Ken Bond – Senior Vice President-Investor Relations Safra Catz – Chief Executive Officer Larry Ellison – Chairman and Chief Technology Officer Mark Hurd – Chief Executive Officer

Heather Bellini – Goldman Sachs Michael Turits – Raymond James Kash Rangan – Bank of America Merrill Lynch John DiFucci – Jefferies Philip Winslow – Credit Suisse Raimo Lenschow – Barclays Kirk Materne – Evercore ISI Brent Thill – UBS

Welcome to Oracle’s Third Quarter 2016 Earnings Call. As a reminder, this call is being recorded for replay purposes. I’d now like to turn the call over to Ken Bond, Senior Vice President of Investor Relations.

Thank you. Good afternoon, everyone, and welcome to Oracle’s third quarter fiscal year 2016 earnings conference call. A copy of the press release and financial tables, which includes a GAAP to non-GAAP reconciliation and other supplemental financial information can be viewed and downloaded from our Investor Relations website. On the call today are Chairman and Chief Technology Officer, Larry Ellison; and CEO, Safra Catz and Mark Hurd. As a reminder, today’s discussion will include forward-looking statements, including predictions, expectations, estimates or other information that might be considered forward-looking. Throughout today’s discussion, we will present some important factors relating to our business, which may potentially affect those forward-looking statements. Forward-looking statements are also subject to risks and uncertainties that may cause actual results to differ materially from statements made today. As a result, we caution you against placing undue reliance on these forward-looking statements and we encourage you to review our most recent reports including our 10-K and 10-Q and any applicable amendments for a complete discussion of these factors and other risks that may affect our future results or the market price of our stock. And finally, we are not obligating ourselves to revise our results or publicly release any revision to these forward-looking statements in light of new information or future events. Before taking call, we will begin with a few prepared remarks. With that, I’d like to turn the call over to Safra.

