Oracle OpenWorld 2018 Financial Analyst Meeting · TOTVS Unit4 Deltek Yonyou Network Tyler Technologies Smaller Vendors Other 52% Microsoft SAP Oracle Infor Sage Epicor Software TOTVS

Copyright © 2018, Oracle and/or its affiliates. All rights reserved.

Oracle OpenWorld 2018Financial Analyst MeetingApplications Business Update

Mark HurdCEOOctober 25, 2018


Safe Harbor StatementStatements 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) 506-4073 or by

clicking on SEC Filings on Oracle’s Investor Relations website at

https://www.oracle.com/investor. All information set forth in this presentation is current as of

October 25, 2018. Oracle undertakes no duty to update any statement in light of new

information or future events.


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.

Non-GAAP Financial Measures

Copyright © 2018, Oracle and/or its affiliates. All rights reserved.4


Applications Ecosystem

5

FY14 FY15 FY16 FY17 FY18

$8.9B

$11.0B

+ 11%

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.


Oracle SaaS . . . built organically along w/ select acquisitions

AI Apps+IOT Apps+

Blockchain AppsERP: Subscription Mgmt

CX: Unity

Fusion R1|R2

Fusion R1|R2

Fusion R18A-18D

Fusion R18A-18D

CloudLaunch

Fusion R3|R4|R5

Fusion R3|R4|R5

CRM, HCM &ERP G.A.

CX: Service, Social

Fusion R6|R7

Fusion R6|R7

CX: CPQSimplified

& Mobile UX

Fusion R8|R9

Fusion R8|R9

EPMERP: Revenue Mgmt SCM: Transportation,Global Trade Mgmt, Product Value Chain

CX: Marketing

Fusion R10

Fusion R10

Data CloudCX: Commerce

Fusion R11

Fusion R11

Adaptive Intelligent Apps

SCM: ManufacturingOrder Mgmt

Fusion R12|R13

Fusion R12|R13

IOT Applications

20182011 2013 2014 2015 2016 20172012

6


Oracle SaaS . . . built organically along w/ select acquisitions

AI Apps+IOT Apps+

Blockchain AppsERP: Subscription Mgmt

CX: Unity

Fusion R1|R2

Fusion R1|R2

Fusion R18A-18D

Fusion R18A-18D

CloudLaunch

Fusion R3|R4|R5

Fusion R3|R4|R5

CRM, HCM &ERP G.A.

CX: Service, Social

Fusion R6|R7

Fusion R6|R7

CX: CPQSimplified

& Mobile UX

Fusion R8|R9

Fusion R8|R9

EPMERP: Revenue Mgmt SCM: Transportation,Global Trade Mgmt, Product Value Chain

CX: Marketing

Fusion R10

Fusion R10

Data CloudCX: Commerce

Fusion R11

Fusion R11

Adaptive Intelligent Apps

SCM: ManufacturingOrder Mgmt

Fusion R12|R13

Fusion R12|R13

IOT Applications

20182011 2013 2014 2015 2016 20172012

7

Most Complete SaaS Portfolioin Technology!


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

8

FY14 FY15 FY16 FY17 FY18Back-Office Sales Rep Headcount

Double2014 HC

– Best of Oracle sales organization supplemented by college recruiting “Class of” program

Copyright © 2018, Oracle and/or its affiliates. All rights reserved.9


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


Applications Market Opportunity

11

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.

Back Office

$74BTTM

Growing $22B2013H2-2018H1

Front Office• Contact Center• Customer Service• Digital Commerce• Marketing Campaign

Management• Sales Force Productivity

& Management

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

Front Office

$42BTTM

Growing $17B 2013H2-2018H1


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


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 2018. 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 any warranties of merchantability or fitness for a particular purpose.


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

14

16%

22%

26%

Q3 FY18 Q4 FY18 Q1 FY19

NetSuite ERP Growth

Amounts and growth rates are non-GAAP USD.


Software Licenses

Software Support

SaaS

SaaS

Current Opportunity #1

Opportunity #1 – Conversion of Installed Base

15

$6.5B On-Premise Application Business,

Converted to SaaS,

At 3X Revenue Multiplier,

Application Ecosystem Doubles!

+$11B

$11B $22BSoftware Support TriplesApps Ecosystem Doubles

(1)

(2)

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.


Microsoft

SAP 27%

Oracle 21%

Infor

Sage

Epicor SoftwareTOTVS

Unit4Deltek

Yonyou NetworkTyler Technologies

Smaller Vendors

Other 52%

Microsoft SAP Oracle Infor Sage Epicor Software TOTVS Unit4 Deltek Yonyou Network Tyler Technologies Smaller Vendors

Opportunity #2 – Adding New Back Office Customers

16

Info

r

Lawson

GT Nexus

SSA Global

GEAC

Source: IDC Worldwide Enterprise Resource Planning Software Market Shares, 2017: Enterprises Journey to the Cloud.


Opportunity #2 – Adding New Back Office Customers

17

B/O On-Prem B/O On-Prem

B/O SaaS

B/O SaaS

Other Apps

Other Apps

Current Opportunity #2

+$21B

$35B Back-Office, On-Premise revenue not with Oracle or SAP

- 20% conversion from other vendors to Oracle

- 3X Revenue Multiplier

$21B incremental revenue

Win Percentage against Other On-Premise Vendors

$11B to $42BIncremental Revenue Opportunity

(2)

(1)

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.

10% 20% 30% 40%$11B $21B $32B $42B


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


Reconciliation Summary – GAAP to Non-GAAP

Note 1

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%

Documents

Oracle OpenWorld 2018 Financial Analyst Meeting · TOTVS Unit4 Deltek Yonyou Network Tyler Technologies Smaller Vendors Other 52% Microsoft SAP Oracle Infor Sage Epicor Software TOTVS