Oracle OpenWorld 2018 Financial Analyst Meeting

Transcription

1 Oracle OpenWorld 2018 Financial Analyst Meeting Applications Business Update Mark Hurd CEO October 25, 2018

2 Safe Harbor Statement Statements in this presentation relating to Oracle s future plans, expectations, beliefs, intentions and prospects, are forward-looking statements and are subject to material risks and uncertainties. Many factors could affect our current expectations and our actual results, and could cause actual results to differ materially. A detailed discussion of these factors and other risks that affect our business is contained in our U.S. Securities and Exchange Commission (SEC) filings, including our most recent reports on Form 10-K and Form 10-Q, particularly under the heading Risk Factors. Copies of these filings are available online from the SEC or by contacting Oracle s Investor Relations Department at (650) or by clicking on SEC Filings on Oracle s Investor Relations website at All information set forth in this presentation is current as of October 25, Oracle undertakes no duty to update any statement in light of new information or future events.

3 Non-GAAP Financial Measures To supplement our financial results presented on a GAAP basis, we use non-gaap measures, which exclude certain business combination accounting entries and expenses related to acquisitions and other significant expenses including stock based compensation, that we believe are helpful in understanding our past financial performance and our future results. Our non-gaap financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. Today s discussion includes certain non-gaap financial measures, and a GAAP to non-gaap reconciliation can be viewed at the end of this presentation.

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5 Applications Ecosystem $11.0B $8.9B + 11% FY14 FY15 FY16 FY17 FY18 Amounts and growth rates are in GAAP USD. Results prior to FY17 do NOT reflect ASC606; FY17 and FY18 results based on ASC606 accounting. Applications ecosystem revenues represent the sum of applications related cloud services and license support revenues; and applications licenses revenues. 5

6 Oracle SaaS... built organically along w/ select acquisitions R1 R2 R3 R4 R5 R6 R7 R8 R9 R10 R11 R12 R13 R18A-18D Cloud Launch CRM, HCM & ERP G.A. CX: Service, Social CX: CPQ Simplified & Mobile UX EPM ERP: Revenue Mgmt SCM: Transportation, Global Trade Mgmt, Product Value Chain CX: Marketing Data Cloud CX: Commerce Adaptive Intelligent Apps SCM: Manufacturing Order Mgmt IOT Applications AI Apps+ IOT Apps+ Blockchain Apps ERP: Subscription Mgmt CX: Unity

7 Oracle SaaS... built organically along w/ select acquisitions Most Complete SaaS Portfolio in Technology! R1 R2 R3 R4 R5 R6 R7 R8 R9 R10 R11 R12 R13 R18A-18D Cloud Launch CRM, HCM & ERP G.A. CX: Service, Social CX: CPQ Simplified & Mobile UX EPM ERP: Revenue Mgmt SCM: Transportation, Global Trade Mgmt, Product Value Chain CX: Marketing Data Cloud CX: Commerce Adaptive Intelligent Apps SCM: Manufacturing Order Mgmt IOT Applications AI Apps+ IOT Apps+ Blockchain Apps ERP: Subscription Mgmt CX: Unity

8 Changed Go-to-Market Model Focus Aligned by buyer... by product... by competitor Reach Built Global Network of Sales Hubs Structure Altered mix between inside and outside sales Renewals Team... Customer Satisfaction Teams Investment Expanded sales organization inside and outside Applications Sales HC up ~60% since FY14 ERP-HCM Sales HC up ~100% since FY14 Best of Oracle sales organization supplemented by college recruiting Class of program Double 2014 HC FY14 FY15 FY16 FY17 FY18 Back-Office Sales Rep Headcount 8

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10 Customer Motivations to Migrate to Cloud Faster Pace of Innovation 2-4 new releases each year with thousands of new feature & functionalities New UX (User Experience) ML/AI (Chatbots/Digital Assistants) Embedded Analytics Lower Cost Lower Cost of Implementation... up & running in months, not years Lower Cost of Operation... automation drives lower labor cost Cost of Upgrades Built In... faster and less complicated upgrades Stronger Security Security patches implemented sooner Autonomous Database... Gen 2 Infrastructure 10

11 Applications Market Opportunity Front Office Contact Center Customer Service Digital Commerce Marketing Campaign Management Sales Force Productivity & Management Front Office $42B TTM Growing $17B 2013H2-2018H1 Back Office $74B TTM Growing $22B 2013H2-2018H1 Back Office Enterprise Asset Management Enterprise Performance Management Financials Human Capital Management Inventory Management Logistics Order Management Payroll Accounting Procurement Production Planning Project & Portfolio Management Source: 2018H1 IDC WW Semiannual Software Tracker Trailing Twelve Month revenue, including pure-play cloud companies. Dollar growth over 2013H2-2018H1 time period. Amounts are in constant revenue. 11