Thanks, Ken. I’m going to focus on our non-GAAP results for Q3 then I will review guidance for Q4 and I’ll provide some color even on Q1 and then I’ll turn the call over to Larry and Mark for their comments. As you can imagine, we are pleased with this quarter. Total revenue was inside my guidance, driven by the fantastic performance of our SaaS/PaaS business, which was well beyond the high-end of my guidance. Earnings per share was a penny above the high-end of my guidance even with the currency headwinds being a penny worse than expected. Q3 currency headwinds were largely as expected around 4% in most categories including total revenue, but as I just said, the currency effect to earnings per share was a penny worse than expected at $0.04 more than instead of the $0.03 I guided too. We will continue to use constant dollar growth rates on our quarterly calls, so we can have some measure of consistency across the quarters as well as to reflect how we measure the business. I’m going to start with our SaaS and PaaS business, where we continue to see excellent momentum. Bookings grew 77% this quarter and that’s on top of the 129%, we reported last year. SaaS and PaaS revenue was $585 million, up 60% from last year. Sequentially, SaaS and PaaS revenue grew 21% with PaaS up more than 150% sequentially and our data-as-a-service business continuing to take off. Our sustained SaaS/PaaS bookings growth is now translating into significant acceleration of our SaaS/PaaS revenue growth. And in Q4, we could see double-digit essential revenue growth again. You can also see the continuing revenue acceleration of our cloud business in the SaaS and PaaS billings and deferred revenue. The gross deferred revenue balance is now over $1.1 billion and was up 96% in U.S. dollars. SaaS and PaaS billings grew 32% in U.S. dollars this quarter. We put the billings numbers up on our website for you to see the detail. The balance of our cloud revenue comes from cloud infrastructure-as-a-service, which was up 2% to $152 million. While SaaS and PaaS revenue will be much – we’ll see much higher growth rate. We expect infrastructure-as-a-service revenue growth will be more moderate for now as it is currently dominated by our hosting business. Total cloud revenues, which is Saas and PaaS revenue as well as infrastructure-as-a-service revenue were $737 million, up 43% from last year. As our Saas and PaaS business continues to scale and grow dramatically, the gross margin continues to expand. The Q3 gross margin for SaaS and PaaS was 51%, up from 43% last quarter, and we will see further improvement in Q4 and from there we will be targeting 80% over time. On-premise software revenues including new software license and software license update and product support was unchanged at $6.3 billion. Software license update and product support revenue was $4.7 billion, up 5% from last year. Attach and renewal rates are running at their usual high level. New software license revenue was $1.7 billion, down from last year as customers continue to direct new spend to Oracle Cloud Services. Over this fiscal year, I expect constant currency on-premise software revenue will be positive, comprised of continued growth in software support that offsets decline in new software license. Finally, total hardware revenue was down 8%, which included hardware products revenue of $604 million and hardware support revenue of $531 million. Total revenue for the quarter was up 1% at $9 billion. Non-GAAP operating income was $3.8 billion and the operating margin was 42%. I continue to believe, assuming no more wild currency swings that this fiscal year that FY 2016 the one we’re in will turn out to have been the trough year for operating income. The non-GAAP tax rate for the quarter was 22.6% and the GAAP tax rate was 21.6% as we saw some catch-up benefits largely related to the U.S. R&D tax credit. Non-GAAP EPS was $0.64 in USD and GAAP EPS was $0.50 in USD. As I mentioned before, had the dollar not strengthened, the GAAP and non-GAAP EPS would have been $0.04 higher. Operating cash flow over the last four quarters was $14.1 billion. Capital expenditures for the quarter were $368 million with just a bit over 15% being cloud-related. And I expect that cloud-related CapEx for the full-year will be dramatically lower than last year as we utilize the investments that have been made. Now the non-cloud CapEx was dominated by real estate lead by the Austin, Texas campus, we are building to support our cloud sales organization as well as moving and consolidating teams and other lines of business currently in other locations. Free cash flow, over the last four quarters, was $12.5 billion. We now have nearly $51 billion in cash and marketable securities, net of debt our cash position is nearly $11 billion. The short-term deferred revenue balance is $6.9 billion, up 11% in constant currency. This quarter we repurchased nearly 61 million shares for a total of $2.2 billion and over the last four years, we have reduced the shares outstanding by more than 16%. The Board of Directors increased the authorization for share repurchases by $10 billion, the board also declared a quarterly dividend of $0.15 per share. Over the last 12 months, share repurchases have totaled $10.5 billion and we have paid out $2.6 billion in dividend for a total that is nearly 120% of our free cash flow. Now before I turn to guidance, as many of you know, the move to cloud is a generational shift in technology that is the biggest and most important opportunity in our company’s history. We embarked on this transformation over 10 years ago, when we began rewriting all of our software to enable our customers to leverage our solutions as cloud solution. We now have the most complete set of cloud services in the industry with more than $11,000 of our customers around the word already using these cloud services to help run their business. We ourselves have been going through an operational transformation which I’ll actually be sharing more of in our in-house town hall that we’ll be having for our own employees later today. But we are really aiming to be the easiest company in the business to do business with and you’re going to see some very good positive changes that we think our customers will love. Now, as I said, we’re not quite at the end of the beginning as we’re actively working to transform our entire business, but I think you’re going to see the results. And we are far enough along that our financial statements will begin to show our success with accelerating revenue growth, operating margin expansion over time leading to very solid EPS growth. We feel very good about the progress of our cloud transition and clearly customers are rapidly adopting Oracle. My guidance will reflect this, making it easier to see that we are taking shares in the industry. Now to the guidance, I’m going to give you the guidance for Q4 and then some preliminary comments for Q1, all of my guidance today is on a non-GAAP basis and in constant currency. We expect to see continued volatility in exchange rate. But I’m going to give you constant currency guidance. But if current exchange rates remain the same as they are right now, we expect to see currency headwinds of about 2% on revenue and about $0.02 on EPS. So onto the guidance for Q4. SaaS and PaaS revenue is expected to grow 57% to 61%. Cloud IaaS revenue is expected to grow negative 1% to positive 3%. Total cloud and on-premise software is expected to grow between 1% and 2%. Total revenue growth is expected to range from negative 2% to positive 1%. Non-GAAP EPS in constant currency is expected to be somewhere between $0.82 and $0.85 up from $0.78 last Q4 depending on the mix of the revenues and tax rate. Looking further out for Q1, SaaS and PaaS revenue growth should be higher than the 59% mid point of my Q4 guidance. SaaS and PaaS gross margin are expected to be higher than Q4 gross margins. Q1 non-GAAP EPS growth should be very solid. I will revisit Q1 with you as part of the Q4 earnings call in June. With that, I turn it over to Larry for his comments.

