Oracle Q4 FY26 Earnings Call | $ORCL | 🔴 WATCH LIVE

Wright County Sheriff's Office went live with our public safety suite. Westfield Insurance implemented Fusion ERP and Pyus Bank went live with the Oracle banking, just to name a few. All of these customers 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 United States 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.

And while not part of our Q4 bookings, the United States government office of personnel management today announced an agencywide award to Oracle for Fusion HCM. So this is obviously a strong start for us in our FY27 applications business. In addition to discussions around AI within our applications, I'm also having very interesting conversations with our customers around leveraging their own proprietary data sets 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 data sets.

This is why Claro, a major telecommunications provider in Latin America, chose OCI field services applications and our AI data platform to automate customer service for their 30 million subscribers this quarter. UK National Health Services share business services. OLED, the Brazilian retailer, a 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 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 contexts. 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 and Vodafone who turned to us in Q4 to consolidate and modernize their operations. Vodafone selected OCI dedicated region and their data centers, our multicloud database offering and a partner cloud and our applications to reduce cost 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. However, customers can also purchase additional agent capacity in a simple, predictable way by purchasing bundles of tokens that can be used across their 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 upsale agents priced on the percentage of end consumer upsale transactions.

In Q4, we started a limited roll out of our token bundles and had 33 customers like Aon Services Corporation and Liberty Energy pre-purchase tokens to have access to more advanced reasoning and models. All of this helps our customers control their cost and align their spending with the value being generated. And with that, I will turn it over to Clay. Thanks, Mike.

Sure. Yeah, thanks for the question, Keith. So outcome-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, subcontractor cash flow, payments, upsell deals as I mentioned in my prepared remarks with hospitality and even in healthcare in our new AI based automated agents where we're automating doctor's notes, we're automating lab orders, we're able to measure and price based on patient throughput, which is one of the things providers care about: how many people can we get through a healthcare system, reduce wait times, provide better service to patients? What is new is that we're now expanding that offering across our entire fleet across all of our applications including accounting, putting our fusion keys. The difficult thing is if you're not creating the outcome in the first place, that's a tricky thing to price. But 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 our horizontal applications and our industry applications, we have a very easy way to measure outcomes for our customers. And 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. So I think we have a very unique advantage since we're in the infrastructure business, we have large language model 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 which is really easy to measure. So 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 spend. I also mentioned the token models. If customers want, 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 premium tokens at the models, we have prepackaged bundles to allow them to do that. So we're allowing as much flexibility and as much alignment with the value in our pricing models across our entire application suite as we possibly can. And 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, it should be helpful for our growth story.

Yeah, sure. It's Mike. So I'll take a stab here and then ask Clay to jump in as well. So on the applications business, I mean, 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%. So when our deferred position is going 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 saw through that. Particularly in the mission critical system space which is where we play at Oracle, people have quickly moved on 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. So I expect that our applications business will continue to be a healthy contributor to Oracle as it has been. As far as database, cloud database 29% in the quarter with multi cloud as I mentioned growing even faster, multi cloud revenue growing at 4x, bookings growing 3.25x in the quarter. And here's the really good news on database. We're in 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 that the final piece is that in addition to multicloud, the innovation in the database, I mentioned a couple of the deep data security and agent memory that we put into 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. So data strategy matters, data architecture matters, and as the inferencing market starts to take hold, which is also in early days, a lot of that data sits in Oracle database across the world and we expect to see continued investment and growth in our database business as a result, multicloud, all facets of database, Oracle cloud, multicloud 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.