructure is extremely demanding Q4 finalizes an impressive FY 2026, where we delivered more than 1.2 GW to customers. q4 finalizes an impressive fy 2026 where we delivered more than 1.2 gw to customers Our pace of delivery continues to accelerate, with our FY 2027 Q1 delivery approaching 1 GW, nearly the same capacity as we've delivered in the previous four quarters combined. There will be many winners named, our strategy is to have them all as customers. We continue to diversify across our largest customers, with four customers contracting for more than $8 billion this quarter. Our infrastructure is fundamentally multi-tenant, we continually allocate capacity between customers. In Q4, 35,000 GPUs from 59 separate customers were up for renewal. 49% of those customers renewed for 92% of those GPUs. That doesn't mean, though, that 8% of those GPUs are idle. Most of those GPUs themselves were subsequently sold to other customers in the same quarter. Our global GPU utilization rate is 97.5%. It's also clear that AI is here to stay. Our pace of delivery continues to accelerate, with our FY 2027 Q1 delivery approaching 1 GW, nearly the same capacity as we've delivered in the previous four quarters combined. our pace of delivery continues to accelerate with our fy 2027 q1 delivery approaching 1 gw nearly the same capacity as we've delivered in the previous four quarters combined There will be many winners named, our strategy is to have them all as customers. there will be many winners named our strategy is to have them all as customers We continue to diversify across our largest customers, with four customers contracting for more than $8 billion this quarter. we continue to diversify across our largest customers with four customers contracting for more than $8 billion this quarter Our infrastructure is fundamentally multi-tenant, we continually allocate capacity between customers. our infrastructure is fundamentally multi-tenant we continually allocate capacity between customers In Q4, 35,000 GPUs from 59 separate customers were up for renewal. 49% of those customers renewed for 92% of those GPUs. in q4 35,000 gpus from 59 separate customers were up for renewal 49% of those customers renewed for 92% of those gpus That doesn't mean, though, that 8% of those GPUs are idle. that doesn't mean though that 8% of those gpus are idle Most of those GPUs themselves were subsequently sold to other customers in the same quarter. most of those gpus themselves were subsequently sold to other customers in the same quarter Our global GPU utilization rate is 97.5%. our global gpu utilization rate is 97.5% It's also clear that AI is here to stay. it's also clear that ai is here to stay AI is delivering value on multiple fronts, but the most clear and obvious is agentic coding. This is an area where we have a front-row seat as both the provider and the consumer. Agentic coding tools have completely changed how Oracle operates, and we see no slowdown in our own demand for such capabilities. The same is true for all the customers and partners we work with. The demand for AI infrastructure in this domain alone is enormous, ignoring the many, many other growth areas. Okay. Now, before I end, let's look at a summary of our five largest sites and the significant progress we're seeing across all of them. To begin, let's look at Abilene, Texas. Abilene, Texas today has delivered 42% of the total capacity. An additional 35% of capacity will be delivered in the next 90 days, with the remainder delivering in the subsequent quarter. AI is delivering value on multiple fronts, but the most clear and obvious is agentic coding. ai is delivering value on multiple fronts but the most clear and obvious is agentic coding This is an area where we have a front-row seat as both the provider and the consumer. this is an area where we have a front-row seat as both the provider and the consumer Agentic coding tools have completely changed how Oracle operates, and we see no slowdown in our own demand for such capabilities. The same is true for all the customers and partners we work with. agentic coding tools have completely changed how oracle operates and we see no slowdown in our own demand for such capabilities. the same is true for all the customers and partners we work with The demand for AI infrastructure in this domain alone is enormous, ignoring the many, many other growth areas. the demand for ai infrastructure in this domain alone is enormous ignoring the many many other growth areas Okay. okay Now, before I end, let's look at a summary of our five largest sites and the significant progress we're seeing across all of them. now before i end let's look at a summary of our five largest sites and the significant progress we're seeing across all of them To begin, let's look at Abilene, Texas. to begin let's look at abilene texas Abilene, Texas today has delivered 42% of the total capacity. abilene texas today has delivered 42% of the total capacity An additional 35% of capacity will be delivered in the next 90 days, with the remainder delivering in the subsequent quarter. an additional 35% of capacity will be delivered in the next 90 days with the remainder delivering in the subsequent quarter Moving forward to Shackelford, Texas. We contracted this in August of 2025. Customer delivery begins in the first half of calendar year 2027. 115 MW of power capacity is already available online, more than one month ahead of schedule. If we take a look at Doña Ana County, New Mexico. We contracted this in September of 2025. Customer delivery begins in the first half of calendar year 2027 as well. Power design is based on gigawatts of clean, energy-efficient Bloom fuel cells. We look at Saline, Michigan. We contracted this in October of 2025. Customer delivery begins in the second half of 2027. The network core is ahead of schedule and delivered at the end of this calendar year. To the final site I want to touch on, Port Washington, Wisconsin. Moving forward to Shackelford, Texas. moving forward to shackelford texas We contracted this in August of 2025. we contracted this in august of 2025 Customer delivery begins in the first half of calendar year 2027. 115 MW of power capacity is already available online, more than one month ahead of schedule. customer delivery begins in the first half of calendar year 2027 115 mw of power capacity is already available online more than one month ahead of schedule If we take a look at Doña Ana County, New Mexico. if we take a look at doña ana county new mexico We contracted this in September of 2025. we contracted this in september of 2025 Customer delivery begins in the first half of calendar year 2027 as well. customer delivery begins in the first half of calendar year 2027 as well Power design is based on gigawatts of clean, energy-efficient Bloom fuel cells. power design is based on gigawatts of clean energy-efficient bloom fuel cells We look at Saline, Michigan. we look at saline michigan We contracted this in October of 2025. we contracted this in october of 2025 Customer delivery begins in the second half of 2027. customer delivery begins in the second half of 2027 The network core is ahead of schedule and delivered at the end of this calendar year. the network core is ahead of schedule and delivered at the end of this calendar year To the final site I want to touch on, Port Washington, Wisconsin. to the final site i want to touch on port washington wisconsin This was contracted in September of 2025, and delivery begins in the second half of calendar year 2027. I think you can see from all of these pictures the massive progress that we're making across a very large number of sites. It's an incredible time to be in technology and to have the privilege of doing that at a company like Oracle. It's especially fun to have an inside view of the birth of a new business that can join the likes of our application and database businesses. Hopefully, these beliefs and the data points give you some insight into why we are so excited about OCI and where that's going to take Oracle. With that, I'm going to hand it back to Hilary. This was contracted in September of 2025, and delivery begins in the second half of calendar year 2027. this was contracted in september of 2025 and delivery begins in the second half of calendar year 2027 I think you can see from all of these pictures the massive progress that we're making across a very large number of sites. i think you can see from all of these pictures the massive progress that we're making across a very large number of sites It's an incredible time to be in technology and to have the privilege of doing that at a company like Oracle. it's an incredible time to be in technology and to have the privilege of doing that at a company like oracle It's especially fun to have an inside view of the birth of a new business that can join the likes of our application and database businesses. it's especially fun to have an inside view of the birth of a new business that can join the likes of our application and database businesses Hopefully, these beliefs and the data points give you some insight into why we are so excited about OCI and where that's going to take Oracle. hopefully these beliefs and the data points give you some insight into why we are so excited about oci and where that's going to take oracle With that, I'm going to hand it back to Hilary. with that i'm going to hand it back to hilary