Thank you, Safra, and hi, everybody. Oracle is now selling more new SaaS and PaaS annually recurring cloud revenue than any other company in the world including Salesforce.com. We are growing much faster than Salesforce.com more than twice as fast. Because we sell into a lot more SaaS and PaaS market than they do. We compete directly with Salesforce.com in every segment of the SaaS customer experience market including sales, service and market. But Oracle also competes in huge SaaS markets, were Salesforce.com does not compete at all, such as ERP and HCM. It took many years for Oracle to develop the most complete ERP suite in the cloud including Fusion Financials, procurement, supply chain, logistics, manufacturing and much, much more. That long effort is now paying off. Oracle Fusion ERP is the overall market leader in the enterprise cloud ERP market. We have more than 10 times the number of customers than Workday. I should say we have more than 10 times the number of ERP customers than Workday. And ERP has always been a much larger market than CRM. Salesforce.com is missing all of that ERP market opportunity. The breadth of our ERP HCM and CRM SaaS product portfolio combined with the technical superiority of our underlying SaaS cloud services should enable us to sustain our rapid cloud growth for a long period of time. And that in term should make it easy for Oracle to pass salesforce.com and become the largest SaaS and PaaS Cloud Company in the world. With that I’ll pass it on to Mark.

Thanks Larry. First I apologize for my voice today. Yes, I’m going to do my best to get some information out here even though with my voice. SaaS PaaS deferred revenue of 96% that Safra mentioned, is growing three times the rate of salesforce and twice the rate of Workday. We’ve booked $310 million in ARR in the quarter, 77% CD growth in Q3, up sequentially from 75%. Our PaaS bookings were $106 million in USD. Our pipeline is huge, SaaS, PaaS. We’re on track for a $1.5 billion of ARR bookings. Customer caps, SaaS, we have 942 new SaaS customers in the quarter. Over half were Fusion wins. We had 783 customer expansions in the quarter, an all time high. Our installed base of SaaS customers is now 11,000. CX, we have 465 customer wins in Q3, more than 500 expansions. HCM 213 new customers in Q3. Over the past two years, we have nearly doubled the number of customers of Workday and we are seeing a lot of Workday defections. In ERP, 334 customers in Q3, a 175 did not have Oracle on-premise apps before they bought. We are clearly taking share; our installed base is now well over 1,800 customers. Together Fusion HCM and ERP had more go lives in the last six quarters, than Workdays life time total. And I would like to use the word in the competition for ERP customers between us and Workday it is a slaughter. Go lives in the quarter, we had – closing in on 1,500 customers. That are now wide on fusion. Our Q3 was our best go live quarter ever. In PaaS, we had 1,143 new PaaS customers. Our installed base now has nearly 5,000 customers. Well, that’s a big number from starting from zero; it is still an enormous opportunity with 310,000 on-premise database customers. This business is going to be extremely large for us. Our renewals continue to improve our renewal rates were higher than previous year. Now, I’m going to give you a few customer wins, just so you have some context of names and brands in the quarter that committed to our solutions. Infusion HCM cloud I’m going to readout some names, Acasta, Adventist Health, Blue Shield of California, Cooperative Group, GeneRally, Real Networks, Sisters of Charity Health System, SuperValu, Technip, Vanderbilt University, Yum! Brands, ERP, Adventist Health, American Institute of Physics, Bluebird Bio, Boston Market, Culinary Institute of America, Cal State University, Dresser-Rand, Harvard Medical Facility, Japan Airlines, Orange in France, SuperValu, Scholastic, SunEdison, Vanderbilt University, The University of Kansas, Velpro, Yum! Brands, in Sales Cloud, Adventist Health, Cigna, GE Intelligent Systems, Kaiser Permanente, Lego, Omron, Real Networks, Suncorp, Telecom Italia Brazil, Travelport, Trenitalia, in Marketing Cloud AIG, Bank of Nova Scotia, Canon, Citigroup, Quintin Foundation, Coach, Dish, Forever 21, TeleServices, Landmark Group, Lego Company, Morningstar, Nestle, Princess Cruises, Quicken Loans, Snapfish, Vodafone. Now, I only named those for you and you heard many names mentioned multiple times. And I did that on purpose so you understand some of the cross pillar opportunities that exist as we go forward that when we see the connection rate between ERP and HCM, sales cloud and marketing cloud, which we think are amazing opportunities going forward as Larry described. We are the only one in the market with the breadth of portfolio that we have today. With that, we’ll take your questions.