12 Oracle Back-Office Applications Opportunity Back-Office Applications = ERP (including NetSuite) + HCM Currently >50% of Oracle Applications Ecosystem Revenue Back-Office will be a key driver to Applications Ecosystem Growth Back-Office Growth Opportunities Conversion of installed base from on-premise to SaaS Addition of new customers from weaker on-premise vendors 12

13 Gartner 2018 Magic Quadrants for Cloud Core Financial Management Suites for Midsize, Large and Global Enterprises Gartner, Magic Quadrant for Cloud Core Financial Management Suites for Midsize, Large and Global Enterprises, John Van Decker Robert Anderson Mike Guay, 29 May These graphics were published by Gartner, Inc. as part of a larger research document and should be evaluated in the context of the entire document. The Gartner document is available upon request from Oracle. Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner s research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including Copyright any warranties 2018, of Oracle merchantability and/or its affiliates. or fitness All rights for a particular reserved. purpose.

14 NetSuite Increased Investment in Product & Distribution Reach New Country Localizations - Germany, France, China, Japan, Brazil, India and Mexico Leverage Oracle field office to accelerate NetSuite distribution Volume SuiteSuccess delivers faster time to value... opens up new market segments Strong upsell opportunities w/ Planning/Budgeting, SuiteCommerce, & SuitePeople Added over 3,000 new customers in the last twelve months Industries & Verticals 12 Industry Cloud Solutions leveraging SuiteSuccess Targeted market initiatives to specific verticals Delivering the Suite 15,000+ Strong Install Base with high retention rate 16% NetSuite ERP Growth 22% 26% Amounts and growth rates are non-gaap USD. Q3 FY18 Q4 FY18 Q1 FY19 14

15 Opportunity #1 Conversion of Installed Base $6.5B On-Premise Application Business, Converted to SaaS, At 3X Revenue Multiplier, Application Ecosystem Doubles! (2) Software Licenses SaaS Software Support +$11B (1) SaaS $11B $22B Software Support Triples Apps Ecosystem Doubles Current Opportunity #1 Sources: Internal analysis. (1) $11B Applications Ecosystem incremental revenue opportunity represents scenario where 100% of license support revenues are converted to SaaS revenues at a 3 times revenue multiplier. (2) $11B to $22B Revenue Opportunity presents scenario where 100% of on-premise support revenue is converted to SaaS revenues at a 3 times revenue multiplier. The above scenarios are not intended as guidance. 15

16 Opportunity #2 Adding New Back Office Customers Oracle 21% Other 52% Microsoft Infor Infor Lawson GT Nexus SSA Global Sage GEAC Epicor Software TOTVS Unit4 Deltek Yonyou Network Tyler Technologies SAP 27% Smaller Vendors Microsoft SAP Oracle Infor Sage Epicor Software TOTVS Unit4 Deltek Yonyou Network Tyler Technologies Smaller Vendors Source: IDC Worldwide Enterprise Resource Planning Software Market Shares, 2017: Enterprises Journey to the Cloud. 16

17 Opportunity #2 Adding New Back Office Customers $35B Back-Office, On-Premise revenue not with Oracle or SAP - 20% conversion from other vendors to Oracle - 3X Revenue Multiplier $21B incremental revenue Other Apps $11B to $42B (2) Other Apps B/O SaaS B/O On-Prem +$21B (1) B/O SaaS B/O On-Prem Incremental Revenue Opportunity Win Percentage against Other On-Premise Vendors 10% 20% 30% 40% $11B $21B $32B $42B Current Opportunity #2 Sources: Internal analysis. (1) $21B revenue uplift represents scenario where 20% of competitor back-office, on-premise revenue (excluding SAP and Microsoft) is converted to SaaS revenue at a 3 times revenue multiplier. Other remaining revenue for Applications Ecosystem is held constant in this analysis. (2) $11B to $42B Incremental Revenue Opportunity presents various scenarios where portions of competitor revenue is converted to SaaS revenues at a 3 times revenue multiplier. Other remaining revenue for Applications Ecosystem is held constant in this analysis. The above scenarios are not intended as guidance. 17

18 Summary Back-Office (ERP and HCM) market nearly 2X size of Front-Office ERP & HCM ecosystems growing faster than Apps Ecosystem Applications Ecosystem grows from $11B to $43B if: Conversion of installed base to SaaS - $11B incremental revenue opportunity Addition of new customers - $21B incremental revenue opportunity Does not consider the addition of any current SAP customers Does not consider growth in SaaS outside of Back-Office 18

19 Reconciliation Summary GAAP to Non-GAAP Slide 14 Q3 FY18 Q4 FY18 Q1 FY19 NetSuite ERP GAAP Growth Rates (in United States dollar) 75% 54% 41% Business Combination Accounting Adjustments (59%) (32%) (15%) Non-GAAP Growth Rates (in United States dollar) 16% 22% 26% Note 1

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