Speaker 3: Thanks Clay. Before I get to our fiscal year 2027 and Q1 guidance, I'd like to share some comments on our funding expectations. We already mentioned throughout the call the compelling opportunities we see at Oracle based on our portfolio positioning. Our strong Q4 results reflect this well. Customer demand and our growing visibility into future revenues is what underpins the long-term financial outlook we shared at our most recent Analyst Day of plus 31% revenue CAGR and plus 28% EPS CAGR through our fiscal year 2030. In order to unlock this unique growth opportunity, we started a program of capital investments. We'll continue those investments in our fiscal year 2027, with an expected net cash outlay for capital expenditures of around $70 billion. This includes customer prepayments and timing impacts expected at around $20 billion-$25 billion, so our reported CapEx will be higher by this amount. Thanks Clay. thanks clay Before I get to our fiscal year 2027 and Q1 guidance, I'd like to share some comments on our funding expectations. before i get to our fiscal year 2027 and q1 guidance i'd like to share some comments on our funding expectations We already mentioned throughout the call the compelling opportunities we see at Oracle based on our portfolio positioning. we already mentioned throughout the call the compelling opportunities we see at oracle based on our portfolio positioning Our strong Q4 results reflect this well. our strong q4 results reflect this well Customer demand and our growing visibility into future revenues is what underpins the long-term financial outlook we shared at our most recent Analyst Day of plus 31% revenue CAGR and plus 28% EPS CAGR through our fiscal year 2030. customer demand and our growing visibility into future revenues is what underpins the long-term financial outlook we shared at our most recent analyst day of plus 31% revenue cagr and plus 28% eps cagr through our fiscal year 2030 In order to unlock this unique growth opportunity, we started a program of capital investments. in order to unlock this unique growth opportunity we started a program of capital investments We'll continue those investments in our fiscal year 2027, with an expected net cash outlay for capital expenditures of around $70 billion. we'll continue those investments in our fiscal year 2027 with an expected net cash outlay for capital expenditures of around $70 billion This includes customer prepayments and timing impacts expected at around $20 billion-$25 billion, so our reported CapEx will be higher by this amount. this includes customer prepayments and timing impacts expected at around $20 billion-$25 billion so our reported capex will be higher by this amount Importantly, these investments are being driven by committed customer demand reflected in our record RPO, giving us confidence in our long-term outlook, as well as strong returns on the capital we're deploying. As Clay already mentioned, this demand is allowing us to garner customer prepayments and bring your own hardware at similar or better margins than the rest of our contracts. To support our capital investments program, we expect to raise around $40 billion in debt and equity in our fiscal year 2027. That includes our already announced $20 billion at-the-market equity issuance. We don't anticipate raising additional debt funding in calendar year 2026. To our fiscal year 2027 guidance, you can start to see the strong translation of our RPO into revenues, with expected growth in our total revenues of +34% in constant currency, surpassing the five-year revenue CAGR included in our long-term outlook. Importantly, these investments are being driven by committed customer demand reflected in our record RPO, giving us confidence in our long-term outlook, as well as strong returns on the capital we're deploying. importantly these investments are being driven by committed customer demand reflected in our record rpo giving us confidence in our long-term outlook as well as strong returns on the capital we're deploying As Clay already mentioned, this demand is allowing us to garner customer prepayments and bring your own hardware at similar or better margins than the rest of our contracts. as clay already mentioned this demand is allowing us to garner customer prepayments and bring your own hardware at similar or better margins than the rest of our contracts To support our capital investments program, we expect to raise around $40 billion in debt and equity in our fiscal year 2027. to support our capital investments program we expect to raise around $40 billion in debt and equity in our fiscal year 2027 That includes our already announced $20 billion at-the-market equity issuance. that includes our already announced $20 billion at-the-market equity issuance We don't anticipate raising additional debt funding in calendar year 2026. we don't anticipate raising additional debt funding in calendar year 2026 To our fiscal year 2027 guidance, you can start to see the strong translation of our RPO into revenues, with expected growth in our total revenues of +34% in constant currency, surpassing the five-year revenue CAGR included in our long-term outlook. to our fiscal year 2027 guidance you can start to see the strong translation of our rpo into revenues with expected growth in our total revenues of +34% in constant currency surpassing the five-year revenue cagr included in our long-term outlook Our fiscal year 2027 gross margins will step down due to timing for the ramp-up of our data center projects into their full revenue contribution, plus impacts from mix. While these investments are creating pressure on the near term to gross margins in our infrastructure business, we expect margin performance in infrastructure to improve rapidly as we reach full contractual revenue levels at our data centers. Operating costs we expect to be slightly negative year-over-year in dollar terms due to efficiency actions driving improved operating leverage. Net-net, we expect our non-GAAP EPS for the year to be $8.05, up 18% in constant currency, excluding the net one-time investment gains we booked in fiscal year 2026 from Ampere and Bloom Energy. I'll finish with guidance for our Q1 2027. In Q1, we'd expect growth in total revenues of between 27% and 29% in US dollars. Our fiscal year 2027 gross margins will step down due to timing for the ramp-up of our data center projects into their full revenue contribution, plus impacts from mix. our fiscal year 2027 gross margins will step down due to timing for the ramp-up of our data center projects into their full revenue contribution plus impacts from mix While these investments are creating pressure on the near term to gross margins in our infrastructure business, we expect margin performance in infrastructure to improve rapidly as we reach full contractual revenue levels at our data centers. while these investments are creating pressure on the near term to gross margins in our infrastructure business we expect margin performance in infrastructure to improve rapidly as we reach full contractual revenue levels at our data centers Operating costs we expect to be slightly negative year-over-year in dollar terms due to efficiency actions driving improved operating leverage. operating costs we expect to be slightly negative year-over-year in dollar terms due to efficiency actions driving improved operating leverage Net-net, we expect our non-GAAP EPS for the year to be $8.05, up 18% in constant currency, excluding the net one-time investment gains we booked in fiscal year 2026 from Ampere and Bloom Energy. net-net we expect our non-gaap eps for the year to be $8.05 up 18% in constant currency excluding the net one-time investment gains we booked in fiscal year 2026 from ampere and bloom energy I'll finish with guidance for our Q1 2027. i'll finish with guidance for our q1 2027 In Q1, we'd expect growth in total revenues of between 27% and 29% in US dollars. in q1 we'd expect growth in total revenues of between 27% and 29% in us dollars Of that, we expect growth in cloud revenues of between 58% and 64%. In non-GAAP EPS, we expect between $1.72 and $1.76, up between 17% and 20% in US dollars. We anticipate revenues and earnings will accelerate in the second half of the year as we bring further megawatts online at our data centers to fulfill customer demand. I look forward to speaking further with all of you over the next few weeks and months leading into our Q1 and at our next Oracle Investor Day, scheduled for October 28th in Las Vegas. With that, I'll turn the call back to Ken for the Q&A. Of that, we expect growth in cloud revenues of between 58% and 64%. of that we expect growth in cloud revenues of between 58% and 64% In non-GAAP EPS, we expect between $1.72 and $1.76, up between 17% and 20% in US dollars. in non-gaap eps we expect between $1.72 and $1.76 up between 17% and 20% in us dollars We anticipate revenues and earnings will accelerate in the second half of the year as we bring further megawatts online at our data centers to fulfill customer demand. we anticipate revenues and earnings will accelerate in the second half of the year as we bring further megawatts online at our data centers to fulfill customer demand I look forward to speaking further with all of you over the next few weeks and months leading into our Q1 and at our next Oracle Investor Day, scheduled for October 28th in Las Vegas. i look forward to speaking further with all of you over the next few weeks and months leading into our q1 and at our next oracle investor day scheduled for october 28th in las vegas With that, I'll turn the call back to Ken for the Q&A. with that i'll turn the call back to ken for the q&a

