Ken Bond - Vice President, Investor Relations Safra Catz - President, Chief Financial Officer, Director Mark Hurd - President, Director Larry Ellison - Chief Executive Officer, Director

Rick Sherlund - Nomura Securities Phil Winslow - Credit Suisse Jason Maynard - Wells Fargo John DiFucci - JPMorgan Heather Bellini - Goldman Sachs Brent Thill - UBS Raimo Lenschow - Barclays Brad Reback - Stifel Nicolaus

Good day, everyone and welcome to today's Oracle Corporation Quarterly Conference Call. Today's conference is being recorded. At this time, I would like to introduce Ken Bond, Vice President of Investor Relations, Oracle. Please go ahead.

Thank you. Good afternoon, everyone, and welcome to Oracle's second quarter fiscal year 2014 earnings conference call. A copy of the press release and financial tables, which include 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 Chief Executive Officer, Larry Ellison; President and CFO, Safra Catz; and President, 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 these forward-looking statements. These 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 from placing undue reliance on these forward-looking statements and we encourage you to review our most recent reports on 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. Finally, we are not obligating ourselves to revise our results or any publicly release of information revisions to these forward-looking statements in light of new information or future events. Before taking questions, we will begin with a few prepared remarks and with that, I will turn the call over to Safra.

Okay. Thanks, Ken. I am traveling today, so I hope you can hear me all right. I am going to focus on our non-GAAP results for Q2. I will then review guidance for Q3 and then turn the call over to Mark and Larry for their comments. This quarter currency was a 2% headwind to new license and 1% to hardware and total revenues, so my comments today generally reflect constant dollar growth rates. Q2 was a solid quarter overall as we exceeded our forecast in all major revenue segments and we are pleased with the results. Total software revenues were $6.9 billion, up 5% from last year. Software updates and product support revenues drove about half of total company revenues at $4.5 billion, up 7% from last year. Attach and renewal rates remain at their usual high levels as our growing installed base of customers continue to power earnings and cash flow. New software license revenue was $2.4 billion, up 1%. As many of you know, we had an absolutely fantastic Q2 last year with new software license growth way above expectations of 18%. So we are actually very pleased because that was quite a tough compare and over the last two years we grew 19%. Looking at GAAP results by region, the Americas grew 5% with Latin America showing excellent growth. EMEA grew 3% and Asia-Pacific declined 10% with Japan continuing to be challenged. Currency continues to be a significant headwind in Japan and Australia. Now while our China business is not large enough to make a significant difference to our business, we did actually see good growth there this quarter. Within software, database continues to do well with Exadata software, GoldenGate and TimesTen In-Memory software products, all up more than 20%. Also strong was human capital management, both on-premise and SaaS as well as our retailing and Life Science verticals. The quarter, by the way, wasn't dependent on any one large deal. Overall the hardware business, including hardware support grew 2%, with hardware system product revenue up $714 million and not only have our engineered systems continued to show excellent growth, but they have actually become a material part of our overall hardware business now accounting for nearly 30% of all hardware product sales. While it is still early in the customer adoption cycle, the new M-Series and T-Series servers saw good growth sequentially. For the company, total revenue for the quarter was $9.3 billion, up 3% from last year. Non-GAAP operating income was $4.2 billion, up 1% higher over last year and the operating margin was 46%. We believe we can invest for growth and make money as we continue to see the leverage of our business model. The non-GAAP tax rate for the quarter was 22% and non-GAAP EPS was $0.69, growing 9% in constant currency. The GAAP tax rate was 20% and GAAP EPS for the quarter was $0.56, up 7% in constant currency. Free cash flow increased 14% to a record $14.6 billion over the last four quarters. Our consistent growth of free cash flow over the last [three] [ph] years has resulted in our surpassing IBM which, as you know, has seen declines in the last eight of the last 12 quarters and we now have nearly $37 billion in cash and marketable securities. Net of debt, our cash position is approximately $13 billion. As we said before, we are committed to returning value to our shareholders through earnings growth, stock repurchases and a dividend. In this quarter, we repurchased 83.4 million shares for a total of $2.8 billion. Over the last 12 months, we have repurchased nearly 323 million shares for a total of $10.7 billion, paid out dividends of nearly $1.9 billion for a total that is nearly 90% of our free cash flow. The Board of Directors declared a quarterly dividend of $0.12 per share for the quarter. Now to the guidance. New software license and cloud subscription revenue is expected to range from 2% to 12% in constant currency and 1% to 11% in reported dollars. Hardware product revenue growth is expected to range from a negative 1% to a positive 9% in constant dollars and negative 2% to a positive 8% in reported dollars. As a result, total revenue growth on GAAP and non-GAAP basis is expected to range from 3% to 7% in constant dollars and 2% to 6% in U.S. dollars. Non-GAAP EPS is expected to be somewhere between $0.68 and $0.72 in constant and reported dollars. GAAP EPS is expected to be somewhere between $0.54 to $0.58 in constant dollars and in reported dollars. Now, this guidance assumes a GAAP tax rate of 23% and a non-GAAP tax rate of 24%, and of course that may end up being different. With that, I will turn it over to Mark for his comments.

