Oracle Cloud Business Update

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Darcy Malone
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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 September 22, Oracle undertakes no duty to update any statement in light of new information or future events. Copyright 2016, Oracle and/or its affiliates. All rights reserved. 2

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. At the end of this presentation we have included a GAAP to non- GAAP reconciliation, which can be viewed and downloaded. Copyright 2016, Oracle and/or its affiliates. All rights reserved. 3

5 SaaS Revenue... Accelerating Growth +42% +36% +23% FY13 FY14 FY15 FY16 SaaS Revenue Amounts are non-gaap constant currency and exclude vertical SaaS services. Growth rates are year over year. Copyright 2016, Oracle and/or its affiliates. All rights reserved. 5

6 SaaS Bookings (ARR)... Strong Momentum Continues $861M $661M $247M $345M FY13 FY14 FY15 FY16 SaaS New and Expansion Bookings (ARR) ARR amounts are n US Dollars. Copyright 2016, Oracle and/or its affiliates. All rights reserved. 6

7 SaaS + PaaS Gross Deferred Rev % Y/Y in FY16 $1.4B $840M $384M $464M FY13 FY14 FY15 FY16 SaaS-PaaS Gross Deferred Revenue SaaS-PaaS Gross Deferred Revenue is reported as SaaS-PaaS Deferred Revenue Plus Billed but Unpaid SaaS-PaaS Invoices. Copyright 2016, Oracle and/or its affiliates. All rights reserved. 7

8 Apps NSL + SaaS Revenue... Majority is Now Recurring 32% 37% 48% 62% Recurring 68% 63% 52% 38% Transactional FY13 FY14 FY15 FY16 New Software License SaaS Amounts are non-gaap constant currency and exclude vertical applications and SaaS services. Copyright 2016, Oracle and/or its affiliates. All rights reserved. 8

9 Apps On-Premise + SaaS Revenue... Even More Recurring 76% 78% 81% 85% Recurring 24% 22% 19% 15% Transactional FY13 FY14 FY15 FY16 New Software License SaaS + Apps Support Amounts are non-gaap constant currency and exclude vertical applications and SaaS services. Copyright 2016, Oracle and/or its affiliates. All rights reserved. 9

10 SaaS Pipeline... Pipeline growing at 71% CAGR +62% +68% +85% FY14 FY15 FY16 FY17 Beginning SaaS Pipeline Pipeline figures in constant currency and exclude vertical SaaS services. Pipeline growth rates are year over year. CAGR based on compounded growth FY13 to FY16. Copyright 2016, Oracle and/or its affiliates. All rights reserved. 10

11 SaaS... Current State Bookings (ARR) % CAGR FY13-FY16 Non-GAAP Revenue % in FY16 Deferred Revenue (1) % in FY16 Go Lives... Nearly 1,000 in FY16 Pipeline % entering FY16 (1) For both SaaS and PaaS combined as these are not reported separately. Copyright 2016, Oracle and/or its affiliates. All rights reserved. 11

13 Customers... A Big Base and Growing >15,000 On-Premise ERP/EPM Customers + 2,800 ERP/EPM SaaS Customers + 8,000 Customers in Pipeline ~25,000 ERP/EPM Customers + XX,XXX Share Gain? ERP/EPM Customers? We Will Gain Share Organically Copyright 2016, Oracle and/or its affiliates. All rights reserved. 13

14 Average ERP/EPR ARR... Expanding ACV with New Services CURRENT ARR -$300K+ Financials EPM POTENTIAL ACV Upsell for More Services Financials EPM Manufacturing Supply Chain Close Bigger Customers We Will Grow the ACV, Not Including PaaS, HCM & CX Current ARR is in constant dollars for ERP/EPM customers. ACV is Average Contract Value. Copyright 2016, Oracle and/or its affiliates. All rights reserved. 14

15 SaaS... Significant Opportunity Bookings (ARR) % CAGR FY13-FY16... STRONG GROWTH in FY17 Non-GAAP Revenue % in FY16... ACCELERATING in FY17 Deferred Revenue (1) % in FY16... STRONG GROWTH in FY17 Go Lives... Nearly 1,000 in FY16... EVEN MORE in FY17 Pipeline % entering FY16... BIGGER BASE entering FY17 (1) For both SaaS and PaaS combined as these are not reported separately. Copyright 2016, Oracle and/or its affiliates. All rights reserved. 15

18 Database NSL + DBaaS Revenue 3% 11% Recurring 100% 100% 100% 97% 89% Transactional FY13 FY14 FY15 FY16 FY17E Database NSL Revenue DBaaS Revenue Amounts are non-gaap constant currency and exclude vertical applications and SaaS services. Copyright 2016, Oracle and/or its affiliates. All rights reserved. 18

19 PaaS Bookings... Faster Ramp than Fusion SaaS New & Expansion Bookings (ARR) ~$500M >$150M 1st Year 2nd Year 3rd Year 4th Year Fusion SaaS PaaS ARR amounts are non-gaap in US Dollars and exclude vertical SaaS services. Copyright 2016, Oracle and/or its affiliates. All rights reserved. 19

20 PaaS Bookings... Quarterly Results Show Clear Breakout PaaS New & Expansion Bookings (ARR) $226M $65M $100M $106M Q1 Q2 Q3 Q4 FY15 FY16 ARR amounts are in US Dollars. Copyright 2016, Oracle and/or its affiliates. All rights reserved. 20