Operator, you may begin the Q&A portion please.

[Operator Instructions] Your first question comes from the line of Heather Bellini, Goldman Sachs.

Great. Thank you, guys for taking my question. Mark, I was wondering if you could share with us your new cloud ARR goal of $1.5 billion that you have for this current fiscal year. I believe you are at close to $800 million now, which would mean obviously you need to sell about $700 million or sign about $700 million in Q4. I mean notwithstanding you just gave us a lot of good data points on customer wins in the quarter, but can you give us walk us through what gives you confidence in attaining that number and then my follow-up would just be to that, any early thoughts on what ARR could look like next year, could it be above the $1.5 billion for this year. Thank you.

Sure. First, I mean I feel Heather no difference than I did maybe year and half or so, ago when we talked about the leading indicators for our growth in SaaS PaaS and starts with our pipeline. The fact that we have that – our pipeline going into Q4 is the biggest we have ever had. As I said in my prepared comments it is I think I used the term huge it is a big pipeline. Second for us is our billing to convert that and our conversion rate. And what you really have to track is the relative growth rates in each quarter and obviously our expectation that we’ll have a strong Q4. As I said before I’m going to reiterate again. We’re going to do nothing but just get better and better at this business. We have obviously a large quantity of people in the salesforce. We staffed our salesforce two or three years ago. We have trained them. We’ve now trained them multiple times. We now have references not only deals that we have closed, but as I mentioned our go lives are now scaled up. And so the ability for us now for breath of references and the fact as I mentioned that we sell across multiple pillars will give us, we just make a tremendous opportunity, so we’re very, very encouraged. To next year, I am not going to give you, next year guidance other than your point of should it be higher. I think the answer is absolutely yes.

Thank you very much.

Thank you.

And your next question will come from the line of Michael Turits with Raymond James.

Hey, guys, and perhaps Safra in particular thanks for taking the question. It’s a follow-up really for blizzard Heather said that, bookings side, but maybe on the revenue side, given that SaaS and PaaS bookings have been so strong 2016, any early thoughts on what SaaS PaaS revenue could grow than the growth could be like in 2017 and could be higher than it was in 2016.

Yes. Well, I think what you are obviously saying, I’ve already given your little bit guidance on Q4 SaaS/PaaS revenue and telling you the Q1 would be even higher. I think that this is we’re in an extremely virtuous cycle with the business now, because success breeds even more success. We have so many customers’ lives we have so much interest from our customer base, and from prospects, et cetera, that as we deliver on our orders that we already have and get even more orders we’re very, very upbeat on the growth rate. Additionally, I think as we work through some of our metered purchases over the years, those are all going to be turning into revenue as utilization continues to go up. So we have both the subscription business, which just continues to grow. But we’ve also working our way through metered bookings which turn into revenue when they’re utilized. So we’re very, very upbeat about our position in the cycle.

[Indiscernible]

By the way, metered revenue was a highlight in the quarter for us. The usage a steady incline in usage was even higher than what we’d modeled. It was very encouraging.

Did you ask a two-part question or was that it, did I cover?

Well, that was half two-part, the other two – the other half way would be on the margin side on cloud, I think you said that you are still working towards 80% gross margin…

Yes.

…talked about. So is that what’s really contributing to this being the trough here on a dollar basis and what could we see going forward?