Speaker 6: Thank you, Hilary. Lisa, if you'd please poll the audience for any questions they might have. Thank you, Hilary. thank you hilary Lisa, if you'd please poll the audience for any questions they might have. lisa if you'd please poll the audience for any questions they might have

Speaker 10: Absolutely. Ladies and gentlemen, once again, that is star one if you have a question. We ask that you limit your questions to one. The first question comes from John DiFucci from Guggenheim Securities. Absolutely. absolutely Ladies and gentlemen, once again, that is star one if you have a question. ladies and gentlemen once again that is star one if you have a question We ask that you limit your questions to one. we ask that you limit your questions to one The first question comes from John DiFucci from Guggenheim Securities. the first question comes from john difucci from guggenheim securities

Speaker 4: Thank you. My question is a question that I've dealt with all this quarter. Clay, that was a ton of information you gave, which is helpful, really helpful. There's one little nuance here. You spent a little bit more this quarter on CapEx than we expected, and that's sort of the topic a little bit, it adds into it. We all know that component costs have gone up a lot, especially memory. It's grown significantly, right? Even though you said that most 3Q and 4Q contracts are large-scale AI contracts that were prepaid for GPUs, you have a lot of other contracts. This has been an issue for a lot of software companies and large cloud companies. I don't think it's as much of an issue for you, given my understanding of how you construct your contracts. Thank you. thank you My question is a question that I've dealt with all this quarter. my question is a question that i've dealt with all this quarter Clay, that was a ton of information you gave, which is helpful, really helpful. clay that was a ton of information you gave which is helpful really helpful There's one little nuance here. there's one little nuance here You spent a little bit more this quarter on CapEx than we expected, and that's sort of the topic a little bit, it adds into it. you spent a little bit more this quarter on capex than we expected and that's sort of the topic a little bit it adds into it We all know that component costs have gone up a lot, especially memory. we all know that component costs have gone up a lot especially memory It's grown significantly, right? it's grown significantly right Even though you said that most 3Q and 4Q contracts are large-scale AI contracts that were prepaid for GPUs, you have a lot of other contracts. even though you said that most 3q and 4q contracts are large-scale ai contracts that were prepaid for gpus you have a lot of other contracts This has been an issue for a lot of software companies and large cloud companies. this has been an issue for a lot of software companies and large cloud companies I don't think it's as much of an issue for you, given my understanding of how you construct your contracts. i don't think it's as much of an issue for you given my understanding of how you construct your contracts Can you explain that to investors, like when it comes to these very long-term contracts, like between you and the end customer and the suppliers? Can you explain that to investors, like when it comes to these very long-term contracts, like between you and the end customer and the suppliers? can you explain that to investors like when it comes to these very long-term contracts like between you and the end customer and the suppliers

Speaker 2: Sure. Yeah. Good question, John. Good to talk to you again, as always. Look, I'll answer, I think, that in two parts. In terms of the capital expenditures, at least from what we're seeing in Q4, any increase in CapEx that is not due to component prices from our perspective, that's largely around timing. Right? Part of my job is to figure out ways to actually accelerate CapEx. Hilary has a tough life. My job is to try to spend the money a little bit faster so I can get ramped revenue sometimes. I don't see that as related to component prices. Now, talking about component prices in general, look, I think everyone knows that memory prices have definitely gone up, SSD prices, hard drive prices, et cetera. One of the things that we do, John, is it's actually quite simple. Sure. sure Yeah. yeah Good question, John. good question john Good to talk to you again, as always. good to talk to you again as always Look, I'll answer, I think, that in two parts. look i'll answer i think that in two parts In terms of the capital expenditures, at least from what we're seeing in Q4, any increase in CapEx that is not due to component prices from our perspective, that's largely around timing. in terms of the capital expenditures at least from what we're seeing in q4 any increase in capex that is not due to component prices from our perspective that's largely around timing Right? right Part of my job is to figure out ways to actually accelerate CapEx. part of my job is to figure out ways to actually accelerate capex Hilary has a tough life. hilary has a tough life My job is to try to spend the money a little bit faster so I can get ramped revenue sometimes. my job is to try to spend the money a little bit faster so i can get ramped revenue sometimes I don't see that as related to component prices. i don't see that as related to component prices Now, talking about component prices in general, look, I think everyone knows that memory prices have definitely gone up, SSD prices, hard drive prices, et cetera. now talking about component prices in general look i think everyone knows that memory prices have definitely gone up ssd prices hard drive prices et cetera One of the things that we do, John, is it's actually quite simple. one of the things that we do john is it's actually quite simple When we're selling stuff at a time period where we have certainty, whether that be certainty because the capacity's already deployed, or we have certainty because we have locked prices across the spectrum, whether it be space and power costs, energy costs, people costs, component costs. When we know those costs, we will then do fixed price contracts. Times that we don't know those costs because it's out too far in the future, or we have too much supply chain risk, whether that be due to just the way the world works or a lack of things being locked in, we then do not do fixed price contracts with our customers. We have a mechanism whereby those costs end up being floating. I don't like it when costs go up. Our customers don't like it when costs go up, and honestly, I don't think our suppliers do. When we're selling stuff at a time period where we have certainty, whether that be certainty because the capacity's already deployed, or we have certainty because we have locked prices across the spectrum, whether it be space and power costs, energy costs, people costs, component costs. when we're selling stuff at a time period where we have certainty whether that be certainty because the capacity's already deployed or we have certainty because we have locked prices across the spectrum whether it be space and power costs energy costs people costs component costs When we know those costs, we will then do fixed price contracts. when we know those costs we will then do fixed price contracts Times that we don't know those costs because it's out too far in the future, or we have too much supply chain risk, whether that be due to just the way the world works or a lack of things being locked in, we then do not do fixed price contracts with our customers. times that we don't know those costs because it's out too far in the future or we have too much supply chain risk whether that be due to just the way the world works or a lack of things being locked in we then do not do fixed price contracts with our customers We have a mechanism whereby those costs end up being floating. we have a mechanism whereby those costs end up being floating I don't like it when costs go up. i don't like it when costs go up Our customers don't like it when costs go up, and honestly, I don't think our suppliers do. our customers don't like it when costs go up and honestly i don't think our suppliers do I think they'd love to be able to give us everything we want. When the costs do go up, we have, I think, a very robust set of mechanisms to ensure that Oracle is not sitting there with reduced margins. I think they'd love to be able to give us everything we want. i think they'd love to be able to give us everything we want When the costs do go up, we have, I think, a very robust set of mechanisms to ensure that Oracle is not sitting there with reduced margins. when the costs do go up we have i think a very robust set of mechanisms to ensure that oracle is not sitting there with reduced margins

Speaker 4: That is really helpful. It makes a ton of sense. If I could, just a quick one. Hilary, you kind of alluded to what I'm going to ask, but this is the second question I get a ton of questions on. You have long-term targets out there. You're a new CFO, right? Congrats, it's great to have you on the line. Can you just comment on those long-term targets at all? I know you've only been there a couple of months. That is really helpful. that is really helpful It makes a ton of sense. it makes a ton of sense If I could, just a quick one. if i could just a quick one Hilary, you kind of alluded to what I'm going to ask, but this is the second question I get a ton of questions on. hilary you kind of alluded to what i'm going to ask but this is the second question i get a ton of questions on You have long-term targets out there. you have long-term targets out there You're a new CFO, right? you're a new cfo right Congrats, it's great to have you on the line. congrats it's great to have you on the line Can you just comment on those long-term targets at all? can you just comment on those long-term targets at all I know you've only been there a couple of months. i know you've only been there a couple of months