22 Average PaaS ARR... Growing with New Services & Cross Sell +57% FY15 Average PaaS / New Customer FY16 Average ARR per Customer Service is Total Fiscal Year PaaS ARR divided by New Customer Service Wins in same fiscal year. PaaS and IaaS customers are counted for each service used Copyright 2016, Oracle and/or its affiliates. All rights reserved. 22

23 PaaS Pipeline... Nearly $2 Billion in PaaS Pipeline FY14 FY15 FY16 FY17 Beginning PaaS Pipeline Pipeline figures in constant currency. Copyright 2016, Oracle and/or its affiliates. All rights reserved. 23

24 PaaS... Significant Opportunity Bookings (ARR)... Tripled in FY16... STRONG GROWTH in FY17 Non-GAAP Revenue... >$200M in FY16... MUCH HIGHER IN FY17 Deferred Revenue (1) % in FY16... STRONG GROWTH in FY17 Pipeline... $600M increase into FY16... $1.3B INCREASE into FY17 (1) For both SaaS and PaaS combined as these are not reported separately. Copyright 2016, Oracle and/or its affiliates. All rights reserved. 24

25 Oracle SaaS-PaaS... Accelerating While Others Are Not 80% 56% 65% 39% 29% 28% 33% 34% 37% 24% MRQ-7 MRQ-6 MRQ-5 MRQ-4 MRQ-3 MRQ-2 MRQ-1 MRQ ORCL CRM WDAY Oracle Non-SaaS-PaaS revenue growth rates as compared with cloud subscription growth rates. All figures and growth rates are based on non-gaap USD revenue. Copyright 2016, Oracle and/or its affiliates. All rights reserved. 25

26 Reconciliation Summary GAAP to Non-GAAP Slide 5 FY14 FY15 FY16 SaaS GAAP Growth Rates (in Constant Currency) 28% 37% 43% Business Combination Accounting Adjustments (5)% (1)% (1)% Non-GAAP Growth Rates (in Constant Currency) 23% 36% 42% Slide 8 Recurring Transactional Total FY13 GAAP (in Constant Currency) 31% 69% 100% Business Combination Accounting Adjustments 1% (1)% 0% Non-GAAP (in Constant Currency) 32% 68% 100% FY14 GAAP (in Constant Currency) 37% 63% 100% Business Combination Accounting Adjustments 0% 0% 0% Non-GAAP (in Constant Currency) 37% 63% 100% FY15 GAAP (in Constant Currency) 48% 52% 100% Business Combination Accounting Adjustments 0% 0% 0% Non-GAAP (in Constant Currency) 48% 52% 100% FY16 GAAP (in Constant Currency) 62% 38% 100% Business Combination Accounting Adjustments 0% 0% 0% Non-GAAP (in Constant Currency) 62% 38% 100% Note 1 Revenue numbers for SaaS, Applications New Software License and Applications Software Support exclude Vertical Application Products Note 2 We compare the percent change in the results from one period to another period using constant currency disclosure. We present constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the exchange rates in effect on May 31, 2016, which was the last day of our prior fiscal year, rather than the actual exchange rates in effect during the respective periods. Copyright 2016, Oracle and/or its affiliates. All rights reserved. 26

27 Reconciliation Summary GAAP to Non-GAAP Slide 9 Recurring Transactional Total FY13 GAAP (in Constant Currency) 76% 24% 100% Business Combination Accounting Adjustments 0% 0% 0% Non-GAAP (in Constant Currency) 76% 24% 100% FY14 GAAP (in Constant Currency) 78% 22% 100% Business Combination Accounting Adjustments 0% 0% 0% Non-GAAP (in Constant Currency) 78% 22% 100% FY15 GAAP (in Constant Currency) 81% 19% 100% Business Combination Accounting Adjustments 0% 0% 0% Non-GAAP (in Constant Currency) 81% 19% 100% FY16 GAAP (in Constant Currency) 85% 15% 100% Business Combination Accounting Adjustments 0% 0% 0% Non-GAAP (in Constant Currency) 85% 15% 100% Note 1 Revenue numbers for SaaS, Applications New Software License and Applications Software Support exclude Vertical Application Products Note 2 We compare the percent change in the results from one period to another period using constant currency disclosure. We present constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the exchange rates in effect on May 31, 2016, which was the last day of our prior fiscal year, rather than the actual exchange rates in effect during the respective periods. Copyright 2016, Oracle and/or its affiliates. All rights reserved. 27

28 Reconciliation Summary GAAP to Non-GAAP Slide 18 Recurring Transactional Total FY13 GAAP (in Constant Currency) 0% 100% 100% Business Combination Accounting Adjustments 0% 0% 0% Non-GAAP (in Constant Currency) 0% 100% 100% FY14 GAAP (in Constant Currency) 0% 100% 100% Business Combination Accounting Adjustments 0% 0% 0% Non-GAAP (in Constant Currency) 0% 100% 100% FY15 GAAP (in Constant Currency) 0% 100% 100% Business Combination Accounting Adjustments 0% 0% 0% Non-GAAP (in Constant Currency) 0% 100% 100% FY16 GAAP (in Constant Currency) 3% 97% 100% Business Combination Accounting Adjustments 0% 0% 0% Non-GAAP (in Constant Currency) 3% 97% 100% Note 1 Revenue numbers for SaaS, Applications New Software License and Applications Software Support exclude Vertical Application Products Note 2 We compare the percent change in the results from one period to another period using constant currency disclosure. We present constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the exchange rates in effect on May 31, 2016, which was the last day of our prior fiscal year, rather than the actual exchange rates in effect during the respective periods. Copyright 2016, Oracle and/or its affiliates. All rights reserved. 28