Yes. Thanks, Safra. I will just add a couple of comments and turn it to Larry. We had solid sales execution and beat forecast in all segments. We had good results in Europe; in the Americas, Latin America was strong for us. Database continues to show good performance due in part to strengthened Exadata and database options and we have not yet begun to see the coming benefits of 12c, which will help drive license growth. Exadata and all our Engineered Systems had booking growth of nearly 35% on top of similar growth last year. All six Engineered Systems saw double-digit revenue growth, including the Big Data Appliance and SPARC SuperCluster, which saw triple-digit growth. Our Engineered Systems business is now big, delivering strong consistent growth in our hardware business, including support grew 2% in constant currency. In Cloud, we had bookings growth of 35%, and saw excellent growth across all major product pillars. Fusion SaaS was even better with HCM, sales force automation and ERP, all up triple digits. We are adding customers at high growth rates, contract sizes are growing and hundreds of customers are now live on Fusion SaaS. In HCM, we had excellent growth in all pillars, core HR, payroll and talent cloud. Let me list out just a few wins. British Telecom, Siemens North America, Carlson Wagonlit, Health Net, InterContinental Hotels, PPG Industries, Cummins, Government of Rotterdam, Southwestern Energy, PDG Realty in Brazil, CEMEX, Marks & Spencer, Scripps Health, those are HCM. BT and Siemens are especially noteworthy as they will both be servicing employee bases of more than 60,000 employees. In customer experience we saw growth across all four pillars, marketing, sales, service and social cloud. Key wins at Oshkosh Truck, All Nippon Airways, Live Nation, Tesco, The Washington Post, Procter & Gamble, Perry Homes, CRH Building Materials, [Econ] [ph] Europe, Queensland's state government, TomTom, LifeScan Canada. In ERP, while still early we saw triple digit growth in ERP, with many of our wins net new ERP customers to Oracle. This quarter, we issued new releases in HCM, talent, sales, marketing and social cloud. We also introduced Hyperion Planning and Budgeting as a cloud service and we expanded our data center talent to 17 locations globally with Canada, Germany and Brazil coming online soon. I will spend a little more time on cloud this quarter as I think it's important to understand what we are seeing and that we are gaining traction. Our Cloud and Engineered Systems business have hyper growth like characteristics, inside to Safra’s point, the largest cash flow company in enterprise technology. The growth of just our software business is more than double the revenue of Workday. Let me with that turn it over to Larry.

Thanks, Mark. Oracle enters 2014 with a refreshed version of the key products that are expected to drive growth over the next calendar year. Oracle's latest database version 12c was specifically designed for the cloud. Oracle 12c makes all your Oracle applications multitenant applications without you having to make any changes to your applications whatsoever. Oracle 12c also dramatically speeds up all your Oracle applications by making them in-memory applications without you having to change a single line of your application code. Oracle's Fusion Cloud applications for HCM, CRM and ERP, all have a new simplified user interface and an integrated social network that makes our enterprise applications as easy to use and familiar as Facebook, while enabling better collaboration and teamwork among your employees and your customers. All these new application interfaces were specifically designed for use on modern mobile devices like telephones and tablets. Bookings for our cloud applications grew strongly this quarter, 35%, reflecting a continuously improving win rate versus the new generation of SaaS specialist. Our Engineered Systems bookings also grew rapidly, 34% in this quarter. We think these three product areas, database, cloud applications and engineered systems will drive Oracle's growth in calendar year 2014.

Thank you, Larry. Operator, if we could now begin the Q&A portion of the call.