Speaker 3: Yeah, that was the intention of putting it in the slides. I think that we're reconfirming those long-term targets in the sense of the CAGRs that we put into the slide today. We feel comfortable with that. You can see the RPO building to the level that you can start to have a lot of belief, I think, in those long-term targets. Exactly. Full reconfirmation from my side on the long-term targets. Yeah, that was the intention of putting it in the slides. yeah that was the intention of putting it in the slides I think that we're reconfirming those long-term targets in the sense of the CAGRs that we put into the slide today. i think that we're reconfirming those long-term targets in the sense of the cagrs that we put into the slide today We feel comfortable with that. we feel comfortable with that You can see the RPO building to the level that you can start to have a lot of belief, I think, in those long-term targets. you can see the rpo building to the level that you can start to have a lot of belief i think in those long-term targets Exactly. exactly Full reconfirmation from my side on the long-term targets. full reconfirmation from my side on the long-term targets

Speaker 4: All very clear. Thank you very much. Nice job, you guys. All very clear. all very clear Thank you very much. thank you very much Nice job, you guys. nice job you guys

Speaker 10: The next question comes from Brad Zelnick, Deutsche Bank. The next question comes from Brad Zelnick, Deutsche Bank. the next question comes from brad zelnick deutsche bank

Speaker 1: Great. Thank you so much for taking the question. Hilary, welcome to Oracle. Hilary, as you come to Oracle from a capital-intensive business in another industry, how would you suggest that investors evaluate Oracle's progress and returns during this period of heavy investment? Great. great Thank you so much for taking the question. thank you so much for taking the question Hilary, welcome to Oracle. hilary welcome to oracle Hilary, as you come to Oracle from a capital-intensive business in another industry, how would you suggest that investors evaluate Oracle's progress and returns during this period of heavy investment? hilary as you come to oracle from a capital-intensive business in another industry how would you suggest that investors evaluate oracle's progress and returns during this period of heavy investment

Speaker 3: Yeah. The way I think about it, as we said in the earnings call, we feel the returns for the infrastructure business, that CPU and GPU business, are quite strong. Probably from a back-of-envelope standpoint, the way I'd think about return from that business model is in return on invested capital. What we see is return on invested capital in the high 20s at a steady state, once the revenues have ramped for large projects at the project level. That doesn't take into account upsides like who knows if the GPUs don't need to be replaced over the long term and things like that. Just purely in the steady state, when we're at the steady state of the contracts that we have. Yeah. yeah The way I think about it, as we said in the earnings call, we feel the returns for the infrastructure business, that CPU and GPU business, are quite strong. the way i think about it as we said in the earnings call we feel the returns for the infrastructure business that cpu and gpu business are quite strong Probably from a back-of-envelope standpoint, the way I'd think about return from that business model is in return on invested capital. probably from a back-of-envelope standpoint the way i'd think about return from that business model is in return on invested capital What we see is return on invested capital in the high 20s at a steady state, once the revenues have ramped for large projects at the project level. what we see is return on invested capital in the high 20s at a steady state once the revenues have ramped for large projects at the project level That doesn't take into account upsides like who knows if the GPUs don't need to be replaced over the long term and things like that. that doesn't take into account upsides like who knows if the gpus don't need to be replaced over the long term and things like that Just purely in the steady state, when we're at the steady state of the contracts that we have. just purely in the steady state when we're at the steady state of the contracts that we have As we're generally able to preserve and improve margins in the case of things like bring your own hardware, the ROIC for those types of structures will be even higher. Again, that back of envelope, I'm just calculating return on invested capital as after-tax operating margin plus depreciation divided by gross investment, so total gross CapEx at the project level. Maybe that gives you a little bit of an idea. Of course, we're happy to talk more about that over the next couple quarters. As we're generally able to preserve and improve margins in the case of things like bring your own hardware, the ROIC for those types of structures will be even higher. as we're generally able to preserve and improve margins in the case of things like bring your own hardware the roic for those types of structures will be even higher Again, that back of envelope, I'm just calculating return on invested capital as after-tax operating margin plus depreciation divided by gross investment, so total gross CapEx at the project level. again that back of envelope i'm just calculating return on invested capital as after-tax operating margin plus depreciation divided by gross investment so total gross capex at the project level Maybe that gives you a little bit of an idea. maybe that gives you a little bit of an idea Of course, we're happy to talk more about that over the next couple quarters. of course we're happy to talk more about that over the next couple quarters

Speaker 1: That's really helpful, Hilary. Thank you, and congrats to the whole team on the execution this quarter. Nice job to everybody. Thank you. That's really helpful, Hilary. that's really helpful hilary Thank you, and congrats to the whole team on the execution this quarter. thank you and congrats to the whole team on the execution this quarter Nice job to everybody. nice job to everybody Thank you. thank you

Speaker 10: Up next, we'll take a question from Mark Moerdler from Bernstein. Up next, we'll take a question from Mark Moerdler from Bernstein. up next we'll take a question from mark moerdler from bernstein

Speaker 8: Thank you very much for taking my question, and also congrats on the quarter. Hilary, welcome, and we're really looking forward to working with you. Clay and Hilary, with so many vendors entering the market to deliver AI data centers, including the Neocloud, SpaceX, which is now going to build data centers in space, etc.. Where does Oracle see itself in the competitive landscape, and how do you see that increase in capacity impacting your ability to, one, retain customers, renew contracts, two, capture new customers, and three, maintain or improve margins? Thank you. Thank you very much for taking my question, and also congrats on the quarter. thank you very much for taking my question and also congrats on the quarter Hilary, welcome, and we're really looking forward to working with you. hilary welcome and we're really looking forward to working with you Clay and Hilary, with so many vendors entering the market to deliver AI data centers, including the Neocloud, SpaceX, which is now going to build data centers in space, etc. . clay and hilary with so many vendors entering the market to deliver ai data centers including the neocloud spacex which is now going to build data centers in space etc Where does Oracle see itself in the competitive landscape, and how do you see that increase in capacity impacting your ability to, one, retain customers, renew contracts, two, capture new customers, and three, maintain or improve margins? where does oracle see itself in the competitive landscape and how do you see that increase in capacity impacting your ability to one retain customers renew contracts two capture new customers and three maintain or improve margins Thank you. thank you