Well it’s really sort of everything coming together. So revenues going up, spending as you could tell our in the cloud capital expenditure is really, really tailed off and we are using all of that infrastructure that we put in. So when you’re not spending more, but your revenues are coming in at these kind of levels and the whole business also – we also have a situation where the revenue for the whole company starting to go up. Then operating income is going to improve. But our SaaS and PaaS margins are on their way up they’ve been really flying high as we said they would than over the last two quarters. And we expect that to continue as revenue continues to go up and expenses do not go up as much and that’s what is going to happen and its happening.

Great Safra, thanks very much.

Thank you.

Next question please.

Your next question will come from the line of Kash Rangan with Bank of America Merrill Lynch.

Hi, first of all [indiscernible] for you Safra, you said back in September the top income would trough this year and six months later. You seem to be delivering, so congratulations making that commitment real. Larry, question for you on the database side, when you look at today the market landscape there’s AWS that wants to go after your business, Microsoft just announced a SQL server running on Linux, and everybody seems to be offering CREDA program, swapping out your Oracle license for their license. Why are they doing this Larry? Is it just because the field that industry views Oracle as this big giant that is less flexible with pricing lot? Is that right, is that the industry feels like they need to take you guys on? I just want to see the comparative flare-up when you – to see how you look at this and how do you – how should we be thinking of Oracle’s presence in the database market a few years from now, given these threats? And I guess, there’s a follow-up, Safra, is there a database as a service model transition happening? How worried or not that licenses and databases could continue to move with the cloud like the Adobe [indiscernible]. That’s it from me. Thank you.

Well, our PaaS business grew at a 150% this past quarter. So our customers, I mean, it’s interesting that Microsoft is now offering people’s server on Linux. But people want Oracle in the cloud. People have a huge investment in Oracle products. I mean, people are coming after us, because we are by far the market leader in database. If you’re in the database business, the only when you can come after is us. So, of course, Amazon, they’re going to be in the database business too is coming after us, and of course Microsoft wants to be bigger in the database business, they have to come after us. We’re the biggest player. We see our customers, literally millions of applications and millions of users of those applications built on top of the Oracle database, wanting to move those applications into the cloud and we do that very well. Our PaaS service is even easier to use and better than Oracle is on-premise. So we see the next generation of our database business predominantly in the cloud that will still sell an awful lot of that software on-premise. The beauty of what we offer is the same exact database experience on-premise and in the cloud and the ability for our customers to move a workload from on-premise and into the cloud, and move data from on-premise into the cloud with the push of the button. That’s something that Microsoft can’t offer. We have a huge installed base that wants to migrate to the cloud, but still wants to have an on-premise infrastructure. And we provide graceful compatibility and coexistence with what’s in your data center and what’s in the cloud, as you begin that decade-long migration to the cloud. We’ve made a bunch of – sorry for the long answer, we’ve made a bunch of enhancements to our database including multi-tenancy and memory, a lot of advanced security to make it easier and favor to go to the cloud. We think that gives us a huge competitive advantage and that our customers aren’t going to leave us quite the contrary, our customers are going to move a lot of what they have to the Oracle cloud.

And the one to Safra, please model transition and databases. Thank you.

Well, the way I guess you should think about it is we would be thrilled if everyone of our Oracle database customer came over to our cloud instead of running it on-premise. That would be fabulous. Now do we expect many of them? Many of them clearly are doing it. But we have such an enormous installed base that some of them will put new applications in the cloud, or different types and development in the cloud or a combination or a hybrid. But we would be delighted. You should think about it as if our customers move to the cloud, that means that they not only of course pay us for the software, but we also offer them a service where we own the hardware and we manage, and we do all the labor, and so even though they end up paying us more than they would have historically, just for a support license, a support fee, but they themselves are customers end up spending a lot left, in total because of the massive economies of scale we have in running the Oracle database for them. That they would not have on their own. So it would be delightful, if they’d all move. But some are moving and many are moving, which is wonderful. But I think this will take quite a long time and some will stay on-premise, in definitely and that’s entirely their choice.

Thanks Kash.

And can I and let me add one more thing.