Absolutely. Thank you. (Operator Instructions). And our first question will come from Rick Sherlund with Nomura Securities. Rick Sherlund - Nomura Securities: First for Larry. I know it’s early for Oracle cloud infrastructure and Platform as a Service but can you update us on where you stand there? We are seeing really good growth out of Amazon. I know your approach is a bit different but if you could update us on your strategy and where we stand on that? And Mark, if I could just get a little clarification from you on the growth rate on the cloud side. I think you said 35% bookings growth and a triple digit for HCM, CRM and ERP. Was that revenue growth or bookings growth?

Rick, why don't we let Larry start and then I will. Rick Sherlund - Nomura Securities: Yes. Thank you.

Okay. Well, Rick, as you know, our strategy is to be a player in all three parts of the cloud. All three levels of cloud: SaaS, cloud applications, platform and infrastructure. We think we are going to be especially strong in platform where our two platform brands, our database brand is the Oracle Database 12c and our programming language brand is this thing called Java. So we think we have a much stronger platform than any of our SaaS competitors. Let's just start from there. If you look at SalesForce.com and Force.com, you look at their platform capabilities versus the Oracle Database and Java and we think we have a considerable advantage and of course all of our SaaS, all of our applications are built on the Oracle Database, built on our platform, our database and our Java server. Finally, down at the infrastructure level, we intend to be price competitive with Amazon and Microsoft Azure and Rackspace. So we intend to compete aggressively in, what I will call, commodity not being a bad word, the commodity infrastructure as a service marketplace. But we are not going to that alone. It is not going to be just infrastructure as a service. Our intention is to sell our customers infrastructure as a service and the same customer a highly differentiated platform as a service will let us get better margins and highly differentiated suite of enterprise applications for the cloud. So we are going to be cost competitive and price competitive at the infrastructure level while being highly differentiated at both the platform level and the application level. Already we have more enterprise SaaS applications than any other cloud services provider. We will continue to expand our footprint and use our size as an advantage.

Rick, Mark. I know I threw a lot of numbers out there quick to you on the SaaS growth but what the numbers are is that our aggregate bookings growth in SaaS was 35%. Okay, point one. That includes all of our products. What I was pointing out was that if you look at Fusion HCM, Fusion Sales Automation and Fusion ERP, those three grew in bookings triple digits. That's the delineation. Rick Sherlund - Nomura Securities: Great. Thank you.

Okay.

Next question, please.

That will come from Phil Winslow with Credit Suisse. Phil Winslow - Credit Suisse: Congrats on a great quarter. A lot of time on the call was spent on cloud applications and database, but I want to focus my question on hardware. Obviously, you guys showed some upside to consensus this quarter and you guided next quarter for hardware to grow year-over-year, I guess, this is for both, Mark and Larry. I wonder if you could just give us more comments on what you see on Exadata, Exalogic, Exalytics and then also compare that to just sort of where we are with the [inaudible] business?

Yes. I will start and let Larry add. Bookings growth in engineered systems, as I mentioned, was 35%. Important Phil to know, this is a big business now, so, we had 35% growth this quarter against a similar growth rate last year, so this is a compounding effect for us. All six of our engineered systems in the quarter had double-digit revenue growth, and as I mentioned, it was really encouraging I think for us to see SPARC SuperCluster had an excellent quarter for us in addition to Exadata. I mean, we had big wins, no not actually big wins, I mean we had we had very important name wins P&G, Verizon, AmerisourceBergen, ICICI Bank [in] [ph] China, Televisa, Exalytics was strong in the quarter, Phil, we had Petrobras from an Exalytics perspective. Again, a very broad based set of customers, very consistent across our regions in terms of performance and again very strong bookings growth against a very strong compare. I will let Larry add anything he would like.

Yes. I think our Engineered Systems business really has two parts. One is Exadata, Exalogic and Exalytics, all of which really built their reputation in the marketplace for high performance and of course you can take that high performance in performance or you can take it in lower cost. The other thing we have introduced recently are lower cost engineered systems. They go after the mass and price-sensitive parts of the market, so we have announced an Oracle Virtual Compute Appliance, a bunch of low cost commodity servers running Linux, integrated in our case with InfiniBand, connected with InfiniBand versus the traditional Ethernet, but our system comes with its own VM. It's kind of an industry standard Xen-based VM, the industry standard Linux, standard commodity servers with a high speed networking interface. We have, again, that's called the Oracle Virtual Compute Appliance. It's relatively new and it's very aggressively priced and we think it's a mass market product that competes against our friends at Cisco. We also have had for some time the Oracle Database Appliance, another low-cost mass market product, so we expect to sell a lot of engineered systems not just the well known high end Exadata machines, but a complete suite of machines that go from extreme high performance, the ability to build large scale clouds out of the commodity servers.