Speaker 2: Yeah. Thanks Mark. Look, first, I think it's very important that we stay focused on customers. The nice thing is that I think whether you see it from existing RPO or increased contracts that we're getting, yes, there's a lot of things happening in the market, but we have a large, diverse set of customers, both very large and also smaller customers. What I spend all of my time doing is I wake up every day and I go, "How do I make sure those customers are as happy as possible with us?" When I shared the numbers, for example, in the prepared remarks about the extremely high utilization rate, even when things come back for renewal, they're instantly snapped up. Yeah. yeah Thanks Mark. thanks mark Look, first, I think it's very important that we stay focused on customers. look first i think it's very important that we stay focused on customers The nice thing is that I think whether you see it from existing RPO or increased contracts that we're getting, yes, there's a lot of things happening in the market, but we have a large, diverse set of customers, both very large and also smaller customers. the nice thing is that i think whether you see it from existing rpo or increased contracts that we're getting yes there's a lot of things happening in the market but we have a large diverse set of customers both very large and also smaller customers What I spend all of my time doing is I wake up every day and I go, "How do I make sure those customers are as happy as possible with us?" When I shared the numbers, for example, in the prepared remarks about the extremely high utilization rate, even when things come back for renewal, they're instantly snapped up. what i spend all of my time doing is i wake up every day and i go "how do i make sure those customers are as happy as possible with us?" when i shared the numbers for example in the prepared remarks about the extremely high utilization rate even when things come back for renewal they're instantly snapped up Those are all indicators that we have great customer relationships, they're happy with the products, and they're very satisfied with the prices that we're charging for them. Look, I think there's going to be a lot of people who enter the space. I think there's clearly, several years in, there's still a massively higher demand than there is supply. I think there are going to be more and more people trying to figure out how to meet that demand. I don't worry about that. I really focus on how do we make sure that we can meet as much of that demand at a reasonable margin profile. That's what I think you've seen us invent new business models, to go out and try to serve. Those are all indicators that we have great customer relationships, they're happy with the products, and they're very satisfied with the prices that we're charging for them. those are all indicators that we have great customer relationships they're happy with the products and they're very satisfied with the prices that we're charging for them Look, I think there's going to be a lot of people who enter the space. look i think there's going to be a lot of people who enter the space I think there's clearly, several years in, there's still a massively higher demand than there is supply. i think there's clearly several years in there's still a massively higher demand than there is supply I think there are going to be more and more people trying to figure out how to meet that demand. i think there are going to be more and more people trying to figure out how to meet that demand I don't worry about that. i don't worry about that I really focus on how do we make sure that we can meet as much of that demand at a reasonable margin profile. i really focus on how do we make sure that we can meet as much of that demand at a reasonable margin profile That's what I think you've seen us invent new business models, to go out and try to serve. that's what i think you've seen us invent new business models to go out and try to serve In terms of how does that affect our future renewals, I find that largely what affects future renewals is the several years relationship that we're going to have between now and then. We're fundamentally in the service business. If you think that you're just buying something and then you're done with it's not the way it works, right? These people are relying on what we do at Oracle to run and maintain these massive clusters every day. Our ability to do that extremely well creates a extremely positive relationship that then ensures that renewals go well. In terms of the margin profile, look, I've been at Oracle now for 12 years, the whole time I've been working on OCI. What I can tell you, it's not easy to build a extremely efficient, highly secure, robust cloud. In terms of how does that affect our future renewals, I find that largely what affects future renewals is the several years relationship that we're going to have between now and then. in terms of how does that affect our future renewals i find that largely what affects future renewals is the several years relationship that we're going to have between now and then We're fundamentally in the service business. we're fundamentally in the service business If you think that you're just buying something and then you're done with it's not the way it works, right? if you think that you're just buying something and then you're done with it's not the way it works right These people are relying on what we do at Oracle to run and maintain these massive clusters every day. these people are relying on what we do at oracle to run and maintain these massive clusters every day Our ability to do that extremely well creates a extremely positive relationship that then ensures that renewals go well. our ability to do that extremely well creates a extremely positive relationship that then ensures that renewals go well In terms of the margin profile, look, I've been at Oracle now for 12 years, the whole time I've been working on OCI. in terms of the margin profile look i've been at oracle now for 12 years the whole time i've been working on oci What I can tell you, it's not easy to build a extremely efficient, highly secure, robust cloud. what i can tell you it's not easy to build a extremely efficient highly secure robust cloud I think that our customers see and appreciate the value of what we provide, the flexibility that we give them, the comprehensive set of services that we provide. I think that over time, as the market continues to mature, and we deploy more and more of our research and development dollars into making things more efficient, I think there's ways that Oracle gets higher and higher margins, but we actually can offer lower and lower prices to our customers. That's ultimately the job that is on our shoulders. What we've been doing over the past decade is why the biggest and most robust customers come our way. I think that our customers see and appreciate the value of what we provide, the flexibility that we give them, the comprehensive set of services that we provide. i think that our customers see and appreciate the value of what we provide the flexibility that we give them the comprehensive set of services that we provide I think that over time, as the market continues to mature, and we deploy more and more of our research and development dollars into making things more efficient, I think there's ways that Oracle gets higher and higher margins, but we actually can offer lower and lower prices to our customers. i think that over time as the market continues to mature and we deploy more and more of our research and development dollars into making things more efficient i think there's ways that oracle gets higher and higher margins but we actually can offer lower and lower prices to our customers That's ultimately the job that is on our shoulders. that's ultimately the job that is on our shoulders What we've been doing over the past decade is why the biggest and most robust customers come our way. what we've been doing over the past decade is why the biggest and most robust customers come our way

Speaker 8: That's really helpful. I do really appreciate it. Thank you. That's really helpful. that's really helpful I do really appreciate it. i do really appreciate it Thank you. thank you

Speaker 10: The next question today is Keith Bachman from Bank of Montreal. The next question today is Keith Bachman from Bank of Montreal. the next question today is keith bachman from bank of montreal

Speaker 5: Yes, thank you very much for the question. Mike, I wanted to direct this to you, if I could. You mentioned two things, as net new. One was moving towards outcome-based commercial pricing models. The other was rolling out some incremental token packages. I wanted to see if you could flesh out the why. More specifically on the outcome-based commercial pricing models, how do you think this reduces friction, and is this related to what modules? In other words, I assume this is the SaaS portfolio, ERP, HCM. What models might this relate to? Then finally, how do you think this might impact growth? That's it for me. Many thanks. Yes, thank you very much for the question. yes thank you very much for the question Mike, I wanted to direct this to you, if I could. mike i wanted to direct this to you if i could You mentioned two things, as net new. you mentioned two things as net new One was moving towards outcome-based commercial pricing models. one was moving towards outcome-based commercial pricing models The other was rolling out some incremental token packages. the other was rolling out some incremental token packages I wanted to see if you could flesh out the why. i wanted to see if you could flesh out the why More specifically on the outcome-based commercial pricing models, how do you think this reduces friction, and is this related to what modules? more specifically on the outcome-based commercial pricing models how do you think this reduces friction and is this related to what modules In other words, I assume this is the SaaS portfolio, ERP, HCM. in other words i assume this is the saas portfolio erp hcm What models might this relate to? what models might this relate to Then finally, how do you think this might impact growth? then finally how do you think this might impact growth That's it for me. that's it for me Many thanks. many thanks