Thank you, very much. But let me add one more thing which is a lot of people over the years have come after us in database. The problem is if you want to move to SAP HANA, you have to rewrite your application. If you want to move to Amazon database, and they have a couple, you have to rewrite your application. That is just a huge barrier for our customers. Our customers want to run their existing applications faster and more securely in the cloud. They want to make an easy transition. We’re very comfortable we get depend our leading position in the database market.

Thank you, Larry. Next question please.

Your next question will come from the line of John DiFucci with Jefferies.

Thank you. I know there is a lot of moving parts at this point in your model. And I’d like to ask a two part question each side of it and I think these both go to market. First of all, license was a little shy of what the Street was looking for realize that’s stuff you don’t guide license, but the cloud was a lot stronger. So is it fair to assume the cannibalization is happening at a more aggressive rate than when Mark, last gave us a numbers on it. I think market Oracle open world to say that I think at that point 0.8% of the maintenance for SaaS, just SaaS a transition to cloud. And then on the cloud side, I believe you are seeing some of your first renewals of deals that were likely signed early on amidst like significant promotions at attractive rates. So I think the consensus assumption or at least my assumption would be that those renewal rates would be pretty low. But I think you just said that you’re seeing good renewal rates even better than you had seen. So I was wondering if you can comment on that so one cannibalization and second, cloud renewals.

Okay. So first on the renewal rate what I said in my comments where our renewals rates were up year-over-year. They were up I think I made this statement at last quarter, that they were up almost 500 basis points. So that would just give you some idea of our year-to-year improvement in renewals. John, I would tell you that is as good as our renewal rates are they will get materially better. So the first sets of Fusion HCM, Fusion ERP, those numbers while you are right. They are all promotions, they are not yet to a renewal stage. So they are sticky, think of it is our stickiest application, which will drive very, very, very high renewal rates are not yet baked into the – now very high in improving renewal numbers that we’ve got. So that’s your second question. To your first question, listen to your point, we’re making that trade every day. If we can trade license for cloud that’s what we’re doing. And so to your point, yes, you saw a more momentum in the cloud business than probably, you have models and we look at that is great. And so that’s what we’re continuing to focus on this continuing to drive movement to the cloud. And if we do, we get as we model this out again at open world that means more money for us, more revenue for us, long run. So when we can get a booking, a choice of a booking, may be as good as cover this one more time. If we get $1 of booking cloud and $1 of booking in license. In next year we get the support on the license. And next year that dollar we get as a booking, we get another dollar of revenue. So the fact that you see those dollars shift that has an absolute good thing for us, John.

Good. Mark. Are you seeing more people that are on existing maintenance move to the cloud and existing customer versus new workloads?

I think let’s be clear. Safra said that in her prepared comments that our support renewal rates whereas high as ever so. This really is the points that we talked about earlier, but let’s say it again when people are thinking about debt test as an example, there is a movement of debt test to the cloud particularly debt test of new applications. Am I going to now getting a new license to for debt test for that new application like I’m do in the cloud? And the opportunity to now do in the cloud is what you’re seeing a lot of those new jobs go and that’s certainly through our debt test.

Okay, great. Thank you.

Thanks, John.

Your next question will come from the line of Philip Winslow with Credit Suisse.

Hi, thanks guys, congrats on a really strong quarter. A lot of focuses, obviously been on the database side of the house, so far I wanted to focusing on the SaaS side of the cloud. Mark you rattled off some pretty impressive customer win counts and also just names reflected on HCM and the ERP side. If you just like the ERP, EPM customer win rate of the huge quarter look like year-over-year. If you listen to some of your competitors calls they talk about displacements of fusion and some of your cloud applications, which seems to obviously go against what our check saying, what thesenumbers say itself. Hopefully, you kind of clear the area here, what are you seeing competitively particularly ERP, HCM in the cloud?