You know, Phil, I think just before we leave the point on hardware, a couple of other points to Larry's point about what we call the ODA, which is the Oracle Database Appliance, we are now at a point where we are roughly at 2,000 of those units. We don't talk about that product much, because to Larry's point it's a more entry-level system, but we’ve had great success with it. On the sort of core server side, it's going to be very interesting for us to see how much share we gained in the quarter. Our M and T Series, the SPARC line, if you will, actually grew sequentially, so if you looked at them quarter-to-quarter, we actually grew sequentially and our decline in that business was actually quite small year-on-year and when you look at that, obviously, compared to our Core Unix competitors, that's going to be a big gain. When you add that to the Engineered Systems' performance in the quarter, our aggregate hardware business just gained a lot of market share.

Next question, please?

That will come from the Jason Maynard with Wells Fargo. Jason Maynard - Wells Fargo: Thanks. Good afternoon, guys. I have a couple of questions, but first maybe Mark and Safra. If I look at your performance on a constant currency basis by geo, the U.S. was up 5% and I think you are now 9% growth in the first half of this year. EMEA looked better, obviously, on a sequential basis in Q2, but APAC looked like the one region where there was more trouble and it was down, I think, 10% on a constant currency basis, so could you maybe talk a little bit about what you see happening at least from a macro perspective, maybe some of the changes to the leadership there and how do you think about Asia performing over the second half of the year?

Why don't I start, Jason, and I will let Safra chime in afterwards, if she would like to. I think you are right in your assessment. I think we had a good quarter in Europe again. I think when you get the read-throughs across our industry it is even broader than that. Our Europe team has performed well. We have said before that our Europe team realigned itself early. There is no question in our mind that our Europe team is taking market share. They have performed well not only this quarter but, frankly, over a consistent period of time. I think we feel very good about our position in Europe and the share that we are gaining. In U.S., I think you are right as well. I think U.S. had a solid quarter, overall, all-in with what we expected. And as you know, that was going against a tougher compare from last year. Asia has been rocking for us. It's obviously rocking from a macro perspective. Safra mentioned the good news was our performance in China. And our performance in China was actually quite strong. Most of the issue involved in the quarter was in Australia and New Zealand which continues to be a difficult market there. I do not believe that to be an Oracle issue. I believe that more to be a macro issue. We really feel in the long-run that we have got a very strong upside opportunity in Asia. We have put, to your point, some new energy into Asia, some new excitement into Asia and we expect it to pay off. So those would be my comments about Asia, to your point. If Asia had done a little better, you can imagine how much would the performance we would have delivered in the quarter. It would have been even more exciting.

Yes, the other part for us for Asia, what we call Asia-Pacific, is merged together includes Japan, which we actually expect to bounce back this quarter, just between comparisons and other things. There is nothing, you know, you made a mention to the leadership in Asia-Pac or something like that and I actually don't know what you are referring to there, because there is nothing in particular going on in our Asia-Pac. So that's it. So it's Japan and Australia basically, where [our expense was] [ph].

Okay. Thank you. Operator, next question, please.

We will hear from John DiFucci with JPMorgan. John DiFucci - JPMorgan: Thank you. I think it was Larry who said that growth is going to come from database, cloud apps and engineered systems. I want to focus on the first and third of those. I guess, can you give us any more color on the database machines including Exadata and SPARC SuperCluster, I think primarily and I guess ODA also? But it is early with 12c, but has there been any impacts that 12c could be having on driving growth with engineered systems? Maybe Mark, even any anecdotes on what customers might be doing with 12c coupled with Exadata that might be different than what they did with 11g?

Well, I will let Larry start and I will add some color after that.