Speaker 9: Sure. Yeah. Thanks for the question, Keith. Outcomes-based pricing is not entirely new for us. This is something we've been doing in our construction business, based upon construction value under management, a general contractor, a subcontractor, cash flow and payments, upsell wheels, as I mentioned in my prepared remarks, with hospitality and even in healthcare, in our new AI-based, automated agents, we're automating doctors' notes, we're automating lab orders. We're able to measure and actually price based on patient throughput, which is one of the things providers fear about is how many people can we get through a healthcare system, reduce waiting queues, give better service to patients. What is new is that we're now expanding that offering across our entire fleet, as you mentioned, across all of our applications, including our Fusion piece. Sure. sure Yeah. yeah Thanks for the question, Keith. thanks for the question keith Outcomes-based pricing is not entirely new for us. outcomes-based pricing is not entirely new for us This is something we've been doing in our construction business, based upon construction value under management, a general contractor, a subcontractor, cash flow and payments, upsell wheels, as I mentioned in my prepared remarks, with hospitality and even in healthcare, in our new AI-based, automated agents, we're automating doctors' notes, we're automating lab orders. this is something we've been doing in our construction business based upon construction value under management a general contractor a subcontractor cash flow and payments upsell wheels as i mentioned in my prepared remarks with hospitality and even in healthcare in our new ai-based automated agents we're automating doctors' notes we're automating lab orders We're able to measure and actually price based on patient throughput, which is one of the things providers fear about is how many people can we get through a healthcare system, reduce waiting queues, give better service to patients. we're able to measure and actually price based on patient throughput which is one of the things providers fear about is how many people can we get through a healthcare system reduce waiting queues give better service to patients What is new is that we're now expanding that offering across our entire fleet, as you mentioned, across all of our applications, including our Fusion piece. what is new is that we're now expanding that offering across our entire fleet as you mentioned across all of our applications including our fusion piece The sort of difficult thing is if you're not creating the outcome in the first place, that's a tricky thing to price in. Since we've made this full stack investment, and since we're able to very easily take the best of the output from the large language models to our customers, pair that with both our horizontal applications and our industry applications, we have a very easy way to measure outcomes for our customers. As I mentioned, one of the things we're increasingly hearing from customers is, "How much am I going to spend on AI, and how do I get ROI very quickly?" I think we have a very unique advantage. Since we're in the infrastructure business, we have large LLM vendors training on there. We've got all of our applications business, both horizontal and vertical businesses. The sort of difficult thing is if you're not creating the outcome in the first place, that's a tricky thing to price in. the sort of difficult thing is if you're not creating the outcome in the first place that's a tricky thing to price in Since we've made this full stack investment, and since we're able to very easily take the best of the output from the large language models to our customers, pair that with both our horizontal applications and our industry applications, we have a very easy way to measure outcomes for our customers. since we've made this full stack investment and since we're able to very easily take the best of the output from the large language models to our customers pair that with both our horizontal applications and our industry applications we have a very easy way to measure outcomes for our customers As I mentioned, one of the things we're increasingly hearing from customers is, "How much am I going to spend on AI, and how do I get ROI very quickly?" I think we have a very unique advantage. as i mentioned one of the things we're increasingly hearing from customers is "how much am i going to spend on ai and how do i get roi very quickly?" i think we have a very unique advantage Since we're in the infrastructure business, we have large LLM vendors training on there. since we're in the infrastructure business we have large llm vendors training on there We've got all of our applications business, both horizontal and vertical businesses. we've got all of our applications business both horizontal and vertical businesses We are naturally generating these outcomes for customers, and it really gives us the ability to help them understand their own AI budgets, as well as align that to the value, again, which is really easy to measure. We are naturally generating these outcomes for customers, and it really gives us the ability to help them understand their own AI budgets, as well as align that to the value, again, which is really easy to measure. we are naturally generating these outcomes for customers and it really gives us the ability to help them understand their own ai budgets as well as align that to the value again which is really easy to measure I think it's a unique offering. It relies on the full stack investment that we made, and as I mentioned, early days, but certainly resonating very well with customers. They appreciate the transparency. They appreciate being able to align outcomes to AI spec. I also mentioned the token models. If customers want this, again, a lot of what we're doing in our Fusion applications, our industry applications, we continue to add at no additional charge. If customers want access to advanced reasoning, if they want it, essentially, for more tokens at the models, we have prepackaged bundles to allow them to do that. We're allowing as much flexibility and as much alignment to value in our pricing models across our entire application suite as we possibly can. I think it's a unique offering. i think it's a unique offering It relies on the full stack investment that we made, and as I mentioned, early days, but certainly resonating very well with customers. it relies on the full stack investment that we made and as i mentioned early days but certainly resonating very well with customers They appreciate the transparency. they appreciate the transparency They appreciate being able to align outcomes to AI spec. they appreciate being able to align outcomes to ai spec I also mentioned the token models. i also mentioned the token models If customers want this, again, a lot of what we're doing in our Fusion applications, our industry applications, we continue to add at no additional charge. if customers want this again a lot of what we're doing in our fusion applications our industry applications we continue to add at no additional charge If customers want access to advanced reasoning, if they want it, essentially, for more tokens at the models, we have prepackaged bundles to allow them to do that. if customers want access to advanced reasoning if they want it essentially for more tokens at the models we have prepackaged bundles to allow them to do that We're allowing as much flexibility and as much alignment to value in our pricing models across our entire application suite as we possibly can. we're allowing as much flexibility and as much alignment to value in our pricing models across our entire application suite as we possibly can I expect that will continue to resonate well with customers as it did in the quarter, and as we roll it out across our entire fleet, certainly should be helpful for our growth story as well. I expect that will continue to resonate well with customers as it did in the quarter, and as we roll it out across our entire fleet, certainly should be helpful for our growth story as well. i expect that will continue to resonate well with customers as it did in the quarter and as we roll it out across our entire fleet certainly should be helpful for our growth story as well

Speaker 5: Thanks Mike. Thanks Mike. thanks mike

Speaker 10: Your next question is from Raimo Lenschow from Barclays. Your next question is from Raimo Lenschow from Barclays. your next question is from raimo lenschow from barclays

Speaker 11: Hey, perfect. Welcome to the team as well from me. The question I had was, we talked a lot about AI and the growth, great momentum you have today, but you still have the classic Oracle business that we all grew up with. There's a lot of noise in the market at the moment, especially on the investor side, what's happening to software, et cetera. Can you address a little bit what you're seeing on the database side? There's OCI, Azure, et cetera, and overall database momentum. On the application side, the growth rate ticked down a little bit, but then you also mentioned on the call some very nice customer wins. Can you talk to what you see in the classic business? Thank you. Hey, perfect. hey perfect Welcome to the team as well from me. welcome to the team as well from me The question I had was, we talked a lot about AI and the growth, great momentum you have today, but you still have the classic Oracle business that we all grew up with. the question i had was we talked a lot about ai and the growth great momentum you have today but you still have the classic oracle business that we all grew up with There's a lot of noise in the market at the moment, especially on the investor side, what's happening to software, et cetera. there's a lot of noise in the market at the moment especially on the investor side what's happening to software et cetera Can you address a little bit what you're seeing on the database side? can you address a little bit what you're seeing on the database side There's OCI, Azure, et cetera, and overall database momentum. there's oci azure et cetera and overall database momentum On the application side, the growth rate ticked down a little bit, but then you also mentioned on the call some very nice customer wins. on the application side the growth rate ticked down a little bit but then you also mentioned on the call some very nice customer wins Can you talk to what you see in the classic business? can you talk to what you see in the classic business Thank you. thank you