Well I mean. I don’t know on the ERP I can keep giving you these counts I’ve heard Workday guys say they’ve got 200. This reminds me when I was originally looking for Hanets many years ago, when I couldn’t find the Hanet I don’t know where there are 200 ERPs from – don’t even take their number, we’re 10x bigger than them. Now in HCM, I don’t know what to tell you I mean I can give you a few brands I mean there is Southwestern Energy. They had Workday and stopped their Workday implementation and use Oracle. Fannie Mae used Workday no longer does and now uses Oracle. ArcGIS they used Workday and they use Workday in the U.S. They went to a global decision for HR, decided on Oracle and replaced their Workday implementation in the U.S. MoneyGram started off implementing Workday. It didn’t go well, reevaluated and now have Oracle HCM cloud as their core HR for their enterprise. Same thing shows that Molina Healthcare. One of the first implementations of Workday, I think it was in Asia-Pacific, was it Simick in Australia. They now stopped their Workday implementation removed it and installed Oracle HCM. Genesis, who’s technology provider here in the Valley, they implemented Workday stop throw it out, and have been implementing Oracle HCM. BrightSource switched to Oracle upon a renewal opportunity for HCM with Workday. So, I mean, California physicians, I mean, Safra is giving me the…

Stop…

Stop but listen, this is just, I get all this stuff that, I hear all this rhetoric and I’m just trying to give you, these are like real companies. That said, we’re going to stop and we’re going to go implement Oracle HCM. And so, that’s what I see going in the market. And that’s why I continue to read all brand names, so we can get away from words and rhetoric and get down to what’s really happening. So Phil, the numbers in ERP are what they are, the names in HCM and let’s just go, I mean, let’s go back to customer counts. The real customers, I mean, what – you can do the extrapolation, I know you do of how many customers that they’re getting new in the marketplace versus how many new we’re getting in the marketplace. So, I’d like to just put the names and the numbers speak for themselves. So, that’s my answer Phil.

Great, thanks guys.

Your next question will come from the line of Raimo Lenschow with Barclays.

Hey, thanks for taking my question. I wanted to shift gears a little bit the market like a global market environments a little bit nervous, I’m just looking down at your geographic performance, I see Asia coming back nicely this quarter, and then stable in Europe and in U.S. can you just comment a little bit what you’re seeing out there, and I’m sorry, Mark, to express your voice a little bit longer but that’s probably you. Thank you.

Okay. I think, what you say is right. I think that Asia-Pacific, I don’t think we want to call that a macro, or make any macro discussions other than – I think our performance in Asia-Pacific is much improved. I think, we took one of our really experienced leaders in the company. And I think, he is done a marvelous job in rebuilding our Asia-Pacific team, and I think it shows in the numbers. So I think our Asia-Pacific performance isn’t necessarily a macro statement, it’s a statement about the improvements in our execution in Asia. I do think that your comments about the stability in U.S., we’ve had very strong performance in many of our SaaS businesses in the United States. Our ERP performance here, our HCM performance here, had really been very strong. The same thing would hold through in Europe as well. I will say that if there’s anything I would comment on the macro that we do see as – we do see the issues in Brazil, probably more than anything else. And we don’t generally make macro comments, but I would say we have a – my opinion, you don’t have to be aware of, but we have a marvelous team in Latin America. You looked over the past several years, but the amount – this is on my chart of market shares. They have gain market share virtually every single category that we compete in virtually every year for the last five years. Their performance cloud SaaS/PaaS has been superb, but we do see what’s gone on in Brazil, say that, I think the rest of your statements are correct.

Perfect. Thank you.

Your next question will come from the line of Kirk Materne with Evercore ISI.

Thanks very much. Mark, just a follow-on a little bit on the geographic question. Could you just talk about cloud momentum outside the U.S.? And so what the competitive environment is for some of your SaaS/PaaS products. It seems that you just have some of a distribution advantage against some of your competitors there. I was just kind of curious about the sort of maturity of the markets to accept PaaS – SaaS and PaaS now. And then just sort of your fleets are going up against in deals. Thanks.