Okay, let me add one more engineered system, which is our M6 In-Memory system. As you know, there is a lot of interest now in in-memory databases. We announced the Oracle 12c In-Memory option and you couple the Oracle 12c In-Memory option with an M6 with 32 terabytes of main memory. That's 99.99% of all the world's databases can be now kept in main memory with orders of magnitude improved the performance. So we think that's going to be a very interesting combination. So 12c, we think, is interesting to a lot of cloud companies and companies that are not in the business of reselling applications but are building private clouds. So the combination of selling it to net suites of the world that allows them to offer a higher quality service at a lower cost or big banks and telecommunication companies that allow them to build an effective private cloud. We have seen more interest in 12c than any database version in recent memory. The multi-tenant option and the in-memory option, I think, are going to have very rapid uptake in 2014 and 2015.

I think, John, in addition, we are yet to see the 12c benefit in our results sort of point one. Point two, to your point about Engineered Systems and database side. Clearly, the opportunity for us to now consolidate Oracle environments in big accounts is extreme. Most of our customers have found tens and tens and tens of ways to configure the Oracle database. They have Oracle 8, 9, 10, 11, they have multiple different types of operating systems, multiple different types of hardware platforms, so the opportunity for us to simplify and standardize those Oracle environments and our customers typically spend 10s and 10s and in many cases hundreds of millions of dollars a year, to operate the Oracle database environment because of that complexity. Our ability to simplify this and standardize this on Exadata, on our engineered systems with 12c, the formation of what would be private clouds and database-as-a-service for our customers, gives us a chance to save our customers in some cases 30% to 40% out of their total costs on the Oracle environment. This is an extremely big opportunity for us and 12c is just one of the added opportunities we have now to consolidate those environments.

I think one part of your question was 12c and does it drives even more growth than the engineered systems, especially Exadata and SPARC SuperCluster, and the M6 in-memory machine and I would say, absolutely yes. John DiFucci - JPMorgan: Larry, my question kind of goes back to something you said earlier, especially with the multi-tenancy option, because our due diligence in talking to customers anyway was this is something they are waiting for, so that they can put multiple applications on one Exadata and be able to manage those applications in isolation, in a way that they couldn't before and it just seems like that that brings that step function up and efficiency and I was just wondering if anybody has actually done that at least in their labs yet or. I mean, it makes a lot of sense, but are you seeing any of it yet?

Yes. We have seen a number of customers take it and do it in the laboratory. Of course, this is back to what Mark was saying. They have lots and lots of Oracle environments and they want to consolidate it onto a smaller number of machines and reduce the amount of labor required to manage all of those machines. Exadata, with all of this extreme performance, a lot of people have questioned the size of the Exadata market, saying, "Well, how many people need that kind of extreme performance?" Well, it's not a matter of one Exadata machine providing extreme performance to one application. It's one Exadata machine that allows you to get rid of 50 machines or 100 machines and consolidate those 100 separate applications and those 100 separate databases on that single Exadata machine and manage it as a single environment and that's exactly what the multitenant option does. It's what Mark was saying, our customers spend a fortune managing tens, hundreds, thousands of different Oracle environments, different Oracle versions. They have to patch them, upgrade them, back them up, do all of those things. We can simplify that, make that a more reliable process, make that a less expensive process, by using the multitenant option on top of Exadata, so it's a huge opportunity for us to sell into our installed base, lower our customers' overall cost of managing the Oracle environment and get them a better overall experience in terms of performance, reliability and maintainability. John DiFucci - JPMorgan: Great. Thank you very much.

Next question please?

We will hear from Heather Bellini with Goldman Sachs. Heather Bellini - Goldman Sachs: Great. Thank you. Safra, you have built one of the most profitable companies in technology as measured by operating margins and I guess I just wanted to ask, how we should think about the puts and takes you see as related to Oracle's non-GAAP operating margin expansion as you look out over the next two to three years?

Well, I think what you can see in our numbers right now is that year-over-year the difference is really we have invested in sales capacity right now as compared to last year and we expect that to pay off, so remember the big things that impact our margins are, first, our enormous installed base of customers who pay us either for license updates and product support or for running systems for that. Those numbers are going to continue to grow. Simultaneously, as you know, as Mark talked about, and he's going to chime in, in a second, we decided that we were really going to lean in to the cloud to get market share and we were going to be able to do it unlike all those cloud companies. We were actually, still as a company, going to make a large amount of money and so we have ramped up the sales organization and we are at full strength and it takes time for that to pay off but at that point your expenses are at one level and now the revenues come in. So we think we still have a lot of room as we expand our installed base, as you know, continue to grow every quarter and now we are going to start seeing expansion in the margins as the revenues follow through. Mark, do you want to add to that?