Speaker 9: Yeah, sure. It's Mike. I'll take a stab here and then ask Clay to jump in as well. On the applications business, we think double-digit growth on an in-quarter run rate of $4.1 billion is pretty good, and we're certainly happy with our continued double-digit growth. As I mentioned, our deferred position in the quarter grew by 16%. When our deferred position is growing faster than our in-quarter revenue, it gives us confidence. As far as impact of SaaS apocalypse, I would say maybe a couple quarters ago, there were some delayed decision cycles out there as customers thought through that. Yeah, sure. yeah sure It's Mike. it's mike I'll take a stab here and then ask Clay to jump in as well. i'll take a stab here and then ask clay to jump in as well On the applications business, we think double-digit growth on an in-quarter run rate of $4.1 billion is pretty good, and we're certainly happy with our continued double-digit growth. on the applications business we think double-digit growth on an in-quarter run rate of $4.1 billion is pretty good and we're certainly happy with our continued double-digit growth As I mentioned, our deferred position in the quarter grew by 16%. as i mentioned our deferred position in the quarter grew by 16% When our deferred position is growing faster than our in-quarter revenue, it gives us confidence. when our deferred position is growing faster than our in-quarter revenue it gives us confidence As far as impact of SaaS apocalypse, I would say maybe a couple quarters ago, there were some delayed decision cycles out there as customers thought through that. as far as impact of saas apocalypse i would say maybe a couple quarters ago there were some delayed decision cycles out there as customers thought through that Really, particularly in the mission-critical system space, which is where we play at Oracle, people have quickly moved on to that, and realized that enterprise software, particularly when you have AI built into our SaaS solutions, is certainly a very good approach and is necessary to move forward for the modernization and protection of their businesses. I expect that our applications business will continue to be a healthy contributor to Oracle as it has been. As far as the database, look, they grew cloud database 29% in the quarter, with, as I mentioned, multi-cloud revenue growing at 4X, tokens growing 3.25X in the quarter. And here's the really good news on database. We're in early age, very early days on multi-cloud database. We continue to unlock new regions and unlock new partnerships, in some cases with our competitor clouds. Really, particularly in the mission-critical system space, which is where we play at Oracle, people have quickly moved on to that, and realized that enterprise software, particularly when you have AI built into our SaaS solutions, is certainly a very good approach and is necessary to move forward for the modernization and protection of their businesses. really particularly in the mission-critical system space which is where we play at oracle people have quickly moved on to that and realized that enterprise software particularly when you have ai built into our saas solutions is certainly a very good approach and is necessary to move forward for the modernization and protection of their businesses I expect that our applications business will continue to be a healthy contributor to Oracle as it has been. i expect that our applications business will continue to be a healthy contributor to oracle as it has been As far as the database, look, they grew cloud database 29% in the quarter, with, as I mentioned, multi-cloud revenue growing at 4X, tokens growing 3.25X in the quarter. as far as the database look they grew cloud database 29% in the quarter with as i mentioned multi-cloud revenue growing at 4x tokens growing 3.25x in the quarter And here's the really good news on database. and here's the really good news on database We're in early age, very early days on multi-cloud database. we're in early age very early days on multi-cloud database We continue to unlock new regions and unlock new partnerships, in some cases with our competitor clouds. we continue to unlock new regions and unlock new partnerships in some cases with our competitor clouds We expect that business to continue to be an outsized growth engine for Oracle going forward. And I'll say the final piece is that in addition to multi-cloud, the innovation in the database, I mentioned a couple of the database security and Agent Memory that we put in the database. Things like vector database search and features that we've been adding into the database are part and parcel to companies' AI strategies. Data strategy matters, data architecture matters, and as the embracing market starts to take hold, which is in, again, also in early days, a lot of that data's just in an Oracle database across the world. And we expect to see continued investment and growth on our database business. We expect that business to continue to be an outsized growth engine for Oracle going forward. we expect that business to continue to be an outsized growth engine for oracle going forward And I'll say the final piece is that in addition to multi-cloud, the innovation in the database, I mentioned a couple of the database security and Agent Memory that we put in the database. and i'll say the final piece is that in addition to multi-cloud the innovation in the database i mentioned a couple of the database security and agent memory that we put in the database Things like vector database search and features that we've been adding into the database are part and parcel to companies' AI strategies. things like vector database search and features that we've been adding into the database are part and parcel to companies' ai strategies Data strategy matters, data architecture matters, and as the embracing market starts to take hold, which is in, again, also in early days, a lot of that data's just in an Oracle database across the world. data strategy matters data architecture matters and as the embracing market starts to take hold which is in again also in early days a lot of that data's just in an oracle database across the world And we expect to see continued investment and growth on our database business. and we expect to see continued investment and growth on our database business As a result, multi-cloud, all facets of database, Oracle Cloud, multi-cloud, as an underpinning support pillar for all of our applications and all the bespoke workloads in the world that are running Oracle database. Prognosis is very good. As a result, multi-cloud, all facets of database, Oracle Cloud, multi-cloud, as an underpinning support pillar for all of our applications and all the bespoke workloads in the world that are running Oracle database. as a result multi-cloud all facets of database oracle cloud multi-cloud as an underpinning support pillar for all of our applications and all the bespoke workloads in the world that are running oracle database Prognosis is very good. prognosis is very good

Speaker 11: Perfect. Thank you. Perfect. perfect Thank you. thank you

Speaker 10: Our last question today comes from Kirk Materne from Evercore ISI. Our last question today comes from Kirk Materne from Evercore ISI. our last question today comes from kirk materne from evercore isi

Speaker 7: Yeah. Thanks very much for taking the question. I had one, maybe sort of a two-parter around the bring your own hardware and prepaid dynamics, maybe for Clay and then for Hilary. I guess, Clay, for you, about 12% of RPO is now related to these type of deals. When you look at the pipeline, where do you think that split could ultimately go? When you go into these type of deals, especially on the bring your own hardware side, what's the value differentiation that maybe those deals have that some of the ones that include GPUs, or I guess, how does that differ versus the GPU-type deals? Hilary, just to clarify on the CapEx guide, I think you said $70 billion in CapEx, but that was excluding, I think, $25 billion from some of these prepaid deals. Yeah. yeah Thanks very much for taking the question. thanks very much for taking the question I had one, maybe sort of a two-parter around the bring your own hardware and prepaid dynamics, maybe for Clay and then for Hilary. i had one maybe sort of a two-parter around the bring your own hardware and prepaid dynamics maybe for clay and then for hilary I guess, Clay, for you, about 12% of RPO is now related to these type of deals. i guess clay for you about 12% of rpo is now related to these type of deals When you look at the pipeline, where do you think that split could ultimately go? when you look at the pipeline where do you think that split could ultimately go When you go into these type of deals, especially on the bring your own hardware side, what's the value differentiation that maybe those deals have that some of the ones that include GPUs, or I guess, how does that differ versus the GPU-type deals? when you go into these type of deals especially on the bring your own hardware side what's the value differentiation that maybe those deals have that some of the ones that include gpus or i guess how does that differ versus the gpu-type deals Hilary, just to clarify on the CapEx guide, I think you said $70 billion in CapEx, but that was excluding, I think, $25 billion from some of these prepaid deals. hilary just to clarify on the capex guide i think you said $70 billion in capex but that was excluding i think $25 billion from some of these prepaid deals Could you just, I guess, talk about this dynamic as it relates to sort of your CapEx outlook? Thanks. Could you just, I guess, talk about this dynamic as it relates to sort of your CapEx outlook? could you just i guess talk about this dynamic as it relates to sort of your capex outlook Thanks. thanks