What was the last thing you said, we’re going up against – where did you missing…

Just competition internationally first on the SaaS/PaaS…

Okay. Yes, I think the maturation of the cloud market or if you will the acceptance of cloud market is becoming – is global. And I think we’ve seen that over the past couple of years. It used to be three, four years ago, when I was talking about cloud in Europe, I would get incredible amounts of resistance to issues around security, data sovereignty, et cetera. Many of those are beginning to go away. Now certainly some of that has been the fact that we now have built out over the past couple of years, data center infrastructure and have so many locations. We have an incredible – by the way, I can tell you Kirky, you realized quickly why you don’t want to get into this cloud business, because the barriers to entry are extreme when you want to go global. Many of these customers want to know their data is in their country and that’s much of the CapEx we invested a couple of years ago. That we put in and that’s a big advantage for us. Most of our competitors don’t have that infrastructure deployed around the world that we now do. To your point, we also have a very scaled distribution capability in all of those countries. And I think you have this growing acceptance of cloud at both the SaaS and PaaS layer, that I don’t have a metric on it. I can just tell you that the acceptance level of – I’m now going to do my Dev test in the cloud. And I’m talking about this happening in Korea, in Australia in Brazil, is now a regular conversation with all of our customers. So, I would say, acceptance is extremely high, but added to the fact that our distribution and our breadth of delivery capability in local basis is at least than a SaaS market, sort of unmatched to me.

Thanks a lot, Mark.

Our final question will come from the line of Brent Thill with UBS.

Thanks. So, for Larry and Mark just on platform and service. It’s early days, but you’re showing really good momentum here. Could you just maybe give us a sense of some of the next milestones you’d like to hit here in the short-term with PaaS. And Mark, you made a comment about 5,000 of the 310,000 database customers who are running PaaS would assume that your belief is that all of those database customers are original candidates to be running PaaS overtime. Can you maybe walk through the dynamics there?

Let me go first and then I’ll let Larry follow-up. First, as I’ve said in OpenWorld, I’ll reiterate again, if you look at the IT market, the IT market is 30% Dev test. And I actually believe all of that Dev test over the course of next several years will move to the cloud. And I think people will be looking for the most advanced tools and most modern tools, and most renowned capabilities, and I think that’s us. Our ability to deliver Java, deliver 12c to deliver all of the capabilities that we can today, makes the PaaS market an exciting market that’s, frankly, if you look at numbers more exciting and bigger in scale, and opportunity to do even the SaaS market, and you know how well we’re doing in the SaaS market. So I think, I will not give you milestone Brent, today, as a committed to you and I’ll stick to. I want to wait until we get a full year under our belt here, and at OpenWorld next financial analyst meeting, I will go into the same sort of modeling that we did for SaaS. But make no mistake about it, we’re extremely excited about the scale of the opportunity. The pipeline is huge. And I think you’re going to see this Dev testing. I almost think it’s entirely as a segment, going to move to the cloud and there’s nobody with a better stack of capabilities today. I will let Larry, follow-up.

Okay. I’m sorry, I dropped off for one second. Could you repeat the question?

The question was about the PaaS market and about the ability for it to be a very attractive market long run for Oracle.

Yes. Well, definitely we expect that – just like the maturity of our application business is well on its way to moving towards the cloud, that’s the majority of our database business to move to the cloud. And along with that that should drag a lot of infrastructure business where infrastructure is a service compute – will computed the service, will run the application, really can run any application, on top of our database which we delivered via platform as a service. So, we are just entering the pure infrastructure as a service market which opens up another huge PaaS play for us. So, I mean, you really did think they are two markets, there’s a SaaS/PaaS market and now which people are running our applications on top of our database. And then there is – if you will, the infrastructure as a service PaaS market, where they’re running virtually any content application they wrote, on top of our database platform as a service. Those are our both enormous markets and we’re really strongly in the first competing with people like Workday, and Salesforce.com. You will see as – in that much of our database customers are moving over. You’ll see a much more database customers moving over when they compare our platform as a service with our compute, which allows them to run virtually any application in our cloud, much more efficiently, much more sincerely than any place else. And they’re our big competitor will be the sales forces and the Workday, the big competitor will be amazon.com, but we’re going to play – we’re playing in both of these markets and PaaS will grow driven by cash and cash will also though driven by infrastructure as a service. Huge opportunities.

Okay.

Thank you, Larry. The telephonic replay of this conference call will be available for 24 hours. Dial-in information can be found in the press release issued earlier today. Please call the Investor Relations department for any follow-up questions from this call. We look forward to speaking with you in the future. Thanks you again for joining us. With that I’ll turn the call back to operator for closing.

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