Sure. No, I think to add to Safra's point, a lot of that sales resource that we have hired up that's in our current period expense is driving that 35% bookings growth in cloud. The great news is it's 35% bookings growth in cloud and triple digits in some of our core Fusion modules. The bad news is, it's not licensed. It shows up as subscription and becomes a continuous revenue stream for us over time. So we have hired into that, to Safra's point, put those resources to work and they are busy building that subscription base. As that goes through the process of becoming annual subscription and it becomes recurring revenue, it behaves a much more like our support business than it would our license business. So we have purposely hired up. By the way, we are really happy now that we have had our sales organization in this sales model now for almost a couple of years. We have had them in the same sales model for a couple of years. We are happy with their progress and I think this quarter, particularly in the cloud, with a number of new logos, the growth in our core Fusion areas and just the absolute growth. This is promising and will over a period of time it will have the effect on operating margins that Safra described and remember even when our licenses are flat, and I am not trying to make that a good number, but even when they are flat, all that means is we have got just as many new subscribers this year as we did last year and with our retention rates and support you know what happens to our operating margins over time. They just continue to expand. So again, I will tell you what I said in my script earlier. I think you have got a company here that has fantastic cash flow with elements of hyper growth inside it and the cloud is one of them and we put resources into it to drive that growth.

I would like to chime in here too briefly saying that the mix of our products is changing. I know we got a lot of criticism when we bought Sun and we have gone through this transition where we had a growing hardware business, Engineered Systems, and a shrinking hardware business, Commodity Systems as we shied away from Commodity Systems in trying to be competitive in that marketplace. As we more or less completed that transition now, the Engineered Systems business is now a large business and it has much higher margins than the commodity business that we have gotten out of over the last couple of years. So the mix has changed in hardware from the low margin hardware to much higher margin hardware. I am also including our storage business in that, by the way. The mix has changed somewhat in our software business where a larger percentage of our software business are annuities or are renewals versus new licenses. That renewal business is a more profitable business. We think, as our cloud application business gets larger, that's also when annuity business that promises to be even more profitable than our license business. Time will tell but we think we are going through a number of changes in mix to our overall products that we sell and that's very, very positive for our margin improvements in the future.

Thank you. Operator, next question, please.

And that will come from Brent Thill with UBS. Brent Thill - UBS: Good afternoon. Larry, on the database side, you mentioned you hadn't seen this level of interest in a while and I was just curious if you could talk through, when do you think we will see the inflection point of 12c kicking in? Is it couple of quarters away? Is it a year away? And historically, the database market is considered to be a single-digit growth market. Anything changed with this release that you think can help accelerate growth beyond the historical rates that we have seen.

Well, yes. I think we will spike beyond the single-digit amount, but given with the warning the caveats that our database business is quite a large business, but I think there will be a spike in that driven by two things. The multitenant option and I don't want to deemphasize the in-memory option either. I think you will see, I mentioned pretty rapid uptake probably starting a little bit in Q3 and then much more in our Q4 in the first half of the next calendar year. The in-memory option, I expect, people will start playing around with in the second half of the year, but as we get around this time next year, we will see good growth being driven by the in-memory option. Again, I had to go all the way back to 11i in the early days of the Internet when I have seen that much interest in new features in our database. Brent Thill - UBS: A quick follow-up for Mark, there has been some ongoing speculation around the sales force and how they are being structured. I think you just mentioned to Heather's question. There really hasn't been any change, but I know that question many of us have gotten in the last couple of weeks and I am just curious if you could just comment.

I really can't. Only in the context of this there's just nothing to talk about. There at the territory level, Brent, we don't have any sales people changing territories, changing accounts. We are not [rewarding] anything. If anything, we are actually very happy with the model we are in and the continuity of it and the continuity of the management, the familiarization of the team with our products, we are driving a lot more training into the sales force, so one of our real tenets is just continuity. We say continuity, continuity particularly of the relationship between the sales person and the customer. It's very important for us to have continuity with the customer and we have made it now, so that the territory changes around Oracle are a really big deal and so that level of discipline is in and nothing has just changed about it whatsoever. Brent Thill - UBS: Great. Thanks.

Next question please.