Speaker 2: Yeah. I'll start and then hand it to Hilary. Look, I would like to tell you that we know all about how things are going to change in the future. I can't say that today. The reality is that what's driving, I think, the mix change is an evolving business model. Right? You have a lot of different types of accelerators. You have a lot of different customers. You have a lot of different business arrangements. Ultimately, one of the things that Oracle can provide to our customers is that we can go out and put up front capital and then depreciate that over a period of time and help finance the customer's usage of that. That's not the only thing we provide, and for a lot of customers, it's not even the most important thing to provide. Yeah. yeah I'll start and then hand it to Hilary. i'll start and then hand it to hilary Look, I would like to tell you that we know all about how things are going to change in the future. look i would like to tell you that we know all about how things are going to change in the future I can't say that today. i can't say that today The reality is that what's driving, I think, the mix change is an evolving business model. the reality is that what's driving i think the mix change is an evolving business model Right? right You have a lot of different types of accelerators. you have a lot of different types of accelerators You have a lot of different customers. you have a lot of different customers You have a lot of different business arrangements. you have a lot of different business arrangements Ultimately, one of the things that Oracle can provide to our customers is that we can go out and put up front capital and then depreciate that over a period of time and help finance the customer's usage of that. ultimately one of the things that oracle can provide to our customers is that we can go out and put up front capital and then depreciate that over a period of time and help finance the customer's usage of that That's not the only thing we provide, and for a lot of customers, it's not even the most important thing to provide. that's not the only thing we provide and for a lot of customers it's not even the most important thing to provide What they contract with us for is the ability to go out and get these data centers constructed, design them properly, secure them, design networks that go inside of them, install a cloud, give the complimentary set of services around the specific hardware, because it turns out that a set of these accelerators on their own is not a functioning cloud. You need general purpose compute, you need general purpose storage, you need load balancers, you need security functions, you need identity. You need all of that to actually make this stuff usable, and Oracle provides all of that. Anyone that thinks that these things are easy to operate is very confused. You're not just buying a single rack and putting it into your data hall. These are extremely complex clusters that require constant care and feeding, constant maintenance across the network and the hardware itself. What they contract with us for is the ability to go out and get these data centers constructed, design them properly, secure them, design networks that go inside of them, install a cloud, give the complimentary set of services around the specific hardware, because it turns out that a set of these accelerators on their own is not a functioning cloud. what they contract with us for is the ability to go out and get these data centers constructed design them properly secure them design networks that go inside of them install a cloud give the complimentary set of services around the specific hardware because it turns out that a set of these accelerators on their own is not a functioning cloud You need general purpose compute, you need general purpose storage, you need load balancers, you need security functions, you need identity. you need general purpose compute you need general purpose storage you need load balancers you need security functions you need identity You need all of that to actually make this stuff usable, and Oracle provides all of that. you need all of that to actually make this stuff usable and oracle provides all of that Anyone that thinks that these things are easy to operate is very confused. anyone that thinks that these things are easy to operate is very confused You're not just buying a single rack and putting it into your data hall. you're not just buying a single rack and putting it into your data hall These are extremely complex clusters that require constant care and feeding, constant maintenance across the network and the hardware itself. these are extremely complex clusters that require constant care and feeding constant maintenance across the network and the hardware itself When you add all that together, I think that what you're seeing is that you've got different entrants in the market around accelerators that are helping customers find ways to procure their accelerators. You've got different customers who have different ways of thinking about that. I can't tell you exactly the mixture of when we do bring your own hardware versus when we do prepay versus when we bring the capital. What I can say is that, I think you'll continue to see innovation and evolution in this model, given the rapid changes that are happening across this entire ecosystem. Hilary? When you add all that together, I think that what you're seeing is that you've got different entrants in the market around accelerators that are helping customers find ways to procure their accelerators. when you add all that together i think that what you're seeing is that you've got different entrants in the market around accelerators that are helping customers find ways to procure their accelerators You've got different customers who have different ways of thinking about that. you've got different customers who have different ways of thinking about that I can't tell you exactly the mixture of when we do bring your own hardware versus when we do prepay versus when we bring the capital. i can't tell you exactly the mixture of when we do bring your own hardware versus when we do prepay versus when we bring the capital What I can say is that, I think you'll continue to see innovation and evolution in this model, given the rapid changes that are happening across this entire ecosystem. what i can say is that i think you'll continue to see innovation and evolution in this model given the rapid changes that are happening across this entire ecosystem Hilary? hilary

Speaker 3: Let me just start. We said on the call a couple of times that we also see the margins in those structures, either at or better than the prior contracts that we have. That's good news in terms of economics. We did introduce this quarter, this net cash outlay for capital expenditures, which I think is pretty important to understand our funding requirements. Indeed, for 2027, fiscal year 2027, we expect around $70 billion in net cash outlay for capital expenditures. That does exclude the $20 billion-$25 billion in repayments that we will collect, or there's some timing difference is in there, but it's just associated with third-party manufacturers. Not vendor financing, just third-party manufacturers. $20 billion-$25 billion. The sum of those is our reported CapEx. Let me just start. let me just start We said on the call a couple of times that we also see the margins in those structures, either at or better than the prior contracts that we have. we said on the call a couple of times that we also see the margins in those structures either at or better than the prior contracts that we have That's good news in terms of economics. that's good news in terms of economics We did introduce this quarter, this net cash outlay for capital expenditures, which I think is pretty important to understand our funding requirements. we did introduce this quarter this net cash outlay for capital expenditures which i think is pretty important to understand our funding requirements Indeed, for 2027, fiscal year 2027, we expect around $70 billion in net cash outlay for capital expenditures. indeed for 2027 fiscal year 2027 we expect around $70 billion in net cash outlay for capital expenditures That does exclude the $20 billion-$25 billion in repayments that we will collect, or there's some timing difference is in there, but it's just associated with third-party manufacturers. that does exclude the $20 billion-$25 billion in repayments that we will collect or there's some timing difference is in there but it's just associated with third-party manufacturers Not vendor financing, just third-party manufacturers. $20 billion-$25 billion. not vendor financing just third-party manufacturers $20 billion-$25 billion The sum of those is our reported CapEx. the sum of those is our reported capex From a funding standpoint, what's happening here is that these structures are enabling us to have a lower cash CapEx requirement when we look at how we plan our business. Also from an economic standpoint, of course, because we're collecting money up front. In normal cases, we would put out the CapEx amount, and then later we would collect money from customers. Here, we collect money from customers up front, and actually, so that doesn't come out of our funding to pay for the CapEx or not 100% of it. Therefore, the return on capital is going to be a bit better as well. From a funding standpoint, what's happening here is that these structures are enabling us to have a lower cash CapEx requirement when we look at how we plan our business. from a funding standpoint what's happening here is that these structures are enabling us to have a lower cash capex requirement when we look at how we plan our business Also from an economic standpoint, of course, because we're collecting money up front. also from an economic standpoint of course because we're collecting money up front In normal cases, we would put out the CapEx amount, and then later we would collect money from customers. in normal cases we would put out the capex amount and then later we would collect money from customers Here, we collect money from customers up front, and actually, so that doesn't come out of our funding to pay for the CapEx or not 100% of it. here we collect money from customers up front and actually so that doesn't come out of our funding to pay for the capex or not 100% of it Therefore, the return on capital is going to be a bit better as well. therefore the return on capital is going to be a bit better as well

Speaker 7: Thank you Hilary. Thank you Hilary. thank you hilary That's very helpful. Thank you all. Thank you Hilary. That's very helpful. that's very helpful Thank you all. thank you all Thank you Hilary. thank you hilary

Speaker 6: For next quarter, this is new for everybody, we expect our Q1 fiscal year 2027 earnings results will be announced on September 10th. Any changes in the date will be publicly announced. Also, as a reminder, Hilary brought this up earlier, but our Investor Day will be held on October 28th in Las Vegas. We look to see you all there as part of AI World. A telephonic replay of this conference call will be available for 24 hours on our investor relations website. As a reminder, the slides that you saw today will be posted up to the website shortly. Thank you for joining us today. With that, I'll turn the call back to Lisa for closing. For next quarter, this is new for everybody, we expect our Q1 fiscal year 2027 earnings results will be announced on September 10th. for next quarter this is new for everybody we expect our q1 fiscal year 2027 earnings results will be announced on september 10th Any changes in the date will be publicly announced. any changes in the date will be publicly announced Also, as a reminder, Hilary brought this up earlier, but our Investor Day will be held on October 28th in Las Vegas. also as a reminder hilary brought this up earlier but our investor day will be held on october 28th in las vegas We look to see you all there as part of AI World. we look to see you all there as part of ai world A telephonic replay of this conference call will be available for 24 hours on our investor relations website. a telephonic replay of this conference call will be available for 24 hours on our investor relations website As a reminder, the slides that you saw today will be posted up to the website shortly. as a reminder the slides that you saw today will be posted up to the website shortly Thank you for joining us today. thank you for joining us today With that, I'll turn the call back to Lisa for closing. with that i'll turn the call back to lisa for closing

Speaker 10: Once again, ladies and gentlemen, that does conclude today's conference. We would like to thank you all for your participation today. You may now disconnect. Once again, ladies and gentlemen, that does conclude today's conference. once again ladies and gentlemen that does conclude today's conference We would like to thank you all for your participation today. we would like to thank you all for your participation today You may now disconnect. you may now disconnect