That will come from Raimo Lenschow with Barclays. Raimo Lenschow - Barclays: Thank you. I wanted to talk a little bit about the Cloud business again. What do you see in terms of customer reception? Obviously, you have a very much increase in growth rates here, but how are you selling that? Is that kind of like account management control function in terms of you going in and a lot of deals we are seeing where you just kind of up-sell from what you have already or are these deals competitive than what you see in terms of your positioning against the competitors, the pure play ones? Thank you.

Well, will take it and let Larry chime in as he sees fit. We go to market by functional area and we call on the functional owner of that functional area particularly in areas like HCM. We will call on the Chief Human Resources Officer and talk to them about our solutions. Now to your point, some of those are customers are current customers of Oracle HR applications and some of those customers are not. We have, we think, very strong differentiations in the area of mobility, we think is a core strength of Oracle HCM, we have social capabilities integrated into our solutions, we have got analytics, which is a very big deal integrated into our application and supposed not everything these are core differentiations in this case specifically versus workday, so, we go directly to the [CHRO] and clearly there is a role of IT in it, but we go at the CHRO acting. We call on the CHRO and then we integrate that sales process with IT. Now, think of us doing that sort of functional area by functional area; whether that's with the CMO and marketing, the Chief Sales Officer and sales automation, et cetera. We feel very strong, Larry made some comments earlier, about our differentiation, the one I just added and that's how we go to market. Raimo Lenschow - Barclays: Perfect.

Let me just emphasize. We are organized against our secular competitors, so a while ago, Mark has emphasized, we haven't made any changes to sales force in a while and that is absolutely true. A while ago though, we decided, we had to lineup an HCM sales force directly against workday. That's all they think about. Every day is competing against every workday prospect and going out there competing against workday. We have another team people that compete against Salesforce and Salesforce Automation. We have another team that competes against Salesforce in service automation and customer experience. We have another team that focuses on ERP and SAP and so far it's the cloud ERP which is a relatively new market where that team is focused entirely on Workday. So Workday is really not in cloud ERP yet. That's an area they would like to get into but we watch that very closely. We are organized. We are organized by functional area so we can compete effectively against these new generation of specialists. Raimo Lenschow - Barclays: Okay. Thank you.

Next question, please.

And that will come from Brad Reback with Stifel Nicolaus. Brad Reback - Stifel Nicolaus: Thanks a lot. Mark, maybe a quick question. I am back on the Salesforce and productivity. Obviously you have hired a lot. This has grown faster than revenue but maybe you can give us a sense of where we are in the productivity curve and will you reach full productivity this year or is it sometime in next year?

No, we would not reach full productivity as, again, remember what we said a little earlier, that a reasonable amount of our hiring has gone into the cloud. And as a result, many of those resources are selling annual recurring revenue. And that annual recurring revenue would be a percent of what you would normally have had in the old license business. So you have got a period of time for those people to get productive and get revenue, and again, it starts all with what we announced today. It starts with bookings and then you drive that booking over a period of time and you build a subscription base. Normally speaking, you would think it would take you a couple to three years to get to that full productivity of the equivalent of a recurring stream of revenue to what you would have typically seen in license. Now that said, some of our resources have gone into what you would think of as the traditional license business. And by the way, you see some of those results in areas like what we have in Europe. So an example, we hired up in Europe very early in the process that Larry was just talking about and it's showing up with our market share gains and you see evidence of that across many of our regions. So the best way to answer that is sort of a hybrid impact. We have more resources. We are seeing the productivity helping us gain share in many of our core markets. In cloud, we are in early days. And as we talked about today, it all starts with bookings. I would say that we have gotten more and more comfortable with now the size of the distribution pipe and really our focus now is on their productivity. The engineering of the sales process, as Larry and I have gone through a couple of examples up today, mean that they are standard sales place for our sales force to go execute, training our sales force and maturing that sales force. So that's really where we are in the process. Brad Reback - Stifel Nicolaus: Great. Thanks very much.

Thank you, Mark. Operator, I think we can turn the call back to you for closing in a moment but I will make some closing remarks here. Thank you all for joining us today. A 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 with any follow-up questions on this call. We look forward to speaking with you. Thank you for joining us again. Happy holidays and I will turn it back to the operator for closing.

Thank you. Ladies and gentlemen, that will conclude today's conference. Thank you again for your participation. You may now disconnect.